Executive Talent and Digital Disruption in Automotive

Digital is impacting the entire automotive value chain, from point of design to engineering and production to sales. It is facilitating communication like never before among manufacturers, consumers and their cars.

Automotive companies are looking for leaders to guide them through this transformation, giving rise to new positions such as chief digital officer, chief digital marketing officer and chief information security officer, while simultaneously demanding changes in more traditional roles, including chief information officer and chief technology officer.

To attract and retain the right candidates for these positions, it is important to understand the growing role digital technology is playing within the automotive industry and the evolving skill set needed at leadership levels.

Russell Reynolds Associates recently conducted its Digital Pulse Survey of more than 3,000 executives from a number of industries to capture how people are driving digital transformation and how organizations are adapting to this changing landscape.

The majority of automotive executives (65%) believe the industry will be disrupted further by digital in the next 12 months, and 17% think this change will be dramatic. Sixty-seven percent of automotive respondents say their company has a digital strategy in place, and an identical percentage reports their company has a digital team in place.

However, only a minority of the automotive executives (44%) believe they have the right people and skills in place to drive digital strategy, and a little over one-third (34%) say they have the right people to execute the digital strategy. Finally, less than a third (27%) think they have the correct organizational structure in place to take advantage of digital opportunities.

According to automotive executives who took the survey, the top three barriers to an effective digital strategy are lack of digital expertise and skills, digital not being seen as important by leadership and absence of a single head of digital to steer the company.

Our experience shows truly outstanding digital leaders are those with experience in leveraging new technologies to enable updated business models and spur digital change. They are strong technologists who can deliver solutions that can drive the company’s broader objectives via digital resources.

The best potential leaders are those with transformational change competencies. Our proprietary data show there are five key competencies that identify a digitally transformative leader: learning agility, willingness to take calculated risks, confidence to go against the grain, entrepreneurial spirit and ability to exert influence and gain support.

Digital at Board Level

Digital transformation requires leadership from the very top of the organization.

Our conversations with CEOs and boards repeatedly have shown that having people in the boardroom asking the right questions is a strong catalyst for change. However, our analysis of more than 200 board members from leading global automotive companies shows only one individual among them has notable digital experience.

Appointing a digital director sends a clear message the company is committed to developing a digital culture. Organizations across a wide range of sectors that succeed on the digital front have one thing in common: They have made an investment in digitally transforming their business, enabling them to be the disruptive innovators of their respective industry.

Digital transformation may begin with a strategy, but even the best strategies will not see fruition without the right leadership.

Companies must develop a digitally savvy board and a digitally enabled leadership team with clear ownership for each initiative, creating top-down momentum. Simultaneously, a new culture of learning, risk taking and flexibility must be nurtured throughout the company.

Companies also should look for partners to leverage each other’s strengths in an equal partnership. All this requires strong talent, meaning companies above all must invest effort in defining, assessing and benchmarking best-in-class digital talent in automotive and beyond, building a bench of quality digital leadership.

The changes are happening now. Is your company ready for the transformation?

Walter Friederichs leads Russell Reynolds Associates’ Global Automotive Practice, advising clients on how best to align talent with the company’s business strategy.