On the ball

Apr 14th 2009
From Economist.com

An IT giant's management style scores in German football

IT IS now quite unlikely that TSG 1899 Hoffenheim, an upstart football club from a small town near Heidelberg, will achieve the ultimate goal of winning Germany’s football championship this year. Having led the country’s premier division, the Bundesliga, for many weeks this winter, it has now slipped to sixth place. And much to the dismay of its growing community of fans, it does not look like Hoffenheim will be able to stage a comeback.

Even so, the club is a football sensation by any measure—and one for which it is hard to find a parallel, at least in recent sporting history. In three years it has advanced relentlessly from a lowly regional league to the glamour of the Bundesliga. What is Hoffenheim’s secret?

Management goals

The easy answer is cash. The club is sponsored by Dietmar Hopp, one of the founders of SAP, the world’s third-biggest software firm, whose headquarters is in nearby Walldorf. Before the economic crash Mr Hopp, who played for Hoffenheim in his youth, was worth €6.2 billion ($8.2 billion). He has poured at least €180m into the club. Much of the money has been spent on a new stadium and training facilities but it has also allowed Hoffenheim to buy more than a dozen promising young players.

Yet cash is not the only ingredient in Hoffenheim’s success. A hands-off management style, the extensive use of technology and smart recruitment techniques have also been important elements in the club’s winning recipe. All these set it apart from other German clubs, which in many respects are set in old-fashioned ways.

Mr Hopp is quite unlike Roman Abramovich, the Russian oligarch who has spent hundreds of millions of pounds on Chelsea, an English football club. SAP made it into the top league of the information-technology (IT) industry, which is dominated by American firms, not least because of Mr Hopp’s management skills. As the firm’s chief executive from its incorporation in 1972 until 1998, he created an organisation more reminiscent of a software commune than a hierarchical IT giant in the mould of Oracle or IBM. Mr Hopp hired good people and let them take charge, largely limiting his role to giving advice and intervening only when things went terribly wrong.

In applying this approach to Hoffenheim, Mr Hopp hired a group of noted football experts, above all Ralf Rangnick, one of Germany’s best coaches, and gave them more autonomy than they would normally enjoy. “I’m not just someone who runs the training sessions and doesn’t stay long, like at most other German clubs,” says Mr Rangnick. “For each season, for instance, I have a budget. And I can do whatever I want with it.”

Just as important, Hoffenheim—like SAP—is about IT. Much more than his German colleagues, Mr Rangnick makes use of technology to show his players how they are doing and how they can improve. Video plays a big role, of course. But Mr Rangnick has gone further and enrolled SAP’s help to build a social network of sorts for his players, where they can, for instance, check their fitness results, get information on the diet they should follow and analyse videos of teams they will play against next. “I’m trying to minimise that factor, ‘chance’, as much as possible,” explains Mr Rangnick.

Finally, although Mr Hopp is deeply rooted in his region and does not like to travel, he has always been open to the world—which goes a long way toward explaining why SAP became an international success very early in its history. It is also a reason why SAP is one of the most globally integrated among big IT firms. Most of its 50,000-plus employees now work outside of Germany, for instance in Bangalore and Silicon Valley. What is more, the firm is trying to make use of cultural differences when deciding where to develop which part of a program: much of the core engineering and planning is still German; interface design often comes from California; and a lot of the programming is done in India.

Similarly, most of Hoffenheim’s players do not hold a German passport. “Without them, we couldn’t hold our own in the Bundesliga,” says Mr Rangnick. But he does not do this just by waving big cheques at foreign star players, as other wealthy clubs have done. He aims to have at least two players from any one region, because otherwise they might get homesick. On the other hand, he also does not want to have more than five from the same region, because then they might form cliques. “In a global team”, says Mr Rangnick, “you have to watch out for these things.”

What is the lesson from all this? One should be cautious in drawing general conclusions from such unique cases. Yet it is safe to say that Hoffenheim’s success is about more than just the depth of Mr Hopp’s pockets. The right mixture of hands-off management, clever use of technology and balanced globalisation can be a recipe for success, in sport as in any other business. All this, it has to be said, is no protection against bad luck, as Hoffenheim’s story also shows. The team’s recent slippage in the Bundesliga is due to a spate of injuries, which have put some of its best players out of action.