FIAT Auto: Case Example of a Company’s Learning Portfolio
The following case was produced from field research I conducted over the course of two trips to Italy. Data were collected through structured and unstructured interviews, participant observation, and content analysis of internal documents. Additional background on this case was previously reported elsewhere (Nevis et al., 1995; DiBella et al., 1996; DiBella and Nevis, 1998.) The case shows how learning takes place through multiple activities supported at FIAT Auto.
FIAT Auto’s learning portfolio
FIAT Auto designs, manufactures, and markets automobiles worldwide under a variety of trademarks including Fiat, Lancia, and Alfa Romeo. Staffed by approximately 3000 managers and professionals, Direzione Technica (DT) is FIAT Auto’s engineering division responsible for the design of new automobiles. DT is organized into functional departments which each specialize in a particular aspect of car design, such as body style or engines.
FIAT Auto once produced vehicles under the Fiat trademark only. Subsequently, it acquired Lancia and then Alfa Romeo. Each trademark was produced in separate companies, which gave FIAT Auto a product focused organization structure. In 1991, the three car companies were reorganized as FIAT Auto into a functionally based structure with a heavy emphasis on project management. Trademark models are designed by new product development teams that reside in staff groups (piattaforma) responsible for the new models of a certain size or cost, e.g. subcompact, luxury. Staff from functional units are assigned to the piattaformas on a full-time basis to develop new models.
In 1989, FIAT Auto had one of its most successful years ever. In the same year, its CEO authorized benchmarking studies to compare FIAT Auto’s performance to that of other world automobile manufacturers and a few consumer durable goods companies. Approximately fifty of FIAT Auto’s top managers participated in this study by visiting other firms and their plants worldwide. The study group discovered that not only was the marketplace changing due to different consumer tastes and expectations, but the processes whereby firms designed and manufactured products were also rapidly changing. The group became convinced that, although FIAT Auto was having a successful year, unless it changed how it worked and how it learned, it would lose its ability to compete with global companies.
One of the process changes DT made was to simultaneous engineering. New product development teams now work together in co-location in common, open work areas to facilitate communication and coordination. Staff from the Direzione Technica and other FIAT Auto divisions, such as manufacturing and marketing, who are also assigned to the piattaformas, work in co-location. Where engineers and other functional staff once worked sequentially on related tasks, now they work concurrently in parallel rather than in series. In this form of simultaneous engineering, new models are completed without the time delays that occurred when components were designed sequentially or when newly designed components had to pass from function to function.
In describing the roots of FIAT Auto’s organizational culture, staff often refer to Italy’s tradition of paternalistic, religious, and militaristic organization forms. Particular reference is made to the heavy reliance on authority that stems from rigid, hierarchical structures and the acceptance of formal authority. There was significant concern at DT that FIAT Auto’s traditional culture generated too much of a Taylorian division between those staff who did the thinking and those who acted. In the 1990s, DT learned about making the transition to a more open and flexible organization. This transition reflects the desire to shift the style of management from capo (head, commander) to leader. In the former, the framework is to command and obey; in the new framework of management the focus is cooperation and integration.
While discrete projects aimed at improvement and learning have been completed or are still underway, management’s aim is to spawn institutionalized processes that facilitate continuous improvement. It is expected that changing the culture, structure, and management style at DT will accomplish this. Among the formal mechanisms to spawn learning is the use of Total Quality Planning (PQT) to identify areas needing improvement. PQT is required of all organizational units to identify both product and process issues that can be improved upon.
Staff also expects learning to occur through the very mechanisms whereby work is accomplished. DT’s functional departments learn through the acquisition of know-how engineering and the establishment and improvement of shelf engineering. Each functional unit is also expected to build a Memoria Technica, a database containing knowledge about components and processes. Learning also occurs in the piattaformas through the application and utilization of know-how engineering in car design. In solving design problems for specific models, functional staff may generate solutions that, once communicated back to the function, may subsequently be applied in the design of other models.
Learning at FIAT Auto
The experiences at FIAT Auto indicate a concerted effort to build learning capability by enhancing and extending the firm’s learning portfolio. FIAT Auto has learned through acquisition (of Lancia and Alfa Romeo), through adaptation (of best practices obtained through its benchmarking studies), and through correction via its PQT process. Now shifts in work process will create new learning capabilities. For example, the Memoria Technica represents a bureaucratic learning style; the shift to concurrent engineering will create communities of practice; and the change in leadership style represents a shift from a learning style of authorized expert to role modeling.