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STUDY

THE IDEA OF “DIGITAL TRANSFORMATION” IS A HOT TOPIC.

The automotive industry, too, is in a process of structural change. Vehicle connectivity, automated or even driverless cars, shared mobility, big data and alternative drive systems are forcing established manufacturers and suppliers to undergo a process of reorientation.
A study by Berylls Strategy Advisors and The Culture Institute shows that small and medium-sized suppliers are in danger of being marginalized. The companies surveyed had in many cases a traditional culture, and were therefore opposed to demands such as agility, shallow hierarchies and self-managed teams. Moreover, the culture that has been practiced until now makes it almost impossible to pursue trial-and-error strategies and short development cycles, with the close integration of external partners.
However, all these factors are demanded by digitalization, and have a direct influence on strategy, structures and processes, skills as well as the company culture. The study results are used to make recommendations intended to show SMEs how to retain their successful position while also expanding for the future.

EXISTING COMPANY CULTURE IS OFTEN INCOMPATIBLE WITH DIGITALIZATION.

The extremely multifaceted drivers of digitalization, such as autonomous driving, shared mobility services, and connectivity of the vehicle and infrastructure, alternative drives and “big data” are very different as regards their relevance and urgency for companies in the supplier industry.
It is therefore necessary to examine them thoroughly in order to be able to exploit the opportunities, identify risks and take appropriate countermeasures as early as possible. Peter Eltze, expert in transformation and cultural management at Berylls Strategy Advisors comments: “Our clients increasingly face the question of how they can master the complexity of digitalization given their existing company culture.”
Now, together with The Culture Institute in Zurich, Berylls Strategy Advisors has investigated the cultural background to this dilemma for approximately 30 small and medium-sized automotive suppliers from the German-speaking world. The participants in the survey are top managers from companies with between 1,000 and 10,000 employees.

DIGITALIZATION EXPERTISE AMONG AUTOMOTIVE SUPPLIERS.

NO DIGITALIZATION MASTER PLAN – STILL TOO MUCH FOCUS ON PROCESS AND PRODUCT OPTIMIZATION.

Although the managers in the survey recognize how relevant and urgent the issue of digitalization is, hardly any company has a master plan for digitalization. There are only a few vague signs of what meaningful assignment must be undertaken in future, and to what extent digitalization is expected to change the company.
In the majority of cases, it is still an open question as to whether a company can continue to exist as a system and component supplier, or whether it must enter into new business models. Many are not able to identify and utilize the opportunities that result from the use of “big data.” The SMEs’ goal is therefore to focus predominantly on process and cost optimization.
Consequently there is little understanding of the opportunities provided by the new product / service offerings or digital business models – companies more or less ignore the potential offered for new sources of revenue. Besides inappropriate managerial and organizational structures, insufficient financial resources and a lack of available skills for the digital world, the existing company culture is the most widely cited reason why there is no master plan, and therefore no overarching engagement with digitalization.
Almost all the respondents are aware of how the company culture impacts the success of their company, and are intensively engaged with the issue of culture. Management discusses and reflects on how it perceives the company culture, formulates the values, norms and fundamental convictions for leadership and collaboration, and in many cases trains its employees in how to deal with these.

OPPORTUNITIES AND RISKS OF DIGITALIZATION.

CULTURAL RECOMMENDATIONS FOR ACTION FOR DIGITAL TRANSFORMATION.

But how can these cultural characteristics be built up? Berylls Strategy Advisors and The Culture Institute recommend a pragmatic approach, and emphasize the importance of systemic and systematic management. Managers have a decisive influence on the development of the culture within the company. “However, it is by no means a question of reinventing management. Management must be adapted to the specific needs of organizational development. Agility, for example, is not only a method, but an attitude.
In addition, it is necessary to bear cultural perspectives in mind when working out the digital strategy. Besides the strategic and structural initiatives, digital transformation also first and foremost demands cultural initiatives. It is helpful to create unambiguous responsibilities and to clearly assign them to the top layer of management for successful implementation of company-wide, centrally controlled measures for digital transformation.
However, the development of an all-embracing master plan for digital transformation must be at the top of the decision makers’ agenda. It is necessary to take into account the potentials and risks of digitalization in order to draw the correct conclusions for the company. Closing knowledge gaps, for example regarding “big data,” in the long term, requires integrating external experts. However, since these sources are not always compatible with the existing cultural patterns, the organization’s digital mindset must be developed accordingly. One pillar of this is to make suitable training available. The values that the company urgently needs for the digital transformation should be considered when making important HR decisions, such as recruitment and promotions. Occasionally they must accept disruptions to established patterns, or even deliberately introduced them.
DIALOG

PETER ELTZE

Partner
T +49-89-710 410 40-0
info@berylls.com

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