The world’s largest automobile manufacturer is in the middle of the greatest transformation in its history. How the Volkswagen Group is implementing the transformation step by step.
Volkswagen is a unique group: large and complex – a major management task. More than eleven million vehicles per year, twelve brands, 670,000 employees worldwide, over 50 percent of the shares are family-owned, 20 percent belong to the state of Lower Saxony, high influence of the trade union, partly different interests of the shareholders. The management is conditioned to internal competition, shaped by Ferdinand Piëch.
The size, history, value of the brands and also the outstanding skills in classic automotive engineering do not protect, but can even become a burden in a time of dramatic change. The world’s largest automobile manufacturer is in the midst of the greatest transformation in economic history. I see it as my task at VW to lead this tanker successfully into the future. Today, the Group’s passenger car fleet accounts for around one percent of global CO2 emissions. For this reason alone, we bear a special responsibility, especially in combating the climate crisis.
The change will take place over the next ten years, with or without Volkswagen. Climate change requires the electrification of our powertrains. Progress in artificial intelligence, particularly in situational awareness, will soon make it possible to replace the driver with a learning, global neural network. Individual mobility will thus become sustainable, safe and comfortable.
Volkswagen must change: from a collection of valuable brands, a manufacturer of fascinating combustion-engine driven products that inspire customers with the highest level of engineering, to a digital company that reliably operates millions of mobility devices worldwide, always stays in touch with customers and constantly improves services, comfort and safety.
This is the crucial question for me as CEO, the board team and the executives who recognize the situation: How do we get the Group and all its stakeholders to rethink, radically re-prioritize and learn new skills despite current successes? We are not a start-up; we have structures and processes that have grown over decades. Many are encrusted and complicated. All this resistance should spur us on and provide us with additional motivation.
What we did not have when I took office five years ago is time. Back then, Volkswagen was late with electrification and, above all, digitization. We had to radically rethink the strategy, set a new course. A strategy can only be implemented on a broad front if it is supported by all managers and stakeholders.
In the past, I have already used an effective management tool in such situations: Professor Fredmund Malik’s “Syntegration“. It enables you to penetrate complicated issues in large and complex companies with the key stakeholders and to work on them efficiently.
Launch pad into the automotive future
In my opinion, Professor Malik’s method is unique and effective. Two examples from the VW Group illustrate this: Directly after I took up my position, we organized the first strategy workshop for the VW Passenger Cars brand in the fall of 2015. The diesel scandal was an amplifier and accelerator of the change process.
In addition to billions of dollars in charges in connection with the diesel manipulations, there were serious problems in the core VW Passenger Cars brand: the vehicle portfolio was outdated in regions like Latin America, but in others like the USA it did not fit. The return on investment was less than two percent, not enough to refinance current business, let alone make important investments in the future.
The workshop was attended by 42 top executives of the VW brand. The Malik method always starts with an opening question. In this case: “What do we need to do visibly in the next three to six months to use our crisis as a launch pad for our new automotive future? To answer this question in the best possible way, the managers were networked in different ways. Malik says that his compositions optimally unleash the collective intelligence of the participants. In this way, we don’t arrive at the lowest common denominator – as is the case with conventional methods – but at the optimal common result.
I have seldom experienced that in retrospect so many of the measures developed were actually implemented as in this case. A decisive one: Instead of the MQB construction kit, the technical pillar of the Group’s passenger car business, a separate electric platform was to be created to fully exploit the advantages of e-mobility. The result: next year alone, ten models from five brands will be launched on the market based on our Modular E-Drive (MEB) kit. A new electronics architecture – updatable and with direct customer access – has also been developed and is now starting up with the e-cars.
In Wolfsburg, hierarchies were polished and decentralized. The regions were given considerably more room for maneuver to make decisions faster and closer to the market. Through the Pact for the Future with the employee representatives, a reduction in staff was agreed without compulsory redundancies.
This enabled us to achieve a sustained reduction in fixed costs. The strategy was divided into three time periods. We are just completing the first one, with the return to sustained profitability of the core brand and the launch of the first electric, fully networked and sustainable Volkswagen, the ID.3.
The transformation is being accelerated by more ambitious climate targets. The competition from IT-driven companies is also setting new standards. That’s why we need to readjust our corporate strategy to keep pace with competitors like Tesla. In April 2020, we organized a second workshop with Professor Malik. It brought together 31 top executives from Volkswagen, Audi and Porsche for “Mission T”. The question was how we can catch up with Tesla – a company that focuses exclusively on the future without traditional business. And which is part of an ecosystem on the west coast of the USA shaped by software capabilities, technology focus and risk culture.
How to technically catch up with Tesla?
This time the opening question was: “What do we need to achieve in the next six months to technically catch up with Tesla by 2024? The results: further expansion of software expertise, bundling of forces at Audi for software and hardware, and the “Artemis” project with an organization outside the Group structures. When we introduced the MEB, we realized that we could not achieve the speed and impact within our structures to keep up with a risk-taking start-up like Tesla in terms of development speed.
I am sure that we will again be able to bring the agreements from the Malik workshop to fruition. The impact and significance of the method should not be underestimated, because it creates commitment – clear commitments. With Artemis and the software organization, we are laying a foundation on which digital technology is developed for the entire Group. The cars become a “digital device”.
I am firmly convinced that we will succeed in this transformation. Despite Volkswagen’s strong corporate culture. When I took office in Wolfsburg, I had firmly resolved to change the VW system. That means breaking up old, encrusted structures and making the company more agile and modern. Together with many companions with the same level of motivation, I succeeded in doing this in many places, but not in some places, especially not yet at our corporate headquarters in Wolfsburg.
With my occasionally confrontational manner, which addresses grievances and the need for action in a very concrete way, I have changed a lot in my professional career so far and achieved good results. I have questioned my management style and adapted it for Wolfsburg in order to achieve the best results.
After all, it pays to lead the way in change. The future of the car will be exciting and fascinating – in about ten years we will be able to drive autonomously. New business models will emerge. The Malik method will be used to identify the business models on which we at Volkswagen will focus. The most valuable company in the world will be a mobility company again in ten years’ time.
Source: Handelsblatt.de
