The times, in Europe, they are a-changin’

From The Hill

afd_germany_1The German elections are over, and for a brief moment, it looks like all is stable. But make no mistake, this is only the eye of the storm. Germany has already shifted away from the current leadership.

German Chancellor Angela Merkel stated that she has done nothing wrong. While that is true, there are many things she hasn’t done right. Society and its problematics around the world have moved on, circumventing traditional politics and politicians.

From a long-term analytical business perspective, politics requires a new direction. The parties in power may elegantly gloss over losing 10 percentage points in voter support. They talk about how the voters have made a mistake; how all it takes are better explanations and how all these inequities will be rectified shortly. How wrong they are!

Perceptions change. Research by Mintel reports that many consumers now judge soap bars to be a haven for bacteria. Similarly, voters now judge political insiders to be parasites to progress. Our work, which systematically tracks business behavior and expectations over the past 30 years, indicates new core values for voters.

Traditional dimensions of politics and individuals have four key dimensions, illustrated by the four legs of a stool. First is competition, which determines the approach to progress — one party achieves “the winner takes all,” others meekly fall in line for the droppings from the table.

Second is the establishment and management of risk, where steely nerves and occasional disasters determine lifestyle. Then comes profit, which accounts for success in tangible form. Finally, the fourth leg of the stool is property rights, which assure innovators of their return on investments. There now is a simultaneous splintering of all four legs, which inhibits successful conduct of direction.

A new stool with new legs has recently emerged, these changes are crucial in understanding society. First is truthfulness. Firms and voters detest fake news, insincere excuses and thoughtless comments. When the shadows of unreality obscure one’s outlook, exposed people extract a penalty.

Second is simplicity. Employees and citizens want to understand how relationships work and interact. Without that, it is hard to provide or accept truthfulness. Then there is participation, permitting insight beyond simple observation and offering an active role in shaping the conditions which confront one’s life.

The fourth leg is responsibility — going far beyond customary short memories and the traditional pleading of ignorance. The new drive says: “We are here and, if not, we are coming.”

Just as in America, European voters are beginning to be energized by the new legs of the stool and their new criteria. They expect new directions that negate tradition. Judging by shifts in Britain and Spain, stability in Germany may not be that assured.

It’s also not just the money or even economic growth that matter most. Known quantity may give way to even more quality and a rise of local criteria. “Merkelism” will be substituted for Mercantilism. German economic power may be repulsed by regions seeking to regain their cultural self-determination.

The U.S. emphasis on re-shoring, and the enhancing and encouraging of local production is likely a portent of the new Europe, which perhaps reduces Germany from the “King of Exports” to a mere prince. More export-supporting banks will permeate Europe, accompanied by increases in protectionism.

There are still many options for tariff and non-tariff barriers. Within, but particularly outside of the EU, one can expect growing restrictions in both capital and labor flows and a rise of sanctions. Vested interests will become more visible, and provide new decision frameworks.

All that requires a new team. Low-profile politicians will inexorably move onto the new pedestal. Andreas Pinkwart (FDP) and Karl-Theodor zu Guttenberg (CSU/CSIS) are two who get it. Bob Dylan may have written the song half a century ago, but now more than eve,r we get key guidance from, “The times, they are a-changing.” The change is with us already — the new stool will give us new rules of success and new directors.

Michael Czinkota (czinkotm@georgetown.edu) teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. His key book is “International Marketing” 10th ed. (with Ilkka Ronkainen), CENGAGE.

Open Ivory Tower Windows Will Bring Fresh Air

Universities are among the most successful institutions that mankind has created in the last millennium. But what role do universities need to play in the knowledge society of tomorrow to continue their success story? This question grows more pressing for the Western welfare states, as their dominance in research and innovation is being challenged by globalization and the dynamics of the emerging economies.

The example of the United States, which like no other nation has been able to benefit from universities as drivers of growth, makes this abundantly clear. For a long time America has combined cutting-edge research not only with strong science and engineering but also with entrepreneurially oriented business schools. With this approach the country has promoted groundbreaking innovations.

Yet, since the bursting of the internet bubble, there are increasing doubts as to whether the previous innovation concepts still fit the new and future challenges and research priorities
The advancement of biotechnology and social sciences absorbs almost half the research funds of U.S. universities. Add the expansion of national security and military research, and universities have lost important drivers for the industrial use of new scientific insights. Instead, the ivory towers, which were believed to be abandoned, have returned. Like the hanging sword of Damocles the gigantic budget deficit will also require new structures and processes in research and teaching at universities.

Germany may currently look better with its broad mix of industrial and service-related innovations and its strong and flexible small and medium-size businesses. However, this should not obscure obvious weaknesses. What has been achieved with the excellence- and high-tech initiatives and more autonomy for universities in recent years is threatened to be lost again with ideologically motivated campaigns against an alleged commoditization of higher education.

Germany and the United States are facing similar problems. So far the American and the German university system have learned from each other in a time delayed fashion. Now, due to mounting competitive and financial pressures, universities need to learn simultaneously from each other. The transatlantic exchange of ideas at a conference in Washington a few days ago made it very clear: University success is not about tearing down the ivory towers, but to open their windows as far as possible to other disciplines and to new markets.

While the freedom of teaching and research have to be defended, at the same time strong bridges for mutual transfers have to be built.

In the 19th century, Alexander von Humboldt revamped the Western education system by insisting on the scientific approach to research. We now need a set of Humboldt kind of ideas for the 21st Century. The university of the future is only viable if best research and best teaching go hand in hand with best knowledge transfers. To achieve these goals, universities need reliable funding and high productivity. Interdisciplinary linkages, a close integration with the eco-system as well as research excellence and relevance are also necessary.

All this calls for major cultural change on both sides of the Atlantic. For a faster industrial use of new scientific knowledge both in universities and in businesses one has to rethink current approaches. We need more risk capital, new business models, and efficient intermediary organizations in order to build a sturdy bridge over the wide valley of death between basic research and innovation.

The efforts are worthwhile. Key is not just wealth and employment; it is all about the development opportunities of each individual and the defense of our freedoms. These provide the ideas and energy for the design of the next stage of our universities and our societies.

 

Michael Czinkota teaches international business and trade in the Graduate School of Business at Georgetown University (USA) as well as international marketing at the University of Birmingham (UK). Andreas Pinkwart is Senior Visiting Fellow, American Institute for Contemporary German Studies at Johns Hopkins University (USA) as well as Dean of HHL – Leipzig Graduate School of Management (Germany). He served as vice chair of the Free Democratic Party in Germany.