STRATEGYTALK #1: Digitilization in the New Normal.

I had the great pleasure to kick-off Wilko Stark’s Interview Series #STRATEGYTALK.

A former member of the Divisional Board of Management of Mercedes-Benz Cars and a former leader of both Daimler and Volkswagen, Wilko is a seasoned expert across the automotive and mobility spheres.

He specializes in overall corporate control of complex companies, strategic alignment, transformation and procurement, as well as mergers & acquisitions (M&A), partnerships and cooperation. He is additionally accomplished in corporate digitalization and cultural change.

Here's our talk.

Virginie: What do you predict will change most in a post-corona world?

Wilko: The Corona crisis has dramatically changed our daily lives. The world post corona will be different to the world we were used to. In the lock down period everybody could experience what is really necessary, what we miss most and what can be waived? We also could experience new working styles. As a result, we will live more conscious in post Corona times. This inescapably will have an impact on the key major trends. Digitalization is one of the key winners and as part of it working from home. But also, sustainability and social responsibility as well as circular economies will benefit, as we will life more conscious in the future. The mega trend globalization will be slightly different in the future, big companies will follow more a local for local approach.

Wilko: From your point of view - how has the coronavirus accelerated digital?

Virginie: Now more than ever, digital is at the forefront of leaders’ agendas and it’s the crucial element for many business ‘to keep the lights on’. This crazy time has pushed many companies to reinvent themselves. It’s triggered teams to rethink their business models and improve their overall performance. The pandemic has pushed many companies to digitally transform. What was once a “longer-term” plan has been expeditated. With the accelerated shut down of global companies in March, the virus helped to supersede the implementation and, adoption of new online tools, methods and software so they can successfully collaborate and run their businesses from home.

And interestingly, this time brings new opportunities that were not possible before. We will likely see digital first strategies across departments and new digital ways being embraced post-corona. Digital opens up new market opportunities and cost-savings, and is a key driver for change. In the months to come, I could imagine that digital will be the central point of navigation for companies.

Virginie: And for you Wilko - what digital trends are on the rise for companies?

Wilko: The Corona crisis has been an accelerator for digitalization. The online channels and platforms in the B2C as well as B2B business will get even more important. This means that companies have to align their IT infrastructure to become a customer and data driven company. Many functions will be moved to the cloud. I also expect the digitalization of indirect functions by robotic process automation and artificial intelligence. This not only saves cost but also leads to safe and scalable processes. Additionally, working from home a few days a week based on the digital tools like Microsoft teams will become more frequent.

Virginie: With the increased adoption of digital, companies will see significant cost savings. Are there any good examples where we can see these cost-savings already?

Wilko: As described earlier, I see huge cost saving potential in the digitalization of indirect functions. After the wave of shared service centers this will be the next wave. The savings can be used to align your IT infrastructure, move part of it to the cloud and become a data driven company. This is also the basis for online sales channels with one to one marketing and new business models. Introducing robotic process automation can be a good starting point for real digital transformation. It is all about implementation.

Wilko: How has leadership been affected?

Virginie: Leaders, their businesses, and their brands have hit the spotlight during the pandemic crisis in terms of what they have done, what they have said and indeed what they haven’t done or said. Leadership has been ‘on watch’ regarding their response to the situation: people are judging how companies have supported the crisis, how they have maintained business and/or offered value to customers and clients.

Leading through times of uncertainty is a true test of leadership and I have certainly experienced and learned a significant amount in the past weeks. From a leader’s perspective the goal during a crisis is to try and remain in front of the situation and return business to operational health as quickly as possible. I would say the key to good leadership during the coronavirus has been the ability to manage the extraordinary challenges that the speed and scope of the virus has presented by acting with urgency, honesty, compassion and agility: and they are all equally essential from the outset.

• Act with urgency – against the natural tendency toward delay, and as unusual as the circumstances are, leaders have had to act fast and dive headfirst into the unknown without all of the information they typically rely on to make informed decisions.
• Course correct openly and productively – in situations like this - of tremendous ambiguity - the best plans will still face unexpected challenges. Strong leaders have openly addressed this without defensiveness, and swiftly course corrected.
• Communicate with transparency, relevance and compassion: Strong leadership remains visible, clear and honest sharing new information and updates as events unfold. This creates a steadiness and a sense control of a situation as it develops and fills people with confidence.

Most importantly, and now more than ever, leaders must put themselves in other people’s shoes. Demonstrating a greater sense of empathy, relevance and trust, and presenting strategies and plans through a more human lens is vital and something many leaders are not used to. In doing so however, leaders will build stronger ‘togetherness’ and a connection to the audiences they need to influence. 

We’ve seen some great examples of strength in leadership over the past weeks from Country leaders such as German chancellor Angela Merkel and New Zealand’s prime minister Jacinda Ardern. Some reports have suggested that female leaders have handled the pandemic situation better than their male counterparts. Whether that is the case or not, what these women have displayed is a strong sense of compassion, communicated with a clear, consistent and reassuring language, and, demonstrated a willingness to take counsel from experts when needed. They have projected a style of leadership that is vulnerable yet assertive, empathetic yet tough and which seems to have worked based on the responses and actions of the nations they lead.

Virginie: What do you think - how is the coronavirus impacting leadership decision making?

Wilko: As in every crisis strong leadership with empathy is required as many employees are personally affected or know someone who is personally affected. This means that you have to reach out to your employees, listen to them, take care of their problems, share information, take fast decisions and explain your decisions and provide confidence. Leaders have to build up trust that they can manage the crisis. We need a positive sense of excitement about the future. In every crisis also lies an opportunity.

Virginie: What impact has the Coronavirus had on the automotive industry and how does that impact the near future of the industry? And - how has supply chain been affected by the shifts to remote working and social distancing?

Wilko: The ramp up at many suppliers and OEMs are on its way. The social distancing can be realized in the plants. Nevertheless, it will take a few weeks as some regions like Mexico are still in the lockdown. In the coming months the key challenge will be the market side. Uncertainty always leads to buying resistance. We need consumer confidence to get back to normal. In this context car abo models are getting very important, as customers want to stay flexible in uncertain times.

The Corona virus has had a dramatic impact on the automotive industry. I expect a downturn in global markets by up to 25% depending on the stimulus programs this year. As China will recover quite fast the recovery in Europe will take a few years to reach pre crisis level. We saw a quite similar picture in the financial crisis 2009. This means that OEMs as well as suppliers have to adapt their capacities and cost structures. The transformation of the industry towards e-mobility will be accelerated after some delays due to technical challenges. Key drivers will be sustainability and social acceptance.

Wilko: How can we best support clients right now?

Virginie: It is crucial for organisations to keep their finger on the pulse to anticipate changes in customer behaviour and public sentiment and use that as a gauge upon which to measure and plan strategic business decisions and initiatives. Relevance is of utmost importance right now – behaving in the right way at precisely the right time - and one wrong move could significantly impact reputation.

The goal for most organisations is to follow the rules, keep business moving where possible and where it’s safe to do so. Every effort needs to be made to minimize the impact of the crisis for customers and clients where feasible. Open and frequent communication has been essential to keep customers informed and create a sense of togetherness with companies communicating through the customer lens which has demonstrated enhanced corporate empathy.

General consumption is changing so businesses have needed to offer a new type of value supported by a new customer experience to ensure customer relations outlast the crisis. This has called on the need for adaptability – the ability to bend and adapt to changing needs and at high speed – and in some cases, to rethink products and services and drive innovation to meet new demands. For some companies this has involved reimagining new products and services and for others it has required them to completely reinvent themselves.

One thing is for sure; consumers are demanding that organizations focus on a common purpose over individual benefit and an organisation’s behaviour and narrative in response to this public-health crisis will influence future custom. In these uncertain times people want companies and brands to solve not sell. To act with compassion and transparency so a renewed purpose is essential.  

Virginie: Thank you for this inspiring conversation, Wilko.