K6201: Case Study 3 DaimlerChrysler KM Strategy

Objective  This case study is to evaluate the KM implementation in the merger of 2 companies: Chrysler & Daimler-Benz.

Background of the merger  The strategic objective of the merger was to deal with 3 threats: Global overcapacity Changing markets Rising costs

KM at Chrysler (Before Merger)  Reason for KM Experienced Engineer leaves the company Re-org from functional to cross-functional setup Teams roll-out new autos much cheaper and faster New problem - Much more defects in new autos! Engineers are working in silos Design Engineering Manufactoring Procurement Sales

KM at Chrysler (Before Merger)  3-step KM solution 1.Map out areas of important knowledge 2.Create informal cross-team Tech-Clubs (CoPs) for each these area 3.Capture important knowledge generated from the Tech- Clubs into a common depository “Engineering Book of Knowledge” Establish quality-control process for writing, editing and reviewing sections in the EBOK Live-document  always work in progress

KM at Chrysler (Before Merger)  Structure of Tech-Clubs  Positive outcome – Chrysler was innovative – e.g. pioneer in SUV

KM in Daimler-Benz (Before Merger)  No concern for Knowledge Preservation German tradition of vocational training provide structure for tacit knowledge transfer  But the structure does not support creative innovation  No formal KM program A failed attempt - have an external consultant gather important knowledge and store in repository Outcome - external consultants gather the ‘wrong’ knowledge Lesson learned – Knowledge is best gathered by those who require it  Daimler Corporate University that fosters corporate learning Target Audience : Top Executives

Challenges at Point of Merger  Integrate internally (Knowledge Merger) operations, management, technology, etc  Face painful trade-offs Keeping skilled workers in contact while expanding markets globally to Asia, Latin America and Africa Encourage creativity to innovate new products, yet preserve market that is doing well  Fulfill 3 strategic objectives of the merger

Knowledge Merger (Short-term)  Technical Integration Targeted engineers Share and transfer the knowledge of the stronger company in each area to the weaker company  Management Integration Targeted executives Executives from both companies grouped into Issues Resolution Teams Collaboration is facilitated through use of groupware technology (Lotus Notes)

Knowledge Strategy (Long-term)  Copy the Chrysler’s TechClub at Mercedes - Benz  New Communication tools developed “Wel-Kom” Share knowledge across the company  Further identify the Knowledge Domains to form CoPs  Preserved Daimler Corporate University Renamed to DaimlerChrysler Corporate University

Results of Implementing KM  Continue to create new market niches. Introduction of PT Cruiser in 1999  Innovation improved. SUV Dodge Durango moved from drawing board to marketplace in just 23 months  Exports and quality were up Fewer wheels were being reinvented.  Strengthening in each area through Knowledge Sharing.

Lesson learnt in KM project  Adjust KM program to tackle the weakest part of organization E.g. Daimler : Strength: Technical Weakness: Organizational knowledge No need to change the way in acquiring technical knowledge Put more emphasis on improving their organizational knowledge  By Workers, For Workers

Thank You!