A combination of traditional and innovative approaches can be the key to success
The transformation of entrepreneurship in Germany is being driven by several key factors. In recent years, the “innovator rate” in established German companies has fallen significantly, suggesting that innovation performance may be stagnating. Meanwhile, family-owned businesses and many small and medium-sized enterprises (SMEs) are facing major business succession challenges. At the same time, we are seeing a surge in the number of new businesses and startups entering the market with innovative business models and frequently benefiting from government funding programs. Steinbeis expert Professor Dr. Norbert Zdrowomyslaw and Christian Wulf (Assecor GmbH) argue that traditional SMEs and innovative startups should work together toward a resilient and sustainable future.

Megatrends and regional challenges: a ubiquitous pressure to transform
The business landscape in Germany is characterized by its remarkable diversity. Traditional large enterprises and SMEs coexist alongside dynamic new businesses and startups. All these different types of business are currently facing a host of complex challenges.
At a global level, geopolitics and climate change are having a significant impact on companies’ strategic decisions. The ongoing rise of globalization requires them to adapt flexibly to international markets and regulations. At a regional level, demographic change and changing values in society are playing a key role in the development and make-up of the workforce and of corporate cultures. [1]
Digitalization confronts businesses with the challenge of integrating technological innovations while at the same time optimizing their existing value creation systems. Sustainability is increasingly becoming a key aspect of how businesses operate, not only for environmental reasons but also due to the social responsibility and long-term profitability dimensions. The retention of skilled employees and development of resilient business models are crucial to weathering market volatility. It is thus vital for businesses to implement effective change management so that they are able to respond flexibly to external and internal factors.
The multitude of social and economic challenges coupled with the volatile market environment means that there is huge pressure for businesses to transform. Risk and crisis management is thus becoming more important for companies’ decision-makers. Factors that are critical to the successful development and continuity of businesses include clear, sustainable business strategies, the ability to respond rapidly, and strengthening their medium- to long-term resilience – in other words, their adaptability, robustness and ability to withstand challenges. The constant changes in the world of business and the workplace mean that the ability to adapt flexibly to change and emerge stronger from crises is becoming more and more important. However, people react to stress differently. What one person finds stressful may be less so for someone else. To a large extent, it is thus up to the individual to build their own resilience. This calls for various character traits that help to cope with stress and crises. Psychologists and HR managers often talk about the seven pillars of resilience: optimism, positive future planning, pursue solution-oriented goals, take responsibility, build and cultivate networks, stop being a victim, and acceptance. [2]
Developing your business through effective change management
Competition for markets and customers is getting much tougher in an increasingly fast-moving society and economy. To enable their long-term success, businesses must continuously manage uncertainty and risk. Both external and internal environmental factors are subject to constant change that calls for proactive, adaptive business management. In short, a business’s future is shaped by people, and change management is key! [3]
Effective change management covers critical areas such as innovation management, digitalization, sustainability, leadership and business succession. [4] These areas are key to ensuring a business’s competitiveness and future security.
The consensus among academics and business practitioners is that companies do not evolve automatically. They need to recognize the opportunities that change brings. Every company has its own DNA and is shaped and developed by people. They must think of the company as a ship that the captain, helmsman and crew (i.e. management and employees) have to guide through all weathers, currents, depths and shallows until it reaches its destination port (customer satisfaction, employee retention, survival of the business, success, sales, profit). Our general definition of business development is thus as follows: Business development denotes systematic efforts by management to develop the business system in times of change in a way that includes the stakeholders in shaping the change process and makes use of appropriate instruments and measures in order to achieve the business’s short-term, medium-term and in particular long-term goals.
While chance and luck may come into play, it is strategic action and targeted change management that will be mainly responsible for a business achieving sustainable success that adds value. [5]
In the future, as well as adding value, entrepreneurship will be resilient and sustainable
Known for their strong regional roots, tradition and stability, Germany’s traditional small and medium-sized enterprises are facing major changes and seem to be losing their aura and sense of direction. This is reinforced by the growing diversity in the SME sector, which necessitates new ways of thinking and corresponding adjustments. [6]
Business founders are the darlings of German politicians, who hope that innovative (new) companies will disrupt ossified corporate structures, unleash new, dynamic growth potential and stimulate the labor market (acting as a “job machine”). These new companies introduce innovative, creative business models that challenge and disrupt existing structures. Knowledge-based and tech startups have the potential to significantly improve quality of life in our communities. Social enterprises that pursue non-commercial goals which benefit society also contribute to sustainable development that adds value. [7]
One promising approach to creating a sustainable future economy is to strengthen knowledge-sharing partnerships between traditional SMEs and innovative startups. These partnerships can combine the strengths of both types of business: the SMEs’ stability and experience and the startups’ agility and innovativeness. The resulting synergies help businesses to respond more effectively to changing market requirements and foster sustainable growth. [8]
Although SMEs and startups differ with regard to their strategies, leadership styles and company cultures, there are nonetheless several ways in which they can complement each other. However integrated changes in strategy and culture are necessary in order to successfully bridge these differences and pull off the transformation.
In view of the current challenges, one might ask whether small and medium-sized enterprises have a future. Professor Dr. Friederike Welter, president of the Institut für Mittelstandsforschung (IfM) in Bonn, gives an unequivocally positive answer to this question in issue 2/2023 of the IfM’s SME research newsletter “Forschungsnewsletter zum Mittelstand”: “SMEs definitely have a future. But they have become more diverse in recent years. This means that the SME policy framework must be adapted to reflect the heterogeneity of small and medium-sized businesses. SME policy also needs to revisit the definition of its target groups. Not every business that is an SME according to the official definition actually sees itself as such. Take the solo self-employed or founders of innovative startups, for example. Conversely, there are many large family-owned businesses that still describe themselves as SMEs even though their structure means that they no longer actually fall into this category.”
The inexorable transformation of entrepreneurship in Germany is being driven by several social, economic and technological factors. Traditional SMEs and innovative startups must work together toward a resilient and sustainable future. Partnerships between established companies and new market players have tremendous potential for innovation and growth.
Friederike Welter puts it in a nutshell: “Especially in the most recent crises, many SMEs have once again demonstrated what makes them so special. They have risen to the challenges flexibly and creatively and, for example, adapted their business models and internal processes to the changed circumstances.”
Resilience and adaptability will be key to successfully dealing with the coming challenges and ensuring that businesses are able to develop sustainably. In the coming years, the businesses that survive in the long run will first and foremost be the ones that successfully combine traditional and innovative entrepreneurship approaches. And change management and strategic partnerships will play a key role in this regard.
Contact
Prof. Dr. Norbert Zdrowomyslaw (author)
Freelance project manager
Steinbeis Transfer Center for Network Planning and Evaluation (Stralsund)
Christian Wulf (author)
Site manager
Assecor GmbH (Stralsund)
Quellen
[1] Zdrowomyslaw, N./Stütz, B./Wulf, Ch.: A Regional and Local Approach to Sustainability, in: Transfer Das Steinbeis-Magazin 2/2021, pp. 36-37.
[2] Auerbach, H./Zdrowomyslaw, N.: Unternehmensentwicklung und Management im Mittelstand. Einblicke in die Praxis von A bis Z, Greifswald 2023, p. 86f.
[3] Zdrowomyslaw, N./Klotz, M./Freyer, M./Wedell, D.: Unternehmensentwicklung durch Veränderungsmanagement. Mit Mitarbeitern Wandel erfolgreich gestalten, in: Der Betriebswirt. Management in Wissenschaft und Praxis 4/2019, pp. 26-32.
[4] Zdrowomyslaw, N. and team: Unternehmensnachfolge in Mecklenburg-Vorpommern. Mit der Praxis für die Praxis! Greifswald 2020.
[5] Auerbach, H./Zdrowomyslaw, N.: Unternehmensentwicklung und Management im Mittelstand. Einblicke in die Praxis von A bis Z, Greifswald 2023, pp. 32-167
[6] Zdrowomyslaw, N./Auerbach, H./Wulf, Ch.: Time for a New Way of Thinking – The Changing Nature of the Mittelstand, in: Transfer Das Steinbeis-Magazin 2/2023, pp. 13-15.
[7] Federal Ministry for Economic Affairs and Energy: GründerZeiten 27: Soziales Unternehmertum, Berlin 4/2016.
[8] Zdrowomyslaw, N./Auerbach, H./Wulf, Ch.: Time for a New Way of Thinking – The Changing Nature of the Mittelstand, in: Transfer Das Steinbeis-Magazin 2/2023, table p. 14.
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