Six transformation secrets for auto industry leaders

Show humility and respect toward the company’s history and values

Successful transformations actively engage with the past and uncover how the company’s ability to change has shaped it to date. The lead questions to be kept in mind are: where have we come from? Why is it like that? Which patterns can be broken and which ones not? Leaders should keep in mind that there are almost always good reasons why company structures are as they are and why people behave like they do.

By recognizing current structures and cultural patterns, and treating them with respect, leaders can evaluate where there is a need for action and where radical changes cannot be initiated overnight.

Convergence of strategy and organizational development are essential

Integrated strategy and organizational development involves combining the conceptual perspective of strategic thinking and acting with the organizational perspective and continuously harmonizing them. This is where we talk about ensuring convergence: the elements of strategy, structure and culture have to be continually examined for consistency and coherence, and the effects of change have to be monitored so that the whole system is optimized rather than only individual elements of it.

When it comes to transformation, the translation of strategy into organizational development such as organizational structure, monitoring systems, IT infrastructure and Human Resources should be examined and adapted just as leadership and culture should. This should be carried out very quickly after the finalization of the strategic target picture, so that a transformation concept for changing the relevant elements can be directly developed and implemented.

All too often, organizations are adapted after too much time has elapsed, and momentum for supporting the transformation cannot be used. Even if the idea of convergence is not new, in practice it is very challenging to implement because it requires a lot of cooperation and alignment between the relevant functions in the organization. There are usually no identifiable organizational tick boxes for elements such as culture and leadership. Setting organizational requirements such as re-interpreting the role of organizational development and investing strategic and organizational functions with creative and joint responsibility has proven to be helpful. This central function oversees convergence during the transformation and works closely with individual functions.

Set and follow your transformation plan consistently and purposefully

The planning component of a transformation is designed to deliver consistent implementation. From the outset, it is essential to convey the transformation plan in a clear and structured way and to set up a firm performance framework which is closely monitored by strict milestone tracking and impact assessment.

Of course, even with the best planning in the world, there is no protection against unfavourable and unforeseen outside conditions, as the events of the past three years have made clear. Leaders must therefore remain extremely alert to changes in the environment. Jim Collins even speaks of a “planning paranoia”, which can be converted into productive action.

The secret is to stick to planned objectives, not underperforming but at the same time not striving for even further-reaching results that go beyond the scope of the current transformation. This is because even if it seems tempting to overdo the speed, scope, and other elements, organizations cannot usually keep this up over the long run and the positive momentum behind the transformation is lost. For the same reason, it is important during the planning phase to scrutinize transformation plans closely and examine their feasibility for the organization.

Create the transformation team from a balanced mix of experienced and younger managers

The core transformation team plays a key role in the success of the overall initiative, and it is essential for top management to choose the members very carefully. In our experience, the ideal team is a mix of experienced managers and younger managers who are keen for change. Experienced managers are usually adept at assessing feasibility, practicability and potential risks. At the same time, there is also a need for adventurous and courageous input from those who see the situation with fresh eyes.

Whereas experienced people in the final stages of their career have little to lose and are in a good position to hand over the new course of action to the next generation, the most dangerous group for the success of the transformation is those who have achieved a degree of seniority and stand to lose it through the changes.

The importance of communicating in an empathic way therefore cannot be underestimated. Conceptual skills are in themselves not sufficient for a successful implementation of a transformation; rather managers are needed who lead staff with empathy and who radiate stability and security in uncertainty.

Make sure that every staff member recognizes their contribution to the transformation

Management needs to not only fully understand and steer the transformation with all its interdependencies; they also have to ensure that all members of staff can make a contribution. Leaders should ensure from the start that people can understand what the transformation purpose means for their role, discover how they can contribute to the purpose, and take ownership of it. Staff should understand why the transformation is the right thing to do, what contribution they are making, and what every individual needs to do to help the transformation take place successfully. If these elements are in place, the chances of a successful transformation will be considerably greater.