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Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

The digital tug-of-war in the automotive industry

During the first years of the discussion around digital transformation, strategy consultants still had much educational work and persuasion to do. Reality however caught up with the upper management levels of OEMs and suppliers alike. Now, the topic is at the top of the agenda and no one needs to be anymore evangelized. Connected car, autonomous driving, e-commerce, data analytics and new mobility concepts – new solutions are emerging without a pause, targeting quasi digital issues, which ultimately decide on the survival of market participants.

With regard to this disruptive progress, however, the interim balance concludes on a rather sober note. A lot of effort and money is being spent on the conception and implementation of individual initiatives and pilot projects. Nonetheless, their resulting degrees of maturity and efficiency are too small. Stagnant, inefficient and rigid processes and organizations have grown over decades, hampering the progress. Despite the euphoria with regard to new possibilities, manufacturers and suppliers neglected the necessary internal adjustments for too long. Compared to the development and innovation speed of the "digital players", the resulting competition can be likened more to snail racing than Formula One qualifying. In this situation, pressure is being exerted by future managers within companies, analysts and increasingly even by shareholders, all of whom are demanding evidence for the appropriate digital skillsets.

With regard to current discussions and company reports, the solution seems to be easy: a (chief) digital officer is in charge to direct the change. Needed are profound expertise of the automotive industry, many years of experience in start-ups, as well in top management positions in a Silicon Valley giant. One must be a powerful decision maker and an empathic change agent, in addition to being an eloquent mastermind with a slightly nerdy appearance. Young enough to go through as "digital native" but still senior enough to make C-level decisions. Considering this high requirement profile, the discussion on whether the CIO needs to become the new CDO can be declared as over - even if IT inevitably will play a decisive role. IT currently is at the crossroads, limiting itself to either pure cost and efficiency management and thereby letting the new digitals to direct the change or IT decides to proactively drive the field of multimodal speeds. Concurrently, the ultimate search for the digital platform can be likened to the hunt for the philosopher's stone.

Nonetheless, how do you actually get digital? How can the CDO get a grip on the degenerate, digital project landscapes? If the CDO was to directly report to the CEO, he or she may get the necessary empowerment but will lack access to the operational business. And if the CDO was to receive his own business unit, his or her influence barely will reach beyond the silo. Digital transformation, however, inevitably will affect all business areas and thus cannot be compartmentalized into organizational silos. With this in mind, breaking up rigid structures must be on top of the agenda in order to facilitate an integrated transformation process through employee empowerment.

Despite the seemingly slow tempo, German automotive companies by no means have been dormant in regards to digitization. At the latest after top management of the automotive groups returned from their pilgrimage to Silicon Valley, it was clear that one quickly became a petitioner. This has led to a novel way of thinking about innovation management, new ventures and startup cooperation, as well as strategic partner networks for targeted acquisitions. The crucial question is hence directed at what will comprise the core performance in the future. The answer should not simply be "digital" but the development of a variety of new skills, which are intended to prepare for the future.

Decisions about digital initiatives must make it on the agenda of the board meetings. Top managers have to act as advocates and convincing leaders in order to successfully bring a company’s transformation forward. The future is less concerned with the "what" than the "how"! The "how" builds on a comprehensive change of meaning and culture in management and with employees, as well as on new cooperation formats and shorter decision-making processes. The art of empowerment and change management plays a new role. Entrepreneurial action under digital programs such as agility and the ability to innovate, as well as flexibility and speed represent a mammoth task for hierarchically large companies of the automotive industry in light of simultaneous process compliance.

Whether it is called "digital transformation" or – in post-digital slang – “survival of the fittest" is irrelevant. It is important to recognize that the digital age requires new visions, new generations of leadership, as well as new skills of learning, all of which now need to be rigorously implemented.

About the author

Markus Winkler
Markus Winkler
Markus Winkler ist Senior Vice President bei Capgemini Consulting. Als Global Head of Automotive beschäftigt er sich hauptsächlich mit den digitalen Herausforderungen im Automobilsektor.

Markus Winkler is a Senior Vice Presidentwith Capgemini Consulting. In his role as Global Head of Automotive he has gained a wide range of experiences in delivering major transformation programs in the Automotive industry with focus on digital transformation excellence, consumer experience and business analytics from strategy to implementation.

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