Implementing organisational ambidexterity for a successful transformation of the automotive supply industry

Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Detroit (2022)

Résumé:

  1. Purpose:

The automotive industry is currently facing the greatest transition of its more than 100-year-old history (Borgstedt et al., 2015). Megatrends such as electrification, autonomous driving, digitalisation, and new mobility concepts pose unprecedented challenges for the industry. In the context of the current COVID-19 pandemic, digitalisation is accelerating and changes in customer behaviour are observable (Klein & Todesco, 2021). In addition, other socio-economic factors such as deglobalisation through protectionist and nationalist policies have an impact on the industry (Lazard & Roland Berger, 2020).

The relevance of this topic becomes even more dominant when the number of jobs in the industry are considered. In Germany alone, around 817,000 people worked in the automotive industry in 2020 (Statistisches Bundesamt, 2021). Of which 310,000 were active in the automotive supplier industry (VDA, 2020).

Especially automotive suppliers are severely affected by current transformation trends as suppliers account for around 75% of value added to the automotive value chain (VDA, 2020). Automotive suppliers with a strong focus on the Internal Combustion Engine (ICE) face substitution risks that many components they produce are no longer needed (Hans-Böckler-Stiftung, 2012). This is the result of the declining global vehicle production (OICA, 2021) and the diminishing core business with ICE’s due to the electrification of the propulsion system (ACEA, 2021). At the same time, suppliers must make considerable upfront investments, for example in electrification, which can exceed the company’s own financial strength and technical capabilities (Lazard & Roland Berger, 2020).

To remain relevant in this dynamic market environment and prevail against international competitors, suppliers must actively drive transformation by making their declining core business more resilient while at the same time seizing new growth opportunities in and outside the automotive sector. Suppliers must therefore manage the balancing act between existing core business and new growth areas to successfully survive and shape the transformation process (Baltes & Freyth, 2017). This “organisational ambidexterity” (Tushman & O’Reilly, 1996; Raisch & Birkinshaw, 2008) places new demands on leadership and the workforce and requires a rethinking of the needed competencies.

To analyse the implications of organisational ambidexterity for the transformation process with specific focus on the competences required of leaders and the workforce, the article aims to answer the following research questions:

  • Which role does organisational ambidexterity play and what recommendations for action can be derived?
  • Which competencies are required of leadership and the workforce for a successful transformation process?
  • How can leadership determine whether the transformation (especially of the workforce) is successful or not?

 

  1. Methodology:

Based on a theoretical analysis of ambidexterity as well as competence management for the transformation in the automotive supplier industry, expert interviews are conducted with top executives of automotive suppliers, consultants, ambidexterity experts, and employee representatives. The emphasis is placed on the German automotive supplier industry because of its very competitive and dynamic environment and as there are no published data about this topic for this segment yet. The experts interviewed include top level managers of automotive suppliers such as Bosch, MAHLE, and Mann+Hummel and are supplemented by interviews with partner-level consultants from BCG and Kearney. To validate the findings internationally and highlight potential differences, additional interviews are carried out with top managers of automotive suppliers in the US and China.

The expert interviews aim to answer the research questions while considering different perspectives and providing a holistic view on the topic. The interviews are semi-structured and based on an interview guideline to make the interview results comparable (Bortz & Döring, 2006) and ensure that certain questions are asked in each interview (Gläser & Laudel, 2009). For the analysis of the interviews, the qualitative content analysis based on Philipp Mayring is chosen. Therefore, a category system is developed to make the analysis comprehensible and transparent to others (Mayring, 2015).

 

  1. Findings and Implications:

The analysis shows that an ambidextrous approach is essential for the transformation of automotive suppliers and that managers must assume three roles for a successful transformation: Caring, Appreciative, and Motivational.

In terms of the required competencies, the focus for managers is on soft skills such as entrepreneurial thinking, agile working, and a strong customer orientation. For employees, technical skills such as software, digitalisation and electrification knowledge are becoming increasingly important. However, in a volatile environment such as the automotive supplier industry, employees also need to be open and ready for change.

Competence management will play an important role for the transformation process and is dependent on the size of the supplier companies. Large suppliers will be able to fill their competence gaps by hiring, while small suppliers will have to place a much greater emphasis on re-skilling and up-skilling. The speed of the transformation process is another factor to consider for a successful transformation. If the transformation process takes place too slowly, the company may no longer be competitive in a few years. However, if the process takes place too quickly, there is a risk that the workforce will not be transformed along with the business.

The right speed therefore depends on the company's room for manoeuvre and can be determined by benchmarking with other companies. To accelerate the transformation process, companies have various options, including collaboration with external organisations (e.g., consultancies), a focus on the core competencies of the business, and the sale of business units.

The measurement of transformation success is a major difficulty for most companies and the focus lies currently too much on classic key performance indicators (e.g. revenue, profitability) and too little on new, qualitative success criteria (e.g. transformation of employees, employee satisfaction). Implementation of ambidexterity inside an automotive supplier company requires new behaviours and new skills of leaders as well as the workforce. The current lack of appropriate transformation success measurement shows the need for improvement in this regard. Therefore, the article outlines a first proposal of a holistic success measurement model for transformation of the business model and required adaptation of the workforce.

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