Over the last five years, Data Respons has acquired five companies in Germany. As of Q1 2021 these companies accounted for 34 percent of the Data Respons groups total revenue. We spoke to CEO, Kenneth Ragnvaldsen, about the investment in German companies, differences in business culture and the biggest lessons Data Respons has made on its way into the German market.
You started to invest in the German market early, why?
And how did you proceed?
We started in Norway over 30 years ago with global technology and IoT-solutions that are inside of cars, ships and planes, among others. After Data Respons achieved solid growth in Norway, expansion to the Nordics became a natural next step. Then we considered Germany as the next milestone for the company, because it is a large and exciting industrial market. We had, and still have, a goal of becoming a leader in Europe within our area. Hence, it was natural to focus on Germany. In our field, the Nordics and Germany cover a significant part of the industrial market in Europe. I think it was smart of us to go via Sweden, which from an industrial point of view is kind of a mini-Germany.
Can you tell a bit more about the projects you have in Germany?
We digitize work processes, products, and solutions for many of the large companies in Germany, such as Daimler and Audi. We have, among other things, developed car sharing applications, wireless infotainment solutions and fleet management. Another project we have been working on recently, is an online platform for trading renewable energy. From a minimum of 3000 MWh, anyone can sell their own renewable electricity produced from solar, wind, water, or biogas via this platform.
How do you experience the German business culture?
There are differences between Norway and Germany both culturally and commercially, but we complement each other well. Norwegians are innovative by nature, take things in stride and do not always listen to what the boss says. The Germans, on the other hand, love order and perhaps are more careful about contradicting their bosses. Once the Germans have decided, they have a very strong implementation power. If you take the benefits out of the two worlds, the result will be very good. As we advanced in Germany, we noticed that the Germans are a very nice people, and that Germans and Norwegians get along well. There has always been good chemistry between the Nordic countries and Germany, with little guidelines or formal policies as there often is between larger countries. Which is also an aspect you should think about when considering markets internationally.
Do you have specific recommendations for other companies that are interested in the German market?
Find your niche and specialize
One of our most important lessons is that in Norway you can be a generalist, but in Germany you must focus on a specific field. Otherwise, the market will simply be too big. To succeed in Germany, you need to select some specific areas you want to be good at.
Don’t lose yourself in the internationalization process
The second is not to lose who you are in the internationalization process. You do not have to change everything for your company to expand to another country, but you have to adapt in the right way. We are Data Respons in Norway, Sweden, and Germany, while in Norway we are Norwegians, in Germany Germans and in Sweden Swedes. We capture the differences between countries by using local employees who work with local partners and customers. Then we teach them who we are to be. As a company, we can only be Data Respons, we must play on the same advantage across borders.
The strengths of a decentralized business model
I believe in a decentralized model despite the fact that we are an international company. We get the employees in the organization to take responsibility and give them the opportunity to influence themselves. Openness and honesty are of course important for this to work. Say what you want to do properly and stand by it. I always ask to hear the employees’ thoughts and opinions. When we build that trust in the organization, we get trust and loyalty back.
When you want to expand, you must be present in the relevant market, and of course invite the companies you acquire to Norway. I have been to Germany a lot over the years, but unfortunately, I did not learn the language. Fortunately, speaking English works just as good.
What has been the biggest lesson along the way?
The importance of investing locally. You do not cover all of Germany from Frankfurt, you only cover the Frankfurt area. We bit off too much at first when we did not realize how huge the country is. Take one step at a time, stay focused and remember that Germany is regionally built with large cornerstone companies scattered throughout the country. If you want to work with Daimler, you need to be in Stuttgart, while for cooperation with Audi, it is Ingolstadt or Munich that applies, and so on.
Digitization is rolling out in Germany – great opportunity for us
Another lesson is digital. The Nordic region is at the forefront of digitalization, both in terms of technology development, but also in general, like how we work. In Norway and Sweden, the cost level is high, few people and large distances, so early on we became good at communication, mobility and digitization. Germany, of course, has some cutting-edge expertise in the area, but is generally lagging behind. Not all places have broadband or card payment options. You can be a little surprised by that. However, this is exactly what has given us a huge opportunity as digitization is fully rolling out in Germany now.
Can you tell us a little about Data Respons’ investment in 5G in Germany, and what the future holds in this market?
We work with 5G in a global perspective, as it is an essential part of the infrastructure that is being developed now – which enables everything to be connected. One of our largest customers is Ericsson, one of the world’s leading suppliers of 5G. Having knowledge of these technologies in place in Germany, gives us a competitive advantage. Our goal in Germany is to be specialised in specific niches. This is why we have built a portfolio of various companies, in Leipzig, Munich, Hanover, Erlangen or Ingolstadt, that work closely with our customers with digitalization that the new business models create. Including areas such as modernizing the car structure and car sharing applications.
How has covid-19 affected Data Respons?
We saw strong growth last year despite covid-19, this also applies to the German market. We have always had a digital structure in the company and many digital platforms for internal communication. It has been an advantage during this time. In fact, our software engineers and specialists are getting more done now than before because they save time not to travel. The biggest lesson for us throughout the pandemic is that we can work just as well across borders digitally. In fact, I think we will work even closer with Sweden and Germany afterwards. But digital is obviously not enough. We will travel to Germany again and meet the employees when the opportunity arises.
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