Human resources

The abovementioned readiness to commit financial resources translates into human capital as well—that is, workforce competence. A highly experienced workforce manages standardization work, both internally (via the standardization department) and externally (via experts).

Manager F, Corporate Standards: “We have long experience, which we have built through many years. We have very experienced staff, with lots of long experience.

So, there is good knowledge about how to work with our standardization areas.

We also [have] people who have been there for many years, involved in standardization.”

To some degree, the competence of the standardization workforce has regulated how standardization has been shaped and is managed within the company; a characteristic example is the nurture of regular information exchange between the standardization department and the rest of the organization, which plays a significant role in overall standardization management. Intraorganizational communication flows are supported by higher management (through regular meetings), but also hinges upon the competence of the standardization

department’s personnel, who have proven themselves capable of maintaining overall control of corporate standardization management.

The standardization department has maintained close collaboration with the organization’s technical experts (through formal communication and regular meetings), who possess the technical expertise and represent the company in the external standardization committees. Without such close connections with experts, the retain of overall corporate standardization management could not have been possible, since input from the external environment is mainly gathered by the technical experts/company representatives.

Equivalently, the technical experts’ competences relate to their capacity to maintain an ongoing external focus as well. Considerable technical expertise is required in order to ascertain that the representatives do not get overwhelmed by the ongoing standardization process, but rather manage to keep up with it and focus on the most relevant (for the company) issues.

Manager D: “Usually [the participating companies] put the old ones, close to retirement, very experienced people in those groups [external standardization committees]. Very knowledgeable people [work] in the groups.”

Hence, the standardization department’s competence and experience within corporate standardization, along with the technical experts’ elevated technical expertise, play a substantial role in Volvo’s corporate standardization management. The company’s choice to employ an assertive approach could not be successfully realized without competent and experienced people (in their respective roles) managing standardization.

More specifically, two types of human competence seem to have played a major role in Volvo’s corporate standardization management. The first type is predominantly organizational and not uniquely standards-related. That is, it refers to the know-how and experience in regard to familiar activities (that is, after repeated execution); this is organizationally oriented competence that illustrates the overall process of how to work with standards and standardization in a corporate setting (namely, what works best, what is important, and how to make the process of corporate standardization more efficient). This comprises competence that the standardization unit possesses based on the number of years for which they have managing standardization activities within the organization.

Manager B, Corporate Standards: “We have some expertise, but that is due to long experience.”

Manager B, Corporate Standards: “… we don’t have to reinvent the wheel.”

Specific examples of previous “bad decisions,” which have also educated personnel (in particular the standardization unit, who have managed corporate standardization over many years), are cited in the following quotes.

Manager B, Corporate Standards: “When Renault trucks was acquired and introduced, in early 2000, Corporate Standards, together with the other stakeholders of course, made a decision to take a new number series for all standards developed together, in common with Renault trucks. That was a very, very bad decision. Because then it becomes very complicated by having multiple number series. After a few years we could not work like this any more. Acquired companies need to adopt what Volvo has in place. So that was a very bad decision. But we learnt a lot; when you have a new company, you need to be early on saying that this is what you need to use, you need to start implementing the existing Volvo standards. We will not change them, unless you have a better proposal.”

Manager B, Corporate Standards: “And also a very bad decision was to change the number of the standard when it was updated. That was a very bad decision because then you have to change all drawings, and that created a huge mess. We have changed this decision now and we are still using the old Volvo numbers when we update the standards. This was one of the biggest mistakes we have made.”

In other words, the standardization department consists of employees that have been present in good and bad times of corporate standardization management, are aware of the history, have been present (or actually involved) when standardization-related decisions have been made, and know precisely why those decisions were made and why they did not work well. All these attributes in practice benefit the company in today’s standardization management.

On the other hand, in terms of the second type of standardization-related competence observed in Volvo, it is more uniquely related to standards and refers to the education that established standards enforce. That is, by creating, developing, and updating corporate standards, the company has built up company-specific technical knowledge over the years, which is demonstrated and shared in the standards per se.

Manager D: “We have learnt through hard experience and many mistakes through the years.”

Specialist A: “We learn from the past. We develop. [The standards] are knowledge streams. They are based on a lot of experience of many years.”

In fact, even the wide application of standards within the company comprised an outcome of gradual organizational learning, many decades ago. At a time when the company was experiencing intraorganizational inefficiency due to the extensive use of different parts and tools throughout the production line, internal standards were developed in order to embody “in-house” solutions, and establish them to avoid further inefficiency or repetition of problem-solving processes.

Hence, throughout a long learning process, the use of standards and standardization has become ingrained in the company, at the same time that a tremendous amount of technical knowledge has been built up over the years, and is demonstrated in the standards per se. The aforementioned need for efficient utilization of standards and standardization has not diminished with the passage of time—on the contrary, the standards system and culture have developed progressively within the company. Specific examples of such ingrained knowledge, which is retained timelessly through the standards, are provided below.

Manager D: “One example right now, there's a working group working with [a]

precipitation hardening steels standard. And there is demand in the old standard that we don’t understand, we think it should be the other way around, it’s strange, we think. But we don’t know why. So we need to invite a retired colleague to see if he knows why that demand was there before. Because there might be some kind of experience in the past that we don’t know about.”

Manager D: “And there was another example [in] the case [of the] hardening standard, which was revised last year. There was a question about one demand, so we called a retired colleague and asked. So after all, we had this demand because of some components' failures. He told us that there is a report written about this. So we have all reports from the last 60 years gathered in a database and we could look into this report from the ’80s. So we realized that was a good demand and we should keep it. So, there is a lot of experience.”

In other words, when very competent and experienced employees leave the company, years of work and experience could leave with them—unless established standards retain and transmit acquired knowledge. Volvo (like many other organizations) has realized and repeatedly benefited from this through an extensive system of internal (and often also external) standards for procedures

and products/materials. However, despite the workforce’s long experience (referring in particular to the standardization unit, but also to the technical experts and managers in the various areas), a major challenge for the whole Volvo Group has not been tackled yet. Specifically, since 2011, when Volvo Group was wholly reorganized by the new CEO and all truck businesses began to operate as an aggregate organization, cross-brand standardization management was not sufficiently examined . That is, applying the right level of common standards among different brands (in order to accomplish synergy effects), yet without “destroying” the brand variations, continues to be an issue—despite combined efforts of the standardization department and brand managers.

Manager B, Corporate Standards: “The challenge for a company doing this [integrating different brands towards synergy effects] is brand management.

Because you want to keep your brands, you want to have the synergy effects but you also want the customers to buy the brands. And what is the brand, why do customers choose a Volvo, or why do they choose a Mack? There is a reason for that and that is about brand. So you don’t want to make all your brands look the same … so, brand management is a difficult part. Which means that you need to have commonality to a certain level where you make the most money, and then brand management needs to take over and make the rest diverse. What is important for the customer for each brand? That is very, very important to get ahold of. What is not important for the customer for a certain brand must be common. Or could be common, because then you can make money. Do the customers care about the screws in the chassis? No, they don’t, as long as they are there and keep things together and safe! So there we can have commonality. But there are other features which make a Volvo different from a Renault or a Mack.”

Manager B, Corporate Standards: “The borderline between commonality and brand management is tricky. And that is a [problem] since the new organization after 2011.”

As expressed in the above quote, the challenge of cross-brand standardization relates to the fact that commonality through the use of common standards for different brands, for the sake of efficiency and scale economies, must not limit brand differentiation—especially as long as the corporation’s strategy is to maintain those various brands for targeting different markets. For instance, on the one hand it is reasonable to utilize the same material standards for a number of brands (thereby achieving substantial economies of scope and scale), while on the other hand applying the same (high-quality) materials for Volvo Trucks to

the low-cost Eicher Trucks, which target the Indian market, will demolish the whole idea of target market differentiation. Corporate Standards is the main department responsible for looking into this issue, which has proven to be more challenging than previously expected (that is, in 2011 when the reorganization took place). In other words, even though very experienced personnel are managing corporate standardization, and a well thought-out (assertive) approach is employed, the “fine balance” in regard to Volvo’s cross-brand corporate standardization remains under scrutiny.

Manager F, Corporate Standards: “I think that [cross-brand management and standardization] is very, very difficult. I have had meetings with brand managers and I sense that we [Corporate Standards] are the ones pushing for commonality, wherever commonality can be driven … otherwise we are out of the market, since the product becomes too expensive to develop. Brand managers drive this issue from the opposite perspective, that we must distinguish each brand from the other. Where do we meet?”

This challenge is well acknowledged (by higher management and Corporate Standards), and efforts have been made to address it, since the standardization unit remains a corporate function responsible for all brands embodied in the Group.

In any case, in order to identify the relevant issues and information (both internally as well as externally—that is, within the setting of external standardization committees), an additional organizational competence is required; namely, strong organizational awareness. That concept will be further explored in the following section.