Automotive Industry: Five Leadership Issues Worthy of Board and Executive Attention

Switches in consumer demographics, consumer habits and technological advances are forcing the automotive industry to switch dramatically. Driving innovation across the organization, digitization, partnering—whether through joint ventures or mergers and acquisitions—and a host of other major risk drivers all are contributing to dialogues in boardrooms and executive offices. Most significantly, executives are asking ​if they have the right leadership talent in light of the challenges they face.

From our conversations with board members and CEOs in the automotive industry, the following five issues and their implications on leadership talent have emerged as top of mind for the executives:

• Nurturing innovation via the entire company
• Capitalizing on digital disruption
• Partnering for success
• Identifying next-generation leaders
• Creating a diverse and engaged board

​We hope this executive briefing document will serve as a discussion starter for thinking through how to attract and retain the right leadership talent in the face of these challenges.

Nurturing Innovation across the Entire Company

• ​Changes in consumer demographics, consumer habits and technological advances are forcing the automotive industry to switch dramatically.
• It is more significant than ever to concentrate on innovation capabilities at every level of the company, not just R&D and engineering, and to develop or acquire the talent needed to lead in this period of transformation.

Capitalizing On Digital Disruption

• 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.
• The automotive industry will require digitally literate and deeply innovative talent at executive levels to match the tempo and nature of this disruptive transformation.„„

Partnering for Success

• The automotive industry is switching rapidly, and individual companies cannot build all the necessary capabilities swift enough to keep up. As a result, partnerships of various forms are on the rise and it is significant to create structures that foster equality.
• Companies must apply due diligence beyond numbers in order to create lasting value from the partnerships, and there is a growing need for talent who are able to identify opportunities and manage integration.

Identifying Next-Generation Leaders

• Future automotive executives will be doing business in a very different industry from the one we know today. Companies need to think about executive profiles, which will enable them to thrive in as-yet unknown markets.
• Promotions based on tenure can backfire in a global market that values agility and lateral thinking, especially if done without decent benchmarking of comparable talent in the market.

Creating a Diverse and Engaged Board

• An effective board is one that represents a rich multitude of perspectives, permitting companies to develop (and execute) sturdy strategies while at the same time managing risk.
• The work of the board has never been more sophisticated as traditional issues remain significant while fresh challenges arise.

Endnotes

Nurturing Innovation across the Entire Company

A  ”Auto Manufacturers Spend Billions Marketing SUVs to American Consumers”, Public Citizen, 2003;  The Decade in Online Advertising,” Dual Click, two thousand four

B  ”Oi car salesmen: it’s time to talk to women, not just their ‘husbands'”, The Telegraph (United Kingdom), two thousand fourteen

C  Rohan Samson, M.D., et al., ” Influence of Online Digital Communication on Customer Buying Decisions” survey, Accenture, two thousand fourteen

D  ”Innovating automotive retail”,, McKinsey & Company, two thousand fourteen

E  ”Digital Ad Spending in US Auto Industry Racing Ahead”, eMarketer, two thousand fourteen

F  ”The Future of Car Retailing”,  Forbes, 2014;  ”Volvo will test selling cars online”,, The Globe and Mail, two thousand fourteen

G  ”Carsharing gets creative with fresh programs from Audi, Toyota,”JWT Intelligence, two thousand fourteen

H  ”US automakers agree fresh “privacy principles” for connected car data”,, Out-Law, Pinsent Masons, 2014

Capitalizing On Digital Disruption

​A  “GM executives help scour social media to spot vehicle flaws”, Automotive News, two thousand fourteen

B  BMW AG press release, November two thousand fourteen

C  “Study: Twitter Marketing Drives $716 Million in Car Sales”, Advertising Age, two thousand fourteen

D  “Audi makes London showroom a tech-rich showpiece for the brand”, Automotive News, two thousand fourteen

E  “Four ways dealer groups can hammer independents on digital aftersales”, AMOnline, two thousand fourteen

F  Digital Pulse Survey, Russell Reynolds Associates, two thousand fifteen

G Proprietary research, Russell Reynolds Associates, 2015​

Partnering For Success

A  “Global Automotive M&A Deal Value enlargened to $27.Five billion, a strong increase of one hundred ten percent over the very first half of 2013”, PwC, two thousand fourteen B

B  “Practice Makes Ideal: Mergers & Acquisitions”, Oliver Wyman, two thousand fourteen

Identifying Next-Generation Leaders

A   Automotive examine of two hundred ten executives at the world’s top OEM brands and Tier one companies by revenue, Russell Reynolds Associates, two thousand fifteen

B  “BMW’s designated CEO Krueger will usher in fresh era at automaker”, Automotive News, two thousand fifteen * Foreigner: Of a nationality other than that country in which the company is headquartered

Creating a Diverse and Engaged Board

A  Automotive examine of two hundred thirty board directors on the boards of the world’s top OEM groups and Tier one companies by revenue, Russell Reynolds Associates, two thousand fifteen

B  “Secure tomorrow’s car buyers today”, global automotive request report, The Nielsen Company, 2014

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