ardly a day goes by when we are not confronted with the concept of “digital transformation” and the car industry is no exception. Structural change is taking place with ever-increasing speed. Manufacturers and suppliers are now faced with changes such as vehicle networking, highly automated or even autonomous vehicles, new mobility products, Big Data, and alternative drive systems. As a result, they are having to reorganize the business model they have had in place for decades.
Digitalization has the potential to shake up value chains and distribution, with a considerable impact. However, companies can improve their existing positioning, and develop new business models, by introducing product and process innovations:
The multifaceted drivers of digitalization in industrial manufacturing, including the Internet of Things, Industry 4.0, mobile devices and Big Data, affect companies in the supplier industry with varying degrees of relevance and urgency. This means that an in-depth discussion about the importance of digital transformation becomes necessary in every company, in order to make use of opportunities and identify risks as early as possible and be able to take the relevant countermeasures.
In this context, organizations are increasingly asking themselves to what degree the existing company culture allows for managing high-complexity digitalization. Small and medium-sized suppliers are on the verge of missing the boat here. Company culture is often still organized along traditional lines and can work against the need for agility, flat hierarchies and self-managed teams in digital transformation projects. Even “trial and error” methods and short development cycles with the close involvement of external partners are often difficult to carry out within a long-established culture.
Although the relevance and urgency of digitalization is accepted, hardly any companies have a real masterplan for carrying it out. It is not immediately apparent what the future direction of the business should be and to what extent digitalization is going to change the company. The question that often remains is whether the company can continue to exist as a component or system supplier or whether an entirely new business model must be developed. For many companies it is simply not possible to identify and use the opportunities that are arising, for example from the application of Big Data. For this reason many medium-sized companies focus primarily on process and cost optimization instead. The fact that digitalization can offer direct customer access is often overlooked.
As a result, there is a lack of understanding about the opportunities created by new products, services or digital business models, and the existing potential for new sources of revenue is more or less ignored. Many suppliers’ financial resources are also insufficient to meet the cost of digital transformation and there is a shortage of people with the right digital skills.
Despite these factors, existing company culture is often cited as the most frequent reason for a non-existent masterplan and a lack of comprehensive discussion about digitalization.
Berylls’ Company Culture 4.0 survey shows company culture to be a significant success factor and many suppliers are indeed working intensively on that: management teams discuss and reflect on their perceptions of culture, describe values, norms and basic beliefs about leadership and co-operation, and in many cases train their staff in how to deal with these. So why is commitment not leading to a comprehensive discussion about digitalization?
Berylls believes the following factors are behind the lack of progress:
To achieve success, the necessary culture patterns of digital transformation need to be identified to define the right measures to be taken for organizational development. Is the existing company culture a help or a hindrance when it comes to the complex demands of digitalization? The company cultures of many organizations show a lack courage to take new pathways, are closed to innovative ideas, favor a culture of debate rather than a pursuit of harmony, and lack the strength to implement change in the face of resistance. Courage as a quality is often dismissed as recklessness and determination as obstinacy. But both of these are attributes without which a fundamental change cannot be tackled.
This is why Berylls Strategy Advisors has established a set of recommendations for adapting company culture to meet the needs of digitalization – for medium-sized companies in particular – without losing the elements that make them successful right now. Our recommendations are continually being redeveloped, with the help of company culture experts and collaboration partners:
Peter Eltze (1964) joined 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.