Dieter Zetsche on Driving Global Growth

Dieter Zetsche, born in Turkey and raised in Germany, has worked in Argentina, Brazil, and the U.S. He has run car and truck businesses and has held senior engineering and sales positions. And now he is chairman of Daimler and head of Mercedes-Benz Cars.

A career that has pulled him in many directions has prepared Zetsche well to lead a company in a global economy that is moving in different directions and at different speeds. Daimler’s luxury Mercedes-Benz brand has flourished in China and other emerging markets.

But Zetsche is not one to rest on past accomplishments. He wants to see more local executives rise into top positions in emerging markets. Until that happens, he says, foreign firms such as Daimler will have a hard time hiring and keeping the strongest local candidates. Zetsche would also like the top management ranks of Daimler to reflect the markets it serves—to be, in other words, younger and more diverse.

Although his travel is concentrated in emerging markets, Zetsche recognizes the need to keep doing the things that have made Daimler a preeminent maker of cars and trucks in mature markets. Even in 2020, these markets will still account for one-half of Daimler’s sales.

Zetsche recently sat down for a discussion with Antonella Mei-Pochtler, a senior partner and managing director at The Boston Consulting Group. Edited excerpts from that conversation follow.

What keeps you passionate about Daimler?

This company was founded by the inventors of the car. And the car changed the world. Our first responsibility is not just for the next quarter but to lay the groundwork for the next 125 years.

Are you happy with Daimler’s global footprint?

Today about 30 percent of our revenues and profits are generated in Asia and the so-called emerging markets. It was less than 10 percent only a decade ago. That is certainly progress. Are we satisfied? Of course not. Because there are so many more opportunities. We might talk later, for instance, about who is running our companies in these countries. Do we have enough local leadership? There are many more things we can and we will improve, but I think we have made major inroads.

Setting priorities in such a large company is one of the critical decisions for a CEO. In this two-speed world, how do you make sure that priorities are established and followed? More broadly, how do you personally set priorities?

The general expectation is that from 2010 to 2015, about 25 percent of growth will occur within the triad markets [the European Union, the U.S., and Japan] and that the rest will happen in emerging markets. From 2015 to 2020, we expect 95 percent of the growth to come from emerging markets. Those numbers speak a clear language.

Yet, even in 2020, almost half of revenues will still be within the triad markets. So you cannot do either/or. You have to maintain your strength in the traditional markets and even expand it. At the same time, you have to leverage these tremendous growth opportunities in the emerging markets.

Will the composition of the management board—and also the time that you spend in the emerging markets versus the mature markets—change dramatically to prepare for this shift in relevance of the various markets?

The typical board of a German company is male, white, 60, and German. When you want to “conquer the world,” it is certainly not a recipe for success for the future. This is a change that will happen over time. But it is more than obvious that we have to become more female—not individually but as a group—and that we have to have more non-German members, ultimately representing the markets that we are doing business in.

What about incentive systems?

We used to set a plan and would incentivize the fulfillment of this plan. If you beat it, you get high bonuses. If you miss it, you get lower bonuses. And it was very obvious what the whole organization was focused on: How can they set their plans as low as possible?

We now have just two elements. The first part is a year-over-year comparison. You compare yourself to last year. If you do better, it is good. If you do worse, it is bad. And the second part is long-term strategic development. Employees are evaluated against their progress against five- or ten-year goals.

Do you have specific initiatives to manage talent and mobility to ensure that your brand is being lived everywhere?

You have to show with your appointments that you mean it. The right moment to ensure this process is not when people come back and you give them the right job. The right moment is when you send them out. When you send out the guys you do not need at home, the consequences are pretty clear.

As a leader, how do you make sure you connect with the various parts of the company? In particular, how do you manage your new stakeholders in the different parts of the world?

To cut a long story short, even five years ago, most of my entry stamps in my passport would have been from the Western Hemisphere. Today, most of them are from Asia.

In terms of stakeholders, we have established some new forums. We now have an annual sustainability dialogue to which we invite NGOs, politicians, and so on to talk about sustainability. There is a very open dialogue, and we receive a lot of criticism. But at the end of the two- or three-day session, we leave with specific tasks. A year later, we have to report what we have done.

Are social media for you a nightmare or a positive platform in this dialogue?

The only assumption you can make is that everything you do—and whatever you want to do—is transparent. There is no way of hiding or pretending. You have to be authentic. Once you accept that, it becomes a tremendous opportunity because you turn around and say, “Let’s not try to paint something pink which is not pink. But let’s rather listen, let’s use these platforms.”

Today we see very early in the blogosphere when something is not going well. And we take that seriously, not by trying to block the bloggers but by understanding the problem.