MAY 1, 2006
How does BMW motivate its employees?
BMW's Dream Factory
Sharing the wealth, listening to even the lowest-ranking workers, and rewarding risk have paid off big time.
The car looks like the victim of some mad scientist's experiment gone awry. Inside a research lab in Munich, a BMW 5 Series sedan is splayed open, with electronic gadgets and wires spewing in all directions. The project: an onboard computer that will recognize you, then seek out information you want and entertainment you love. While you sleep, your BMW will scour the Net -- via Wi-Fi and other connections -- collecting, say, 15 minutes of new jazz followed by a 10-minute podcast on the energy industry. It may sound far-fetched, but for BMW's research wizards it's yet another way to woo customers by personalizing cars. This intelligent machine will grow to know you better every day, constantly learning what you like by monitoring your choices. The brains of the system might even tag along with you on a business trip in the form of a "smart card," instructing the Bimmer you rent in Beijing to load up your daily fix of news and music. When Hans-Joerg Vögel, the 38-year-old project chief, hops in the car's front seat and fires it up, his excitement is palpable. Launching into a riff on the wonders of melding the virtual world with the nuts and bolts of an automobile, Vögel says the next generation of BMW 5 Series and 7 Series sedans will be the most Net-savvy cars on the road. And if he's right, it'll be because Vögel had the vision to see the importance of the technology and the gumption to build it so everyone at the automaker could recognize its potential. "We are encouraged to make decisions on our own and defend them," says Vögel. "Risk-taking is part of the job."
Vögel's project is only a tiny part of BMW's vast innovation machine. Just about everyone working for the Bavarian automaker -- from the factory floor to the design studios to the marketing department -- is encouraged to speak out. Ideas bubble up freely, and there is never a penalty for proposing a new way of doing things, no matter how outlandish. BMW, says Ulrich Steger, a professor of management at the International Institute for Management Development in Lausanne, Switzerland, is "a fine-tuned learning system."
That's no small accomplishment, and it has fueled BMW's growth over the past decade from a boutique European automaker to a global leader in premium cars. Although BMW, with $59.2 billion in sales last year, is much smaller than its American rivals, the U.S. auto giants could still learn a thing or two from the Bavarians. Detroit's rigid and bloated bureaucracies are slow to respond to competitive threats and market trends, while BMW's management structure is flat, flexible, entrepreneurial -- and fast. That explains why, at the very moment GM and Ford appear to be in free fall, BMW is more robust than ever. The company has become the industry benchmark for high-performance premium cars, customized production, and savvy brand management, making it the envy of Mercedes-Benz (DCX ), Audi, and Lexus and the subject of Harvard Business School case studies. Even mighty Toyota Motor Corp. (TM ) regularly dispatches engineers to BMW's factories to see how the company cranks out 1.3 million customized cars a year.
Few companies have been as consistent at producing an ever-changing product line, with near-flawless quality, that consumers crave. BMW has redefined luxury design with its 7 Series, created a mania for its Mini, and maintained some of the widest margins in the industry. A sporty four-wheel-drive coupe and a svelte minivan called the Luxury Sport Cruiser are slated to roll off the production line in 2008. Those models promise to continue BMW's run of cool cars under its new chief executive, Norbert Reithofer, who took over in September. (His predecessor, Helmut Panke, stepped down upon reaching the mandatory...