“Absolutely, different leadership is needed in software. I find that auto OEMs know they need to change, but the culture and organisation doesn’t fully reward, recognise and support digital transformation.”
OEM, leader in digital services, Germany

80% of all respondents believe that a software-focused business requires a different leadership approach, yet 50% of respondents at OEMs say their leadership teams do not match this future focus.
 

Does the profile of your leadership team match this future structure?

“We need different mental models, speed, lean learning vs. major initiatives and an appreciation of how crucial the right talent is to success”
OEM, leader in consumer connectivity services, Sweden

Lack of alignment is even greater for organisational culture, which does not match the future focus for approximately half of OEMs, tier 1 and tier 2 companies.
 

Does the culture of your organisation match this future structure?

“We must fully recognise that future cars or trucks are wheels on smart and connected devices that customers will use as an extension of their daily lives, no matter whether transporting goods or people.”
OEM President, China

For some OEMs, the lack of cultural alignment is a significant impediment to commercial success.

 

How to Achieve Convergence

We explored whether or not convergence is better achieved by having hardware and software experts working in separate teams, with convergence achieved through a common leader, such as Chief Digital Officer.

It is better to have hardware and software engineers working together in converged operations to achieve an entirely digital organisation?

“Project teams now need to be there for the entire vehicle life cycle.”
Tier 1 company CEO, United Kingdom

The general consensus is that it is better to have hardware and software teams working together to achieve an entirely digital organisation.



 

Talent & Leadership Challenges

Competing with technology firms is such a significant challenge that for nearly half of OEMs and tier 2 companies, it could harm their business outlook.

How hard is it to compete with tech firms for the software talent you need?

“With the advent of completely new software architectures, like neural net software and machine learning, there is a paucity of talent available, and it is very difficult for OEMs and even Tier 1 companies to compete with startups and established software suppliers to attract this talent.”
Tier 2 leader, United States

A majority highlight the United States as having the best organisational and leadership culture to maximise digital disruption in the industry.

 

How important is it for a leader to have a ‘Silicon Valley mindset’?

A ‘Silicon Valley mindset’ — risk-taking, learning from failure, iterative innovation, customer engagement and fast-paced decision making — is seen as business critical for nearly half of tier 2 companies and over 40% of OEMs.

“Much more agile, with a fail-fast attitude” 
Tier 1 company, software and electronics leader, Germany

It is important to recognise that software talent is strong all over the world, particularly in Russia, Israel and Germany. Yet, there is a reticence in accessing these regions for talent. Organisations lack the sense of a ‘global benchmark,’ so they tend to rely on the United States to source talent.

To what extent do you think you need to prioritise people across the organisation?

There is widespread recognition that prioritising people is essential to safeguard the future of the business with HR leaders playing an essential role.