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Episode 101 is here, and we're diving deep into a compelling journey through the heart of the auto industry's transformation. Buckle up as we explore how legacy companies are reimagining themselves in the face of rapid change.

In Episode 100, we sat down with industry veterans John McElroy and Jason Stein, to examine the auto industry's leadership and culture. Now, it's time to shift our focus towards the future—toward transformation. 

While the term "transformation" might seem like a ubiquitous buzzword, the present episode promises a fresh outlook. We're not just talking about change; we're uncovering the essential elements that propel legendary auto companies into the future.

Remember the Blockbuster and Netflix tale? Think of it as a cautionary tale for our beloved industry. How can century-old giants like Goodyear and Ford shift their thinking to harness the power of startups? We delve into the success story of Mach49 and Goodyear's transformation journey, revealing how they're nurturing innovation and embracing the startup mindset.

And here's a hint: It's not just about splitting businesses or making structural changes. It's about a cultural revolution that brings innovation to the forefront.

Linda Yates, CEO of Mach49, lays out the path to success in her book, "The Unicorn Within," unveiling how legacy giants can tap into the magic of startups and innovation. It's a blueprint for reinvention—a guide to unleashing the true potential of auto industry leaders.

But the real magic lies in understanding how Tesla's "all design in one room" philosophy can break down the silos that have held us back. It's time to ignite a startup mentality and forge new paths.

So, rev up your curiosity and join us on this riveting journey of transformation and innovation. Click the play button and hear the auto industry's evolution from the inside out.

Get ready to shift gears and embrace the future. Because, as we'll uncover, the road less traveled is where the true revolution begins.

Themes discussed in this episode:

• Transformation in the Auto Industry
• Startup Mentality and Culture shift
• Lessons from Goodyear and Mach49
• Nurturing innovation and embracing startups
• Overcoming Silos and Nurturing Innovation
• Importance of fostering an authentic leadership approach
• Adapting and staying relevant in a rapidly changing landscape

Others mentioned in this episode:

• Episode 92: Meet the Man Behind the EV Wireless Charging Revolution: HEVO Founder & CEO Jeremy McCool
• "The Seven Secrets to Tesla's Success," a Youtube video by John McElroy
• Sandy Munro, CEO of Munro & Associates
• "10x Is Easier Than 2X" by Dr. Benjamin Hardy
• Lori Jo Vest, Partner at Popspeed Digital Marketing LLC

Featured Guest: Jan Griffiths (Host)

What she does: Jan is the founder and president of Gravitas Detroit, an organization dedicated to cultivating authentic leadership in the automotive industry by providing courses, workshops, speaking events, and more. She is also the host of The Automotive Leaders Podcast.

On leadership: "This podcast is all about finding those leaders who really 'get it,' who understand what the leadership model and the culture is required for in the future of this industry."

Episode Highlights:

[00:03:59] Injecting Innovation into Legacy Giants. Jan discusses the need for legacy auto companies to infuse a startup mentality into their operations for innovation. Splitting business units like Ford did is a step, but true transformation requires cultural shifts beyond just structural changes.

[00:06:37] Unleashing Innovation. Jan highlights Goodyear's example of successfully integrating startup mentality into their legacy company. This case study showcases the importance of nurturing innovation, fostering cross-functional collaboration, and adopting a venture capital approach.

[00:08:29] Strategies for Cultivating Innovation. Jan delves into "The Unicorn Within," a book by Linda Yates, showcasing how legacy companies can create a nurturing environment, leverage their strengths, and diversify their growth engine.

[00:11:35] Disrupting Traditional Silos. Jan explores Tesla's innovative approach of having all design under one roof. This strategy disrupts traditional silos, enabling streamlined communication and collaboration, resulting in more cohesive and innovative designs. 

[00:15:52] Journey to personal and professional transformation. Jan shares her personal transformation journey, from leaving a corporate job to pursuing her mission. The story illustrates the importance of aligning personal beliefs with professional goals to drive meaningful change. 

[00:17:34] Shifting from Incremental to 10x Thinking. Jan encourages a shift in mindset from incremental improvement to a more ambitious 10x thinking, citing examples of how personal and professional transformations can drive significant change.

Top Quotes

[00:02:37] Jan:  "Think back to the Netflix story. Blockbuster had the chance, didn't they, to nurture that startup, but they didn't do it... They were complacent. They thought that they knew best. And they were dead wrong."

[00:05:12] Jan: "It's one thing to make the structural change, but it's about much more than that. It's about the culture and the way that we do business."

[00:10:09] Jan: "There are advantages that we have in legacy auto land, but we have to learn how to leverage those unique attributes and those unique things that we have."

[00:10:37] Jan: "It's about finding the right culture for our legacy companies; I believe will be the secret to our success."

[00:16:35] Jan: "I walked away from that, took it all to $0 income, because I believed—I believe in myself, and I believe in my mission. My mission is to transform the culture in the auto industry."

[00:18:09] Jan: "And so what we have to do in legacy auto land is to get away from this 2x incremental steps of improvement kind of mindset and move to more of a 10x kind of thinking, both professionally and personally, to close this out.”

[00:18:54] Jan: "It's going to take a heck of a lot more than small incremental steps of improvement. It's going to take massive transformation in the way we think and the way that we do business. The time for this transformation is now.”

[Transcript]

Welcome to the automotive leaders podcast, where we help you prepare for the future by sharing stories, insights and skills from leading voices in the automotive world with a mission to transform this industry together. I'm your host, Jan Griffiths, that passionate, rebellious farmer's daughter from Wales, with over 35 years of experience in our beloved auto industry, and a commitment to empowering fellow leaders to be their best authentic selves. Stay true to yourself, be you and lead with Gravitas, the hallmark of authentic leadership. Let's dive in.

Here we are at episode 101. Can you believe it? 101 episodes—boy, that came around fast. If you haven't listened to Episode 100, you have to. John McElroy and Jason Stein joined me at the mic, and we talked about our beloved auto industry through the lens of leadership and culture: who's getting it right, who isn't, and what we need to do to prepare ourselves for the future. It is that future that I want to talk about today. I want to talk about transformation. And before you hit that stop-play button, I know you're probably sick to death of hearing the term "transformation." We're bombarded with it, aren't we? I can feel you roll your eyes already. Because you hear about it all day long—digital transformation, product transformation, culture transformation. I talk about truck culture transformation all day long. But I want to go a little deeper into what it really means for OEMs and tier ones in the auto industry. Particularly those companies that have been around for a long time—and our industry is full of them. Here's an interesting stat for you: Do you know that 50 years ago—50 years ago—the average life of a Fortune 500 company was 75 years? Now it's 15 years and falling. That trend doesn't bode well for our legacy auto industry, now does it? So let's start off with our acceptance of why we need to transform our business and our industry, and the rate of transformation that's required. Think back to the Netflix story. Blockbuster had the chance, didn't they, to nurture that startup, but they didn't do it. They just completely discounted Netflix. They just said, "Oh, they don't. They don't really know what they're talking about. They're just a startup. They don't know anything about anything." The corporate culture and the leadership model would not allow them to even contemplate, let alone accept, that this company called Netflix could have something to offer. They were complacent. They thought that they knew best. And they were dead wrong. I believe that we, in our beloved industry, are in danger of doing the same, of going the same way as Blockbuster. In case you haven't noticed, Tesla's eating our lunch in the EV business, and the Chinese are coming in. Yeah, might want to keep an eye on Vinfast, the Vietnamese EV company. So what is Tesla's secret? You'll need to watch the YouTube video from John McElroy titled "The Seven Secrets to Tesla's Success." It's eight minutes of your lifetime that I guarantee is worth devoting to watching this video. I'll drop a link in the show notes for you to make it easier for you to find, and anything that I reference in this episode, there'll be a link in the show notes.

There are two key points that John makes in his videos that I would like to explore a little deeper. John makes it clear; he says that in order for the auto industry to evolve and, yes, transform, we must employ more of a startup mentality. And I agree with him, and most of us in the industry would agree. He's absolutely right. But the big question is how—how on earth do you reinvent our 125-year-old company? A lot of the companies that are in our industry today have been around for a very, very long time. Now we see Ford splitting their business into two, and that's a great start. Love that. But what about the culture? The idea of splitting the business into two is that you could perhaps generate more of this startup mentality in the EV business. What about the operating models they deploy? Quite frankly, I don't see too much change in the behavior at the buyer level at Ford. In fact, I would even argue that it's deteriorated. So it's one thing to make the structural change, but it's about much more than that. It's about the culture and the way that we do business.

Here's an example of success. I don't want this to be all doom and gloom because there are examples of success. And, in fact, this podcast is dedicated to finding those leaders who really "get it," who understand what the leadership model and the culture is required for in the future of this industry. That's what this podcast is all about. I digress. Let me go back to this example of success that I stumbled across recently. I recently attended CAR MBS in Traverse City, and I almost missed this session. It was at five o'clock on day three. Yeah, you know, the one that's right before drinks and networking—the one that you're probably the most likely to nix. But I'm so glad I attended. The session was titled "Diversifying Your Growth Engine." I got to be honest, this sounded a bit corporate bullshitty to me at first, but I was wrong. And I'm so glad I went. It featured a company called Mach49. Never heard of them. And one of their clients, Goodyear—well, of course, you've all heard about Goodyear; we all know Goodyear in the auto industry. You want to talk about a legacy auto company that has been around for over 100 years? Yep. Goodyear would be a pretty good example of that. Can you imagine what it's going to take to turn Goodyear around? Wow.

But this session was all about getting that startup mentality and business operating model into your legacy auto company. And here was a success story. Now? Okay. Have they completely turned the company around? Of course not. But are they on the right track? Oh, yes, I think so. And I was blown away. And here's why. Aaron Spring was the representative upon stage from Goodyear, and she talked confidently, comfortably, and yes, with a very much authentic leadership-type approach. She talked about three different phases, as she puts it, operating modes that you need in your business, particularly at the startup phase. She talked about how to nurture innovation with more of a VC startup mentality approach. I couldn't agree with you more, Aaron Spring from Goodyear, particularly that early phase where you're trying to get new technology. You want innovation, you want startups in your business? But how do you make that happen? And you cannot deal with them the same way that you deal with serial production and normal production suppliers. Surely we all know that by now in this industry, but I'm not sure we've all gotten it yet. But Goodyear seems to have gotten that message. Aaron talked about the different types of people, the different traits that you need at these three different operating modes. I was fascinated with this discussion. And so that led me down the path, and I wanted to know more about this Mach49. And their CEO, Linda Yates, has written a book, and it's called "The Unicorn Within." It's all about how you as a legacy company can indeed nurture innovation. How do you find the unicorn within? How do you create the environment, the leadership, the culture, and the operating model to change your business? And yes, diversify your growth engine. Now, I am just at the early stages of reading this book, and it is called the unicorn within and I'll make sure that you have a link so that you can check it out too. But I can tell it's going to be a lot more about this book that I'm going to want to talk about to quote from the book.

Linda says, and I quote, "The foundational elements of success. Your success is contingent on four things." The best Silicon Valley startups do three of these things exceedingly and obsessively. Well, understanding customer pain, marrying that pain with the art of the possible, and placing small bets. You'll need to do the same. But that's the easy part. The fourth element, managing the mothership, so you can seize the mothership advantage, is unique to corporate ventures. Unlike startup founders, as an intrapreneur, you must manage the powers that are inside your company. You can excel at the first three things, but if you mismanage the fourth, you're in deep trouble." End of quote. I agree with you, Linda. It's about managing the mothership. There are advantages that we have in legacy auto land, but we have to learn how to leverage those unique attributes and those unique things that we have.

I'll give you an example. We know how to scale. We know how to manage a launch in auto legacy land. EV startups don't have that. But it's about finding the right culture for our legacy companies, I believe will be the secret to our success. Going back to John's point, yes, John, you're right. We need more of a startup mentality. But it's going to take an enormous amount of effort and a complete change in mindset with the way we think about our business and how we nurture startups and new technology in our business.

If you go back to the interview I did with Jeremy McCool, CEO of HEVO, the EV wireless charging company, I asked him, I said Jeremy, what was it like when you first came to Detroit? And you started to deal with the OEMs. And he said one word, "antiquated." And he's not alone in his thinking. He believes that we need to employ a more nurturing and coaching approach. Yes, we do. We've got to change our thinking and our operating modes, I think Goodyear's onto something.

The second point in John's video, "The Seven Secrets to Tesla's Success," is this. "All design in one room, reporting to one person." Ooh, think about that. Getting away from silos. Oh, we do love our silos in auto legacy land, don't we? We love to cling to them for dear life. I think it's because that's the way we've always done it, and it assured our success. I mean, most of the leaders today are in those roles because they have followed the rules, followed the system. And knowing how to navigate those silos has assured their success, and it's given us some sense of security. We know what the boundaries are, don't we? We don't have to push ourselves and go outside of our comfort zone. Once you know what your silo is, how it interacts with the others, it's kind of easy to play the game. But Tesla doesn't play that way.

And this takes me back a bit. I'm gonna go back to two points in my history. The first one, something that happened just a few months ago, actually, I was at Munro and Associates, Sandy Munro's place with a client. And I've never been to Sandy Munro's place before, so I was kind of excited to be there. And I walked into this conference room, and there was a poster on the wall. And this poster was dated 1989. And it showed that 70% of the cost of the product is influenced at the design stage. And I couldn't believe that that poster was still on the wall. 1989. But I know why. It's because things haven't really changed in the way that we've designed product since 1989. Well, I would say maybe even before then, back in 1988. I was a feisty young buyer with BorgWarner. I had lots of ideas, and I wasn't afraid of anything. I worked for the BorgWarner torque converter division in Sterling Heights, and we had a very progressive leadership team there. It was led by Paul Humphries. I was part of a concurrent engineering team. Yeah, back in the 1980s. Working on a torque converter project, we dedicated a cross-functional team to design and cost a new product by breaking down the traditional silos, moving away from the normal process, and actually working together. We were physically located in the same place. Yep, going back to John's reference, in one room. We were in a special area, and that was a permanent desk. We were not in our normal functional areas, and we interacted with each other every day. We were given training. We were trained on the latest Boothroyd and Dewhurst methodology, DFA and DFM, and we launched an early supplier involvement program. We designed it ourselves. We didn't employ some high-price consulting company. We did it ourselves, and we used a lot of common sense. We obtained all the relevant design inputs from steel suppliers, parts suppliers, tooling, tool and die guys, equipment suppliers. We brought them all in together for discussions way early on in the process. This was at the quoting stage where they may or may not end up being the supplier of choice. We documented the process, and we wanted to make sure that we could replicate our success for future programs. And it was a great success. It was an extremely cost-effective torque converter that we had designed and put together quote for. Kudos to BorgWarner for the innovative thinking.

But as I sat in that conference room at Munro and Associates in the year 2023, I started to think about that team. And you know what, things really haven't changed that much in the way that we design product and the way that we engage suppliers. Yes, we've got some technologies now that we didn't have back then, and some tools to help us. But the mindset, the way we think about designing the product, and breaking down those silos hasn't changed that much. We've got a lot to think about, haven't we? And that made me think about my personal transformation.

And last month, July 2023, I celebrated five years—five years since I walked away from my corporate job. And a lot of this goes back to mindset. And the way that we think about transformation, whether it's a personal or professional transformation. Now, if you have more of that incremental mindset, where you're just looking at small incremental steps of improvement, which many of us do, both professionally and personally, you would never do what I did, which was to take my corporate salary that I'd worked all my life for, the title that I'd worked all my life for, the position, the power, all of that—all the corporate trappings that we love. I walked away from that, took it all to $0 income, because I believed—I believe in myself, and I believe in my mission. My mission is to transform the culture in the auto industry. If I had employed more of an incremental approach to that, where I would be moving into maybe the next level of position and roles and responsibilities, and some incremental improvement in salary, and so on and so forth, it would never happen. I know that to realize my vision is going to take time. And it's—and it is taking longer than I expected. Of course, it is. But I believe in what I'm doing. And I believe in getting off the treadmill off the day-to-day life. And taking my income to zero was the right thing to do. And I believe that it's going to come back with a far greater multiple in the future.

I'm finding all these nuggets along the way. The Goodyear example was one, you know, walking into the Sandy Munro conference room was another. But I'm reading a book right now by Benjamin Hardy. Many thanks to my accountability lab colleague, Lori Jo Vest, for recommending this book. Didn't expect him to look like a 12-year-old. He actually isn't a 12-year-old, but he looks very young. But he's a very smart, smart guy. And he's written a book, and it's called "10x Is Easier Than 2X." Ooh, think about that. 10x is easier than 2x. And he's talking about exactly what we're faced with, with our mindset, the mindset that we need in our automotive industry today.

And so what we have to do in legacy auto land is to get away from this 2x incremental steps of improvement kind of mindset and move to more of a 10x kind of thinking, both professionally and personally, to close this out. John McElroy said in our 100th episode, "We'll see more change in the next seven than we've seen in the past 100 years." Yeah, I know, that's reminiscent of the old Mary Barra quote, when she said, "We'll see more change in the next five than we've seen in the past 50." But this takes it to another level—more change in the next seven than we've seen in the past 100 years. And if that isn't alarming, it should be. It's going to take a heck of a lot more than small incremental steps of improvement. It's going to take massive transformation in the way we think and the way that we do business. The time for this transformation is now. It's right now, in fact. If you're not already on more of a 10x kind of mode of thinking, you're probably behind, and you've got some catching up to do. But the good news is that legacy auto companies can transform. I'm going to keep my eye on Goodyear and Mach49 and see what they're doing. And I'm going to be reporting back to you and let you know what's happening. They could be this shining light, this beacon, an example of what we can do and how we can do it. But don't wait around for them. You've got to start now. I'm all in making that happen. Are you? I'll be back. Remember, be your beautiful, authentic self. Let that authentic leadership shine and come through in everything that you do. Gravitas is the hallmark of authentic leadership. Talk to you soon.

Thank you for listening to the automotive leaders podcast. Click the Listen link in the show notes to subscribe for free on your platform of choice. And don't forget to download the 21 traits of authentic leadership PDF by clicking on the link below. And remember, stay true to yourself, be you and lead with Gravitas, the hallmark of authentic leadership.