We explored a Mittelstand company and what makes similar companies Germany’s economic backbone
Our day surrounded the idea of the German “Mittelstand.” These are small to medium sized companies that are family owned for multiple generations and their annual profits do not exceed €5 billion. Some other characteristics of Mittelstand companies include being incredibly innovative, leaders in their respective industries, keeping out of the public eye, and focusing on the long term stability of the company rather than enjoying short term profits.
As the professor from Innovation Academy and Dr. Gangi informed us, Mittelstand companies make up around 60% of jobs in Germany. What is even more incredible concerning the Mittelstand is it’s sustainability. By most metrics Germany is not an innovative country. In a list of entrepreneurial countries Germany is rarely at the top among the likes of Israel and the United States, countries that have many start ups and are celebrated for their numerous entrepreneurs. However, in an age of constant innovation and globalization Mittelstand companies remain at the top of their industries globally. Dr. Gangi told us Mittelstand companies are incredibly innovative and reinvent themselves to ensure their place in an always changing global market.
The Mittelstand is a business culture that is studied by many economists and businesses worldwide but is difficult to reproduce anywhere but Germany. They have allowed Germany to remain a top global economic player. In fact, Dr. Gangi joked that recessions should be German companies’ business strategy because numerous studies have shown German companies expand their market share shortly after an economic downturn. Their stability, focus on long term goals, and strategy of scaling back hours not firing workers allow them to hit the ground running before other companies following a recession.
In the afternoon after our visit to the market we visited a Mittelstand company called IKA. It was originally a drug store when it started in 1910 before developing and reinventing into the laboratory equipment and technology manufacturer it is today. It is now owned by the fourth generation of the family that founded IKA. The company employs 800 people on four continents and leads the world market for most of its product groups.
IKA officials gave us a tour of their different products in their experimentation room. Unfortunately, they did not allow us to take pictures inside their facility. They walked us through their many product groups including shakers, centrifuges, grinders, magnetic spinners, heating baths, photo bioreactors, calorimeters, and many other instruments. It displayed their innovation and impressive product field that keeps IKA at the top of its field. Like many Mittelstand companies IKA enjoys incredible notoriety in its chosen niche but is not well known to the general public.
Our visit lasted for a few hours and ended with banana milkshakes made using IKA equipment. The German Mittelstand is a model for economic sustainability and will hopefully inspire other US companies to adopt similar values and goals.