Shaping Transition from Industrial Age
Enterprise Leadership 5.0
December 18, 2024
Our NET.story Fact or Myth?
About sticking to running systems, escaping comfort zones, and the failure of large business models using the example of the Automotive Industry
In the 21st century, change is no longer the exception, but the rule. Technological advancements, increasing digitisation, and global challenges require companies to possess an unprecedented ability to adapt. Those that fail to keep up with the accelerating pace of innovation and continuously transform their business models risk being overtaken by competitors. In a world where market conditions, customer needs, and technological possibilities are constantly evolving, transformation becomes a key success factor.
A particularly striking example of this dynamic is the Automotive Industry. A sector traditionally defined by long development cycles and stable, established business models now faces a fundamental disruption. The ongoing digitalisation, the shift towards electric mobility, and the growing pressure to operate more sustainably present immense challenges for companies. Yet many leading car manufacturers are grappling with the consequences of delayed transformation. While competitors quickly respond to the change, established companies often remain stuck in old mindsets – and risk losing their market leadership.
The term "Delayed Transformation" describes the tendency of companies to postpone necessary changes for too long, which causes them to fall behind both in competition and in technological innovations. In the case of the automotive industry, this means not only missing out on trends like e-mobility, but also failing to adapt to the changing geopolitical landscape and new global trade dynamics.
The Face of Delayed Transformation
Economic Losses and Market Backlogs
The impact of delayed transformation is multifaceted. The most severe consequence is often economic loss. Companies that miss the transformation train frequently experience a dramatic decline in market share. Competitors do not sleep – while established manufacturers are still busy developing new technologies, others have already taken the next steps. This leads to lost revenue and an increasing weakening of market position. For many companies that had relied heavily on combustion engines, transitioning to electric mobility turned out to be more difficult than expected. High investment costs, insufficient infrastructure, and technological lag have slowed progress, while newcomers or companies from Asia have been able to act more swiftly with more innovative approaches.
Leadership and Management: A Failure of Responsibility
Another central aspect is management. If companies fail to develop and implement a clear vision for the future, they not only lose competitiveness but also the trust of their employees and investors. For too long, many large car manufacturers hesitated to break free from outdated but entrenched models. Rather than taking bold steps – such as focusing early on electric vehicles or digital components – changes were postponed, and internal resistance went unaddressed. The failure to embrace transformation, coupled with often hesitant leadership within companies, can have devastating effects – both on the success of product innovations and on the company’s position in the global market.
Missed Opportunities and Innovations
Delayed adoption of new technologies leads not only to direct financial losses but also to missed opportunities in innovation. While competitors are already developing new models and technologies, companies that have failed to transform are stuck in the old mindset. They miss the chance to position themselves as leading innovators, losing relevance as a result. The automotive industry is particularly dependent on innovation – whether in the development of autonomous vehicles, the integration of artificial intelligence, or improving battery energy efficiency. Those who lag behind here risk becoming increasingly irrelevant in the competition.
Underrated catalysts
De-Globalization and the Impact on Suppliers and Resources
Another critical factor is the increasing de-globalisation and the challenges it poses in terms of suppliers and resources. Companies that have relied on global supply chains for too long are now feeling the effects of trade wars, political tensions, and economic uncertainty.
In the automotive industry, where vehicle production requires a vast number of specialised suppliers, disruptions in global supply chains can quickly lead to bottlenecks. The failure to strategically adjust to these new challenges – such as by establishing alternative production sites or shifting to more localised supplier relationships – has caught many companies off guard.
Furthermore, geopolitical tensions, such as trade wars between the U.S. and China, have severely disrupted global supply chains and driven up the cost of raw materials and components. This has led to increased production costs and has intensified the need for companies to adapt to new economic realities.
China as a Strategic Partner and Competitor
China plays a dual role in the automotive context. On the one hand, it is the world’s largest automobile market and thus an indispensable partner for companies that want to compete globally. On the other hand, China has also become a growing competitor in the electric vehicle industry and is now not just a supplier, but a direct competitor in the international market.
Companies that have not timely adjusted their strategic considerations and investments regarding China now face a double risk: they miss the opportunity to benefit from China’s booming electric mobility initiatives, while simultaneously having to contend with growing competition from Chinese brands.
The Importance of the Comfort Zone of Companies, Their Decision-Makers, and Employees
A key reason for delayed transformation in many companies lies in the comfort zone. Both leaders and employees are often trapped in established processes, structures, and success models. Change brings uncertainty, and resistance to new ideas that challenge the existing business model is often prevalent. For companies that have operated in stable markets for years, change not only feels like a challenge but can seem like a threat.
Yet this is where the core problem lies: when companies and their leaders remain too long in their comfort zone, they miss the opportunity to adjust their organisations to future demands. One of the greatest challenges for leaders is finding the courage to question existing structures and foster a culture of change. On the employee level, resistance to new ways of working, digital tools, or innovative business models is often palpable – here, it is the responsibility of leadership to create a culture to overcome this resistance and communicate a vision that brings the workforce along.
The Importance of Self-Reflection and the Personal Transformation of Entrepreneurs and Leaders
The ability to self-reflect is a critical factor when it comes to transformation. Leaders must not only recognise external changes in the market but also constantly question their own mindset and leadership skills. Often, it is not just the organisation that needs to change, but also the entrepreneurs and executives themselves. They must be capable of rethinking their own thought patterns and actions in order not to remain stuck in the same patterns that previously made them successful but are no longer sufficient today.
Leaders who are willing to develop personally, acknowledge their weaknesses, and remain open to new ideas set a strong example for their organisations. Self-reflection not only fosters personal growth but also the willingness to drive change and take responsibility for transformation. When entrepreneurs and executives adopt a mindset of continuous learning and growth, it influences the entire organisational culture and triggers a positive transformation dynamic.
Conclusion
The Central Importance of Transformational Capability for Companies
The automotive industry is just one example of a widespread challenge that many sectors are facing: companies that actively shape the transition and drive transformation forward, rather than delaying it, will be more successful in the long term. However, the need for transformation applies not only to the automotive industry but to many companies, regardless of size, sector, or market. The question is: Are companies ready to embrace the changes that are coming their way? And are leaders capable of initiating the necessary change both within their organisation and within themselves?
Transformation requires more than just adapting to new technologies. It demands the courage to question established business models, step out of the comfort zone, and venture into uncharted waters. Yet, the success of transformation does not depend solely on the leadership; it also relies on the entire organisational structure. Are you as a leader able to empower your employees to actively participate in the change process? Have you established the right structures to foster a creative and innovation-driven environment where every employee can contribute to shaping the transformation?
The ability to transform must not only be passed down from the top but should be embedded as an integral part of the company culture. It’s not just about implementing new technologies but also mobilising the collective potential of the entire organisation. As a leader, have you created the conditions that allow your employees to not only accept the changes but to also become driving forces of the transformation? How can you unlock their skills and creativity to develop innovative solutions and actively shape the change?
Perhaps the most crucial step is to question your own mindset: Am I, as an entrepreneur or executive, ready to change personally? What new competencies and ways of thinking must I develop to make the company future-ready? And how can I encourage my employees not just to go along with the transformation, but to actively engage in it?
Ultimately, the success of transformation does not solely depend on external factors but on the willingness to take responsibility, see change as an opportunity, and have the courage to explore new paths. However, this success can only be achieved when the entire organisation is involved in the change process and empowered to act.
The companies of tomorrow will not be those that cling to the past, but those that are ready to actively shape the transition from the industrial era to the digital age – with an organisation that not only accepts change but drives it forward.
The question remains: Will you be an active creator or a passive observer of this transformation?
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