Why Daimler is embracing the „swarm-organization “

The competitive pressure imposed by IT corporations like Google or Apple is forcing the hand of traditional companies. To be able to operate faster and more flexible Daimler is switching in parts to a swarm-organization.

Digitization has led to a hyper-dynamization in the contest for innovation. Therefore, competitive advantages are now only temporary. In preference to efficiency and stability it is more about dynamics and agility. Which is why traditionally hierarchical organizations are experiencing increased criticism.

The statement of Daimler CEO Dieter Zetsche (FAZ 09.07.2016) is also to be put in this context: “We envision to shift about 20 percent of our employees to a swarm-organization. In doing so, employees who are not bound to strict hierarchies shall be linked for certain topics” (original wording: „Wir stellen uns vor, dass wir (…) rund 20 Prozent der Mitarbeiter auf eine Schwarm-Organisation umstellen. (…) Dabei sollen Mitarbeiter, die nicht in strikte Hierarchien eingebunden sind, für bestimmte Themen verknüpft“). Thereby Daimler should be operating like a start-up company, at least partially. But what does this entail for the digital contest for innovation?

The traditional contest for innovation is about one-dimensional innovation. Product and process innovation are being promoted, which will partially have an impact on the business model. The digital hyper competition on the other hand, is all about multi-dimensional innovations. At least two different types of innovations are being promoted simultaneously and integrated with each other, e.g. product and business model innovation (lean Start-up).

With this new multi-dimensional competition for innovation organizational challenges for companies arise. It is well-known that it is required to build new interdisciplinary teams beyond the traditional departments for development and already established hierarchies (e.g. Business Innovation Factory), for the advance of multi dimension innovations. Although, in some cases the problem is, that there is a lack of a solid connection to the core-organization. This makes a renewal of the existing organization difficult.


Swarm-organization: horizontally connected teams

Within the dynamic competition companies have to be capable of quickly acting and reacting to unforeseen changes, they have to be increasingly agile. Here, a “horizontal connection/ horizontal inter-compatibility” of the teams beyond the traditional hierarchies is critical for the success. This peer-to-peer connection between (decentralized) teams is an essential for a swarm-organization.

The new “inter-compatibility” requires a horizontal connection on various levels. First it is necessary to set up a connectivity of infrastructure through internal electronic marketplaces and platforms within the company which allow a continuous and spontaneous “real-time” transfer. On the information-level, employees are able to permanently view relevant information as well as contribute their own input. Within the cognitive-level the connectivity fosters new understandings and with it the exploration of ideas for innovative products and business models. Through common understandings the spontaneous and fast cooperation is facilitated on the social-level.


Autonomy and self-organization within the swarm-organization

Furthermore, “self-organization” is at the center of the swarm-organization. Herby, the “swarm-teams” and the associated employees are appointed a higher occupational competency and more freedom of action. At the same time a greater flexibility and self-motivation is necessary. The employees and teams work as internal entrepreneurs within their own company. In doing so, the internal connection has to be accompanied by a connection with the current and future customers of the sector as well as the cross-sector arenas of competition.

But self-organization does not signify a complete elimination of external-organization by the management. The external-organization rather concentrates – as seen e.g. with the online company Alibaba – on the vision and the strategic issues. Specific development of new (multi-dimensional) product and business model innovations lies within the responsibilities of the appointed innovation-teams and employees.

For several years, Alibaba operates in this manner. Their leadership has continuously evolved the vision of the company based on “Strategic Foresights”. This has led to continuous enhancements of their original e-commerce platform for small export companies to an online shopping platform, an online B2C market place and other divisions, through the use of multidimensional innovations as well as with the help of small innovation-teams  by Alibaba.


Willingness to change as a part of the company culture

Therefore the “swarm-organization” is indeed capable of being a structural solution to the challenges arising from the multi-dimensional innovation management. Thus, the implementation of a swarm-organization rather complies with the proceedings of a company-transformation.

It is not about the “big leap forward” but more about the consistent implementation of target oriented steps. Hereby, the execution has to originate from a central vision, so there is a disciplinary experiment at the core of the execution. Within the corporate practice the opportunity arises to start with pilot topics promoted by internal entrepreneurs.

The employees outside of the swarm-organization/-teams must parallelly be increasingly sensitized towards changes to the company – willingness to change has to become a solid part of the company culture. Leadership and employees mustn’t understand continuous changes as a threat but rather as an opportunity. If established companies strive to achieve the agility of start-ups, this constitutes a substantial challenge.