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German economic model – American style

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Germans barely do IT innovation. Why, then, would a country be seen as a global role model for industrial modernization after it has just about skipped a full cycle of innovation?

Well, Germans may not be good at transformative innovation, but they are great at incremental innovation. Germans, the saying goes, make things that go inside the thing that goes inside the thing. They produce niche products, and do that well. By the end of, say, 10 improvement cycles, German tinkering has produced a completely new product.

Tinkering doesn't earn you Nobel Prizes, but it does help to build successful businesses. Today, the ascent of the emerging economies is powered by German high-tech machine tools, though they may be controlled by hardware and software that Americans invented. The same goes for medical equipment and all sorts of other high-tech gear.

And the lesson in all of this? America is sleeping through the green- and energy-economy boom, mostly because it chooses not to believe in it; it is thus missing out on an efficiency revolution that is transforming the globe while making countries and businesses rich. The German example shows that no Western country is doomed to fail permanently just because it takes an innovation and modernization pause. But a country needs to get back into the game – and on its own terms, building on its own strengths.

There is no use in copying German incrementalism when America is in the transformation business. The "Swabian Tinkerer" is not the role model when your guy is the "Silicon Valley Creator."

Just when America fell into disrepair at the turn of the millennium, Germany engineered its comeback.

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