One of the things that you find in trying to innovate and develop software is that it is hard to outsource the coding elsewhere. While there are exceptions to this rule, one sees the spur to innovation built into a process where people are able to tinker with and iterate their ideas in a hands-on fashion using simpler and more powerful software frameworks.
I have posted previously about coding reality with tools such as 3D printing, having the effect of unleashing that same dynamism into manufacturing. Extending the logic of the experience in software, a prerequisite to having that happen is keeping a base of manufacturing in this country. This defies the often-stated logic that the outsourcing of manufacturing is not an issue if high-value, innovative tasks remain in the country.
There is a lesson in this from the innovation of the spine of Germany’s economy – the centuries’ old Mittelstand system or the small and medium-sized enterprises that account for 70% of its employment. As described in this FT excerpt, at the core of keeping the innovation of Mittelstand, was keeping production capacity within Germany, as there is a manufacturing ecosystem that is disrupted by losing manufacturing capacity.
Carl Miele imprinted the motto Semper Melior, or Always Better, on his company’s first washing machines more than a century ago and that ethos of constant improvement remains the same. Like other Mittelstand companies, Miele has always focused on the premium segment.
Developing and manufacturing products in Germany has also helped its engineers to develop new ideas. “Having production capacity in a country is important as without that it is harder to improve and innovate – some of the knowhow goes missing if production capacity is lost,” says Markus Miele, great-grandson of the founder.
Hermann Simon, chairman of Simon-Kucher & Parntners, a consultancy who will this month publish an updated version of his book on Germany’s “hidden champions”, says: “There are some Mittelstand companies who file more patents in a year than an entire country like Portugal or Greece. That’s where it starts.”