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Daimler Wants to Counter New Rivals by Adopting Silicon Valley Tactics

Daimler Wants to Counter New Rivals by Adopting Silicon Valley Tactics
In a drive to empower staff, fend off new rivals such as electric carmaker Tesla Motors and to speed up decision making, Mercedes-Benz maker Daimler is embracing Silicon Valley management techniques.
By encouraging a more experimental approach to new products, Chief Executive Dieter Zetsche is sweeping away layers of bureaucracy. According to sources at the German luxury automaker, new leadership ideas have been asked to be generated by 144 employees of the company by him, many of them from the rank and file.
The company is following a trip by around 100 top managers to Silicon Valley last summer when they met executives from companies including Apple, Google and Uber and for a company known for strict hierarchies and meticulous planning, these are big changes.
As traditional carmakers weigh up how to respond to new technologies including electric vehicles and autonomous driving that have turned firms like Google and Tesla into rivals, the changes will be closely watched by rivals such as BMW and Audi.
Zetsche has decided that in order to succeed, the company, as well as its product range, needs an overhaul and Daimler is investing heavily in electric vehicles.
With twice Tesla's market capitalization and 20 times the number of staff, he likened Daimler to a rhino but said its size but said that it did not mean it couldn't also be nimble and decisive, Zetsche had said outlining some of his plans in June.
"Rhinos are large, but they are not slow," Zetsche said.
Daimler was now encouraging ideas from all team members and not just the "Bereichsleiter" or department chiefs, as well as greater collaboration, said Alexander Hilliger von Thile, a senior graphics and rendering manager at Mercedes-Benz research and development in North America.
"We do not want to have experts who know everything, who sit somewhere and don't talk to anybody," he said.
Daimler was initially skeptical about prospects for electric vehicles like many traditional carmakers. Daimler chief Zetsche had jokingly said that the company the only automaker to make money from electric cars when it sold out a stake in Tesla from 2009-2014, according to a senior executive.

However that attitude has changed when last year, the Tesla Model S outsold Mercedes's flagship S-Class limousine in the United States and the advances in battery technology.
"We said before that if you are too early, you lose money. Now the view is if you are too late, you lose the market," the executive told Reuters.
However earlier this year when Tesla shares tumbled after news that a driver of one of its cars had been killed while using "autopilot" mode, the risks associated with releasing new technologies were laid bare.
In addition to techniques studied at other Silicon Valley companies, the company's dealings with Tesla when it was a shareholder had influenced Zetsche's reforms,Daimler sources say.
A clash of cultures was clear from the outset while working on various projects with Tesla.
"One party (Daimler) wanted to plan and think things through. The other (Tesla) acted on a 'shoot and aim' principle correcting things as you go along," one Daimler source told Reuters. The source added Tesla was often faster at implementing new technologies as a result.

Christopher J. Mitchell

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