“Investing in education and research is vital during times of economic turbulence”

TRANSFER speaks with Prof. Dr. Heinz Trasch, Chairman of the Board of the Steinbeis Foundation

Professor Trasch: SMEs in particular benefit from the services provided by the Steinbeis Foundation. At the same time in periods of economic turbulence, these smaller firms also receive far less attention than large enterprises when experiencing difficulties. What advice would you give to SMEs currently suffering under the economic crisis?

Take an active approach – tackle the crisis head-on. Don’t just take a back seat and wait to see how the economic situation will develop, letting your company merely drift with the tide – take the initiative and act. If employees have to switch to short time because of a lack of orders, firms should make the most of this extra free time by arranging training sessions and professional development measures for staff to take advantage of. German chambers and associations as well as Steinbeis offer a very wide range of courses and seminars. But firms can also tailor their own training to respond directly to customer needs – such as training on different management systems or new technical methods. Companies should take a critical look at their product or service portfolio and update it if necessary, or even develop innovative new products and services to add to their portfolio. Firms who want to do this can consult Steinbeis companies for advice on planned innovations – in fact, we offer complimentary initial consultations to SMEs in the state of Baden-Württemberg, as long as their annual turnover was under 100 million euros in the last fiscal year. An initial consultation with Steinbeis experts can help firms develop potential solutions for problems relating to processes, products or services, or can even help generate innovative new ideas. Steinbeis experts also provide firms with technical assistance in turning these ideas into reality, as well as advice on funding.

One thing is crucial in a crisis: professional consultation needs to go beyond merely analyzing problems, it should help firms develop potential solutions which can be readily put into practice. Will Steinbeis be continuing its offer of complimentary initial consultations for SMEs?

Yes, Steinbeis will continue to offer initial consultations at no charge. This offer really proved its worth in the past, so we began to offer complimentary initial consultations again in Baden-Württemberg as of October 2005. This allows us to complement other consultation services offered by German chambers and organizations. Very small companies in particular – which make up a large number of SMEs – are taking advantage of this service. Microenterprises like these benefit from discussing their challenges and ideas with top Steinbeis consultants who are experts in their field. In many cases, Steinbeis consultants are able to suggest a variety of funding programs and help firms take advantage of them. Surveys have shown that companies are highly satisfied with our consultation service, and complimentary initial consultations often lead to tangible projects.

One of the key criteria for financial success, now more than ever, is a firm’s ability to innovate. Meanwhile, there’s been years of criticism that the German economy generates plenty of innovative ideas; the problem lies merely in implementing them. How would you rate the innovative power of German firms in general – and what do you think could be improved?

The economist J. A. Schumpeter defines innovation as the implementation of a new idea in the production process – on either a technical or managerial level. But that doesn’t suffice to describe what we mean by innovation today. J. Hausschildt, a researcher of innovation, defines innovation as a new idea in a business which has a positive impact on the existing situation. By combining both of these definitions so that they complement each other, we arrive at the current understanding of innovation – a new idea in a business which leads to financial success.

For an innovation to come into being, firms must be in touch with the latest information and research on technology and management systems. Over 97% of firms in Germany have fewer than 50 employees – which means the vast majority of these firms have no research department of their own and have to rely on external sources – such as universities – to tap into current information and research.

Companies can benefit from this expertise directly by employing graduates or maintaining contacts with Steinbeis centers at universities. This is one area that I believe holds tremendous potential for innovation which many firms have yet to exploit. Even companies overflowing with knowledge don’t necessarily have the expertise to translate their visions into reality. The most efficient way to bring new ideas to life is by working with experts who are able to take this knowledge and turn it into financial success. This is the principle by which Steinbeis companies work: our specialist consultants do more than answer questions and advise firms on their problems, they help firms solve these problems and put new ideas into practice. And in doing this, our experts are aided by the modern infrastructure of our centers and academic institutions. Our services stand at the crossroads of science and business, but firms are still not making the most of them. So at Steinbeis, we intend to step up our discussions with SMEs.

The Bologna Declaration and its effects are still viewed somewhat critically in Germany – and universities are under a great deal of pressure to implement its resolutions. Will the Bologna Process have a major impact on the current system of knowledge and technology transfer between Steinbeis and universities?

I think the Bologna Declarations are exactly the right way to establish a uniform higher education system across Europe, and even worldwide – even if this means abandoning certain traditions. Bologna helps create an open marketplace for higher education, one which allows international competition. And just like in a free market economy, quality – in this case, the quality of tuition and research – will remain key. The prospect of gaining a bachelor’s degree after only 3 or 4 years of study is bound to encourage more high school graduates to enter university – a key goal of the German government. In turn, this means that universities and colleges will need to expand, leading to a growth in research output. Especially for Germany, a country with relatively few natural raw materials, knowledge is key to developing innovations which can help companies compete internationally. As university research departments expand, more and more German SMEs will want to tap into their expertise. So once the terms of the Bologna Declaration have been adopted in 2010, I expect universities to see increased demand for knowledge and technology transfer – not just from SMEs, but also from large enterprises.

It was long feared that government research funding could be an early victim of the financial crisis. Now, thankfully, the federal and state governments have agreed to continue to subsidize research. The German government has earmarked 16 billion euros for higher education and research institutions – what does that mean for you?

The government’s provision of 16 billion euros is further proof that investing in education and research is vital during times of economic turbulence – to provide the foundations needed for innovation in business. This investment will support and stabilize the national research network and is proof of the German government's long-term vision. As well as funding academic research, the government has launched the ZIM innovation program to subsidize innovative SMEs and the research institutes with which they collaborate in the same field. Together, these measures give companies the potential to be more proactive than ever and kick-start innovation – as long as they are able to tap into academic expertise easily and use it to their benefit. This is the role of the Steinbeis centers – as well as helping companies find funding programs which meet their needs.

In Chinese, the word crisis is a combination of the characters for opportunity and risk. If we take steps to counteract risk and thus avoid disaster, this leaves us with opportunity – the chance to emerge from the crisis financially successful. This is how I see the situation: we should make the most of the government's financial commitment and work together to try to bring the economy back on course. We need to give companies and financial institutions the opportunity to become successful again by acting independently, responsibly and entrepreneurially.


Steinbeis Foundation (Stuttgart)

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