Studio Guest: Bernd Venohr

Institute for Management, FHW Berlin DW-TV: ...and we'll be taking a closer look now at Bernd Venohr, professor at the Berlin School of Economics in Berlin, - and today, he's our studio guest. Hello. You teach Strategic Management, and the classic question there is "Why are some firms more successful than others?" - have you found the answer? Bernd Venohr: Yes, and it's easy. One, you have to dominate a niche worldwide. Secondly, it helps if you're privately owned and is you have a family as a shareholder. Third, you have to be very good operationally, you have to improve everything, all the time. DW-TV: Doesn't sound all that easy. You mentioned that a family business could be an advantage, and in fact a large number (more than 70 percent) of Germany's global market leaders are family businesses -- what is the big advantage there? Bernd Venohr: Family shareholding gives you two advantages. First, you have stability, continuity. You are able as a company to focus on the long run when looking at markets and developing products. Secondly, family means values as well. The family represents certain values which tend to be good and which create company employee loyalty. DW-TV: In what way do their methods of running a business differ from other, non-family businesses? Bernd Venohr: That's a good, difficult question. First of all, family companies have one problem: the management capabilities of the second, third or fourth generation. It's not always there. So the best model is family ownership plus external management. This is done by many of Germany's champions. They combine those two aspects and have professional management. That means budgeting, strategic planning, all the professional tool, but also all the advantages of family ownership. DW-TV: That could also explain why there are fewer huge companies and big groups that belong to these world champions. What do they have to do in order to adopt a few of these methods? Bernd Venohr: There's a nice statement from Jack Welch, I think he understood it perfectly well when he said you have to be able to put a small-company heart into a big-company body. That means installing the values and spirit of the small company into the big company organization. And that means getting close to customers, being very innovative, looking very much outside, how can I help my customers, and not inside, as unfortunately, many large companies do. DW-TV: Even among those family-run businesses or medium-sized businesses that are world champions, some are more successful than others, like the engineering sector, which manufactures and provides machine tools. I think 27 percent of these are global leaders. Why is that? Bernd Venohr: It's a good fit, probably. Those companies are extremely specialized and they know how to develop specific machines for specific customers. So there is the area where customer intimacy helps and where it helps to be very international, the way those companies are. So it's a perfect fit. DW-TV: How hard do you think they will be hit by the global economic crisis? Bernd Venohr: The crisis will hit those companies, but I'm optimistic. Those companies are strong, they produce products and services which are highly in demand. Look at sectors like renewable energy and medical technology. They will do well, while some other sectors, like autos, will have trouble. DW-TV: Bernd Venohr, thank you very much for joining us. (Interview: Monika Jones)

DW-World | December 9, 2008

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