“Since starting at PSI in 1981, our business has changed dramatically. Back then like today, people made the company what it is. Let me introduce some of them to you.”
I would like to introduce Helmut Scharle - one of the six founders of PSI - who together with the other founders presented the "self-determination model" and the first PSI solutions for the steel business.
Helmut, what I always wanted to ask you. . . Do I remember correctly that PSI was founded on April 1st 1969 because AEG felt like it didn’t make sense to continue with automation in the steel industry?
Yes, just about. From 1966 to 1968, the five other founders of PSI and I worked at AEG. We created software for controlling the operation in a hot strip mill for the "Bochumer Verein" in Germany. Until then, AEG carried out such controls conventionally, electrically. This project ran into a lot of difficulties and AEG did not want to push this area any further.
For us, however, the idea had a lot of potential. So we founded PSI on April 1st, 1969 and it was declared on May 12th.
Let’s start at the beginning. You are from Saarland, aren’t you?
I was born in Saarland in 1940 and studied electrical engineering in Karlsruhe. The measurement data evaluation for my Master’s thesis was programmed on a Zuse computer.
When did you come to Berlin and start with software?
I started at AEG in 1966 in the rolling mill department in Berlin. They also had an automation department.
The first project at AEG was difficult?
You could say that. The project team consisted mostly of newly hired university graduates who had no experience with either steel or computers. It took us 1.5 years for the programming and then another 1.5 years for the commissioning at the site in Bochum, Germany. Finally the system was up and running with good customer satisfaction, but our boss in Berlin had practically forgotten us. The long, hard time at the facility had bonded us together. We had acquired quite a lot of know-how - which also meant we couldn’t imagine going back to work at a hierarchical, inflexible company anymore.
”We came up with the company name PSI in a pub in Berlin 50 years ago!”
Who founded PSI?
The six founders were Wolfgang Dedner, Winfried Gerresheim, Dietrich Jaeschke, Paul Kruse, Franz Mailänder and me. Back then we founded PSI as the "Gesellschaft für Prozesssteuerung und Informationssysteme mbH". The basic idea was to provide real-time programming for the industry. By the end of the year, we already had ten employees and in eight months had made 350,000 DM revenue!
Who were the first customers?
AEG customers from the steel industry quickly saw the usefulness and potential of software and commissioned more projects. We had the know-how and worked for AEG as sub-contractors.
It’s probably easier today to found a start-up than it was in 1969, isn’t it?
It was pretty exciting back then. I was one of the first who could work for the new company. The company was founded, we looked for new employees, wrote up work contracts, paid salaries. We rented an office in a large apartment in Frege-Straße in Berlin, where we could work on our projects.
How did you come up with the company name?
We came up with it together in a pub in Berlin. We had coasters, a pen and a lot of ideas. We liked the acronym “PSI” right away, which also stands for the Greek letter for the unsolved mysteries of mathematics. We then came up with the logo a little while later in the same pub.
How did the “self-determination model” come about?
Our young new employees were influenced by the ’68 movement in Berlin. The founders, too, also wanted a new form of work, not the same old corporate culture. In 1972, we didn’t have any real financial controlling department, our customers didn’t pay until the project was completed. We expanded and the shareholders had to pre-finance. At that time our new employees proposed to us to waive their salaries and invest their money in the company.
How did that process go over?
The young people were eloquent, dynamic but also business-oriented. The debates were pretty fierce at first, but soon ended with an amicable contract. We called this the “self-determination model”. The main idea was that every employee was involved in the decision for the company. However, one of the founders left the company as a result.
What were the highlights of the model?
Every employee could become a shareholder. So they had to buy shares – but not more that 1%. As shareholders, they all participated in the profits and losses. 50% of the profit was distributed equally to the employees, the other 50% to the shareholders according to their shares.
The managers were elected or reelected by their employees every two years, too. The shareholders also voted for their CEO – interestingly over the years, it was also the same every two years – Dietrich Jaeschke.
You could also trade the number of vacation days for payment. On average, the employees opted for less vacation than the norm. Yet everyone was happier that way, those with less vacation and those with more vacation.
Did the model work?
It worked very well. The employees were all very dedicated and committed to customer satisfaction and profit. We discussed everything. The group was so heterogenous that most of them were happy when the executive board followed a strategy and ensured profit as well as interesting work.
How did people around you react to the model?
At first we were known as the “software commune” and didn’t dare tell our customers about it. Would you trust the automation of your steel production to a group of long-haired hippies, living in the middle of the socialist GDR and next to the revolutionary Berlin student movement? Later, we promoted the model as a strength. We didn’t have any employee turnover, employees were as dedicated as our solutions were innovative.
The employee associations and the unions looked on the model with a very suspicious eye, however. When the company went public, we got rid of the model. It didn’t conform to corporation law. But still today, employees hold essential significant part of the shares.
Did you have time for a private life?
Sure, a few days after founding PSI, I met a young doctor and fell in love. We got married soon thereafter. So this year I’m celebrating 50 years of PSI and next year our golden anniversary. I am at least just as proud of my three children and nine grandchildren as I am of the expansion of PSI.
Helmut, what would you write today in the PSI Metals family album?
First, I’d like to congratulate everyone at Metals from the bottom of my heart. Out of our business here in Germany, you have created a world market leader in production management in metals. Chapeau.
My wish is that you treat employees and customers well. Deliver innovative solutions that deliver benefit to customers. That’s what we started in 1969 and I think you will continue this successfully in the future.
Thank you very much Helmut for founding PSI, establishing the Steel business and giving all employees the chance to become owners of PSI. All the best for you and your family and best regards to your nine grandchildren.
Detlef Schmitz (64), married to his first love Karola (61), proud father of Hanna (29) and Paul (27), has been in different management positions at PSI for almost 30 years. Today he is Director of Business Development.