Chryslerís New Know-Mobiles

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June 12, 2006

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Chryslerís New Know-Mobiles
Knowledge practices pay off in hot new car models, even as post-merger integration presents new challenges.


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by Warren Karlenzig

From Knowledge Management Magazine May 1999
Auburn Hills, MichiganĖ-The hottest new car model for 1999, the Plymouth Prowler, is more than a tour de force of automotive design. Spinning out of showrooms like a cool but crazed hybrid of a í30s Ďracer and something ZZ Top might blast around in, the production hot rod is a harbinger of new times for DaimlerChrysler and the automotive industry as a whole.

While the Prowler recalls the sleek design and muscular performance of classics from the American car heyday, make no mistake--this and other 1999 models such as the new Chrysler 300M donít conform to traditional notions of automotive engineering and manufacturing. When you test drive a 1999 Chrysler, you can see for yourself how knowledge management performs out on the open road. Thatís because the 1999s are the first Chryslers that embody a start-to-finish high-speed engineering process based on virtual and physical networks of knowledge.

Since 1996, when the company made knowledge management a vital condition for its design and engineering, Chrysler has been on a roll. Sales have been stronger than ever, with a record 2.5 million Jeeps, Chryslers, Plymouths and Dodges sold in 1998. Execution has been faster and cleaner, according to engineers, and market awards include "Motor Trend Car of the Year" for the Chrysler 300M and Petersenís "4x4 of the Year Award" for the 1999 Jeep Cherokee.

"What weíve done is to redesign the whole process for bringing new vehicles to market," said executive engineer Jack Thompson, who was a driving force for knowledge practices at Chrysler. New approaches in design and engineering can cut the time to market for new automobile designs, he said. "Once a decision is made to start developing a new model, we donít want a lot of circuitous backing up or starting over--we want it to be a rifle shot."

That shot was fired from this sprawling campus of 11,000 employees, which includes design, engineering, pilot testing and U.S. headquarters, all under a single roof. At the heart of this new way of working at Chrysler is the Engineering Book of Knowledge, an intranet repository of process best practices that was spawned by a pair of engineering managers but carried on through employee participation in grass-root Tech Clubs (see "In the BeginningÖ" and "Reinventing Apprenticeship," this article).

The new directions in Auburn Hills have become evident to buyers on the showroom floor. According to John Keller, a salesman with Boardwalk Chrysler-Plymouth in Redwood City, Calif., "The 300M was such a hot car when it came out in October that we still canít keep enough of them in this place. Chrysler has definitely stepped it up in the past few years. And now with the Daimler merger it will step up even more."

Yes, times change. The new Prowler and 300M models are products of DaimlerChrysler, a German company renamed in November after Daimler-Benz became the majority owner of the 75-year-old Chrysler Corp. The global reality of transnational markets and mergers no longer rewards loyalties in Detroit or Deutschland. Instead it rewards the fast, efficient and innovative.

"There are no American or German companies any longer--only successful ones," said consultant and author Regis McKenna, who offers strategic counsel to auto makers and his other corporate clients.

[This article covers the DaimlerChrysler knowledge management story from the Chrysler perspective. An ambitious post-merger knowledge management integration effort, currently underway, will be the subject of a future article.]

Back from the brink
Daimler-Benz judged Chrysler Corp. worthy of being its partner in the largest merger in manufacturing history partly because of Chryslerís extremely successful platform approach to design and engineering. Platforms meant cars could be built around customer needs and preferences, not around organizational functions, called stovepipes. Platform teams of people work and learn together focused on the product, with a payoff in market responsiveness, reduced cost and increased quality.

Spared from bankruptcy and imminent death in 1980, Chrysler Corp. came back from the brink so resoundingly under the leadership of former chairman Lee Iacocca that he was popularly thought of as a serious presidential contender. It was at this time that the seeds of the new, knowledge-powered Chrysler were planted, becoming a company that was willing to try new ways of looking at its business, its suppliers and its workers.

In this environment of change, Jack Thompson was able to work closely with Iacocca on the development of a new engineering and design facility that seemed to embody the new attitudes. Thompson, who then served as Technology Center development director, sculpted the center around knowledge-sharing and productivity principles: open air, natural light, even escalators instead of elevators because everyone knows people donít talk on elevators. In 1994, the Tech Center opened for business in a walnut grove north of Detroit, providing an appropriate home for a transformed engineering culture at Chrysler. The building proved to be so successful that two years later corporate headquarters was relocated from Detroit to a site adjacent to the Tech Center; executives wanted to be closer to the action.

It was during Chryslerís 1987 buyout of American Motors Corporation (AMC) that company executives first saw the enormous potential for a dedicated platform production method. At AMC, Francois Castaing had been designing a new development approach in which teams of engineers focused on a single type of car platform (such as Jeep, truck, small car and large car), working on new models as a system from concept to production. This differed from the standard automotive practice of organizing work around departments (project planning, design, engineering, manufacturing, marketing) and components (engine, powertrain, body). After the acquisition, Chrysler dumped the clunky AMC models but pursued Castaingís sleek platform design and production ideas.

Annoying gaffes
The results of switching to the non-linear platform design were significant. The first model to use the platform approach, the Chrysler LH, was produced in a record 39 months, compared to other models that took more than 50 months. But there were errors cropping up in the new platforms, annoying gaffes such as leaving a moisture barrier out of one modelís door. No one could explain what was causing the bugs.

In a 1997 Ernst & Young case study written by consultant Al Jacobson, now a senior research fellow at Andersen Consultingís Institute for Strategic Change, an executive Chrysler engineer described the situation. "It was a memory problem. It was as if Chrysler was forgetting its own solutions and procedures on how to build cars."

Said Rick Rose, a DaimlerChrysler IT architect who helped implement the original EBOK, "When we moved core groups of people who knew about engines or transmission to platforms, they no longer had peers to share information with. We lost some of the advantages of organizing by group. Mistakes were being repeated and they werenít picking up new developments in their core area."

This was obviously no small matter. According to the Meta Groupís David Yockelson, "If you havenít caught an error in engineering or design, the problem is exponentially multiplied when it goes into production."

Nor were these the only glitches that the rebounding company encountered. Jacobson also pointed to the closing of an in-house training institute and the loss of a sizable chunk of the companyís knowledge base during heavy downsizing in the mid to late 1980s as continuing obstacles to engineering excellence.

Buckets of knowledge
Thompson looked at the nature of the problems and knew that the way to overcome them while becoming more competitive with even faster product cycle times was to institutionalize knowledge sharing and collaboration at Chrysler. But first the knowledge residing within the organization needed to be mapped out. According to Jacobsonís case study: "Engineers proceeded to map out where the knowledge resided within Chrysler. The Ďbucketsí ranged from product databases to CAD/CAM systems to manufacturing, procurement and supply vehicle test data. Within each category, details included the type of information stored there, the platform type and the data formats."

Working in tandem with executive vice president of vehicle development Francois Castaing, the former AMC platform innovator, Thompson rec- ognized that sharing knowledge meant integrating these knowledge buckets while resolving cultural issues that impede sharing among platforms. The answer, first suggested by Castaing, was to encourage the creation of informal cross-platform Tech Clubs, functionally organized communities of practice that reunited designers and engineers with cohorts from other platform groups. The supporting knowledge base--the EBOK--would be created by the clubs as a collection of best practices and technical know-how to be shared and maintained.

"We had a vision early on that we should take advantage of lessons we learned from prior programs, best practices, who to talk to on specific issues, and who the knowledge experts in the company are," said Thompson. "This is not hard data, it is based in peopleís opinions and in the intangible knowledge that can be only learned through experience."

Double-edged sword
Though the intense team and system-based focus succeeded in giving designers and engineers a sense of platform ownership, it cut them off not only from their mentors and peers but also from their component suppliers. The EBOK thus became the way in which Chrysler was able to reconcile its platform problems and develop a keen technical memory, while keeping abreast of external issues, such as competitive information, quality information and outside standards.

The success of Chryslerís EBOK is exemplified not just by the attraction of Daimler as a suitor, but by more than passing interest from the worldís number one and three auto makers, General Motors and Toyota (DaimlerChrysler is fifth largest by revenue).

"Toyota came here and we gave a presentation to them on the EBOK," said Thompson. "We both agreed to what prearranged questions we were going to answer or not answer, so that coming into the meeting there were no surprises. But I think showing what youíve done is a little different than showing how to do it."

According to Jacobsonís study, part of the inspiration for Chryslerís EBOK came from a benchmark study of Toyota and Mitsubishi engineers who maintained "little notebooks" for scribbling their experiences in. Now, with Toyotaís interest in the EBOK, the shoe is on the other foot.

"If you donít have our kind of organization, you probably canít do it the way we did it," Thompson said. Nonetheless, General Motors has in the past year started its own knowledge management system, called the GM Knowledge Network, under the auspices of Wendy Coles, director of learning organizations.

"GM is in an exploratory period," Coles said at a San Francisco KM conference earlier this year. "We got rid of strategic planning [as a department] and shifted instead to the mode of drawing upon expertise and learning for new business direction. Learnings are put into the new vehicle development, so even as each team begins they are learning from other senior managers and previous processes."

To help instantaneously move insights from one team to the next, GM began piloting an intranet-based corporate memory technology from Instraspect in January. "A system is needed to track these variables, analyze and diagnose social dimensions," Coles said. "We canít capture insights and hope theyíll be passed on in a class three months later."

When asked if GM had copied or been influenced by Chryslerís knowledge-sharing methods, Thompson would only say, "People are mobile around here. Weíve had some of our folks go to General Motors. You have to consider the effects of knowledge transfer."

No executive mandate
Unlike GMís shift from top-down strategic planning to bottom-up learning-based methods, Chrysler does not have a prescriptive executive mandate for its knowledge-sharing programs. The closest it came, according to the Jacobson study, was when Chairman Robert Eaton tasked the vehicle engineering department with the goal in 1995 of creating an accelerated performance improvement process through a learning environment, providing the then-nascent EBOK with a formal link to Chryslerís strategic plan. But, despite the backing in principle, central funding has been scarce.

"Thereís no central budget for the books of knowledge and the associated processes," said DaimlerChryslerís Norman Irish, senior manager for management education. "We want employees to use existing entities. We tell people: ĎYouíve got to make do with what youíve got--donít go out and get Ernst and Young for every problem. We donít have hundreds of thousands to throw at this thing.'"

Undaunted, Irish said Chrysler now is rolling out books of knowledge in other departments such as manufacturing, finance and sales and marketing. "Weíre not trying to lord over the process but rather just service it," he said. "Weíre happy to allow it to percolate up from those willing to make it happen."

With the DaimlerChrysler merger, Irish acknowledges the program will likely require greater top-executive support, particularly since the post-merger integration team has identified knowledge management as a prime success facilitator.

Irish has been working with a DaimlerChrysler executive sponsor so that the top level in Auburn Hills and Stuttgart, Germany, has a better understanding of the many grassroots knowledge initiatives under way. "She uses the terminology in her speeches and presents on these initiatives to executives," Irish said.

Faster, better, smoother
"The issue is how can you get more quantitative information not just to justify knowledge management, but to support its spread?" Irish said, "That includes models, processes and procedures. How do you monitor something so everything is faster, better and smoother?"

As for DaimlerChryslerís Stuttgart headquarters, Irish has been meeting with Roland Deiser, head of DaimlerChryslerís new corporate university as well as Michael MŁller, Irishís management learning counterpart from Daimler-Benz. (Though English has been deemed the official language of DaimlerChrysler, perched on a bookshelf above Irishís desk in the textbook German is Fun: Book 1.)

"Weíre now in the process of establishing a common framework and data model for finance, procurement and supply, IS and IT, as the post-merger integration teams make two corporations into one," Irish said. "Thatís going to be much more visible to the executive level."

Supply-chain enigma
DaimlerChrysler must also contend with another major issue well outside the bucolic walnut groves of its Auburn Hills campus. Wiring together the entire DaimlerChrysler supply chain will be the biggest operational challenge it faces, since thatís where 70 percent of the companyís product comes from. Conceded Thompson: "A lot of our knowledge experts are really in the supply base."

Chrysler has been a world leader in supply-chain design and management, according to Charles Fine, author of Clockspeed: Winning Industry Control in the Age of Temporary Advantage (Perseus Books, 1998). "Chrysler has done amazing things with supply-chain collaboration," said Fine, a Chrysler Leaders for Manufacturing professor at MITís Sloan School of Management. "But it may also be that they are at the point of diminishing returns--there may not be that much more they can get out of the relationships, because soon it could come to the point where suppliers will have too much control or too much power. Imagine buying a car that says ĎBosch Insideí like computers now say ĎIntel Inside.í"

When it comes to EBOK supplier participation, not surprisingly Chrysler has been wrestling with issues of security, liability and culture.

EBOK supplier participation is currently limited to suppliers presenting computer disks to Chrysler employees for their review. Once the sponsoring Tech Club section gives its approval, a Chrysler EBOK section sponsor can enter the information. Itís a cumbersome process requiring lengthy downloading (submissions often include voluminous CAD files) and numerous levels of review.

"The security issue that keeps them at armís length will be resolved so that a supplier who wants to can contribute to the EBOK without sharing his practices with competitors." Thompson predicted.

Then there are other barriers. However proficient Chrysler has been at planning and managing its supply-chain partners, there is still a cultural gulf between it and those companies.

"Enterprise boundaries between suppliers and Chrysler have always been large. You have a problem with the door locks and the Chrysler people fire back at the manufacturers who then fire back at Chrysler," said Tom Trimmer, president of grapeVine Technologies. "What we need to determine is how do we wire the brains of Chrysler engineers with the brains of suppliers. Thatís the real challenge."

The final bogeyman--a big one--is liability. If manufacturers document lessons learned from previous product failures, DaimlerChrysler is left with a paper trail. "Our lawyers are nervous about this," Irish said. "How do you legally capture information and keep from being subpoenaed when there is a product problem?"

Market kudos
Such future challenges aside, knowledge management and the EBOK have played a critical role in Chryslerís new way of doing things. Those cultural and technical processes empowering knowledge workers have resulted in successful real-world products--well-engineered automobiles.

"Learning occurs when information, theory and experience are integrated," noted Langdon Morris, president of consulting firm KMLab (and KMM contributing editor). "The quality of each of these elements differentiates mediocre learning and exceptional learning. For the EBOK, the quality of the information available to anyone is continually updated from real-world feedback based on experience, and then synthesized into a system of the important information discovered by everyone. This adds relevant breadth and depth to the entire process of building progressively greater cars. The EBOK leverages technology in service to human thinking, the proper role for all KM tools."

Now that Chryslerís EBOK has been a qualified success, institutionalized knowledge sharing must be integrated with a more strategic executive-level framework, one inextricably bound to the multinational DaimlerChrysler and an entirely new cultural process. The freewheeling Chrysler must reconcile its grassroots sharing and collaboration systems with the greater deliberation of its fiscally controlling German partner.

"When you look at these giant mergers such as Chrysler and Daimler-Benz what tears them asunder is a direct result of knowledge and cultural issues, but no one looks at these issues during the pre-merger process," said Larry Prusak, director of the IBM Institute for Knowledge Management. "What looks good on paper in reality may be a disaster in the making."

Integrating processes and cultures will certainly prove to be a challenge, as they are in all organizational mergers (see "Dial KM for Merger," this issue). Nonetheless, Chrysler salesman John Keller has a good feeling not just for this yearís crop of Chrysler "know-mobiles" but for what he expects off the DaimlerChrysler lines in the years ahead. "In the future, this is a company that could really dominate."

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