I introduced COINs in Chapter 1 with the phone call
that led to my involvement with the global procurement group of the newly
merged DaimlerChrysler. Two key lessons emerged from the DaimlerChrysler
e-extended Enterprise (e3) project: what makes COINs so effective is that
they communicate efficiently by sharing knowledge within the team, and
COINs build and maintain distributed trust.
For businesses, these lessons lead to a direct benefit: the knowledge
sharing inherent to COINs lowers transaction costs.
Project genesis and overview.
At the end of 1999, DaimlerChrysler decided to develop an e-Business strategy
that would streamline its Global Procurement and Supply operations, optimize
transaction processes, tighten control of materials flow and inventory,
and improve the transfer of information throughout its supply chain. The
solution would have to be one that enhanced relationships with suppliers,
increased efficiencies, reduced new product development time, and cut
expenses. To achieve these goals, the company launched the e-extended
enterprise, or e3, initiative, which today links DaimlerChrysler with
its supplier partners in a supply community.
DaimlerChrysler’s competitors were also busy leveraging e-Business
technologies in automotive procurement and supply chain processes. So,
the company wanted a solution that was unique.
The e3 project began in January 2000. Approximately 15 people from the
Global Procurement and Supply function worked full time, supported by
members of the IT organization and with employees from the business units
working part time as required. A team of 15 external consultants from
the United States and Europe reinforced the project team. This entire
group operated as a global COIN.
In the e3 initiative, DaimlerChrysler examined and reevaluated its organizational
structure as well as the roles and responsibilities required for new and
redesigned Web-based business processes. The company also created new
processes around Web publishing, transactions, and integration of sales
and marketing, and developed new technology components – from the
user interface to the back-end integration. The new Global Procurement
and Supply solution that was developed integrates legacy systems from
both Daimler and Chrysler, and addresses the various technologies of its
supplier partners. In the meantime the system has been rolled out worldwide.
And while it was not planned at the beginning, the COIN came up with a
highly innovative solution: join forces with DaimlerChrysler’s competitors
by creating the Covisint online marketplace, a worldwide automotive exchange.
The Covisint exchange – which includes Ford, General Motors, Renault,
and Nissan as major partners – is now an integral part of DaimlerChrysler’s
procurement solution.
Chapter 2 explored the swarm creativity that was so vital to the success
of the e3 project. Let’s look at two other key aspects of COINs
that were discussed in the preceding chapter.
The e3 ethical code.
The concept of an ethical code, so important to a COIN’s success,
was a central element of the DaimlerChrysler project. People working on
the e3 project became committed team members by experiencing the COIN
attachment mechanisms investment, communion, and transcendence. In workshops
held in Michigan and Stuttgart, Germany, the team developed a strong “we-feeling”
of belonging to a select group that was on a mission – to change
the procurement processes of DaimlerChrysler. Working long hours and giving
up functions outside of the e3 project itself, members grew a strong attachment
to the community. Important decisions were made in “transcendent
behavior” not by the team leaders, but in full-team workshops.
Communication among team members was very direct and social capital in
the team was high. People treated others as they themselves wished to
be treated. In workshop presentations, immediate and honest feedback was
given to presenters. Although the team numbered up to 30 people, all were
directly connected, communicating not through project and subteam leaders
but making information accessible for whomever needed it to get the job
done. The degree of sharing became very high. Once trust was established
in face-to-face meetings, open and honest knowledge sharing took place
over the Internet. A Lotus Notes-based Website served as the main knowledge
repository where relevant information, even highly sensitive documents,
was accessible to all team members independent of whether they were DaimlerChrysler
senior or junior staff or external consultants. All project members received
a daily project update. The degree of individual interactivity was also
very high; team members interacted intensively, and requests – whether
made face-to-face, by phone, or by email – were usually answered
the same day.
The culture in the mixed team of German and U.S. DaimlerChrysler employees
and external consultants was governed by the Tao of COINs. While team
leaders and senior experts were highly regarded, all team members were
treated respectfully. We employed a fact-based, non-hierarchical communication
style. Senior experts took the time to introduce and tutor novices, who
then quickly became valuable team members. The project and team leaders
came from a wide range of different hierarchy levels, nationalities, and
ethnicities, demonstrating the meritocracy of the project. We had defined
clear rules of team-based and hierarchical decision-making, thus demonstrating
consistency. We also shared all knowledge on our project Web server and
by mailing lists, therefore demonstrating transparency. Working together
in swarm creativity, with our mutual behavior defined by the Tao of COINs,
members also connected with each other in an efficient communication network.
The e3 project’s small world.
The DaimlerChrysler e3 project also exhibited a typical scale-free small
world structure. The overall team comprised, at times, up to 30 people
from DaimlerChrysler and different consulting firms. A larger group of
more than 60 people from different parts of the DaimlerChrysler organization
complemented the team, participating temporarily at different phases of
the project as outside subject matter experts. The team leaders from DaimlerChrysler
and the consulting company, together with the different subteam leaders,
acted as hubs of trust in the communication networks of the larger project
team. This core team got to know each other well at early face-to-face
workshops in Michigan and Stuttgart. Once trust was established, team
meetings were teleconferences. Because the e3 project leaders acted as
hubs of trust, senior DaimlerChrysler managers on both sides of the Atlantic
who were not part of the e3 project team agreed to share sensitive data.
By gaining the confidence of senior procurement managers in Stuttgart,
the e3 team leaders became bridges of trust and could convince those managers
to share data with their counterparts in Michigan that they had originally
wanted to keep secret. Also, junior e3 team members who had no opportunity
to fly over the ocean to get to know their counterparts trusted each other
remotely and shared sensitive data because their local team leaders were
acting as hubs of trust on their behalf.
Lessons learned.
My own involvement into the e3 initiative was a great learning experience
into the workings of a COIN operating on a global scale in a major multinational
corporation. Overcoming initial distrust between team members from both
sides of the Atlantic and successfully establishing teamwide trust fostered
a spirit of true collaboration within the project, which resulted in a
huge efficiency improvement. Three areas in particular were essential
for effective collaboration: (1) efficient sharing of knowledge by communicating
the right message tailored to the audience; (2) flexibility to change
one’s role in the course of the project; (3) building and maintaining
trust virtually, without meeting face to face.
People and company culture are the critical factors in large-scale projects
such as the e3 initiative. A principal challenge was to enable DaimlerChrysler
to “think the unthinkable.” At the outset, people were apprehensive,
and apprehension hampers innovation. Staff members were worried that projected
savings and streamlining of procurement processes might lead to their
jobs being eliminated. It was crucial to communicate openly what changes
would occur and what opportunities would be afforded to individuals.
A major advantage of any project based on Internet technology is that
initial results are seen quickly, so people can relate to and identify
the changes immediately. The e3 project made full use of Web technologies,
publishing position documents and using Lotus Notes-based collaboration
tools. The guiding principle was that there can never be too much communication,
and project management sent out daily project updates to all team members.
At first, this led to information overload. Over time, a more personalized
e-mail service with abstracts was provided, where the full contents would
be stored on the project Intranet Web site to reduce the cognitive overload.
Despite apprehensions, some communication glitches, and all the other
obstacles, we learned an important lesson: COINs communicate efficiently
by sharing knowledge within the team. We also learned that COINs operates
as what are called “x-teams” (see Sidebar 5a).
Another crucial aspect of the e3 project was to bridge cultural differences
between the procurement and supply departments in the United States and
Germany. Initially, the cultural differences were profound. For instance,
in the United States mistakes are accepted as a natural part of the process,
and speed is seen as an essential driver. In Germany (and Europe in general),
the tendency is to accelerate efforts only when some positive results
have been achieved; this appears to make the process slower. To establish
a common pace, people from the United States were brought to Germany and
vice versa. They reached a common understanding, and both sides agreed
to try and let go of these expectations, which amounted to cultural barriers.
Initially, DaimlerChrysler executives from both sides of the Atlantic
were quite reluctant to share confidential data. Once trust was established
in face-to-face workshops, collaboration over long distance became much
more productive; for instance, video- and Webconference meetings and workshops
could be conducted productively. After overcoming the initial resistance
and once relationships were established, information was shared openly
at the virtual meetings. It took the establishment of mutual trust before
team members would offer their insights and reveal confidential information
to their counterparts on both sides of the Atlantic. The clear lesson
is that COINs build and maintain distributed trust.
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