Creating a Culture of Innovation at Deutz

More than any other sector, the auto industry is facing unprecedented change. Germany’s Deutz AG is a 150-year-old company that these days specializes in commercial vehicle engines. To help it meet the challenges of digital manufacturing, it joined a five-day innovation workshop with SAP — with surprising results.

Even established companies at the top of their industry struggle with the digital transformation. For answers, they turn to a vast and confusing array of technologies and the capabilities they offer. Yet digitalization’s fundamental questions have little to do with technology itself. They are: How can a company become more efficient and therefore more competitive? What are the business models of the future? And: What are the returns on investments in digitalization?

The 2020 Road Map

Abderrazzak Askaoui, who became Deutz’ CIO at the end of 2016, put digitalization at the top of the company’s 2020 road map agenda: “We want to bring innovation into the company. We have to find the solutions that will make Deutz even more competitive and fit for the future.”

After day one of the innovation workshop, Frank Hiller, CEO of Deutz, had no doubt that his company had made a good decision in choosing SAP: “We have found the right sparring partner to get us ready for the digital transformation.”

The kick-off SAP and Deutz had originally planned turned into a five-day workshop to identify the best solutions. It had the backing of Deutz’ entire management board. The partners invested the time in discussing fundamental issues such as what processes will look like in each part of Deutz’ business in 2020, what the company needs to do to get there, and what its priorities are.

Off to an Encouraging Start

The workshop began with a general innovation kick-off at which Deutz’ strategy, the agenda for the five days, and SAP’s method were presented. Deutz’ CEO and CFO were both at the kick-off. They, and the CIO, encouraged the 50 or so participants to: “Think about what Deutz needs to do differently for it to continue to thrive in the future.”

They all agree that: “We need change. SAP is here to look at our processes with us, to challenge us, and to bring in new ideas.”

This was enough to get everyone talking as equals and to unleash a sense that anything was possible. “Deutz’ managers were so fascinated by what was going on that they didn’t want to wait until the fifth day for the closing presentation. So they showed up again the next day to join in as well,” says Vasyl Glynyanyj, one of the workshop facilitators.

The Right Structure for the Right Outcomes

In a company like Deutz, digitalization affects practically everyone. This is why management was keen to get as many employees a possible involved in producing a well-devised digitalization strategy. Each business department had selected eight people from across the hierarchy and agreed to have up to three people from SAP, including the moderators. This approach paid off. Different departments attended on different days to give everyone sufficient time to come up with their particular vision.

Each day had its own topic, and every day started with a brief and inspiring demonstration in which SAP presented a specific example of innovation for the business department in question. Then the attendees focused on clusters of topics Deutz had identified, each of which had a fixed timeframe. The business department described which processes it could support today and where it needed to innovate to meet Deutz’ plans for new revenue streams and greater efficiency. SAP presented potential solutions at process level for each block of topics.

Adopting a New Approach

The next step was for everyone to assess the significance of the main topics to Deutz’ strategy and the investment each would entail. The findings from this discussion were used to place the topics on a value map. This made it much easier to prioritize the eight to ten key business topics for the road map at the end of the day and for everyone to agree with the decisions.

In this brainstorming exercise, Deutz’ employees had to generate creative, unconventional approaches not rooted in the status quo. For instance, sales and service teams are very much involved with the Internet of Things in connections to engines, IoT use cases, connectivity, and integrated with SAP’s ERP solutions. The workshop participants took a close look at efficiency and transparency in the services, and at the variant configuration.

The logistics team explored internal logistics, transportation and storage space planning, and how to connect suppliers. HR topics covered included talent management, time management, and recruiting.

A Resounding Success

“Over the five days we spent with Deutz, we discussed at the highest level which topics customers must tackle first as they go digital,” says Adrian Langlouis. “We followed the customer engagement methodology to come up with innovations, prioritize them, and produce a road map. Working together as well as we did is really rewarding. And, as always, I’ve learned so much from and about the customer. This will be extremely valuable when we implement the road map.”

Deutz’ entire management board came to the final presentation of the workshop findings and was impressed by them. Three weeks later, Deutz and SAP met again to turn the findings into a broad road map.

Everyone at the workshop found it inspiring and encouraging, especially because it was about Deutz’ processes, not SAP products. Discussions were kept strictly on track to avoid getting bogged down in operational details. So that everyone concentrated on the task hand, laptops were left the office. There was no seating either, which made participants interact in a more agile and dynamic way so that they were ultimately more productive.

At a review of the workshop, all the participants agreed that it had sparked a radical rethink at Deutz. SAP was not just a software vendor, it was a partner that talked processes, they said. The innovation workshop was the idea of Deutz’ CIO. His plan to get started on digitalization with SAP shows that the ‘I’ in CIO stands as much for innovation as it does for information. And innovation is what Deutz needs to become a digital business.