Prof. Dr. Barth
Hannover, April 2, 1995
The increasingly complex work environment and the increasing globalization of markets pose tremendous challenges to industry - and in particular to industry in high-price and high-tech Germany. The environment in which many - including many companies - have comfortably established themselves is changing dramatically. I cannot warn strongly enough against a desire to return to the "old days" now that memories of the last recession are fading. Not nearly enough has been done in Germany to prepare ourselves for the demands of intense international competition.Whether we want to or not, we have to continue to rid ourselves of habits of which we have become quite fond. We have to change corporate structures, open new markets, and produce faster, more economically, and closer to market. We have to further increase our percentage of exports represented by high tech, which is currently 16%. Compare this to 43% for the USA and even 27% for Japan. In other words, we have to overcome all sorts of existing limitations which prevent us from preserving our standard of living and creating jobs.
"Expanding horizons" is our central theme for the "innovation market" of the 1995 Hannover Trade Fair. We at Daimler-Benz have already been hard at work expanding our horizons: we have become a company which manufactures not only in Germany, but all over the world. Consider only the last two years at Mercedes-Benz: in addition to the production sites in the USA (commercial vehicles), Brazil, Argentina, and South Africa, we are currently establishing production capacities in Spain, France, the USA (our "All Activity Vehicle - AAV"), South Korea, Indonesia, and India. This expansion is also being accompanied by an increasing utilization of the expertise available abroad. Our competence center for gas buses, for example, is Mercedes-Benz do Brasil in Sao Paulo. The natural gas buses deployed between the airport and the exhibition grounds here in Hannover run thanks to the know-how of our engineers in Brazil.
The globalization of the markets and production must inevitably be followed by the globalization of research. Last fall, we announced the establishment of a joint research laboratory with the Chinese Academy of Science in Shanghai. We monitor technology in Russia, Japan, and the USA, where we also are actively involved in research.
The Daimler-Benz research cooperation network is really rather impressive. We have entered into joint research agreements with almost every world-class institute. This applies to American and Canadian facilities, as well as to Japanese and African ones, to say nothing of the tight European network. A portion of our successes can be attributed specifically to the fact that we have been able to overcome the widespread and costly - in both time and resources - "not-invented-here" syndrome to the advantage of cooperation with the best in the world.
Globalization makes it clear that we must measure ourselves against local competitors at each individual location. For research, this applies to both external and internal competitors. Take Freightliner, our successful truck subsidiary in the USA as an example. It, too, has research needs. But if American research facilities are better than central Daimler-Benz Research, our researchers will be left empty-handed.
For the researchers, expanding horizons therefore means being in competition with top research institutions all over the world - and succeeding. Today this is no longer a matter of the researcher's "fame," but - as you have seen - pure economic necessity. Daimler-Benz Research therefore launched an "innovation offensive" last year to expand horizons and overcome the limitations of existing structures. In a broadly structured process totally new to research, we reviewed all of our research projects. At the end of a discussion process involving the entire Research and Technology (R&T) Corporate Function, a whole series of projects were abandoned in favor of new projects. Even R&T's management was surprised at how openly topics were criticized, and the enormous potential for new project ideas revealed. The end result was that research was better oriented toward the concerns of the corporate units with a simultaneous concentration of resources on innovative subjects.
The Daimler-Benz Research Prize, which we awarded for the first time in 1994, represents a break, an overcoming of a limitation imposed by the previously almost sacrosanct social structure in large companies. The prize is awarded exclusively to employees of R&T who have made outstanding achievements in research. It will help improve the motivation of the researchers to contribute their own ideas more than is now the case. For the employees in research, the prize signifies that at Daimler-Benz, outstanding work is honored in ways which go far beyond conventional compensation systems.
Our first winner is a research group led by Dr. Peter Konhäuser, which was honored for its fundamental research into the phenomenon of traffic jams on our roadways. The group's work has made it possible to develop a new model, which can be used to simulate the flow of traffic on highways. The structure of the traffic jam has been analyzed and explained. This newly gleaned understanding of the cause of traffic jams will enable us to quickly develop new methods for the optimization of traffic flow.
Transfer: more, faster, more effectively
The transfer of knowledge is of particular importance on the road from innovation to a new product. Transfer means that ideas must flow from research to development, to production, and to marketing. Of course, new customer needs must also be passed on in the opposite direction from marketing to research. Transfer also means - and this applies in particular to Daimler-Benz with its broad range of products - a transfer of knowledge between people working on similar problems at the various corporate units or in central research.
We therefore specifically promote the overcoming of the traditional horizontal and vertical structures within the company by supporting the formation of personal networks. One such network is the FT Exchange Group. 70 employees, who we already know will later work at one corporate unit or in research, will for a period of two years intentionally not be sent to their future assignment. Instead they will work in the same department or office where their future partner works. An engine researcher, for example, will therefore first work in engine development, which will later be his contracting authority.
The Circle Member Group is also assembling a network. However, this network is oriented toward research colleagues at external research facilities and serves to promote personal contact and enhance the exchange of knowledge between young, excellent scientists from throughout the world and the Group.
Importance of Information Technology to the Daimler-Benz Group
The Group is also committed to the intensive utilization of information technology in its quest to expand horizons. Although CeBIT is over, it remains one of the most important topics at the Hannover Fair, for today, efficient production and sales are simply not possible without information technology.
Daimler-Benz's external turnover of approximately DM 1.5 billion in the area of information technology does not say nearly all there is to say about the importance of this key technology to our Group. The Group currently develops software valued at approximately DM 3 billion a year for its own uses.
Information technology changes our world and our Group on two levels:
products are made more intelligent by means of information technology and
we can use information technology to optimize our operations and processes. Daimler-Benz Research has supplied the Group with innovations for both.
Allow me to illustrate this by giving an example for each level:In the field of text recognition and understanding, the transition from the recognition of printed texts to deciphering handwritten text has just been achieved. An intelligent address reader which recognizes handwritten addresses for mail sorting will be produced by AEG Electrocom. The reader is based on the results of last year's research.
The exchange of product data between development groups using different CAD systems is supported by the joint use of standards. The Production Information Technology area is conducting research into the data models required. Based on these data models, it is developing tools which support the design of integrated systems. This makes it possible for the first time to simultaneously design the electronics, hydraulics and mechanical structure of the interior of a engine, for example, reducing the time-consuming iterations between the various design centers.
A fundamental component of the Group strategy in the field of information technology is to "recycle" and "reuse" wherever possible. A cornerstone of "information technology recycling" is the design and further development of object-oriented technologies. We feel that object-oriented technologies possess the most potential when it comes to reusability, and thus represent the best chance of increasing the efficiency of software development. If the use of object-oriented technologies saves us just 10% of the Group's software costs, that is still DM 300 million per year.
A recent step was taken in the direction of object-oriented technologies when Daimler-Benz decided to participate in ONTOS, one of the world's leading suppliers of object-oriented databases. We will work with ONTOS to develop systems solutions in the field of distributed information systems. These systems solutions will give the Group's companies a unique advantage when it comes to computer support for operations and processes.
We took the first step in September 1994 when Daimler-Benz became the first German group of companies to join the Object Management Group (OMG). As an organization encompassing both information technology manufacturers and suppliers, OMG should - by providing rapid feedback - enable the further development of user-oriented products and technologies.
Daimler-Benz at the 1995 Hannover Trade Fair:
Expanding HorizonsLadies and Gentlemen, I have described to you some of the reasons why we are devoting all of our strength to the fight against stagnation in the research sector. Moreover, I have also provided you with examples of how we hope to achieve our aim. If we are to successfully master the challenges ahead it is imperative that we expand horizons and overcome boundaries. Achieving this goal will mean overcoming national, geographical, linguistic, cultural and social limitations, as well as - perhaps the most difficult hurdle of all - mental limitations. If we can succeed here, our innovations will be implemented more rapidly, our production will be increasingly competitive, and our standard of life can be preserved for both us and our children.
At our exhibition stand, we will be presenting the fruits of the new approach in the form of some of the latest developments to come out of Daimler-Benz Research. The fuel cell - a type of small, efficient and environmentally-compatible power plant - represents one such achievement. Fuel cell technology has already been proving its worth in the NECAR fuel cell vehicle. However, we believe this is just the start of a very promising future for the fuel cell. That is why we are showing how it works, as well as potential applications. However, we are also willing to examine all the likely consequences arising from its use. In short, we are seeking an open dialog with the public. To this end, the experts at the exhibits will be happy to discuss and answer corresponding questions.
Going through the series of exhibits, the motto of our stand becomes clear: Our goal is to expand horizons by overcoming barriers, such as those sometimes existing between a company and its divisions. That this is possible is evidenced by the VITA research platform, on which a number of research units cooperated closely with the corporate units. Last but not least, the innovative concept of the "Vario Research Car" shows that we can also expand horizons as far as the normal perception of reality is concerned.
I don't want to list all of the other exhibits, let alone discuss them in detail. Instead, you are invited to take a walk through the stand. The representatives at the individual exhibits will be only too pleased to provide you with more detailed information and answer any questions you may have.
I would also like to invite you to attend the events we will be putting on here in the Forum throughout the week. In addition to the brief description of the stand, your press kits include the schedule of events. The variety of topics reflects the breadth of the Group's activities, and I think that everyone will find at least one topic of interest.
So, I hope you enjoy your walk through the stand, and hope that your discussions are informative and interesting. I wish you the same for your entire stay here at the Fair, and look forward to seeing you again at one or more of the events here in the Forum.
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© 1995 Daimler-Benz