The presentation of the Daimler Strategy 2020 this week made it painfully clear how little heart and vision there is in the Daimler strategy. I have already summarized my thoughts in a commentary on it, but the problem becomes even more obvious when you compare the Daimler presentation with Tesla’s Battery Day, which was held two weeks earlier.
The topics and the language reveal who actually runs the company. At the Tesla Battery Day, the head of battery development Drew Baglino and Tesla-CEO Elon Musk took the stage together, and went comparatively deep into technical details, which changes were and still are being made in production, the technology itself or in raw material processing and recycling. It was a technology-driven event with a mission, which showed clear concepts, certainly with certain risks, but presented a company run by engineers.
Daimler’s Strategy 2020 presentation was completely different. There a lot of time was spent on the company’s cost structure, savings, cashflow, ROI, profitability, profit margin and results of the past quarters, plant shutdowns, and plans for future profit margin increases were talked about, but technology was almost missing out. And what technology-related talking points were presented were surprisingly shallow and noncommittal.
In the Twitter comments, Daimler was described as a company run by spreadsheets, while Tesla is a company run by technology and products.
This is not a new phenomenon. A similar, albeit slightly different, approach was seen in 2017, when it was easy to see how differently Audi and Google/Waymo talked about autonomous driving. At the Audi Summit 2017 in Barcelona, so many technical terms were let loose that it was easy for viewers to forget why this technology was actually being developed. Waymo, on the other hand, did without technical terms and instead told a story. But see for yourself the differences in this article.
The Whole Mars Catalog cut a juxtaposition of the two talks of Daimler and Tesla together, and one makes you really cringe. Here is the video:
The difference also lies in the management structure. It is not necessarily the case that the Daimler Board of Management is stupid, not at all. Rather, it is the general condition of a 130-year-old company where the founders and founding families have not been active for a long time, and so the board members, in their positions for a four year period, have to achieve short-term goals during this period in order to increase shareholder value and satisfy investors. To make a cost-intensive, long-term conversion of the company – for example to electric drive – which will only pay off after the end of the board mandate (if at all), no board of directors in such a structure will do so without cutting their own bonus. Cost savings today lead to rapid, short-term increases in profitability, and thus a good bonus, but in the long run to the death of the company because it no longer has competitive products in its portfolio.
A company that is managed by its founders or owners can focus on completely different key figures. For example, Google has been developing autonomous cars since 2009 without still having a marketable product that generates revenues. During the same period, Volkswagen had three different CEOs.
The bottom line of these spreadsheet versus technology driven companies is that the former have much less long-term prospects than the latter. Controller-led companies also have difficulty bringing new and motivated talent into the organization to help the company fulfill its mission. The stock market valuation between Daimler and Tesla shows the difference dramatically: Tesla is worth 7 times as much as Daimler. The share price is a bet on the future.
The paradox is that while spreadsheet-driven companies focus on financial metrics, vision-driven companies do not. And yet the financial numbers of the latter are much more attractive to investors, as any Tesla shareholder (with the exception of short position holders) can confirm.
Here the original video posted on Twitter by Whole Mars Catalog
This article was also published in German.