Mercedez-Benz: Digital transformation driven by the people
Speak to the leader of any ambitious business in any region of the world, and it won’t be long before you arrive at one particular topic in the conversation.
‘Digital transformation’ may well rank as the buzziest of buzz phrases from 2017, a year that also made convincing commentators ‘influencers’, heralded any progress points as ‘nextgen’ and redefined an employee’s (human, not robot) working capacity as ‘bandwidth’.
While quirks in language come and go, however, the plans and processes that define a ‘digital transformation’ are here to stay. This is no fad. Like the office chairs you sit in and the screens you’re reading on, technology as the vertebrae of a business – and installing it quickly - is becoming less desirable and more just plainly essential.
Yet a recent study, conducted by Vanson Bourne, reported that nine out of every 10 digital transformation projects fail. The research called on input from 450 CIOs, CTOs and Chief Digital Officers at sizeable companies in the United States, the United Kingdom, Germany and France. This startling rate of derailed disruption is consensus, not just a manufactured statistic.
Why does the embedding of digital in businesses prove so problematic, when the very people charged with managing that business have, more often than not, made it their priority? Are they trying too hard, losing sight of its true purpose?
Conrad Fritzsch is Director of Digitalisation, Marketing & Sales, at Mercedes-Benz. As the overseer of a digital transformation in a world-famous company steeped in tradition, he is keenly aware of the challenges. For him, the focus shouldn’t be on technology itself, but on people.
“Customer-obsession is the starting point for any transformation,” he tells Business Chief from the automaker’s headquarters in Stuttgart, Germany.
“In the past (at Mercedes-Benz), often we built things because we can. Technical things, more driven by innovation, more driven by what us as engineers can build. Now we're trying to find out what our customers want today and tomorrow.
“What is important for our customers? When you have true customer-obsession, then this is what will drive your transformation because you see what's important and what's not so important.”
Fritzsch joined Mercedes-Benz’s parent group, Daimler AG, in August 2016. In the short period since he has started the long journey to change, trying to impart his expertise on a company boasting 280,000 employees; a weight of work he admits being surprised by initially. “Coming from start-ups, I really underestimated how huge and complex the company is,” he remarks.
The 48-year-old’s primary role is to weave innovative digital products into modern working models, all with the customer’s requirements as the motivation. For example, Fritzsch lead on ‘Mercedes me’, the manufacturer’s range of mobile services and apps that come together to deliver a best-in-class digital service to its customers.
His most notable change so far, though, has been to merge Mercedes-Benz’s marketing and IT provisions, creating a swarm mentality that has hastened the pace of change from both a technical and personnel perspective. He claims its most crucial aspect has been the buy-in of the employees.
“The first point that you have to really solve is, does the company want to change or not? Not only the Board, not only the top management, everyone. We have to create a working and culture model that works for all of us.” explains Fritzsch.
“Digital transformation in big companies is more a transformation of the people, from A to B. It’s not too much about digital only; you have to understand that the people are the core in this changing process. Daimler is a fantastic company and it knows that we have to change because the world is changing, the customer is changing.
“In our department, there were around 250 people from IT and the business unit together. We said, ‘Okay, these are our problems we have to solve and these are the people we have’. Then you see white spots because there are new roles we didn't make! When you build digital products like apps, you need all kinds of experts – so we built a team from both outside experts and inside experts.”
A vital part of the process was establishing the new working models, with the scale of change broken down into step-by-step parts – an approach to transformation that Fritzsch likens to developing a key piece of software.
“When you build software, you go out with beta, the version one, version two etc. This is the same method. With the people, we said ‘let's change in this direction’. We built a Daimler blueprint which combines the strengths of start-ups and global company,” he adds.
“Everybody was on the boat, they had the right mindset. They didn’t say ‘so we made something wrong and now some guy’s come here and has some big answer?’. We built a solution together and everyone could see that solution. That is super important when you want to change.”
Fritzsch’s energy for his mission is career, and it’s a passion that powered a unique career ahead of him taking up the role at Mercedes-Benz one and a half years ago.
Back in 1993, he co-founded the advertising agency Fritzsch & Mackat, where he served as Creative Director, leading on all creation and consulting. His innovative spark saw him launch tape.tv in 2008, an online music video streaming service that, at its peak, serves 3.9mn unique users, hosting videos from high-profile artists from around the world. Fritzsch left the company in 2016, with Daimler picking up the phone.
“I have never worked on this scale. And I thought, ‘okay, the transformation of the car industry is a fantastic challenge’,” he reveals.
“In my life, I had built my own companies but I had never had one of these corporate challenges, as they described; when a corporate company really wants to change. I thought, with all the skills and experiences I gathered in the past, that I can do it.”
Is he content with how it has gone since he picked up the baton in August?
“Am I happy how it goes? 100% yes. Are we done? 100% no. It's a really tough journey for us,” he summarises.
“In my world, when I made it my plan in August, September 2016, I thought it will be much quicker. We’ve decided that we need more people, to move forward and to change more dramatically.
“With digital transformations, don't make a plan and think it will just work. There is always a change, there is always a new idea from outside, there is always a distraction. But you have to take everyone on this journey with you.”
Intelliwave SiteSense boosts APTIM material tracking
“We’ve been engaged with the APTIM team since early 2019 providing SiteSense, our mobile construction SaaS solution, for their maintenance and construction projects, allowing them to track materials and equipment, and manage inventory.
We have been working with the APTIM team to standardize material tracking processes and procedures, ultimately with the goal of reducing the amount of time spent looking for materials. Industry studies show that better management of materials can lead to a 16% increase in craft labour productivity.
Everyone knows construction is one of the oldest industries but it’s one of the least tech driven comparatively. About 95% of Engineering and Construction data captured goes unused, 13% of working hours are spent looking for data and around 30% of companies have applications that don’t integrate.
With APTIM, we’re looking at early risk detection, through predictive analysis and forecasting of material constraints, integrating with the ecosystem of software platforms and reporting on real-time data with a ‘field-first’ focus – through initiatives like the Digital Foreman. The APTIM team has seen great wins in the field, utilising bar-code technology, to check in thousands of material items quickly compared to manual methods.
There are three key areas when it comes to successful Materials Management in the software sector – culture, technology, and vendor engagement.
Given the state of world affairs, access to data needs to be off site via the cloud to support remote working conditions, providing a ‘single source of truth’ accessed by many parties; the tech sector is always growing, so companies need faster and more reliable access to this cloud data; digital supply chain initiatives engage vendors a lot earlier in the process to drive collaboration and to engage with their clients, which gives more assurance as there is more emphasis on automating data capture.
It’s been a challenging period with the pandemic, particularly for the supply chain. Look what happened in the Suez Canal – things can suddenly impact material costs and availability, and you really have to be more efficient to survive and succeed. Virtual system access can solve some issues and you need to look at data access in a wider net.
Solving problems comes down to better visibility, and proactively solving issues with vendors and enabling construction teams to execute their work. The biggest cause of delays is not being able to provide teams with what they need.
On average 2% of materials are lost or re-ordered, which only factors in the material cost, what is not captured is the duplicated effort of procurement, vendor and shipping costs, all of which have an environmental impact.
As things start to stabilise, APTIM continues to utilize SiteSense to boost efficiencies and solve productivity issues proactively. Integrating with 3D/4D modelling is just the precipice of what we can do. Access to data can help you firm up bids to win work, to make better cost estimates, and AI and ML are the next phase, providing an eco-system of tools.
A key focus for Intelliwave and APTIM is to increase the availability of data, whether it’s creating a data warehouse for visualisations or increasing integrations to provide additional value. We want to move to a more of an enterprise usage phase – up to now it’s been project based – so more people can access data in real time.