Book 4
Unit 5
Key to Success
Section A
Pre-reading Questions
1. What is BMW known for?
2. What does the initial letters “BMW” stand for?
3. Do you like BMW cars and what characteristics do BMW cars have?
BMW stands for top quality cars. Its continuing success is certainly attributable to its “top quality” management which ems to be running on the verge of chaos a lot of times.
The Secret of BMW’s Success
1 At 4: on a Friday afternoon, when most German workers have long departed for the weekend, the mini-cafés sprinkled throughout BMW’s sprawling R&D center in Munich are jammed with engineers, designers, and marketing managers deliberating so intently that it’s hard to hear above the din. Even the cappuccino machine is running on empty. It’s an atmosphere far more Silicon Valley than Detroit.
2 “At lunch and breaks everyone is discussing ideas and projects all the time. It’s somewhat manic. But it makes things move faster,” says BMW chief designer Adrian van Hooydonk.
3 The inten employee buzz at BMW is hot management theory in action. Top consultants and academics say the kind of informal networks that flourish at BMW and the noi and borderline chaos they engender in big organizations are vital for innovation — especially in companies where knowledge sits in the brains of tens of thousands of workers and not in a computer rver. Melding that brain power, they say, is esntial to unleashing the best ideas.
4 Hands Across Divisions
5 “Cross-functional teams look messy and inefficient, but they are more effective at problem solving,” says James M. Manyika, a partner at McKiny & Co. in San Francisco who has studied the effectiveness of such networks. Companies such as BMW that leverage workers’ tacit knowledge through such networks “are widely ahead of their competitors,” Manyika adds.
6 BMW is one of a handful of global companies including Nokia (NOK) and Raytheon (RTN) that have turned to networks to manage day-to-day operations, superding classic hierarchies. Tho pioneering companies still turn to management hierarchies to t strategic goals, but workers have the freedom to forge teams across divisions and achieve targets in the best way possible — even if that way is unconventional.
7 And they are encouraged to build ties across divisions to speed change. “Good companies have this lateral ability to communicate across divisions and silos, not just up and down the hierarchy. That’s what makes BMW tick,” says chief financial officer Stefan
Krau.
8 Lightning-fast Changes
9 Speed and organizational agility is increasingly vital to the industry, since electronics now make up some 20% of a car’s value — and that level is rising. BMW figures some 90% of the innovations in its new models are electronics-driven. That requires once-slow-moving automakers to adapt to the lightning pace of innovation and change driving the miconductor and software industries. Gone is the era of the 10-year model cycle.
10 Now automakers must ram innovation into high gear to avoid being overtaken by the competition. That’s especially true in the luxury-auto leagues, where market leaders must encourage new innovations constantly into the market, from podcasting for cars to infrared night vision systems.
11 By shifting effective management of day-to-day operations to such human networks, which speed knowledge laterally through companies faster and better than old hierarchie
s can, BMW has become as entrepreneurial as a tech startup, consultants say. “Not many large companies take on lateral communications the way BMW does. It’s a knocking down of barriers, like Jack Welch did at General Electric (GE ) to make a boundaryless corporation,” says Jay Galbraith, a Breckenridge (Colo.)-bad management consultant.
12 BMW’s ability to drive innovation even pervades its marketing division. “People talk about innovation in products, but what’s underestimated is innovation in process and organization,” says Ernst Baumann, head of personnel at BMW, which has its share of radical new ideas.
13 Few large companies are willing to embrace the lack of organizational clarity and nebulous structures that drive innovative ideas. At most companies, headquarters would have put the kibosh on the short-film idea, which has since been widely imitated. Rearchers say most experiment with networks on a small scale and very few u the practice to full effect since doing so means an uncomfortable balancing act between hiera
rchy and discipline on one hand, and free-wheeling networks that can veer toward near-chaos.
