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

 



​Introduction

Changes in consumer demographics, consumer habits and technological advances are forcing the automotive industry to change 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 throughout 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 throughout the Entire Company

  • ​Changes in consumer demographics, consumer habits and technological advances are forcing the automotive industry to change dramatically.
  • It is more important than ever to focus 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 pace and nature of this disruptive transformation.„„

 

Partnering for Success

  • The automotive industry is changing rapidly, and individual companies cannot build all the necessary capabilities fast enough to keep up. As a result, partnerships of various forms are on the rise and it is important 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 proper benchmarking of comparable talent in the market.

 

Creating a Diverse and Engaged Board

  • An effective board is one that represents a rich variety of perspectives, allowing companies to develop (and execute) robust strategies while simultaneously managing risk.
  • The work of the board has never been more complex as traditional issues remain important while new challenges arise.

 

Endnotes

Nurturing Innovation throughout the Entire Company

A  "Auto Manufacturers Spend Billions Marketing SUVs to American Consumers", Public Citizen, 2003;  The Decade in Online Advertising,” Double Click, 2004
B  "Oi car salesmen: it's time to talk to women, not just their 'husbands'", The Telegraph (United Kingdom), 2014
C  Rohan Samson, M.D., et al., " Impact of Online Digital Communication on Customer Buying Decisions" survey, Accenture, 2014
D  "Innovating automotive retail",, McKinsey & Company, 2014
E  "Digital Ad Spending in US Auto Industry Racing Ahead", eMarketer, 2014
F  "The Future of Car Retailing",  Forbes, 2014;  "Volvo will test selling cars online",, The Globe and Mail, 2014
G  "Carsharing gets creative with new programs from Audi, Toyota,"JWT Intelligence, 2014
H  "US automakers agree new "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, 2014
BMW AG press release, November 2014
“Study: Twitter Marketing Drives $716 Million in Car Sales”, Advertising Age, 2014
“Audi makes London showroom a tech-rich showpiece for the brand”, Automotive News, 2014
“Four ways dealer groups can beat independents on digital aftersales”, AMOnline, 2014
Digital Pulse Survey, Russell Reynolds Associates, 2015
Proprietary research, Russell Reynolds Associates, 2015​

Partnering For Success

A  “Global Automotive M&A Deal Value increased to $27.5 billion, a strong increase of 110 percent over the first half of 2013”, PwC, 2014 B
“Practice Makes Perfect: Mergers & Acquisitions”, Oliver Wyman, 2014
C  “The Science of Alliances”, PwC, 2014

Identifying Next-Generation Leaders

A   Automotive study of 210 executives at the world’s top OEM brands and Tier 1 companies by revenue, Russell Reynolds Associates, 2015
“BMW’s designated CEO Krueger will usher in new era at automaker”, Automotive News, 2015 * Foreigner: Of a nationality other than that country in which the company is headquartered

Creating a Diverse and Engaged Board

A  Automotive study of 230 board directors on the boards of the world’s top OEM groups and Tier 1 companies by revenue, Russell Reynolds Associates, 2015
“Secure tomorrow’s car buyers today”, global automotive demand report, The Nielsen Company, 2014

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