Israel and Germany: Trust Breeds Innovation

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At the 50th anniversary of relations between Israel and Germany, business
leaders confirm a strong bond that has led to unique collaboration not shared
with other international business partners.

Imagine for a minute that Israeli and German businessmen come together to
proclaim their strong bonds of trust and friendship, to celebrate complementary
natures that spur technological innovation, and to discuss how they’ve
transcended deep seated prejudices and healed old wounds left over from a dark
past in a spirit of reconciliation. Sound like a future vision, something
possible perhaps in the next century, maybe even the next millennium?

Think again. It’s happening right now, and the accolades are being showered
from both sides. At the recent celebration of 50 years diplomatic relations
between Israel and Germany June 28-30 in Tel Aviv, high-level politicians and
key business executives from both countries came together in Tel Aviv to honor
the progress the two countries have made.

Germany is Israel’s most significant trading partner in Europe, and is the
third largest globally. The industries in Israel in which German companies are
most actively investing include information and communications technology,
cybersecurity, mobility, venture capital investments, medical devices, and
pharmaceuticals. In addition, Israel serves as a significant exporter of
knowledge, innovation, and creativity to the German market. Its “Startup Nation
Brand” has marked Israel as a center for excellence for hundreds of
multinational corporations. With nearly 1000 startups per year, Israel is in a
select league with the U.S.A. and China for innovation-driven countries, but
with the difference that Israel’s innovations are designed from the beginning
for export. The domestic market of 8 million is too small and segmented to
sustain a local business model.

For sure, some of the trade between the two countries is ignited through
government policy. But according to business leaders from both countries, there
are more fundamental factors that support and nourish this relationship which
are seated in the Israeli and German cultures.

Turning deficiencies into a major Advantage

Yossi Vardi should know. The Israeli high-tech entrepreneur and angel
investor has some 40 years of experience in co-founding, leading, and helping
build over 70 high-tech companies. According to Vardi, the problematic
background between Germany and Israel helped them turn deficiencies into a major
advantage. “Whenever German and Israeli businessmen came together, both sides
tried to demonstrate trust, reconciliation, and friendship,” he said, “step by
step, milestone by milestone, visit by visit, deal by deal.” This was built up
slowly over decades, step by step and business by business, a “huge
transformation” he calls nothing short of miraculous. “The lesson of this
amazing development is that you can overcome the wounds of the past, you can
reconcile, and you can trust the people you didn’t trust in the past,” Vardi
explained.

But that is not all. Yossi Vardi believes that each side brings something
unique to the table, and it goes something like this: Israelis bring the early
stage dynamic and a willingness to “jump into the water” to found businesses,
while Germans bring the vision, strategy, and industry knowledge. These
complementary natures are widely recognized by German companies, a reason why
many have established innovation centers in Israel.

Managing the innovation

But since the world’s not perfect, executives at the 50-year celebration do
have some tips for optimizing the innovation among Israeli and German teams.
Recognizing early the innovation potential of Israel, for nearly 20 years SAP
has maintained an R&D center in Ra’anana, North of Tel Aviv. This was well
before the company even considered establishing centers in Bangalore and
Shanghai.

According to Clas Neumann, global head of SAP Labs Network, SAP will continue
to invest in Israel for strategic technologies that the company delivers in its
global enterprise software solutions. Some of the technologies that SAP is
currently developing out of Israel include the cloud experience for users and
developers, mobility solutions, and cybersecurity. Last year it acquired Israeli
startup Optier for software process monitoring.

Clas Neumann has experience managing innovation projects around the world. A
German who has made his home in Bangalore and Shanghai, Neumann is a strong
supporter of internationally diverse teams, but also knows what it means to
protect and nurture innovation where it is found.

“As for all cultures, also the German working culture has pros and cons in
international collaboration,” he notes. With the German love for structure and
planning, and the Israeli fearlessness and “get-it-done” attitude, it’s
important to have the right people in both cultures to find that measure of
understanding for each other’s strengths. Without a give-and-take attitude,
Neumann explains, the Israeli impact-driven mindset might not be fully leveraged
by their global counterparts.

So while he recognizes that the cultures complement each other well, he also
throws into the ring that “complementary needs to evolve.” Other German
companies apparently share the same viewpoint, and often hire development
liaisons who act as an interface between the Israeli teams and their German
counterparts.

Plugging into a vibrant startup culture and ecosystem

While SAP Labs Israel is an integral and essential part of a large worldwide
development organization, its managing director, Orna Kleinmann is working
constantly to keep her teams plugged into the vibrant startup culture and
ecosystem that makes Israel so unique.

Acquisitions are one route, but Kleinmann also recently launched a
partnership with Israel’s largest startup accelerator, The Junction. She is
convinced that SAP has a lot to offer startups, who generally lack a network and
financing in the early phases. “The startups we meet are very much interested in
enterprise software, and in how we work. They are also want to connect their
ideas with some of the largest companies in the world, the ones we already have
as longtime and loyal customers. What startups and venture capitalists offer us
in return is information on the latest trends and technologies, and we can bring
that knowledge and experience to SAP globally.”

Contributing to this article was David Lange from SAP Labs Israel,
Ra’anana, and Thomas Leonhardi from SAP News.