A Follow-Up on My Presentation – Questions&Answers #9 Location Munich

In this series, I will comment on the written feedback I received after my presentation. Also, I will answer the online questions asked by students I had no time to amply reply to during said presentation

Lehren für Unternehmensführer – das Leben, das Wissen, die Informatik und die Ethik

(Lessons For Managing Directors – Life, Knowledge, Computer Science and Ethics)

„Innovative Entrepreneurs“/ Summer Semester 2010

Leadership in growth-oriented enterprises

Today: Location

How important do you consider the choice of location for establishing a company in the IT sector?
What were the determining factors in your case? What advantages are there to the area around Munich?

Choice of location:
Various locations have various advantages and disadvantages. In far-off regions, you often have to pay lower wages and rates for freelancers. Transport connections also play a role. It will do no harm if, especially during the foundation phase, you have some customers who live “just around the corner”. Not all regions can offer this potential. On the other hand, I know quite a few very successful enterprises that sell their products exclusively through the internet. They also develop their products in a distributed way through the internet. If you do that, all you need is a more or less reasonable web connection.

My factors:
Since I lived in Munich, had studied at TUM and knew my important partners, such as Siemens, had their relevant branches in Munich, I never thought much about the location. In the 1970ies, Munich was the German IT city. Many producers (apart from Siemens) were seen all over the place with their IT sectors. We had many famous software houses and an IT culture that deserved the name. Consequently, Munich was like a magnet for all kinds of computer scientists and electronic data processors from all countries, both Germany and elsewhere. I had many colleagues and friends who came to Munich from Great Britain or Austria, but also from all over Germany and many other countries because of the job opportunities.
We in Munich had (and I believe still have) the highest density of computer scientists in Germany. In other words: there is no other city where there are more computer scientists per capita than here. Munich was something like the “Silicon Valley of German software”. There was a second, considerably smaller “nest” of computer scientists around Stuttgart (HP, IBM, SEL). But that was about it.    
Later on, it turned out to be a disadvantage, because we had most of our projects in the late 80ies and 90ies in Düsseldorf, Frankfurt and Hamburg, instead of Munich. After all, that was where the demand was strongest – and they had less IT experts.

Current advantages of the Munich region are:
Well, I am not sure that there still are any. As before, competition is fiercer in Munich than anywhere else in Germany. Probably the only remaining advantages are that ours is a nice city with a high standard of living, that we have excellent traffic connections and good universities.

Where do you see the IT location Germany in the international competition? Are there any advantages in favour of Germany? How would you judge the human capital in Germany in the IT sector?

IT location Germany:
With the exception of SAP and a few successful niche suppliers, German IT does no longer play a role as innovative power. As I see it, most of the future developments will take place outside Germany.
Advantages for Germany:
We are still excellent engineers who are particularly good at organizing things. Besides, I think that – due to our still high educational standards and our European culture – we are a lot better at thinking and acting in an “inter-disciplinary” way than our competition. I see a huge chance in methodology and integrated designs, where many individual areas of competence have to be linked. I also believe the German understanding of quality to be a unique one. Unfortunately, this is not always an advantage. In the past, I often saw bidders win who had thrown faulty products onto the market quickly, following the maxim: “brashness rules”.    
“Human Capital” in Germany:    
I believe that our human capital is still better than in almost all other countries. This is not only true for IT, either. However, this lead does not have its origin in the fact that we improved. From my travels in many countries, I got the impression that most other countries suffer an even more acute downturn in the sectors of education and culture than we do. As I see it, the ingenious and ever so talented and best educated, hungry Indians, Chinese, Asians and Africans are a fairy tale. For me, it is a constant source of dismay to see employees from those highly-praised cultures that were advertised as extremely competent disappointing me in the projects. More often than not, they are a failure. Still, it would be wise for us not to rest on our laurels. Because if you rest on your laurels, you are wearing them at the wrong part of your body…     
In a nutshell: I am mildly optimistic.

My next post will answer your questions on studies and continued education.

(Translated by EG)

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