In this episode, Jan talks about the new supplier Terms and Conditions recently issued by automaker, Stellantis and what this means to the automotive industry.

Topics covered include:- Command & control leadership, compliance vs conviction, remembering SCORE, the bottom-line impact of collaborative relationships and where do we go from here?

Here are the links to the articles and episodes quoted in the podcast.

Automotive News article dated 2/2/22

Speed of Trust - Stephen Covey see section 9

Supply Chain Management Review June 2014 - Lost supplier trust

Interview with Mark Bole, General Motors

Interview with Stefan Krause, CEO MOOV

For more on authentic leadership email me directly at Jan@gravitasdetroit.com or visit our website at GravitasDetroit.com

[Transcript]

Here we go, it's time for some tough talk. You might not like what I'm about to say on this podcast. And that's okay. I'm not here to please everyone. And as my mother would say, I'm not everyone's cup of tea, and I know it. But I feel a responsibility to you to my audience, to give a voice to the supply base in the automotive industry, and amplify the concerns and far reaching implications of a leadership style that is quite simply a relic of the industrial age, and will not will not propel this industry into the future. I am of course talking about command and control. So what happened here? The title of this episode is the exact reaction I had when I read the automotive news article on the Stellantis new supplier terms and conditions. And I quote, "Stellantis has made controversial changes to its purchase order terms and conditions for 2022. They can force North American suppliers to reduce prices whenever they achieve any cost savings and remain locked into unfavorable contracts for as long as the automaker wants." Wow. You've got to pass on all the cost reductions. There's no sharing in this apparently. And, if the automaker so chooses, they can unilaterally extend North American purchase orders across multiple vehicle programs and extend vehicle programs more than once. Woff and there's something else in there too that I looked at and it says something about future events are deemed foreseeable by the seller. Hmm. Seller assumes such events will occur and seller assumes the risk of the occurrence or non occurrence for all future events white, and that's to name but a few of the new T's and C's. My response to this was simply Stellantis What are you thinking? Sorry, there's just no way to sugarcoat it. My outrage is based on what this really means to an industry that's facing massive disruption, and industry where traditional OEMs and suppliers are grappling with the realities of a totally new industry, not only in terms of the product and the technology, but in terms of culture and leadership and the way that we do business. Employee attraction, retention and employee engagement are all top of mind. And, we as an industry on the hole, I'm making strides in the right direction. I really believe that we are, we're engaging and collaborating with all stakeholders, embracing a leadership style where people Yes, including suppliers can thrive. And let me give you an example. My latest episode on the podcast was an interview with Mark Bole. Mark was previously president of GM Financial, he is now head of V2X and battery solutions at General Motors. He is an authentic leader. He knows how to create an environment where people can thrive. He gets it he understands psychological safety. He knows how to nurture trust, he cares about people. And I know this for a fact because I have spoken to many people that have worked for him and in his organization. And it warms my heart to know that this is a man in a leadership role at General Motors. So there is hard evidence of the leadership model changing and it fires me up to think we're making progress. And then there's this the new T's and C's from Stellantis that make me feel like we've taken 10 steps backward. A Stephen Covey said in the Speed of Trust, and I quote, trying to operate in today's world with a command and control style is like trying to play tennis with a golf club. The tool is completely ill suited to the reality." Covey goes on to say, command and control persists as the prevailing norm, especially when there is great pressure to perform, but you cannot command and control a person's best contribution he or she has to choose to give it in that's what this whole thing does, right? This this T's and C's document, it takes away any sort of choice of, or negotiation or discussion or give and take, it just takes it all away.

Stefan Krause, CEO of MOOV, said in his podcast interview, he discussed the need for trust and conviction. And he believes that many traditional OEMs have a compliance culture which causes them to lose employees to more progressive startups. And that's exactly what this is all about. It's all about control and compliance. These new terms and conditions published by Stellantis appear to me as clear evidence that command and control is alive and well. But it wasn't always that way was it? Take a look back in history, it was a time we loved being a supplier to Chrysler. Remember the score program and the extended enterprise program back in the 90s. Here's an interesting quote from a supply chain management review article dated June 14. The extended enterprise program focused simultaneously on strengthening supplier working relations as measured by supplier trust of Chrysler, while achieving greater supplier price reductions. There is a very real and measurable impact to the bottom line. When you treat suppliers with respect, operate in a trusting environment and work collaboratively with don't take my word for it. The article I refer to is titled lost supplier trust how Chrysler missed out on 24 billion in profits over the past 12 years. The article is co authored by Professor John Hankey, well known for his research in the space, and the data is there for you to see. So for those doubters, amongst you, that might think that this whole relationship thing is all soft stuff. Think again, the data is there. So how did this happen? How did this new T's and C's document come into being? Let's take a look at the leadership model that might have contributed to this. I don't know for sure. I've never worked for Stellantis. And clearly, I never will. But imagine how many people were involved in putting this document together? And how many executives Stellantis were involved in approving this? Did nobody stand up and say, Hey, wait a minute, nobody in their right mind would sign up for this? What are we doing? Maybe they did that? Maybe they didn't I don't know. But their voice wasn't heard. Because here we are. And here's the document. In a classic command and control type situation. The boss says something like, we need to get tough on our suppliers. We need execution and we need to hold them accountable. And everybody in the group says, Yeah, that's right, we need to get tough. In even though deep down inside, they might be thinking, maybe this isn't the best idea. Everybody's afraid to disagree with the boss. Because if they speak out against it, they're afraid that they'll look weak. And they'll suffer judgment from their peers, and maybe even their boss. And nobody wants that. Because let's face it, at the end of the day, the boss controls your paycheck, which has a significant impact on your life. And I've known throughout my career, how far I could push certain bosses when it came to speaking up. It shows complete lack of respect, trust, and collaboration with such a large part of their stakeholder group and the supply base. And what happened to trust. What happened to the foundational principles, high performing respectful relationships with our suppliers, well, that clearly isn't happening. And then on the Stellantis website, I noticed there's not too much on there about suppliers, but it says we win together. Don't see this as a winning formula. And why why are you trying to control everything with a document with a contract, you can't possibly create a document that covers everything that could go wrong, although they've given it a pretty good try with this document. But it's seems to say, whatever could go wrong in the world, it's on you, supplier. I don't particularly like that. Because in a business relationship, and yes, it's exactly that it's a relationship there's give and take. Of course you need guide posts. You need guidelines, you need a way to govern how the parties will behave once certain conditions occur. But really, this one is so one sided. I can't imagine anybody in their right mind who would sign up for this?

Is there anybody in the Stellantis? Who would sign up to this? If they were in the supply base? If they were running a tier one business? That's a question I'd like to know the answer to. But I feel for the purchasing people at Stellantis. Now charged with implementing these ridiculous terms with an already agitated supply base. They're already down the bottom of the pile when it comes to customer-supplier relationships. But I know what it feels to be in their shoes. I've been there not at an OEM, but as a tier one heading up supply chain, having to implement one sided terms into the supply base. And it's really difficult. The environment needs to be conducive to having conversation and debate around whether or not this is the right thing to do. And often that just that doesn't happen that doesn't occur. In a command and control environment, you live in fear. And I've been there I mean, I There are times when I've had to do what the boss said, I have a mortgage, single mom, I'm going to do what he tells me to do, even though it might not feel 100% true and correct. And I think that's what happened to you. But I don't know that for a fact, what but when the boss says, This is what you need to do, like dutiful soldiers, you execute his orders. And this is why command and control will not take us into the future. We've got to create this environment where we can have debate where people feel safe to put their opinions forward, so that you can end up with the best possible outcome and solution. We've got to stop the madness. When something like this happens, we have to stand up and say no, wait a minute, that's not in line with our values. Imagine the hours, days, weeks and months we as an industry are going to spend on this, when we should be focusing on productive, innovative ideas that move us forward. Instead, we're going to be lawyering up and going into battle. And that's not all. I haven't even touched the subject of innovation. This will choke off innovation in the supply base. Do you really want to give some of your new and innovative ideas to a customer? Who's going to treat you this way? Are you really going to put your best people on the Stellantis account? Ohh I don't know, it's a question I'd be asking myself if I was running a tier one business right now? How are you going to go the extra mile for this customer. And if you're a startup business with a new technology, let's say you've got this great new technology that has the potential to significantly impact EVs, autonomous vehicles, would you sign up for this. And so you have a choice. You can fight and do what ever you need to do to protect your business. Or you can pass them on to your tier two, supply base as a tier one. And I'm sure there'll be some causes in the Status terms that require you to do that. But I've seen people in the past just bury their head in the sand. And they don't want to get stuck in the middle. So they say well, okay, we'll just pass it all onto the tier two supply base, but you are going to get stuck in the middle, you know, right? It's going to happen. So you have to address this issue. Or you can just say, hey, it is what it is. It's automotive. That's how we do business. We cannot do that anymore. This industry is changing and it is changing for the better. This is just a blip in the future of this industry. But we've got to stop the madness. We've got to stand up and say it's not in line with our values. We must stay strong to our beliefs, our values and continue to move forward and not backwards. I'm here to support you any way I can. I'll continue to provide more interviews with successful people who are practicing the right way to lead an organization. Practicing authentic leadership every day, command and control is dead. Let's move on. Authentic leadership is our future. Let's inspire our people, our business and our industry with the art of possibility of new technologies. Innovation and Transformation. Let's excite with visions and missions of what we can achieve together, create an environment, a culture where we all thrive together, all stakeholders and that includes the supply base. Join me on their quest for gravitas.