There is now a great deal of experience across different countries as they act in their own ways to improve the productivity and excellence of their higher education institutions. Each nation wants to create an international reputation for excellence that will attract students, academic staff and business. This involves change at the national level, in terms of programs, structures and policies, as well as action by individual institutions. It is important that Australia learn from and build on this experience and examine how it might benefit from the successes of other countries. This paper describes and explores the lessons of the German Excellence Initiative (and a similar program from France). The Excellence Initiative is a major, national program that has helped and is helping to revitalise the German higher education sector by focussing on excellence, supporting success and promoting innovation within the sector. In setting out to support excellence by concentrating resources in institutions able to demonstrate a strategic commitment to superior performance, the program has influenced institutions across the whole sector--and had the deliberate intention of doing so. One of its underlying objectives was to target the perceived inertia in the faculty structure of the universities and it has served to create a new, more competitive culture which promotes superior performance even beyond those institutions receiving funding. (Contains 4 footnotes.)