ZF inspired by the evolution of Microsoft

LAS VEGAS — ZF buys cloud storage and other services from Microsoft. But to the German supplier's r&d chief, that's not the half of it.

In addition to giving his team better tools to work smarter as programmers, Dirk Walliser sees an example in Microsoft of how a successful company can reinvent itself — and an institutional mentor willing to share how it happened.

"I see your cultural transformation that you have been doing the last five years," he said to Jean-Philippe Courtois, Microsoft's global head of sales, in a meeting room at Mandalay Bay last week at CES. "And that's about the blueprint of what we will face in the next five to 10 years — we will have changed as much as Microsoft."

The two had just met, but they talked like old friends. Walliser said being able to ask Microsoft counterparts " 'How did you do it?' and 'What were the big takeaways from this cultural transformation?' for me, is the most important piece of the partnership."

To look at Satya Nadella's track record as CEO of Microsoft, it's not hard to see why others might want to emulate him. In his almost six years at the helm, the company's stock has risen about fourfold. He's reinvigorated the mindset from a software company calcified by its own success and gave it a new mission.

Looking at a global economy and work force very different from what it was like in 1975, when Microsoft was founded, Courtois said Nadella saw that "we need to change our aspiration.

"We said we want to empower every person, and every organization on the planet to achieve."

Courtois recalled a meeting at another major confab held each January — last year's World Economic Forum at Davos, Switzerland — between Nadella and ZF CEO Wolf-Henning Scheider. Courtois said the conversation was about "what it's going to take for a company with this deep [mechanical] engineering culture like ZF to become a truly at-scale software company."

Microsoft's vision of industrial evolution in an era when everything run by software — under the umbrella of what Nadella calls "tech intensity" — was a perfect fit for ZF, which is transforming itself from a maker of precision parts and components, such as axles and transmissions, into one that offers full driver-assist systems, central computing units for smoother chassis movements, even airbags for the outside of the car.

As the industry was starting to change toward electrification and automated driving, it was clear, Walliser said, that just remaining a maker of parts wasn't going to be enough.

Peter Drucker said that culture eats strategy for breakfast, as the two men cited, so for ZF — or at least Walliser's part of it — to become more of a software company, it needs not only new tools, but new ways of using tools and working together. And new friends to show the way.

"So I'm really, really pleased," he said at CES, "that there's Davos."