Made in Germany
This post originally appeared in German on the Haufe Personal website. I write a regular column there, covering #HRTECH.
I figured I’d post the english draft here. Thanks Michaela for the German translation.
You may know the back story about “Made in Germany“, but let me repeat it anyway. At the zenith of its Victorian power, in 1887, the British passed the Merchandise Marks Act. The Act insisted that German imports were clearly marked as Made in Germany. It was part of a trade dispute at the time, and the goal was to signify that the German imports were of inferior quality. Over time the label became a sign of high rather than inferior quality, an excellent case of unintended consequences.
I read a lot of HRTECH press and analyst reports, and they typically imply that almost all the HRTECH innovation is the US. Yet I‘ve spent a good part of the last two years working with German and European HRTECH start ups and scale ups. I‘ve seen really innovative solutions to national and global HR challenges that can compete and win locally, and on the global stage. However,with the notable exception of Germany‘s largest software company, much of the German HRTECH industry seems invisible globally, and somewhat ignored locally.
I think it is time to change this, but that change needs to start here, at home. It is clear that part of the challenge is that German start-ups need to do a better job of communication internationally and locally, but I would like to see German corporations doing a better job at fostering and engaging with the start-up community.
Rather than than immediately buying whatever looks hip from America, I‘d urge HR leaders to have a good look at what is going on locally. When going through an evaluation for say an employee engagement solution, or shift planning, internal mobility, OKRs, chat based recruiting, virtual reality based training, skills management, recruitment analytics and so on, make sure that you include at least one local vendor on your short list. I think you will be pleasantly surprised about the state of innovation in German (and European) HRTECH. Can you list out 10 German HRTECH start-ups or scale-ups, because there are at least 200 now?
There is no perfect list of startups, as things change rapidly, but there are some useful sources of information you can access. See for instance, the Personal Magazin list. I find the HRwins service very useful see https://larocqueinc.com/ and I also watch Pitchbook, Crunchbase, and other VC databases, and events such as Unleash (in person and virtual) are an excellent source. Set up a couple of Alerts via google search.
I’d also like to see leading German companies working more closely with universities and FH on HRTECH start-ups, both formally and informally. After all, it was that close collaboration between academia and industry that transformed the Made in Germany brand in the first place. Sponsor a hackday, get involved with a start-up hub, encourage HRTECH focused thesis work. Invite local vendors to update you on their products. Join a start-up advisory board.
The good news is that the investor interest in German HRTECH continues to grow, so this will help with scaling for international success. Encourage your corporate ventures team to explore HRTECH investments.
Many of you are rethinking your HRTECH landscape to support the changing nature of work, and this is being accelerated by COVID. The Digitalization of HR is real, and it is now, and Silicon Valley doesn’t have all the answers. As you investigate solutions, make sure you ask probing questions about local HR requirements, such as Kurzarbeit, Worker’s councils, Probezeit, GDPR and so on.
Speaking of GDPR, ask all your vendors, big and small, what their response to Schrems II is. More about Schrems II in a future column, it is going to have a big impact on HRTECH.
I'm a venture capitalist at Acadian Ventures, investing in the future of work.