Daimler Embraces Silicon Valley Style of Doing Business

Daimler’s Chief Executive Dieter Zetsche is sweeping away layers of bureaucracy and encouraging a more experimental approach to new products. He has also asked 144 employees to generate new leadership ideas, according to sources at the German luxury automaker.

FRANKFURT, Aug 24 (Reuters) – Mercedes-Benz maker Daimler is embracing Silicon Valley management techniques in a drive to speed up decision making, empower staff and fend off new rivals such as electric carmaker Tesla Motors.

These are big changes for a company known for strict hierarchies and meticulous planning, and follow a trip by around 100 top managers to Silicon Valley last summer when they met executives from companies including Apple, Google and Uber.

Daimler, whose founder invented the modern automobile 130 years ago, is investing heavily in electric vehicles and Zetsche has decided that in order to succeed, the company, as well as its product range, needs an overhaul.

Outlining some of his plans in June, he likened Daimler to a rhino but said its size – with twice Tesla’s market capitalisation and 20 times the number of staff – did not mean it couldn’t also be nimble and decisive.

“Rhinos are large, but they are not slow,” Zetsche said.

Alexander Hilliger von Thile, a senior graphics and rendering manager at Mercedes-Benz research and development in North America, said Daimler was now encouraging ideas from all team members and not just the “Bereichsleiter” or department chiefs, as well as greater collaboration.

Daimler sources say Zetsche’s reforms have been influenced by the company’s dealings with Tesla when it was a shareholder, as well as techniques studied at other Silicon Valley companies.

So far, Daimler staff have generated around 150 ideas of which 80 percent have been implemented. The results are confidential, although it is clear that in future, decisions should be reviewed by only two management levels instead of up to six, the source added.

Another major change is to allow departments to fund an idea even if it is not clear what products will result from the spending. Having a perfect “specification sheet” used to be a precondition for investment.

Daimler calls this “corporate crowdfunding” – a technique learned during last year’s Silicon Valley trip, when managers also met start-ups such as San Francisco-based La Cocina, a non-profit organisation helping low-income food entrepreneurs.

As much as speeding up decisions, Zetsche’s reforms are focused on engaging and retaining staff.

Marissa Peretz, founder of headhunting firm Silicon Beach Talent and a former recruiter at Tesla, said a corporate culture of freedom was key to success.

“Tesla offered employees ownership and entrepreneurial freedom. To make changes at an established company is a bureaucratic process. Tesla’s success has given executives the confidence to consider joining other start-up carmakers,” she said.

Daimler, however, believes it can be at least as successful as Tesla in forging an entrepreneurial community without becoming too reliant on centralised organisational structures and concentrating decision-making responsibilities with key senior staff.

 – Published on Newswire/WardsAuto

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