STUTTGART - A DaimlerChrysler executive who is German recalled a meeting held earlier this year which he said illustrated the large cultural gap between the former Daimler-Benz and Chrysler.
'When one of the Americans from Chrysler brought up what he thought was a new issue a German counterpart said, `But we have agreed on this already in an earlier discussion. It is all written in the protocol.'
'The American looked puzzled and said, `What protocol? I remember you took some notes and you sent me some papers recently, but I didn't think they were important. Next time I'll take a look.''
The German said the exchange was typical in the combined company. The new partners don't do things in the same ways and the differences have threatened to undermine the merger.
So after months of frustration, the two sides recently decided to stop trying to blend their vastly different management styles. Instead they will let Daimler be Daimler and Chrysler be Chrysler and not enforce a single D/C way, even in merged operations like purchasing.
At a meeting of 500 senior D/C managers in Washington D.C. last month, executives gave business units freedom to operate however they choose - as long as they achieve their targets. D/C says the change means less friction when Germans and Americans work together in small groups.
As it was, the culture clash was proving an obstacle to the integration that began a year ago.
After Day One in November 1998, department heads in Stuttgart and Auburn Hills with group-wide responsibility tried to establish common processes for both sides of the Atlantic. But managers discovered huge differences in work habits and in the way executives plan and conduct meetings, exchange information and make decisions.
'At the beginning, one side tried to impose its working style on the other,' said Roland Klein, D/C's manager of corporate communications in Stuttgart. 'This prompted conflicts and misunderstandings. But even worse, it just didn't fit with the people's culture.'
Germans were irked by the Americans' unstructured ways, while Americans thought the Germans were too rigid and formal.
'In the past few months we realized it was not going to work,' Klein said. 'The business cultures are different and we have to accept that these differences will continue. So we now let each side organize themselves as they did before the merger.'
The differences are sometimes more than just a matter of style. 'Each side thought its components or methods were the best,' said a senior product development executive in Stuttgart.
An early example was when German and American engineers discussed the production costs of a Mercedes-Benz E-class seat.
'They told us that the 300M seat cost a fraction of the price and that we should use either Chrysler seat components or come up with suggestions on how to reduce the cost of our seat significantly,' said a Mercedes-Benz designer. 'Our engineers were completely beside themselves. Then our benchmarking department acquired a 300M seat and stripped it down.'
He said the Mercedes specialists were appalled by what they found.
'We had to tell purchasing that they pay far too much for what they get,' said the designer. 'The seat does not meet any Mercedes-Benz standards. If we would purchase this kind of seat component we would refuse to pay more than half of what the Americans pay their suppliers.
'Since then we have never heard a word from them about using Chrysler seat components in Mercedes-Benz cars. But we know that they are working hard on improving the 300M seat quality.'
But Chrysler insiders, who defend the quality of the 300M seats, say that the Germans sometimes have an attitude problem.
Klein said there are fundamental differences between Chrysler and Daimler executives.
'Germans analyze a problem in great detail, find a solution, discuss it with their partners and then make a decision. It is a very structured process,' he said. 'Americans start with a discussion, and then come back to it with new aspects after talking with other people. Eventually - after a process which they call creative - they come to a conclusion.'
Former Daimler-Benz executives found that system chaotic. They were often puzzled by the American tendency to return to a subject they thought had been settled.
Klein said the two sides also decide things in different ways. In America, he said, 'At any time you can just pop into your boss' office and tell him something. The boss can make an instant decision - without explaining the reasons or involving other employees.'
It's different in Germany, he said. Underlings prepare extensive reports for top bosses and make recommendations at formal meetings.
'These two approaches are contradictory,' said another D/C executive in Germany. 'They can neither be combined nor transferred to the other culture.'
Management board members also organize their offices differently. In Germany, each board member has at least one executive assistant. Among their duties is to prepare the detailed position papers that precede important decisions. The documents reflect opinions from specialists throughout the company.
Senior American executives don't have executive aides. 'Americans prefer to ask their specialists directly if they want to know more about a matter before making a decision,' Klein said.
A high-ranking engineer in Auburn Hills said: '(At the old Chrysler) if an idea had merit, you didn't worry about approval, you just went ahead and did it. Working-level people feel empowered to do things. It's based on management trust. Over there (in Germany) they've got all these smokestack organizations that measure things, survey things. A lot of time is spent on unproductive activities.'
The clashing styles became apparent when Chrysler's US methods were adopted inside purchasing operations in Germany. The American style was imposed, largely because Chrysler executive Gary Valade heads global purchasing.
'It just didn't work out over here,' said Klein. 'There are some European suppliers which you have to approach differently or even have to deal with in the German language. For the Americans this was a cultural shock.'
A senior product development executive in Germany said top management probably underestimated the difficulties.
'Management probably thought the integration would happen naturally from the two sides talking about synergies and processes. But this didn't work because each side thought its ideas or technology was the best. Now management realizes it should not try to force integration through the back door of technical synergies.'
Though the two sides are now trying to accommodate each other there is still friction. Some Germans dislike American work habits.
'I think we are a lot more devoted to work than the Americans,' a high-ranking German D/C manager said. 'There's never a discussion if the Germans have to jump on the plane for a meeting on Friday afternoon in America. It's understood that they will need Saturday or Sunday for the return flight. Not so for the Americans. The tight schedule of a transatlantic company seems not to be acceptable for them.'
Executives from the former Chrysler say they work hard enough.
'We're extraordinarily lean,' said a high-ranking Chrysler engineer in the USA. 'They have staffs of hundreds of people where we'll have just one guy. They clearly have a bureaucracy that will choke a horse. They realize how overstaffed they are by our standards.'
Most cultural problems can be traced to communications, said Andreas Renschler, head of D/C's MCC-Smart subsidiary. Until recently, Renschler was in charge of international management integration of the combined companies.
'When you say something it does not necessarily have the same meaning, depending on the person you talk to. So we established a discussion culture. We are continually asking questions like, 'What you just said - does it mean this or that?' We have not had a cultural gap,' said Renschler. 'It is only a gap in the way people express themselves.'
Said Klein: 'Maybe we should have had a cultural specialist to counsel us. But we wanted to achieve the integration without outside help.'
Bradford Wernle contributed to this story