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Successful transformation starts at the top: the importance of good leadership

Munich, December 2023

Featured Insights

Successful transformation starts at the top: the importance of good leadership Munich, December 2023

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total of 7 Chinese car manufacturers presented themselves impressively at the IAA with large stands and high-quality, innovative vehicles. However, brands such as Fiat, Peugeot and Jeep were not represented. The profound change in the automotive industry cannot be denied.

The industry is undergoing massive changes that go beyond new drive concepts and designs and lead to a reorganization of brands and market shares in Europe and worldwide. The uncertainty in the German automotive and supplier industry is noticeable, and managers must actively shape the transformation to remain competitive. 

In the midst of transformation processes towards electric drives, agile supply chains and autonomous vehicle technologies, a better balance is needed between leadership and management. Management controls and monitors the present. It focuses on business processes, plans budgets and organizes the necessary resources. Leadership, on the other hand, focuses on future viability. It creates an environment and a culture in which the company can be successful in the long term by breaking down rigid thought patterns and motivating employees to help shape the change. 

However, there is no standardized definition of leadership, and it requires regular discussion so that individual scope for interpretation can come together. The basic prerequisite is a shared understanding of leadership attitudes and mindsets within the leadership team. This significantly impacts the way they make decisions, treat their employees, and shape the corporate culture. Without debate and reflection within the leadership team, individual mission statements develop and inevitably lead to contradictory behavior and decisions. For example, a „charismatic manager“ or a „good coach“ is not automatically a strong leader. There is no doubt that these are desirable qualities. However, they can also be a risk for a company, as seen in the DeLorean Motor Company in the early 1980s. Its founder, John Z. DeLorean, was a charismatic but controversial engineer who quickly gained fame and influence at General Motors and is still considered the youngest department head in the company’s history. Through his courage, self-confidence, and innovative spirit, he quickly made a name for himself outside the automotive industry. However, his business practices, his personal lifestyle and his financial and strategic decisions quickly led to problems and ultimately to the collapse of the company. 

If charisma alone is not enough to successfully transform a company, what are the decisive elements?  

Our observations reveal that successful leadership teams possess five specific characteristics, drawing inspiration from Jim Collins‘ principles: 

1. „Entrepreneurial spirit“ characterizes managers who are distinguished by a unique combination of two essential qualities. Through personal humility, they focus on teamwork and devote their ambition to the good of the organization rather than their own personal recognition. In addition, they are highly committed to the long-term success of the organization through professionalism, high work ethic, high standards and willingness to take tough decisions. 

Eiji Toyoda is an example of true „entrepreneurial spirit“. During his 15-year presidency, Toyota became one of the leading automobile manufacturers, setting new standards for quality, efficiency, and continuous improvement. Rather than personal enrichment or self-promotion, Eiji’s focus was on improving the company and promoting the Toyota Production System. 

2. „Fanatical discipline“ involves setting a clear performance framework that must be demanded and adhered to with the utmost rigor. Even under the most unfavorable conditions, no restraint is granted, even if it seems tempting due to short-term profits or external pressure.  

Although his disciplined approach is not without controversy, and his leadership style attracts both admiration and criticism, Elon Musk is a living example of fanatical discipline. His enthusiasm and dedication to his products became clear in 2018. During this time, there were reports that he slept on a couch in the factory to monitor production processes and intervene immediately in the event of problems to achieve the ambitious production increases.

3. „Empirical creativity“ encompasses the relentless urge to first subject innovative ideas with experiments, facts and figures. Instead of putting extensive resources into an idea from the outset, the „bullets first, cannonballs later“ approach is pursued. 

For centuries, „Hongbao,“ traditional red envelopes filled with money, have been cherished in Chinese culture, especially during Chinese New Year. In 2014, Tencent transformed this tradition by introducing a digital version on WeChat. In an advertising campaign, around EUR 70 million was digitally distributed, marking the success of this innovation. This breakthrough paved the way for WeChat Pay, allowing users to link their bank accounts for seamless digital transactions. The founder, Allen Zhang, is integral to WeChat’s cult-like success in China, akin to Steve Jobs in the USA and Europe, with a staggering 1.3 billion active users. 

4. „Productive paranoia“ aims to identify and anticipate future challenges and problems at an early stage before they occur and the ability to react decreases. Productive paranoia represents a sensible form of prevention and risk management. The key motivation of leaders with productive paranoia is not to take past success for granted and remain self-satisfied. Instead, they think about what dangers may lurk in the future and what reserves need to be built up for protection in the form of time, money or even knowledge. 

Alan Mulally, the former CEO of Ford Motor Company, became known for his pragmatic approach to the automotive business and his use of big data for decision making. Unlike GM and Chrysler, Ford did not have to turn to the US government for funds from the Troubled Asset Relief Program (TARP) during the financial crisis of 2008/2009.  With empirical data and well-founded analyses, Ford had already prepared itself for economically uncertain times and reacted early to changing consumer preferences with more economical models, such as the Superior Fuel Economy Package of the Ford F150 in 2009. 

5. „Radical Candor” is a catalyst for transformation by encouraging controversial thinking and creating an environment that values diverse perspectives. Conventional thinking is broken, and innovative solutions are identified by encouraging active listening and open conversations. Conflicts are not seen as an obstacle to be avoided, but as a source of creative tension for collective learning and growth. With curiosity and openness, leaders lead through conflict to solutions.  

 

Netflix embodies radical candor, with a culture deeply ingrained in seeking a „diversity of thought.“ Originating from Reed Hastings, co-founder and CEO, this conviction is rooted in the belief that diverse perspectives foster creativity and enable agile adaptation to changing conditions. Netflix actively encourages debates, where decisions prioritize the quality of proposed solutions over authority or charisma. The company operates on the principle that the best idea, regardless of its origin, prevails. Embracing „Fail Fast and Learn,“ Netflix recognizes that not every idea succeeds, fostering experimentation and risk-taking crucial for innovation. In acknowledging that failure is a natural part of the process, individuals are not solely held responsible for setbacks, contributing to a culture of continuous improvement.  

The escalation of competition from the Far East is not a passing challenge but the emerging norm. The demand for continuous competitiveness and innovation places unrelenting pressure on companies and their managers. Resilience is key. For leaders steering their companies through transformative times, the emphasis is not on embodying all leadership characteristics individually. Instead, the goal and challenge lie in cultivating and fostering these qualities within the leadership team. 

Successful leadership teams create trust as the basis for all actions

Leadership teams wield numerous levers to navigate effectively. They must inspire through their actions, setting an example for others to follow. Establishing a culture of openness requires the management team’s receptivity to feedback, offering employees a platform for expression. Personnel decisions, serving as guides for valued behaviors, necessitate a commitment to entrepreneurial thinking. This, in turn, demands the creation of structures fostering innovation, risk-taking, and efficient problem-solving. Actively shaping the organization enables the desired culture to flourish. Transparent resource distribution clarifies priorities, fostering not only understanding but also trust. Trust, the cornerstone for effective collaboration, forms the basis upon which a culture of success is constructed. By proactively engaging with these levers, managers not only shape the present but also chart the course for the future of the company.   

Good managers are made, not born

Continuous training and development are indispensable for managers to keep pace with evolving requirements and successfully guide their companies. While empathy and a commitment to personal development are prerequisites for managerial suitability. Further, essential leadership skills can be honed through targeted training, encompassing active listening, adept handling of resistance and conflicts, and the ability to make tough decisions.  

As challenges confronting management teams multiply, skills such as decision-making under uncertainty and maintaining operational effectiveness gain prominence. Shifting away from the mere „management“ of existing standards and plans, managers must rethink strategies for the future. Regular self-reflection on leadership performance becomes imperative for continuity and personal growth.  

At Berylls, we offer support to management teams and executives in identifying strategic areas of focus and deriving actionable insights for leadership aspirations and performance. Our commitment extends to providing comprehensive assistance through team development, coaching, and capability building. 

Discover how Berylls can elevate your leadership team through tailored development programs. Navigate to our website for more information on our comprehensive support. 

Authors
Laura Kronen

Partner

Peter Eltze

Partner

Peter Nuck

Project Manager

Laura Kronen

Laura Kronen (1980) is a partner at Berylls by AlixPartners (formerly Berylls Strategy Advisors) with a focus on transformation. She is passionate about moving people and organizations forward. With over 18 years of industry and consulting experience, her focus is on transformative challenges in the operations context – from executives to individual employees, at manufacturers and suppliers. She helps her clients align strategy, structure, and culture in their respective market environments to build resilience.

Prior to joining Berylls, Laura Kronen worked at PwC Strategy&, Volkswagen AG and Audi. She holds a diploma degree in industrial engineering from the Karlsruhe Institute of Technology (KIT).

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Peter Eltze

Peter Eltze (1964) joined Berylls by AlixPartners (formerly Berylls Strategy Advisors) as a Partner in November 2015. He began his career in the medical technology division of an integrated technology corporation, and became a project manager at Malik Management Zentrum St. Gallen in 1996 before being appointed Partner in 2001. From 2003, in his role as member of the executive board, he was in charge of Management Education & Development. Since the end of the 1990s, Peter Eltze has advised companies in the automotive and mechanical engineering industries. At Berylls, his consulting activities focus on integrated organizational development (strategy, structure, culture), transformation management, and executive development.
Education in wholesale and international trade; administrative sciences at the University of Constance, Germany.

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Exceptional onboarding: creating an outstanding employee experience from the start

Munich, December 2023

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Exceptional onboarding: creating an outstanding employee experience from the start Munich, December 2023

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reat onboarding makes a difference to any employee journey. As the automotive industry’s transformation process accelerates, attracting, integrating, developing, and retaining employees with mission-critical capabilities is key to assuring future readiness and successful transformation.

Here we outline a “but different” recommendation for onboarding programs.

The automotive industry finds itself at a crossroads, navigating the challenging transformation driven by connected, autonomous, shared, and electric (CASE) vehicles in a digitized world. In this era of unprecedented change, future readiness and successful transformation inevitably require the ability to reshape capability and skill portfolios efficiently. It’s not just about staying competitive – it goes beyond simple competitiveness – it’s about dynamically redesigning the capability portfolio that serves as a foundation for driving future innovation and delivering greater customer value.

To address this challenge, the industry recognizes the pivotal role of onboarding both new hires and existing staff coming from upskilling and reskilling programs. The effectiveness of this process is crucial for closing strategic skill gaps and ensuring the rapid integration of new arrivals. At the same time, it acts as a protective measure and validates the substantial investments made in acquiring talent, fostering leadership, and developing functional skills. Against the backdrop of a shrinking average employee tenure, onboarding has emerged as a critical success factor. It acts as the driving force behind boosting commitment, strengthening retention rates, speeding up time-to-productivity, and ultimately cutting down on staff turnover. Onboarding goes beyond its usual role, becoming a strategic necessity that not only tackles challenges but turns them into chances to improve organizational effectiveness.

Facts tell a different story, but underline the importance of exceptional onboarding:

  • In 2021, a mere 12% of employees in the United States felt that their onboarding experience was satisfactory, according to Gallup (2021)
  • 1 out of 3 HR professionals reported that the quality of their company’s onboarding processes was not up to standard (ClickBoarding, 2020)
  • 35% of companies have zero spend on onboarding (Enboarder, 2019)

On the flip side, a remarkable 70% of those who underwent exceptional onboarding describe their job as “the best possible job” (Gallup 2021). This contrast highlights the immense potential onboarding holds for shaping employees’ perception of their roles and, by extension, their commitment to the organization.

What is onboarding?

Onboarding is more than just setting up your laptop and finding your seat; it’s about grasping your responsibilities, understanding the context of your role, familiarizing yourself with processes and tools, and immersing yourself in the company’s unique culture. And it should be even more than that. As we see it, onboarding is the art of forging connections and relationships, instilling purpose, weaving the company’s DNA, and nurturing commitment.

In essence, onboarding must create those legendary moments that can define the trajectory of high-performing employees. The efforts put into recruitment and people development should come to fruition during the onboarding process. However, the reality looks different. Onboarding processes often seem to be “undermanaged,” leading to a disconnect between potential and performance.

So, what concrete results can be achieved by an exceptional onboarding process?

  • Improved retention rates by more than 50% (Harvard Business Review, 2018) 
  • Increased productivity by over 60% (Harvard Business Review, 2018)
  • Strengthened employee commitment by almost 90% (BambooHR, 2023)

By the way, we are not simply talking about the onboarding of a few individuals in this article. Reviewing our actual project landscape, we conclude that it regularly involves hundreds, and even up to several thousand new team members annually at certain clients. This large-scale onboarding requirement and its significance cannot be overstated. In practical terms, it goes hand in hand with CASE-related upskilling/reskilling initiatives, venture building projects, the setting up of new hubs and plants, post-merger integration situations, and lots more.

The four phases of onboarding

Source: Berylls Strategy Advisors

Onboarding – cornerstones of a “but different” concept

The onboarding journey is far more than just a day-one matter. It begins long before the new employee walks through the office doors or embarks on an upskilling journey. A strong focus is usually on the first 6–12 weeks, but it extends well up to the end of the first year in a new position. Effective onboarding is a journey, not a destination where the mutual understanding that you are an exceptional employer is established.

To ensure an outstanding onboarding process, our latest project experience indicates that a holistic approach that combines a fluid offering of collective and individual nuggets, action orientation, culture alignment, and networking is key. For organizations dealing with a significant number of new employees, especially in a global environment, the digitization of onboarding is essential in order to meet the efficiency requirement.

So lastly, here are the “but different” key factors that can help secure the ultimate success of your onboarding program:

1. Modular and flexible learning journeys: Firstly, onboarding is based on purpose and outcome. Tailor onboarding content to specific roles and requirements, allowing for individualized learning. Offer a mix of mandatory and optional content and provide additional nuggets for those who want to explore further and deeper. Onboarding should be focused on action, with a “learn, apply, experience” approach. Avoid overwhelming employees with information and ensure that the content aligns closely with daily business needs.

2. Purpose and culture integration: Instill a sense of belonging by aligning onboarding with your organization’s purpose and culture. Create emotionally empowering experiences and moments that foster a shared mindset, e.g. a special brand, product, or cultural experiences. Make new employees or team members feel like essential teammates and celebrate their unique talents, contribution, and perspectives in meetings and all-hands situations. Always provide equal and transparent access to information. Help employees to feel like they can be their true self and make sure you find ways to openly value differences.

3. Fostering networks and relationships: Building relationships within the organization is key. Invest time in fostering cross-functional relationships, whether in digital, blended, or physical formats, to encourage interaction with colleagues from across the organization. Build and grow communities as a forum for commitment, interaction, and communication around onboarding-related topics (e.g. special use cases, processes, methods, tools, etc.), and empower participants by providing peer support. 

4. Put digital learning at the center: When it comes to scalability, flexibility, online and offline availability, effectiveness, and efficiency the advantages of digital learning in onboarding situations outweigh the disadvantages of higher initial costs and longer preparation times before programs can be launched. Live online formats can be a significant part of blended learning and make highly personalized learning journeys possible. This transition is not confined to individual organizations, but is essential on a larger scale in a world that has become smaller thanks to digitization.

5. AI-based learning journeys: The use of AI in onboarding boosts efficiency when it comes to creating relevant nuggets and enables the deep-search and auto-tagging of content across your databases. Truly personalized training and virtual coaches that provide real-time feedback, answer common questions, and offer guidance on company policies and procedures are no longer a utopia. Finally, AI can leverage large amounts of data to identify trends and patterns in the onboarding process. This data can be used to continually refine and improve the onboarding experience, leading to higher employee satisfaction and improved retention rates.

Conclusion

By following these five key factors, your onboarding program can ensure that every employee, whether new to the organization or coming from an upskilling and/or reskilling program, has the best possible start. Give your employees the time they need to acclimatize to their roles, understanding that the investment will pay off over time.
Remember, you’re not starting from scratch. Many intelligent and engaging applications and experiences are already in place. They might only need to be adapted to form a holistic approach and enriched by some new but already proven pieces of technology. By doing so, your onboarding can become a transformative and rewarding journey for both employees and the organization as a whole.

We are happy to support you in the conception, design, and implementation of effective onboarding programs that strongly engage your workforce and thus dynamically develop your capability landscape for driving future innovation and increasing customer value. Please contact us to find out more. We look forward to hearing from you.

Authors
Dr. Frank Heines

Associate Partner

Wiktoria Bulka

Consultant

Dr. Frank Heines
Dr. Frank Heines (1967) joined Berylls Strategy Advisors as Principal in September 2016, and is based at Berylls’ Swiss office. He started his career at the postal automation division of Siemens AG before changing to a medium-sized electrical and electronics company where, in his position as responsible for the technical department, he soon became member of the board. In 2003, he began his consulting career at the Malik Management Zentrum St. Gallen, becoming Partner and member of the group management board in 2007. The focus of his consulting work lies in strategy development, organizational design, productivity increase as well as in integrated organizational development and transformational management.
Economics at the University of Constance, Germany; business administration at the University of Zurich; Ph.D. at the University of St. Gallen, Switzerland.
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Beyond Agile … oder wie man ein Unternehmen im Sturm steuert

München, Dezember 2023

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Beyond Agile … oder wie man ein Unternehmen im Sturm steuert München, Dezember 2023

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ie erhalten wir die Steuerbarkeit des Unternehmens, wenn es grösser und komplexer wird? Wie können wir navigieren, wenn Prognosen kaum mehr möglich sind und sich Kundenbedürfnisse, Märkte und Technologien rasend schnell verändern? 

Die deutsche Automotive Industrie befasst sich intensiv mit dieser Frage. Die Qualität des Steuerungssystems der Firma ist zum neuen Top-Management Thema geworden.

«If the rate of change outside exceeds the rate of change inside – the end is in sight» soll die amerikanische Management Legende Jack Welch bereits in den 70er Jahren gesagt haben.  Das Unternehmen muss anpassungsfähig sein an eine sich immer schneller verändernde Umwelt. Aber wie geht das heute bei der schwindelerregenden Veränderungsrate, mit der Unternehmen in Form von Multikrisen, neuen Technologien und neuen Geschäftsmodellen konfrontiert sind? Wenn wir uns auf keine Prognose mehr verlassen können: Wie kommen wir trotz Nebel und Sturm am Ziel an? Viele Unternehmen sind diesbezüglich schwerfällig geworden und stellen ihre Steuerungsorganisation auf den Prüfstand. Sie hat trotz der Einführung agiler Methoden noch immer Mühe im Umgang mit Dynamik. Sie gibt nicht die nötige Orientierung, vergeudet zu viel Management-Kapazität auf das Kompensieren von Schwächen in der Entscheidungsstruktur, die Kommunikation funktioniert nicht und die Traktion ist nicht da.

 

Kybernetik: Die Wissenschaft vom Steuern

Es wird derweil in vielen Bereichen nach Lösungen gesucht: Man startet Initiativen zur Verbesserung der Leadership, der Kultur, der Agilität oder gar der Abschaffung von Hierarchie. Aber nichts scheint wirklich zu funktionieren. Man hat halt am Ende doch nur die Leader die man eben hat, die Kultur ändert sich sehr langsam – wenn überhaupt. Agil sind zwar nun die Prozesse aber nicht das Unternehmen als Ganzes, und wo Hierarchien abgeschafft werden, entstehen neue informelle. In der Firma heisst es, dass die falschen Leute die falschen Dinge entscheiden und das Unternehmen fährt derweil langsam gegen den Eisberg. Die gute Nachricht ist, dass es eine Wissenschaft gibt, die uns lehrt, wie man steuert. Sie hat die Welt bereits einmal revolutioniert, indem sie die Automation, den Computer und letztlich die KI hervorge- bracht hat, und sie könnte es nun ein zweites Mal tun, wenn wir sie nicht nur auf die technischen, sondern auch auf die sozialen Systeme anwenden: Die Kybernetik. «Kybernetes» ist das griechische Wort für Steuermann, und Wörter wie der Gouverneur oder Corporate Governance sind daraus abgeleitet. Sie hält überraschend interessante und robuste Lösungen für das Steuern im Sturm bereit, die derzeit insbesondere in der Automotive Industrie diskutiert und aufgegriffen werden. 
 

Steuern was steuert

Als erstes müssen die Voraussetzungen für das Funktionieren von Steuerung geschaffen werden.

Dazu verlagert sich der Fokus des Top-Managements für einen Moment von der Arbeit im System auf die Arbeit am System, also an den Strukturen. Die Kernfrage lautet: Welche Entscheidungsstruktur erlaubt es uns, das Unternehmen sicher durch die aktuellen und zukünftigen Stürme zu steuern? Mit der Entscheidungsstruktur untrennbar verbunden ist die Kommunikationsstruktur. Wie bei der Maschine: Wenn man das Kabel kappt, funktioniert die Steuerung nicht mehr. Aber wie macht man das? Benchmarking liefert keine relevanten Hinweise, weil die meisten Unternehmen hier gerade ihre eigene Baustelle haben. Woran kann man sich also orientieren? Bereits in den 70er Jahren schlägt der britische Kybernetiker Stafford Beer ein Modell für die Diagnose und das Design der Entscheidungs- und Kommunikationsstruktur einer Firma vor. Dies zu einer Zeit allerdings, in der weder das Problem relevant noch die Technologie verfügbar war. Dennoch wird damit in allen Arten von Organisationen wie NGOs, KMUs, Konzerne und ganzen Staaten experimentiert. Inzwischen ist neben der Lösung auch die Technologie da und vor allem der Bedarf.

 

Die Lösung liegt nicht in „Reinventing Organizations“

Die Lösung die Beer vorschlägt, liegt nicht in neuen Organisationsformen oder alternativen Organisationsmodellen. Die Suche nach hierarchiefreien, soziokratischen, purpose-driven oder andersartigen Organisationen ist eine Suche am falschen Ort. Beer führt unseren Blick in eine andere Richtung, nämlich in eine dritte Dimension des Organisierensneben der Aufbau- und der Ablauforganisation. Man hat sie bisher übersehen und deshalb nur schwer steuerbare Organisationen gebaut. Wie in der Fliegerei: Man konnte schon lange geradeaus fliegen, bevor die Gebrüder Wright mit dem Seitenruder eine dritte Dimension unter Kontrolle gebracht haben. In unseren Firmen optimieren wir seit 100 Jahren die ersten beiden Dimensionen, die Aufbau- und Ablauforganisation. Was fehlt also? Orientierung gibt das beste Steuerungssystem, das wir kennen: Unser eigener Organismus. Er besitzt neben seiner Anatomie (Struktur) und seiner Physiologie (Prozesse) eine Neurologie, die ihn dazu befähigt, mit Komplexität umzugehen. Die spannende Frage ist nun, welche Lösung die Natur in vier Milliarden Jahren für das Steuerungsproblem wohl entwickelt hat, und was wir daraus für unsere Firmen lernen können. Diesen Problemlösungsansatz kennen wir auch aus der Bionik, die sich mit dem Lernen von Lösungen der Natur für technische Probleme befasst. Unsere Unternehmen brauchen neben der richtigen Aufbaustruktur und neben funktionierenden Prozessen also eine dritte Dimension, die Steuerungsorganisation, damit das Unternehmen fliegt.

 

Viability als oberstes Ziel

Die von Beer vorgeschlagene Struktur ist das Viable System Model (VSM).  Es enthält alle notwendigen und hinreichenden Bedingungen für die Lebensfähigkeit eines Unternehmens. Lebensfähig oder eben «viable» heisst, seine eigene Existenz auf Dauer aufrechterhalten zu können – also nicht nur «Geschäfte machen», sondern im Geschäft bleiben. Es gibt eine allgemeingültige Steuerungsstruktur vor. Diese gilt über alle Ebenen des Unternehmens (Prinzip der Rekursivität) und sieht die Entscheidung auf möglichst niedriger Ebene vor (Prinzip der Subsidiarität), nämlich dort, wo die sachnahe Information ist. Durch diese Prinzipien entsteht Agilität, die eine Teilmenge der Viabilität ist.

Quelle: Berylls Strategy Advisors, MP Consulting

Kundennutzen als Ausgangspunkt

Die erste Vorsteuergrösse für Lebensfähigkeit fängt beim Kunden an. «Stellt die Struktur das ins Zentrum der Aufmerksamkeit, wofür unsere Kunden bezahlen?» Mit dieser Frage beginnt der Designprozess und hieraus wird die Aufbauorganisation des Unternehmens abgeleitet. Es werden die Einheiten festgelegt, die sich weitgehend selber steuern sollen und dem Prinzip der Rekursivität folgend wiederum ein eigenständiges Viable System repräsentieren. Diese Entscheidung mag in Unternehmen mit wenigen, gut abgegrenzten Produkten und einer überschaubaren Anzahl an Kunden und Märkten einfach erscheinen. Die Realität zeigt aber, dass durch die zunehmende Vernetzung von Produkten zu Ökosystemen, die Unterschiedlichkeit der globalen Märkte und dem Streben der Kunden nach möglichst individuellen Produkten die Komplexität bei der Beantwortung der Frage nach dem Kundennutzen steigt. Ein guter organisatorischer Schnitt durch die Etablierung von E2E-Verantwortung in der Aufbauorganisation auf allen Ebenen reduziert diese Komplexität, löst sie aber nicht auf.

 

Komplexität als Massstab

Wir erinnern uns: Es geht um das Steuern im Sturm. Die verbleibende Komplexität muss übergeordnet gesteuert werden. Das ist die zentrale Aufgabe des Top-Managements, und wie gut sie erfüllt wird, ist heute der wohl wichtigste Qualitätsmassstab. Komplexitätsmanagement bedeutet dabei die Vermeidung unnötiger, aber auch die Beherrschung notwendiger Komplexität. Die vielleicht wichtigste Lektion, die uns die Kybernetik lehrt, basiert auf «Ashby’s Law»: Nur Komplexität kann Komplexität bewältigen. Mit anderen Worten: Je komplexer ein System und seine Umwelten sind, desto stärker muss die Steuerung sein – das erinnert uns an Jack Welch! Das VSM stellt uns das Werkzeug zur Verfügung, um diese Passgenauigkeit herzustellen.

 

Die Klaviatur der Steuerung

In einem lebensfähigen System umfassen die Aufgaben der Steuerung: Koordination (System 2), Steuerung des operativen Erfolgs (System 3), Steuerung der Zukunftsfähigkeit (System 4) sowie das Schaffen von Identität und Normen (System 5). Dieses Zusammenspiel aus operativem, strategischem und normativem Management ist von herausragender Bedeutung. Insbesondere das rechtzeitige Umsteuern der personellen und finanziellen Ressourcen vom bestehenden auf neues Geschäft, ist wohl die schwierigste und zugleich wichtigste Aufgabe des Senior Managements. Wann und wie viele Ressourcen sollen, z.B. in den Ausbau der Elektromobilität, der Konnektivität oder in die ADAS-Entwicklung investiert werden? Diesen Fragen kann sich ein Senior Management nur dann ausreichend widmen, wenn das operative Geschäft nicht seine ganze Aufmerksamkeit absorbiert. Zur Integration dieser Aufgaben stehen dem Management aus dem VSM ein Prinzip und zwei Steuerungsachsen zur Verfügung, die situativ gespielt werden müssen.

Quelle: Berylls Strategy Advisors, MP Consulting

Das Prinzip der Selbststeuerung

Gerade in zunehmen volatilen Zeiten, gewinnt das Prinzip der Selbststeuerung über alle Hierarchieebenen hinweg an Bedeutung. Kann das Unternehmen auf kurzfristige Veränderungen interner und externer Faktoren reagieren und rechtzeitig den Kurs anpassen, um trotzdem die gesteckten Ziele zu erreichen? Auch hier steht uns die Kybernetik als Wissenschaft Pate. Wie bei technischen Systemen müssen im Unternehmen durchgängige Regelkreise mit regelmäßigen Rückmeldungen (Feedbackloops) installiert und gelebt werden, um die Leistung und das Verhalten des Unternehmens im richtigen Moment anzupassen. Dies gelingt nur, wenn klare Entscheidungsstrukturen und -kompetenzen vorhanden sind. Dann kann Feedback, also die Auswirkung von Entscheidungen, zurück auf den Entscheider fallen. Das sorgt für Selbstregulation.

Zwei Achsen der Steuerung

Wir streben mit dem VSM also möglichst autonome und sich selbst regulierende Einheiten an. Auch bei technischen Systemen ist das so. Das Antriebssystem im Automobil kümmert sich auf gerader, freier Strecke autonom um den Vortrieb und muss sich dazu nicht groß mit dem Brems- und Lenkungssystem abstimmen. Es besitzt eine Schlupfregelung, die kontinuierlich die Straßenbedingungen (Umwelt) erfasst und bei Bedarf regelnd eingreift. Im VSM wird diese autonome Steuerung über die horizontale Steuerungsachse beschrieben. Wird es hingegen kurvig, benötigt es eine übergreifende Steuerung, um sicher am Ziel anzukommen: Die vertikale Steuerungsachse. Sie sorgt dafür, dass mehrere Systeme sinnvoll zusammenwirken. Über sie wird im Unternehmen koordiniert, Informationen gesammelt, Ressourcen und Budgets verteilt, oder im Notfall regelnd in die Autonomie der Subsysteme eingegriffen. Im genannten Beispiel würde diese Achse über den Fahrer oder das automatisiert fahrende Fahrzeug gesteuert, um rechtzeitig vom Gas zu gehen, zu bremsen und zu lenken. Durch diese Steuerung wird das Gesamtoptimum des Systems sichergestellt: Schnell aber sicher am Ziel anzukommen. Hierarchie ist in diesem Sinne besser als ihr Ruf.  Steuerungssystem erfordern eine logische Hierarchie, die sich aus der Relevanz von Information ergibt, nicht aus Status und Macht. Diese Art von Hierarchie ist für das Funktionieren notwendig.

 

Keine Steuerung ohne Kommunikation

Kommunikation ist schon zwischen zwei Menschen nicht einfach. Hier könnten gegebenenfalls Paul Watzlawick oder Schulz von Thun helfen. Noch anspruchsvoller ist die Gestaltung der Kommunikationskanäle, die für eine wirksame Steuerung funktionieren müssen. Welche das sind, und wie leistungsfähig sie sein müssen, können wir wiederum am VSM ablesen. So stellen wir sicher, dass die Verkabelung funktioniert. In der Praxis bedeutet das die Gestaltung der Input-/Output Verbindungen zwischen Organen, Gremien, Meetings und Abteilungen verschiedener Management-Ebenen. Hier kann man sich leicht verlieren, wenn man keine Orientierung hat. Diese Orientierung fehlt üblicherweise, und so entsteht eine ungesunde Art der Selbstorganisation, in der sich die Dinge zurecht rütteln und dabei weniger die Steuerungslogik sondern mehr persönliche Interessen und historische Gründe das Design bestimmen. Die meisten Steuerungsorganisationen sind demzufolge nicht aktiv designt, sondern einfach irgendwie entstanden. Hierin liegt das vermutlich grösste Leistungsreservepotential in unseren Firmen.

 

Beyond agile

Qualität ist nicht erst seit «Total Quality Management» von grösster Bedeutung für ein Unternehmen. Sie verlagert sich aber nun zunehmen von Produkten, Services und Prozessen auf die Qualität der Entscheidungs- und Kommunikationsstruktur des Unternehmens, also auf seine Steuerung. Es wird im zunehmenden Nebel und bei zunehmender Dynamik schwierig, ohne ein hochqualitatives Steuerungs- und Kommunikationssystem auszukommen, das diesen Herausforderungen gewachsen ist. Agilität alleine genügt nicht, selbst wenn sie gut skaliert ist, weil sie sich auf die Prozesse beschränkt, und nicht auf die Steuerung des Unternehmens als Ganzes. Der Aufbau einer starken Neurologie des Unternehmens ist im Sinne der «Total Management Quality» deshalb die aktuell wichtigste Aufgabe des Top-Managements. Viability ist der nächste Schritt nach der Agility.

Hinweis: Erstveröffentlichung 11/23 im Q-Magazin

Autoren
Laura Kronen

Partner

Peter Eltze

Partner

Sebastian Bräuer

Associate Partner

Dr. Martin Pfiffner

CEO MP Consulting

Laura Kronen

Laura Kronen (1980) ist Partner bei Berylls by AlixPartners (ehemals Berylls Strategy Advisors) mit Schwerpunkt Transformation. Menschen zu bewegen und Organisationen voranzubringen begeistert sie. Mit über 18 Jahren Industrie- und Beratungserfahrung liegt ihr Fokus auf transformativen Fragestellungen im Operations Umfeld – vom Executive bis zum einzelnen Mitarbeiter, bei Herstellern und Zulieferern. Sie unterstützt ihre Kunden dabei, Strategie, Struktur und Kultur in ihrem jeweiligen Marktumfeld in Einklang zu bringen und somit ihre Resilienz zu stärken.

Bevor Laura Kronen zu Berylls kam, arbeitete sie bei PwC Strategy&, Volkswagen AG und Audi. Sie hat einen Diplomabschluss in Wirtschaftsingenieurwesen vom Karlsruher Institut für Technologie (KIT).

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Peter Eltze

Peter Eltze (1964) ist seit November 2015 als Partner bei Berylls by AlixPartners (ehemals Berylls Strategy Advisors) tätig, einer internationalen und auf die Automobilitätsindustrie spezialisierten Strategieberatung. Er ist Experte für ganzheitliche Transformationsprozesse und kann auf eine langjährige Erfahrung im Vertriebs- / Marketing- und Operations-Umfeld zurückschauen.
Peter Eltze berät seit 1994 Automobilhersteller und -zulieferer im globalen Kontext. Er verfügt über ein fundiertes Expertenwissen in den Bereichen Strategie- und Organisationsentwicklung. Zu seinen weiteren fachlichen Schwerpunkten zählen unter anderem Top Executive Coaching und der Themenkomplex rund um die Gestaltung von Führungsstrukturen und -konzepten.
Vor seinem Einstieg bei Berylls Strategy Advisors war er für MP und Malik als Mitglied der Geschäftsführung.
Im Anschluss an seine kaufmännische Ausbildung bei Siemens studierte er Verwaltungswissenschaften mit dem Schwerpunkt Managementlehre an der Uni Konstanz.

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Sebastian Bräuer
Sebastian Bräuer (1982) verstärkt Berylls by AlixPartners (ehemals Berylls Strategy Advisors) seit 2022 als Associate Partner. Er startete seine Karriere in der Beratung und leitete Projekte mit Fokus auf Operational Excellence vorrangig in der Automobilindustrie, jedoch auch im Konsumgüterbereich und der Chemieindustrie. Anschließend wechselte er zu einem deutschen OEM, bei dem er Führungsrollen in der Organisationsentwicklung, der Entwicklung digitaler Produkte und Services sowie der digitalen Produktstrategie übernahm. Bei Berylls fokussiert er auf Themen rund um das Digital Car.
Sebastian schloss den Diplom-Wirtschaftsingenieur an der Technischen Universität Dresden ab.
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AI as your strategic ally: customer-centric portfolio decisions, powered by Artificial Intelligence

Munich, December 2023

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Portfolio decisions have become increasingly complex as the pace of transformation in the automotive industry accelerates. Munich, December 2023

P

ortfolio decisions have become increasingly complex as the pace of transformation in the automotive industry accelerates. Driven by intensifying competition to meet customer demands ever more accurately, we expect this trend to continue for the foreseeable future.

A well-crafted portfolio strategy has never been more essential. Selecting the right products, services, and features that meet customer desires and needs is the key challenge in portfolio decision making, alongside managing risk, allocating resources, and maintaining agility. Could AI be the new standard for how portfolios can be managed more effectively? Think of AI as your most versatile team member, equipped for a variety of tasks. Much like a Swiss Army knife in the field of portfolio strategy. The only question is: how do you best use it?

Our approach offers a practical roadmap for using AI effectively. Not all pieces of the puzzle allowing usage of AI’s full potential are yet in place. However, the picture of how these pieces will fall into place is becoming increasingly clear. By integrating AI into portfolio strategy, a variety of benefits, such as time efficiency, deeper analytical insights, and easier scenario analyses, can be expected. The urgency to integrate AI into strategic planning cannot be emphasized enough. By doing so, not only present work and decision making can be improved, but also the groundwork for significantly greater benefits in the future is laid. Now is a crucial time to consider AI integration; those who act promptly are likely to be better positioned in an increasingly competitive market.

This article is the first in a series of articles exploring the potential of AI for portfolio strategy. As this technology is evolving fast, we look at AI with a dual lens: assessing what is already possible, and subsequently, identifying the next steps for leading automotive players towards (even more) customer-centric portfolios. In this context, this first article will focus primarily on the opportunities for automotive OEMs.

Artificial Intelligence (AI) is a broad field of computer science dedicated to developing systems capable of performing tasks that normally require human intelligence; for example, solving problems, recognizing patterns, and understanding natural language.

Large Language Models (LLMs), such as the latest GPT models, are advanced AI models trained on vast datasets and designed to understand, process, and generate human-like text based on the context provided. LLMs have revolutionized the way we interact with AI systems and bear great potential for applications like customer segmentation and – when done right – can even support strategy work.

 

Unleashing AI’s potential for customer-centric portfolio decision making:

The transformative power of AI for customer and portfolio strategy lays in the ability to inform human decision making. If complemented by a robust framework and accurate data, AI has the potential to enhance customer understanding and increase the speed of analysis in portfolio decision-making. This can lead to greater cost-efficiency compared to traditional data science methods such as advanced analytics or big data. By harnessing vast amounts of structured and unstructured data from different sources, such as customer demographics, purchasing behaviour, vehicle usage, and online interactions, AI can unlock nuanced insights about customer preferences and behaviour enabling a dynamic, real-world understanding of customers. From the discerned patterns, AI can then offer a glimpse into the future, fundamentally informing human decision-making. This granular understanding empowers automotive companies to refine their portfolio strategy with timely insights and tailor their products and services in a way that resonates with customer preferences fostering competitiveness as well as strategic, sustainable growth.

We believe that harnessing the potential of AI for portfolio strategy offers distinct key benefits for OEMs:

Authors
Malte Broxtermann

Partner

Timo Krall

Project Manager

Philipp Brandner

Consultant

Claudius Feldmann

Thesis Student

Benefit 1
Benefit 2
Benefit 3
Benefit 1

1. Dynamic customer understanding & sensing tomorrow’s landscape:

The utilization of AI as a tool for dynamic understanding of customers and market prediction can be a strategic advantage for OEMs. AI can provide timely updates on customer behaviors and needs as required, coupled with detailed segment and persona analysis. This allows automotive companies to gain comprehensive insights into their target audience's preferences and anticipate shifting demands. Through pattern identification AI can anticipate emerging market changes before they fully emerge. By this proactive detection of trends, risks, and opportunities as they emerge, OEMs are better equipped to make more effective decisions in an industry that is more dynamic than ever before.

Benefit 2
2. Aligning strategy with real-world insights:

In today’s rapidly evolving market, aligning strategy with real-world insights is crucial, and AI can play a pivotal role in this process. By comparing strategic concepts with a wealth of internal and external data, AI performs well in scenario recognition. It detects inconsistencies effectively and allows the refinement of strategies to ensure they align more closely with actual market conditions. With actionable insights, these strategies are not only robust on paper but also practical in real-world conditions.
Benefit 3

3. Empowering decision-making through human-AI synergy:
Consider AI as the perfect partner for complex analysis. When humans and AI collaborate, decision-making is supercharged. While humans bring empathy, ethical considerations, and intricate practical understanding to the table, AI ensures precision, speed, and vast data handling. Together, this partnership takes decision-making to the next level, combining the depth of human intuition with the efficiency and analytical capabilities of AI.

After exploring the key benefits and understanding the significant impact of AI, we recognize that the automotive industry is on the threshold of a new era. This leads us to these key questions:

“How do we transition from recognizing these advantages to implementing them in tangible, actionable strategies for portfolio management? How can OEMs leverage AI to not only understand but also anticipate the dynamic demands of the market?”

Operationalizing AI insights: A strategic approach to portfolio management

A clear roadmap is essential to harness the AI benefits and close the gap between AI’s potential and its practical application in portfolio management. This is where we, at Berylls, step in. As agents of operationalization, our goal is to transform abstract concepts into tangible, actionable strategies.

Our approach follows five clear steps for portfolio strategy development:

A) It begins with summarizing existing relevant aspects of corporate, functional, and business unit strategies into key statements, forming a comprehensive understanding of the strategic landscape. Where feasible, key statements are also quantified to enable more meaningful data-based analysis.

B) This is followed by a detailed analysis of the portfolio environment, which is crucial for understanding the stakeholder landscape and market trends. This analysis especially highlights the significant role of understanding customers and competitors to ensure a thorough evaluation of latest leading portfolio strategies and best practices. There is no one-size-fits-all solution, and we pay close attention to what makes a portfolio work (or fail) depending on each specific company and its target customers.

C) We then conduct a comprehensive review of the current internal portfolio in question, analyzing its composition, performance, and enablers.

D) These initial steps lay the foundation for the subsequent phases, where we identify and evaluate potential improvements to the portfolio, focusing on portfolio gaps, key levers, and scenarios for enhancement.

E) Finally, the analysis concludes with defining or updating the portfolio strategy, the setting of specific objectives, and the development of a detailed implementation roadmap.

This approach is optimized for AI integration with the first three steps (A-C) providing the relevant input for AI-supported decision making and the last two steps (D-E) involving AI to analyze all available information effectively.

Figure 1: Berylls framework for portfolio strategy

Source: Berylls Strategy Advisors

The integration of AI into portfolio strategy development represents a significant improvement. Already in the initial stages where qualitative and quantitative data is made accessible for AI, it can play a key role in improving the speed, cost efficiency and quality of strategic decision making. In later steps, AI supports in identifying data patterns, pinpointing missing data points, suggesting portfolio improvements, and preparing meetings by decision makers effectively. Moreover, this integration of AI enables a more dynamic, agile, and efficient iteration of the entire process that closely aligns with evolving market needs.

Figure 2: Berylls framework for AI-enabled portfolio strategy

Source: Berylls Strategy Advisors

An example ChatGPT case illustrating the framework can be found by clicking on this box

Output generated by current LLMs should never be used without diligent review and confidential data must not be submitted to ChatGPT. The example ChatGPT output above was created based on dummy data for a hypothetical company. This output was left completely unchanged by Berylls to help provide a realistic example of the type of quality that is feasible with the latest generation of LLMs. Replicating similar results for real applications requires access to the latest generation of LLMs that guarantees full data security. A real-world project covers drastically more inputs, analytical steps, and output than is included in the simplified example case.
Click here

An example ChatGPT case illustrating the framework can be found by clicking on this box

Output generated by current LLMs should never be used without diligent review and confidential data must not be submitted to ChatGPT. The example ChatGPT output above was created based on dummy data for a hypothetical company. This output was left completely unchanged by Berylls to help provide a realistic example of the type of quality that is feasible with the latest generation of LLMs. Replicating similar results for real applications requires access to the latest generation of LLMs that guarantees full data security. A real-world project covers drastically more inputs, analytical steps, and output than is included in the simplified example case.
Click here

Using AI to take smarter portfolio decisions by putting the customer front-and-center:

AI can demonstrate significant advantages over traditional analyzing methods. AI’s speed and adaptability enable quicker decisions, eliminate human biases, reduce manual research, and efficiently process large datasets for precise market alignment and feedback analysis. Correctly providing relevant input and gradually refining the prompts provided to AI does require expertise and AI currently cannot (and in our assessment: should not) replace human decision making in matters of strategic importance. Latest AI models, nevertheless, can be applied to accelerate analysis and help human experts take more informed and well-prepared decisions. Remarkably, an analysis as outlined in the example case linked above can be replicated in minutes, assuming an AI model comparable to the latest version used by ChatGPT has access to all essential data in a way that ensures data security. While the case linked above is hypothetical, AI indeed can create significant value once it has access to an organization’s real-world data and strategies. Berylls invites you to start working towards unlocking the full potential of AI to achieve a deep, data-driven understanding of customer behaviors, preferences, and expectations.

Engage several powerful AI flywheels and lay the foundation for success by embracing the following enablers:
1. Redefine data for AI

Quality data is the backbone of meaningful AI insights. Ensure your data is well-structured, high-quality, meaningful, and thus prepared to enable accurate results.

2. Forge AI-ready strategies

Condense your core business strategies into written key statements to make them AI-readable. This allows AI to analyze data and generate insights with your strategy in mind.

3. Human-AI decision synergy

Use AI to support your decision-making process, ensuring faster responses to dynamic market demands. Combining the strengths of human intuition with AI’s analytical capabilities creates a powerful duo, maximizing both precision and efficiency.

4. Tailor your AI approach

Different needs require different solutions. Whether it's leveraging AI for specific tasks or a more comprehensive AI-driven strategy, aligning the technology with individual organizational goals and capabilities is crucial.

Engage several powerful AI flywheels and lay the foundation for success by embracing the following enablers:

1. Redefine Data for AI

Quality data is the backbone of meaningful AI insights. Ensure your data is well-structured, high-quality, meaningful, and thus prepared to enable accurate results.

2. Forge AI-ready strategies

Condense your core business strategies into written key statements to make them AI-readable. This allows AI to analyze data and generate insights with your strategy in mind.

3. Human-AI decision synergy

Use AI to support your decision-making process, ensuring faster responses to dynamic market demands. Combining the strengths of human intuition with AI’s analytical capabilities creates a powerful duo, maximizing both precision and efficiency.

4. Tailor your AI approach

Different needs require different solutions. Whether it's leveraging AI for specific tasks or a more comprehensive AI-driven strategy, aligning the technology with individual organizational goals and capabilities is crucial.

We expect a broad spectrum of relevant use cases for applying AI to portfolio strategy. The role of AI can range from fundamental applications in stakeholder analysis to more complex scenarios in business case preparation and continuous improvement. Each use case demonstrates a specific aspect of AI’s contribution to portfolio strategy and has unique requirements for successful implementation. Different use cases can be rolled out sequentially, gradually creating more value with AI over time.

Four types of portfolio strategy use cases for AI

Low Complexity
Low Output

High Complexity
High Output

Use case I: stakeholder analysis

LLMs enable detailed profiling and analysis of customers, competitors, and other key stakeholders. Profiles can also cover the portfolios and best practices by key competitors. LLMs can provide frequent, cost-effective updates based on AI-assisted research, competitor monitoring, and customer data analysis. This speed and breadth of analysis helps improving the understanding of market expectations, behaviors, and dynamics.

Main requirements:

- Introduce LLM integration: Provide access to a Large Language Model (LLM) like ChatGPT for analyzing anonymized stakeholder data.

- Establish customer data platform: Develop a platform to manage and analyze customer data across relevant data sources, ensuring it is structured and AI-ready.

- Ensure data updates: Implement a system for continuous updating of stakeholder data to keep the analysis relevant.

Use case II: Identification of decision option

AI aids in broadening decision options for portfolio adjustments. It helps in generating new ideas for portfolio changes by using pattern recognition in the available data to identify potential opportunities and optimize strategic choices. Specifically, AI can help identify untapped potential by highlighting discrepancies of the current portfolio with available customer insights, market trends and best practices by comparable competitors.

Main requirements:

- Ensure available strategies are AI-readable: Turn the relevant aspects of current strategies into AI-readable (quantified) key statements.

- Integrate results of stakeholder analysis: Grant AI access to all relevant analysis of the impact and interests of various key stakeholders, especially by customers and competitors. This should include a thorough review of competitor portfolio best practices and strategies with clear assessments of the company-specifics that make each competitor succeed (or fail).

- Describe portfolio for AI Analysis: Submit a comprehensive documentation of the current product and service portfolio, the portfolio performance, and any relevant information about company-specific portfolio enablers. The information about enablers should include the main resources allocated across the portfolio as well as key competitive strengths (or weaknesses). Examples for relevant competitive attributes would be information about the sales and manufacturing model used, describing (e.g.) the resulting supported production speed, variety, flexibility, and cost-efficiency

Use case III: Assessment of decision options

Latest generation LLMs can assist in qualitative comparison of decision alternatives, for example by suggesting (dis)advantages for each available decision. For quantitative decisions, they can also support in preparing business cases. At the current technological level of LLMs, business cases are mainly manually crafted, with LLMs offering suggestions that require in-depth expert review for accuracy. Over time and as LLMs evolve, their suggestions become more reliable, allowing them to draft business cases based on company data. This evolution will gradually shift the human role towards systematically refining these AI-generated suggestions, leading to more complex and accurate business cases that account for scenarios involving competitor responses, thus enhancing strategic decision-making

Main requirements:

- Integrate results of stakeholder and decision option analysis: Inform the AI about the final set of decision alternatives and the related scenario assumptions. This will be the starting point for the business case. In addition, provide input to the AI with any relevant findings from the stakeholder analysis such as identified customer preferences. This information, for example, can help the AI to suggest meaningful parameters and assumptions for the business case.

- Provide access to operational and financial data: Both internal and market-related operational and financial data must be accessible for a comprehensive AI analysis. Where available, validated forecast data will improve the accuracy of the analysis.

- Involve industry experts: From start to finish, AI prompts should be engineered by industry experts to ensure relevant and accurate AI outputs.

Use case IV: Continuous improvement

AI supports the ongoing refinement of a portfolio strategy. It quickly identifies opportunities for action based on current data and ensures that the portfolio remains aligned with market trends and customer preferences, leading to continuous improvement and strategic agility.

Main requirements:

- Establish regular data updates: Ensure AI analyses are based on most current information.

- Implement feedback mechanisms: Integrate customer feedback and performance data into ongoing AI analysis.

- Develop a dynamic strategy adaption process: Allow regular strategy refinements based on AI insights.

Leveraging AI for your company… but different

The potential of AI to drastically change the way strategy work is done grows rapidly. Berylls stands ready to help you transform successfully and in a way that is uniquely centered around your customers, company, situation, and aspirations. Stepping into the AI realm can be complex; however, having a dedicated partner ensures that you harness its full potential efficiently and strategically. Berylls provides a tailored way to make AI work best for your needs, from initial assessment to final implementation. Backed by a team of experts and collaboration partners with custom software solutions at the forefront of AI advancements. Embrace the AI-driven future of automotive customer strategy and gain the AI advantage with us. The automotive industry faces a time of accelerating change, and those who can sense and adapt to these changes first as AI matures will have the upper hand.

Malte Broxtermann

Malte is an expert in the development and implementation of automotive digitization strategies.

He focuses on helping clients scale (generative) artificial intelligence to improve their bottom line across the entire automotive value chain. His primary customers are automotive manufacturers and their suppliers, especially those active in the Software-Defined-Vehicle space.

Before his time at Berylls by AlixPartners (formerly Berylls Strategy Advisors), he advised leading North American utility companies. Prior to that, he saved lives as emergency medical technician. Malte holds master’s degrees in economics from Maastricht University and Queen’s University in Canada.

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Automotive Software’s Next Challenge Is Procurement – And It Needs to Be Addressed Today

Munich, November 2023

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Automotive Software’s Next Challenge Is Procurement – And It Needs to Be Addressed Today Munich, November 2023

T

he structured and linear procurement model of the past must give way to a new collaborative approach. 

Automakers need to adapt their procurement systematics and acquire new skills in order to source software successfully.

Earlier this year, Mercedes-Benz announced it would no longer be offering a proprietary automotive navigation and map system in favor of collaborating with Google. This signaled a significant change in the company’s software and procurement strategy. The German OEM was effectively announcing that developing, running, and maintaining core elements of its vehicle software stack required new supplier relationships in order to stay competitive with other car manufacturers – including collaboration with companies from non-automotive sectors.

Today, an estimated 73% of value creation in automotive R&D is hardware-related, but before long, the majority of value will be delivered by the software running on it. We can already identify some successful frontrunners today like Tesla and new entrants from China.

In recent years, OEMs have realized that they do not possess the in-house capabilities and resources to develop a full software stack including E/E architectures, underlying operating systems, and consumer-facing applications and services. BMW’s Senior Vice President of Electronics and Software Christoph Grote recently said: “It is completely unrealistic to build almost all software components yourself as a car manufacturer. Those who do so isolate themselves.”

However, the balance of power is also shifting. Large tech companies like Apple, Google, Tencent, and Huawei become essential contributors to software-defined vehicles. Driven by high customer expectations for the standardized integration of their platforms and services across car brands, the bargaining power of OEMs is steadily decreasing.

Consequently, OEMs needed to learn that while in the past, they were in the position to dictate a customer/supplier collaboration with Tier-1 and Tier-2 suppliers, this role may be subject to change in the era of the software-defined vehicle.

Pricing stands as the most potent lever for increasing profitability within the automotive sector. Consequently, it should take center stage for all Original Equipment Manufacturers (OEMs). However, it’s essential to recognize that Revenue Management extends beyond Pricing. It involves a strategic business practice adopted by companies to maximize their revenue and profitability through the optimization of product or service pricing. This discipline entails the application of diverse pricing strategies, data analysis, and forecasting techniques to make informed decisions about price setting, resource allocation, and capacity management. The primary components are depicted in the chart below. Pricing emerges as the most significant lever for enhancing profitability, making it of utmost importance for top management.

A new collaborative and flexible software procurement framework is needed

This significant role and power shift implies that OEMs will have to source key elements of their vehicle software externally while at the same time ensuring state-of-the-art integration into their vehicles in order to maintain a competitive edge. The traditional “design-bid-build” model, which is characterized by highly specified requirements, strict cost discipline, and high-volume orders, is unlikely to work in this case.

A new collaborative and flexible software procurement framework for design, development, and delivery is needed to enable co-development and partnerships. You cannot plan software development efforts years in advance. As a result, the framework must reflect the needs of the fast-moving and fast-changing nature of software projects where scope, timeline, and technology change more frequently than in classical procurement processes. This will require both internal empowerment and new evaluation criteria to assess software partners.

Figure: Software Procurement is different

Source: Berylls Strategy Advisors

In terms of internal empowerment at OEMs, we have identified four success factors:

  • Eye-level collaboration: The classic relationship between an OEM and its suppliers is a hierarchical one in which the OEM sets targets and directions and makes the important decisions. If a project goes wrong, many OEMs have specialized task force teams that will “invade” the supplier and take over operations. Due to the existing lack of software competencies at OEMs and the power of large tech providers, this approach will not work for many software projects. Software collaboration demands shared beliefs and a strategy underlying a joint approach toward the development of software products. This is why our first success factor is “eye-level collaboration.” This means that shared responsibility allows each party to contribute their unique expertise and capabilities while sharing risks related to technology, market, and regulatory compliance. Procurement must take this position on the OEM side and constantly steer this relationship with supplier management. This establishes the foundation for more flexible requirements and target setting as well as new contract and business models.

 

  • Flexible requirements and target setting: The playing field of software-defined products needs a completely different approach to target setting and documentation. Moving away from rigid specification sheets and towards flexible requirements will allow for changes and adaptations in the scope, timeline, and deliverables of the software. This approach will benefit from agile development methodologies, which emphasize iterative and incremental delivery of software and may include performance metrics that are tied to the achievement of project milestones and goals (e.g., achievement of a defined number of story points), rather than strict adherence to predefined functional requirements. Challenges arising out of this “softer” target agreement must also be addressed through new contract and business models.

 

  • New contract and business models: Traditionally, the classic contract model between an OEM and a supplier has focused on two parameters – unit price and development cost. Software was usually included in the (one-off) unit price of the hardware component. Today, however, new business models are needed for continuously developed and delivered software components. OEMs may need to evolve beyond a software license model based on production volume, irrespective of software usage intensity, and consider time-/usage-based payment models that better take into account ongoing supplier development and maintenance costs. Indeed, we predict that software-as-a-service business models will become the new normal. A further step is the participation of software suppliers in vehicle or function sales (e.g., autonomous driving functionality). This business model is applicable, especially in terms of long-term strategic partnerships and cooperation.

 

  • Software assessment competence: Procurement needs to increase its ability to understand and evaluate software and deepen its connection to hardware. This includes knowledge of the overall software architecture with all its dependencies, common programming languages, software development methods, and systematic procedures for the management of critical projects. Therefore, procurement needs to establish a close relationship to development departments in order to build up this understanding in addition to its commercial competence. This competence is crucial in order for procurement to remain a neutral partner between the supplier and the OEM development departments. It is the foundation for negotiation in the initiation phase and the basis for a successful partnership.

In addition to internal empowerment, OEMs should consider four evaluation criteria when assessing potential software partners:

  • Software delivery model: Compelling software products are the result of efficient development, rigorous testing, feedback loops, and appropriate adjustments throughout the product lifecycle. Suppliers need to offer a software delivery model that implements new requirements fast in agile teams using shorter release cycles and DevOps methods. Short feedback loops within the development value chain, from the OEM to the supplier, are a prerequisite for shortening time-to-market while maintaining quality. This enables continuous development, refinement, and delivery of software components “as-a-service” over the entire lifecycle. It stands in contrast to the traditional, SOP-focused delivery models used for hardware projects.

 

  • Software flexibility and efficiency: A modern vehicle with its increasingly centralized computer architecture processes hundreds of millions of lines of software code – it is now estimated that a typical electric vehicle uses four times as much code as a commercial jetliner. Even though computing power is continuously increasing, the complexity of porting software to multiple platforms makes the flexibility and efficiency of acquired software a strategic issue. Buyers and suppliers must move from developing static, monolithic software tailored to specific hardware to prioritizing a flexible and modular cross-domain software portfolio.

 

  • Automotive software steering competence: Nowadays, organization in agile teams to develop and maintain software is pretty much standard. But the implementation of these practices varies vastly across organizations and hierarchies. Currently, there is no global blueprint on how car software is developed and steered. The supplier’s management team in particular needs to be able to assess and handle the steering of software projects and the interfaces to the OEMs as part of automotive systems engineering. This includes efficient decision-making, prioritization, harmonization with hardware engineering, and communication in a much more volatile setup than with traditional hardware projects. And, if a project turns critical, the ability to manage overarching task forces up to and including the highest levels of corporate leadership is crucial.

Berylls Research

How to not mess up software projects
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  • Processes, methods, and tools: As future automotive software will consist of both prepackaged on-board components and ad-hoc additive components, this combination will require holistic underlying processes, methods, and tools. When choosing a supplier, the consistent use of PMT across the value chain needs to be considered to ensure collaboration efficiency. One special area of focus is the requirement management process that needs to be standardized via tools and aligned processes.

The big shift

The move to software-defined vehicles is transforming the automotive procurement landscape and requires procurement professionals to adapt their practices in order to effectively source and manage software suppliers.

This means that the process and the principles of procurement must reflect the business logic of software, which is closer to signing a service contract than buying a product. To establish an innovative and future-proof software procurement organization, OEMs will need a deeper understanding of software development, supplier management, industry standards and regulations, intellectual property, and talent management. The key is self-empowerment: OEMs need to develop the necessary skillset while at the same time creating flexible and resilient organizations to manage software supplier relationships that have broken free of the “captive supplier” model and more closely resemble collaborations and joint ventures. Markdowns will not be the dominant measurement for success of procurement.

This shift will not be easy, but the software-defined automotive future demands it.

Author
Sebastian Bräuer

Associate Partner

Sebastian Bräuer
Sebastian Bräuer (1982) joined Berylls by AlixPartners (formerly Berylls Strategy Advisors) in 2022 as Associate Partner. He started his career in consulting where he led and supported assignments with focus on operational excellence programs primarily in automotive but also in consumer goods and chemicals. Later Sebastian worked for an German OEM in leadership roles regarding organizational development, digital product offering and digital car strategy. At Berylls Sebastian focuses on topics regarding Digital Car.
Sebastian graduated in economics and engineering at the Technical University of Dresden.
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Navigating the automotive revolution: Insights into the future of automotive operating systems

Munich, March 2024

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Navigating the Automotive revolution: Insights into the fututre of automotive operating systems
Munich, November 2023

I

n the landscape of the automotive industry, an enormous transformation is underway. The very essence of vehicles is being redefined, not under the hood, but in lines of code and algorithms.

Automotive Operating Systems (AOS) have emerged as the catalysts for this revolution, promising a future where software dictates the driving experience. In our in-depth survey conducted among industry experts spanning OEMs, Tier-1 suppliers, Big Tech players, and engineering service providers, a tapestry of insights has been woven, illuminating the path forward.

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Navigating the automotive revolution: Insights into the future of automotive operating systems
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Author
Dr. Jürgen Simon

Associate Partner

Sebastian Böswald

Associate Partner

Felix Günther

Consultant

Dr. Jürgen Simon

Dr. Juergen Simon (1986) is Associate Partner at Berylls by AlixPartners (formerly Berylls Strategy Advisors), an international strategy consultancy specializing in the automotive industry. He is an expert in sales and corporate strategies as well as M&A and can look back on many years of consulting experience.
Dr. Juergen Simon has been advising automotive manufacturers and suppliers since 2011 and has in-depth expert knowledge in the areas of holistic strategy development, business models and commercial due diligence. He also focuses on market entry strategies and topics related to the „Software Defined Vehicle“.
Prior to joining Berylls Strategy Advisors, he worked as senior consultant at the Droege Group, a consulting and investment firm.
As a graduate economist from the University of Hohenheim, he completed his doctorate at the Institute of Management at the Karlsruhe Institute of Technology (KIT) before joining Berylls.

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Pressemitteilung: Berylls Strategy Advisors und Rechtsexperten von Synthetic Law gehen strategische Partnerschaft ein

München, November 2023

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Pressemitteilung: KOMBINIERTES KNOW-HOW FÜR DIE DIGITALE TRANSFORMATION

München, November 2023
K

OMBINIERTES KNOW-HOW FÜR DIE DIGITALE TRANSFORMATION 

  • Kombination von Expertise in der Mobilitätsbranche mit hochaktuellem juristischem Fachwissen
  • Zukunft der Mobilität wirft komplexe juristische Herausforderungen auf, Synthetic Law ist in diesem Bereich bestens aufgestellt und idealer Partner für Berylls
  • Noch bessere Unterstützung der Berylls Kunden bei Datenschutz, Compliance und Data-Governance
  • Berylls wappnet sich und damit seine Kunden für künftige rechtliche Auswirkungen, die durch anstehende Datenschutzvorschriften und verschärfte Cybersicherheitsanforderungen entstehen

Jetzt die gesamte Pressemitteilung herunterladen!

Berylls Pressemitteilung
Pressemitteilung: Berylls Strategy Advisors und Rechtsexperten von Synthetic Law gehen strategische Partnerschaft ein
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Christian Kaiser

Christian Kaiser (1978) is Partner and Head of IT at Berylls by AlixPartners (formerly Berylls Strategy Advisors), specialising in software and digitalisation. He started his career at DaimlerChrysler AG in 1997 and has 27 years of industry and consulting experience in the automotive sector and has worked as CDO, CIO and CEO in various international OEMs and software companies.
Mr Kaiser has also held roles as chairman or board member of various companies in the software industry.
At Berylls, he specialises in the areas of software defined vehicles, software development, digital business models, digital operating models and software task forces.
Christian holds a degree in ‘Business Economist (EBW)’ from the University of Applied Sciences Würzburg.

contact About Berylls

Accelerating Automotive R&D: Strategies and approaches to maximize efficiency and speed

Munich, November 2023

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Accelerating Automotive R&D: Strategies and approaches to maximize efficiency and speed

Munich, November 2022
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utomotive OEMs face challenges in sustaining profitability due to escalating product complexity, which in turn results in heightened research and development expenditures.

Five improvement strategies can help not only to reduce R&D expenditures but also increase innovation cycles.

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Berylls Insight
Accelerating Automotive R&D: Strategies and approaches to maximize efficiency and speed
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Author
Sebastian Böswald

Associate Partner

Sebastian Böswald

Sebastian Böswald (1991) joined Berylls by AlixPartners (formerly Berylls Strategy Advisors) in April 2021. He is an Associate Partner and an expert in both transformation and operations. Over the last decade, he has focused his work on strategy and organizational design, as well as on two megatrends shaping the automotive industry: software-defined vehicles and CASE (connected, autonomous, shared, and electrified mobility). In these fields, he has advised our global OEM clients as well as Tier-1 suppliers and tech companies.

Prior to joining Berylls, he worked for PwC Strategy& and started his career at BMW as a project manager for product strategy and digital charging services.

He received a Bachelor of Science in Automotive Computer Science at the Technical University of Ingolstadt as well as a Master of Science in Management from the Technical University of Munich.

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Middle East Consumer Study

München, Oktober 2024

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Pressemitteilung: KI beschleunigt und vereinfacht den Autokaufprozess

München, Oktober 2024
B

erylls by AlixPartners schließt sich mit dem KI-Unternehmen FULLY AI zusammen, um einen virtuellen, KI-basierten Assistenten zu entwickeln.

München, 30. September 2024 – Die Berylls by AlixPartners Marketing und Sales-Experten rund um Jonas Wagner, geben eine Partnerschaft mit FULLY AI bekannt. Das Unternehmen, mit engen Beziehungen zur Tech-Szene des Silicon Valley, entwickelt zukunftsweisende KI-Lösungen nach höchsten Standards in Bezug auf Datenqualität und -sicherheit. Gemeinsam wollen die Partner die Automobilbranche grundlegend verändern und setzen in ihrer Zusammenarbeit bei der Customer Journey an.

Die gesamte Pressmitteilung ist zum Download verfügbar.

Berylls Pressemitteilung
Pressemitteilung: KI beschleunigt und vereinfacht den Autokaufprozess
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Ansprechpartner
Christian Bangemann

Pressesprecher

Jonas Wagner

Jonas Wagner, Jahrgang 1978, ist Partner und Geschäftsführer von Berylls by AlixPartners (ehemals Berylls Mad Media). Mit etwa 20 Jahren Beratungserfahrung in der Automobilindustrie ist Jonas ein vertrauenswürdiger Berater für das Top-Management, der sich auf Strategie, Organisationsentwicklung und große Transformationsprojekte für führende, globale Automobilhersteller spezialisiert hat.

Jonas ist ein Experte darin, Automobilunternehmen durch die Transformation ihrer Vertriebs- und Marketingfunktionen zu führen. Er hat eine nachweisliche Erfolgsbilanz in der Digitalisierung von Customer Journeys zur Verbesserung der Kundenerlebnisses, des Vertriebserfolges und der Kundenbindung. Seine Expertise umfasst die Einführung und Umsetzung neuer Vertriebs- und Geschäftsmodelle, sowie den Aufbau datengetriebener Vertriebs- und Marketingorganisationen zur Performance- und Effizienzsteigerung. Sein Expertise umfasst sämtliche On- und Offline Touchpoints, sowie alle Geschäftsbereiche, einschließlich Vertrieb, After-Sales, Finanzdienstleistungen sowie neue Geschäftsmodelle.

Vor seinem Einstieg bei Berylls war Jonas Berater der Automobil-Practise von Oliver Wyman, wo er mit globalen Automobilherstellern zusammenarbeitete und deren strategische Initiativen und Operations optimierte.

Jonas hat einen Abschluss in Betriebswirtschaftslehre von der Aarhus School of Business und der Universität Mannheim, mit einem Schwerpunkt auf Internationalem Management, Marketing und Controlling. Durch die Kombination von tiefem Branchenwissen und strategischem Scharfsinn ist Jonas Wagner ein wertvoller Partner für Manager im Automobilsektor, die komplexe Transformationen meistern.

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