"If you think about innovation, if you think about maybe even at some point starting your own corporate venture fund or have corporate entrepreneurship, that's almost the end stage of a process like this. In the beginning, it's just like an iceberg". This episode with Sasa Saric from hivetime and Markus Schwarz from Alfmeier Automotive Systems Shanghai features a deep dive from both a client’s and consultant’s perspective on their transformation journey together, with a specific focus on strategic and cultural change, and implementing localized initiatives to win in China.
"If you think about innovation, if you think about maybe even at some point starting your own corporate venture fund or have corporate entrepreneurship, that's almost the end stage of a process like this. In the beginning, it's just like an iceberg". This episode with Sasa Saric from hivetime and Markus Schwarz from Alfmeier Automotive Systems Shanghai features a deep dive from both a client’s and consultant’s perspective on their transformation journey together, with a specific focus on strategic and cultural change, and implementing localized initiatives to win in China.
Sasa: (00:03)
If you think about innovation, if you think about maybe even at some point starting your own corporate venture fund or have corporate entrepreneurship, that's almost the end stage of a process like this. In the beginning, it's just like an iceberg. Like what you see at the top is "okay at the certain company has a corporate venture fund and they're launching new initiatives, they're launching new products." And that's what you see from the outside. But what is invisible, so below the water line is all the effort that went into the structures and processes that had to build up giving the teams, confidence, establishing a culture that actually incentivizes and appreciates innovation.
Christine: (00:45)
Welcome to the Lost in Transformation podcast series dedicated to the complex world of Digital Transformation. We feature guests from large corporations, start-ups, consultancies, and more, to shed light on the success factors around Innovation, Transformation, and adjacent topics.
We share first-hand insights and inspiration from experts for all the intrapreneurs, Entrepreneurs, and anyone curious about Digital Transformation.
Christine: (01:14)
Hi, I’m Christine, the Marketing Manager at MING Labs, and today, I am joined by Sasa Saritsch and Markus Schwarz. Sasa is the Managing Partner at the boutique consultancy Hivetime, where he supported the transformation process with Markus and the team at Alfmeier Automotive Systems. From both the client’s and consultant’s perspectives, they guide us through the work of their transformation journey over the past years, focusing on strategic and cultural change and implementing localized initiatives to win in China. We hope you enjoy this episode!
Christine:(01:49)
Hi Sasha. Hi Markus. I'm very excited to have you both on our podcast today on Lost In Transformation. And thank you both so much for taking the time today and yeah, Sasha, you're the managing partner at Hivetime, a boutique consultancy that's also are particularly focused on culture and strategy. And Markus, you are the executive vice president at Alfmeier Automotive Systems in Shanghai. Very curious to hear more about your transformation journey together today to learn how it all started and how far you've come together so far. And to start off, I'd like to get to know you both a little bit better. Could you tell us about your background and your experience to help us understand more about you and your work in general? Perhaps, Marcus, you could go first.
Markus: (02:34)
Yeah. First of all, of course, thanks also for having me on this podcast. So it's also my pleasure and it's a good way to spend Friday afternoon in Shanghai, so much better than on the road in the traffic. I'm with this company Alfmeier now for 18 years, and previously, basically my first 10 years working out of Europe. Was a lot of leading and technical department responsibilities in Europe and then transferred basically almost nine years ago to China where the transformation journey for Alfmeier in China started. And also basically my journey was this company in China. My background is engineering purely. So also for me, it was a little bit of transformation too I would say, extend my scope of business, understanding from purely engineering to where I am right now, basically responsible for the China and career setup for Alfmeier in Asia.
Christine: (03:34)
Cool. Really impressive to hear also about the international background and how you actually came to China and Sasa, you have a similar international background. I'm happy to hear more about it too.
Sasa: (03:45)
Thanks, Christina. And also from my side, thank you for having me on this podcast today, speak in the making. So very happy that today we're sitting together and also for Markus for making the time today. As you mentioned, Sasa, my name is, I'm a managing partner of Hivetime. Together, the partner founded Hivetime in 2013 in Shanghai. So we actually a China-born consultancy. And now since, two years ago, we're also in Europe. We have two locations, in Shanghai, in Europe, specifically Germany, we serve our European clients. So as you mentioned, we're a strategy and culture consultancy. And, what we do is we, in a nutshell, help our clients win in China. And we do this with a framework that we have developed over the years, also based on the project that we did together without Markus and this team. And we use this framework to assess our clients there in their China opportunities. And then we work with them to push forward, either to pivot in China, if that's necessary or actually to reach the next level of performance which is exactly what we will be the topic of our call today.
Sasa: (05:01)
And, I'm personally, I'm a strategist at hearts. So I studied strategy at university. I did my Ph.D. thesis about strategy, in China to be specific. And now I'm also the practice leader, so to speak for anything related to strategy. I came to China in 2007, as part of my studies and stayed until 2020. So I've been in China for 13 years. It's been, I would say the time of my life, it's been probably one of the most exciting periods to be in China and something we will dive more deeply into today.
Christine (05:42)
Cool. That sounds really exciting how you both of you have a German, Chinese professional background, how you're both working in the field of innovation as well. Really cool. And now knowing that you both work quite closely together, I'd like to kind of take a step back and go back to the very beginning. Markus, could you explain a bit how the connection with Hivetime actually started, also what Alfmeier does basically overall and in the collaboration?
Markus: (06:10)
So as I mentioned, Alfmeier itself has been transforming in China, started as a trading pretty standard approach, 2005, 2006. We are just basically developing a customer base in China and just trading parts components from Europe or from the US to China. We have two business units. We have one business unit, which is more focusing on fluid systems means, one involves technology inside brake systems or fuel [...]. And the other business unit is basically addressing seating comfort. That means lumbar support, [...] massage, systems as a tier two, but mainly focusing on directly discussing technology with OEMs, being there the director. So we have a lot of exposure. So OEMs and tier ones are pretty heavy loaded on R&D testing and validation, a lot of requirements. So therefore at the beginning, we just have had a trading representative office and in 2010, we started to transform a little bit into production.
Markus: (07:13)
And then from 2012, basically we started to implement more capabilities, just application engineering and slowly localizing. And until then, I would say our China strategy was mainly driven by corporate strategy. We just have been basically executing. And so far we have been growing the business and the customer base was growing, but mainly driven also out of support from headquarters. And in 2015, 2016, we saw a little bit of change, a transition coming. And as we met with Hivetime, this was then the time where we had like one belt, one road initiative to meet in China 2025. And you could see basically that there was a transformation also inside China going on, GDP growth was going down. So it was not only, basically possible to grow out of the growth from the market. Now you have to be more active locally.
Markus: (08:12)
And also the China strategy itself was going into local for local. And this is basically where we identified that corporate-driven or headquarter-driven China's strategy is not enough anymore. So we need to have a better translation of it. And we have to also really understand what fine-tuning, what adjustments do we need to do really for China. And before we started to work with Hivetime, the strategy was done and the meetings were at the top headquarters, then we hold a presentation, that's where we go. Everybody was like, oh, okay, okay. And that's it. Yeah, but with the, I would say more need for localization, understanding the markets, the speed of China, really, and making the adjustments and the speed that you need here in this market, we need to have a better translation. And this was recognized, fortunately at this time, by our GM here in China, it was not me.
Markus: (09:07)
It was my predecessor. And we started to work together with Hivetime to basically say, okay, how can we now take the corporate strategy, which is basically showing our direction for the next seven years and to translate, but rather than the necessary initiatives or activities that we need to start to look at in Chin. And how do we bring China set up from here to where it needs to be seven years from now? Cause normally our strategy process looks at a three-year budget and additionally on the top five-year strategic sales plan. And this is of course triggering necessary activities, either production, footprint, capabilities set up, local R&D, what's the topic, testing supply chain. And, this is something that basically needed really detailed identification to say, so what's necessary to get it to the next level. And this is where Hivetime basically jumped in with us as a navigator through this process and basically breaking it down was the team that we had at that time.
Christine: (10:10)
Interesting. So basically having the headquarter, driving most of the transformational steps, as you were saying, also the China strategy, quite interesting to know what the status quo looked like before the journey and how it then changed when Hivetime came in and supported you. And now zooming into your actual transformation journey together between Hivetime and Alfmeier, could you both guide us through the first steps of the journey at how Hivetime helped Alfmeier with their approach to culture and to strategy. Perhaps, Sasa, you could start and you could both explain the first steps together.
Sasa: (10:45)
I think what Markus just emphasized, I would call them the technical aspects of what happened in this period 2015 to 2017. So we started working together, if I'm correct Markus, in October 2017, and there was exactly that time when the Chinese government declared the new normal. So the new normal meant, so you go from double-digit growth. So China was growing double-digit for 30 years to single-digit growth, it's of course it was a much bigger market. So the absolute growth was still staggering, was still significant because everybody has planned that capacity for double digital growth. You had what Markus just called suddenly a much more intensified competition. So what Markus just described, the technical aspects of this transition, and I would like to zoom in on the cultural aspects of this transition, in our own frame when it comes to China and Markus will recognize some of those elements.
Sasa: (11:45)
I would like to just emphasize the first four. So first of all, if you want to be successful in China, you have to commit to China as a multinational company. You have to be serious about China. Secondly, you have to grant the China team adequate autonomy. So they have to be able to run in the markets at their own discretion, of course, within a framework. Third, to do so the team has to have a strategic and leadership maturity. So the people in China have to be capable to make something out of this autonomy and fourth, which is the topic of today. You need to have your core technology your core assets and your innovation capability in China. And as you'll notice, innovation capability is step four. Step three is all about the organizational and the cultural setup of your company in China. And that's exactly where we started with Alfmeier. So having to develop that strategy is one part, but we also had to take the team that was used to receive strategic guidance from headquarters, and then execute it. We had to take that and take that team, the China team, and step by step, develop their capability to think strategically for themselves and also to lead the company forward. And I think that was the key aspect of the transformation journey. And I'd be curious to hear from Markus, how he perceived that transition because I've witnessed Markus' own transformation that he was just alluding to from being an engineer to actually being a business leader. So I think that Markus, in a way, encapsulates this transition as a person.
Markus: (13:29)
I mean, the thing is mentioning really the culture transition of the organization is also key because otherwise you can bring in all production capabilities and you can drop in R&D, but when there's no team to pick it up and to really run those initiatives and implement them, then you will be not successful yet. That's definitely key and you need to transform the organization. But I think the biggest thing is really to make it explainable, to explain what's happening. Because every transitional transformation it's related to change, it's a change for the company. It's a personal change and people need to be aware that it's normally we are hesitating every time something changes. Everybody's like, oh no, but we did it until now like this, why do we have to change? Why do I have to do it now differently?
Markus: (14:15)
And I was used to doing it this way, but now I have to do it this, I don't wanna talk to him actually. And we even had cases where we had to split up a department, right. So I basically had to tell the guy you're now responsible only for this, the other rest we have to bring it into another setup, that basically he needs to understand it I'm taking something away, but it's just for good. So you need to really have this big picture. And this is also where I think the strategy process itself, how Hivetime is running. It's basically a lot of workshops, a lot of discussions. We are basically working together to formulate the strategy. And the most important part is then for the results to identify initiatives and then run the implementation because then people really understand why I do this now.
Markus: (15:01)
And, what's the purpose of it. And I think this helps also everybody who's involved to understand the change. And we start in 2017 and we have mentioned this already I think before. We now have maybe 50% of the people, even less than started with us this journey, the team now is almost a new one, especially my management team in China the setup changed totally. Therefore there are a lot of new players and we also used this, because we started, of course, to communicate this on a regular basis. It's not like a one-time-a-year event. You know, it's not like a team-building and then you just put it somewhere, and yeah, let's wait until 2022 or something, but we are basically taking it in regular communication. We review the status of the implementation of the initiatives and so on and so on.
Markus: (15:52)
And this helps also to integrate new people, of course, it takes a little bit time to bring them on the train that's running but gives you a lot of tools also to bring them up to speed and to understand why we are going in this direction. And, what is your purpose in this organization? And what's expected. And also, I mean, the best thing was for me when I hired our sales director and then we go to headquarter and we are talking about strategy and sometimes you have people sitting like, I don't know the strategy. And I'm looking at my sales director, like what was the first thing we discussed and he's like, "strategy." So it just becomes a natural thing. It's not so like a big question mark, which is done somewhere on the owner or CEO level. It basically needs to really drop down into the organization. And this process that we run together with Hivetime was helping to do so, to communicate it.
Christine: (16:46)
Definitely. I think it's super insightful to hear about success factors, in such a big process and all of the differences that you mentioned to keep in mind. I think basically being faced with such a huge project and figuring out where to actually start, how to translate then also the corporate strategy into one that also works locally for China. You were mentioning communication, regular communication, bringing everyone in, which I think is super interesting and super insightful. And now to make it a bit more tangible and also easier to understand also for the listeners, could you give a few concrete examples of how Hivetime helped Alfmeier specifically? Perhaps now Markus, you could go first and then Sasa, you can add your view too.
Markus: (17:31)
I mean, for me it was one of those at the very beginning when we started with Hivetime help was really to break down the company value stream map, and really also make the management team understand how the company works and how we make money. I remember we really had discussions about, it because at the end when we draw the value stream of the company, I had a different view than one of the members in this meeting. So, I was looking at his value stream member. I said that's Alfmeier, that's the company you work for. So the thing is, I think where the Hivetime guys and the process helps is really to start discussions and to come to an understanding of the specific point like value stream mapping, like that's the company, where are we good at?
Markus: (18:16)
Where do we have areas for improvement? We start always with external analysis. So it's really the corporate strategy. That's basically on a big picture. Does it fit totally to China, or where have we have some adjustments, what's different? What is internal, where are our competitors? So basically really systematic approach for me and for the team to work out really our current point in the status to say, okay, this is where we are. This is what we do. Good. This is where we need to improve. These are the competitors. This is the market, and then from there on basically, okay, where do we wanna be? We basically generate a division for China. So where do we wanna be five years from now? And then basically, how do we want to get there? And that's when it becomes interesting when you basically then start to work on these initiatives.
Markus: (19:06)
I mentioned this several times, cause from really where the work with Hivetime was giving us a benefit. We are not shutting down after we do a funny presentation and say, yeah, that's the strategy then? Cause we actually identify the work that needs to be done to get there. And these are the initiatives which need to be done. Anything else is basically just having a partner on board for two months to run some workshops, generate a lot of paper and the final presentation, and then that's it. We have dinner and here we go. But actually, the outcome is really those initiatives that they need to implement, and that's the key. And this is where Hivetime helped us actually really to understand, that's the key of the process, the outcome, and the implementation, and the workshops are basically just a journey there to get everybody aligned and understanding what's coming the next.
Sasa: (20:03)
And I think Markus, just to pick up on the value stream mapping, I think this allowed you to actually transfer one of your products from Mexico I think to China, wasn't it?
Markus: (20:16)
I think in the value stream mapping, we definitely, helped us to translate and speed up the localization of more R&D capabilities because we're definitely identified we need to have software hardware. We need to have the whole R&D capabilities here because our customers are now running at a different speed. They're getting more mature and we need to be able to talk to them. We cannot go through a loop over us or Europe and wait one week for an answer. This does not work here. So this was definitely where the value stream mapping was like, okay, we need to have a focus. It's still until now localized R&D. The other thing was a localized footprint. And definitely at the beginning of this, this journey in 2017, 2018, like local for a local, basically much stronger focus on purchasing, local purchasing.
Markus: (21:05)
And this was actually also the drive that we rearranged our whole supply chain and purchasing. So basically, those results out of the strategy had the impact that we reorganized the organization there. So then for the people involved in this during the process, after, during the implementation of this initiative, they're like, oh yeah, really they're changing the organization. So it's really happening. It's just not like a paper box or chart now, really we are separating it and this helps us now. So the thing is that the strategy implementation takes time. But right now, in those last years, when you have all the crisis, covid, this setup helps you, so you see, basically, we implemented this at the right time to now water through those heavy waters in a comfortable way. I would say it's still a challenge, but we are in a much better setup. And I think without starting this in 2017, it would look different now.
Sasa: (22:04)
And I think one thing that'll probably be a recurring theme today is that you can see how much effort actually goes into the preparatory stages before you can build up a significant R&D capability in, let's say in China, doesn't matter that it's Europe, USA or China. So if you think about innovation, if you think about maybe even at some point starting your own corporate venture fund or have corporate entrepreneurship, that's almost the end stage of a process like this. In the beginning, it's just like an iceberg. Like what you see at the top is OK. A certain company has a venture fund and they're launching new initiatives, they're launching new products and that's what you see from the outside. But what is invisible? So below the water line is all the thought that went into the structures and processes that had to build up giving the team's confidence, establishing a culture that actually incentivizes and appreciates innovation, questioning the status quo and even the so much talked about failure culture.
Sasa: (23:07)
So all that is below, below the water line that we don't see. So that's the recurring theme here. So before in the end, you can benefit from a significant innovation capability. There is work to be done way before that, to get your teams ready. I like to give you another specific example, which ultimately resulted in Alfmeier today being able to launch a corporate venture fund in China, and end of this year, they will start an ideation process to come up with innovative ideas to feed into that corporate venture fund. Let me give you a specific example from before 2017 when we started this process, and where Alfmeier is now actually allowed Alfmeier to launch and feed a proper venture fund. So in 2017 most of the customers of Alfmeier were actually sourced in Europe or in the USA, classical Germany [...]. Germany would require those clients, have after the project in China, Alfmeier in China has to execute, OK. But as we all know, starting 2014-2015 the Chinese automotive market just the global market went into overdrive.
Sasa: (24:25)
So you had a massive transition in the automotive market, in an industry that hasn't seen a disruption in 100 years to the famous case, right? So connected, autonomous shared electric, suddenly this arrived in China and you had, I dunno, a lot of new automotive stuff. And a lot of Chinese players suddenly become serious there. But the question was which one of those should target because resources are scar if you go, and automotive requires significant investments into plants, hardware machinery. So you cannot go, after all, you have to pick the winners. So as part of the strategic initiative, one initiative that came out was a key account strategy. So to identify potentially future winners in the Chinese automotive market, and then really strategically go after them, identify opportunities and develop them as a client. Now that's pretty standard. But what led out of this, which is not relevant for innovation is a completely new understanding of the Chinese customer, the end customer, the person who's actually sitting in the car using Alfmeier products, but also the Chinese OEM. The direct result of this is that now Alfmeier has lots of ideas, on how to actually bring new products to the market specifically to China, to benefit from these trends, whether it's digitalization, autonomous driving, or shared mobility. And this outcome wouldn't happen possibly if in 2017 Alfmeier wouldn't have started with account strategy, and that gives you an idea of the timeframe when we talking about a company that is really serious about launching such innovation initiatives.
Markus: (26:22)
That's true. It's a time-consuming process. This is not something you just finished in one year.
Christine: (26:27)
Super interesting to see how it works firsthand and how you also highlighted all of the prep work basically to actually come this far and how the team then started developing their own capabilities and so forth, really interesting to kind of understand your transformation in practice as well. And now looking back on the transformation journey on your whole experience, working together and driving innovation, especially with a focus on the strategy part, as you mentioned, and also the cultural aspects as well, I'm sure there's probably a ton of things that you learned along the way, too. What would you say all would be your biggest learning or take away from the journey? Is there anything that you'd like to specifically highlight? Perhaps Markus?
Markus: (27:11)
For me, definitely, it's communication. You need to basically keep this topic alive by communicating it and also taking it in your, I would say DNA as a company. It needs to be always visual. We even basically implemented our leadership values, ownership, trust, respect, recognition. This is a theme that we have as values we implemented is also in those initiatives and strategy, really to build up a culture, which is then, like Sasa already mentioned, able to really run on their own, take those, I would say ownership to another level to basically drive those topics. And I think you need to really, once you start this strategy and you start on a higher level with your team, we call the team number one, basically on the top management level, you need to take next step, and to also take it to the next level.
Markus: (28:06)
So the head of the department needs to take this I would say mindset that you try to build and you start to implement also to the next level. So it's the culture change to live with the strategic initiatives and really understand that they are driving the companies outside journey and transformation, stay alive. If you just do it as a one-time event per year, and then you never mention this again, you will lose it. It will not be visual anymore. And people will just dive into day-to-day business and problems and forget about that. There was a certain initiative, which was connecting basically with the targets in four or five years from now because it is how it is today. The business will be always the one piling at your desk and there will be problems to solve immediately from the customer supply chain and so on and so on.
Markus: (29:00)
And I think being in the leadership position, me and also my management team, we always have to pick up the strategy topic and put it on top, bring it in connection with even active problems or topics that are running with customers, and basically try to drive it and keep it alive and bring it again to discuss if it needs to be changed because that's also something you need to understand. The strategy that we do today may be not valid 12 months from now. So you also have to revisit it a little bit to say, do we have to pivot? We have to adjust that change, right? Otherwise, we will run in a certain direction, which is no longer valid for us, especially in China where things are changing so fast. You need to always keep an eye on how is the market developing, how are your customers moving around, who is the next big one or a small one, or are we really going with this customer?
Markus: (29:57)
Like Sasa mentioned, do we put the resources in there? Is this something it really, because we don't have unlimited resources, right? So even if the market is so big, we need to be pretty picky and specific to say, okay, this fits into for this customer, we would like to go with, but we will have to do totally new development. We don't have this asset right now. We don't have so much capacity. Let's just stay with what we have right now. So, this basically helps you also to maneuver through a dynamic market and the disruption that you have now in China.
Christine: (30:29)
Yes. So communication, definitely visualizing, building a solid culture that can basically work on their own as well. I think it is great to hear about all the learnings along the way, Sasa, wanna add anything?
Sasa: (30:42)
So for me, the greatest learning, and I think every leader of teams or organizations, who's now listening to this podcast probably can emphasize with this, the question every leader should ask herself or himself is, am I working in the company or am I working on the company? And I can tell you, you should be working on the company. And when Markus started this journey, he was very much working in the company. So he was tied on operations, he's laughing now. Day-to-day, sometimes emergency cases, sometimes meetings really day to the day-to-day grind of running a company. But if you are in the day-to-day grind to run a company, you'll not be innovative. You'll not be strategic and you'll not bring the company to the next level. And you'll not be looking around the corner. And I think one of the core, like the personal benefit that everyone can take out of such a process for herself or himself, is to build a cohesive team.
Sasa: (31:49)
Number one, Patrick Lencioni, in his fantastic book, "Why organizational health [...]" talks about having a team number one for direct reports, who have a shared vision, as you just said, Christine, everybody knows exactly where the company's going. Everyone knows exactly their plays in that vision. And then they can execute on that vision, which means for a leader like Markus or any of the leaders now listening to us, it means suddenly you don't have to be there day-to-day. Of course, you still have to be there as a leader. It's important. You have to show what is important. You have to show what the priorities are. You have to hold the vision, but now you have the capacity for network, for going out, seeing what's next. And then suddenly innovation, creativity, new possibilities, they actually become possible where before your day was just taken by issues.
Sasa: (32:46)
Now suddenly you have time and this time is absolutely crucial, absolutely necessary to be innovative. And this is exactly what has now happened with Alfmeier. Markus has a very cohesive team. Number one with a shared vision and Markus now has freed up time to think about new ventures, new startup ideas, new products that he can bring to the Chinese market and to the Chinese customers. And that's an absolute positive vision for anybody who is thinking of embarking on such a process that is actually a state and end state, I would say, which makes all of this absolutely worthwhile.
Christine: (33:25)
It's great learning. Basically what you just mentioned, working on a company to be innovative, to execute on the vision, and then also making space for creativity and innovation to become possible at all. I think that's a good takeaway, but on the other hand, implementing those initiatives that are relatively new to the company, or perhaps also to the industry, then also working with different people, I can also imagine that that must be difficult too overall. What would you say were your biggest challenges throughout the journey so far? Perhaps Sasa, you can just start with this one.
Sasa: (34:01)
So normally the biggest challenge in such a process for us as consultants would be to keep the motivation high once the strategy has been envisioned, okay. So I don't like the separation in strategy development and strategy implementation. I think that's misleading because if a strategy can't be implemented, then it's not a good strategy. So it's as simple as that. So strategy and implementation actually go hand in hand together and make clients, leaders understand that the implementation is actually much more important than all the thoughts that are going into this. Because you know, when I take a shower, I have 10 ideas, but I implement none. So implementation is really what is key. So typically in a process like this, motivation is very high. When you sit in the workshops, you do the analysis, you come up with the vision, you define initiatives and you have this new feeling of what's actually possible, right?
Sasa: (34:59)
So people are energized. They want to get things done well. And then they start implementing, then they run into obstacles. There's not enough money. There's not enough time. There are not enough people. So there are so many excuses not to get things done. If you then don't have a leadership that's behind this and that whole vision for the team, it's just not gonna happen. So that's whether it's strategy, whether every change has of implementation. And now here I have to give credit to Markus specifically, and also to Alfmeier's owners because they understood that the implementation needs to be staffed. It needs to be resourced. There has to be time allocated for it. There needs to be a structure, just like any other function in the organization as well. So they understood this. And Markus personally was actually behind this, holding the vision and making sure that the implementation happens. And this is not a one-month journey. This has been relaunched. The strategy was approved by the board in October 2018. Now it's November 2021. We're talking three years, right, where we had the biggest crisis of our generation in between. So COVID lockdown and still Alfmeier and the owners, they held that vision and they held implementation. And they're all the credit goes.
Christine: (36:38)
That's really good to hear, to really have that strong vision. Also making people understand that implementation is key, all as part of the things that they need to pay attention to, and really highlight their importance here. Markus, any biggest challenge for you?
Markus: (36:54)
Yes. The implementation, it's like I would say key bus stop on the whole journey. Because in the end, you're mapping out a lot of initiatives and sometimes it can be pretty overwhelming also for the team. And they're like, yeah, we will never implement this because they're also putting numbers and timeline behind it. It's like 1 million, 2 million. They're like, they will never do it. But at the end, basically, you need to sit down and say, because as Sasa mentioned, it's just another part of the whole journey of implementing than the strategy. It's part of the strategy journey, right? So it's just a bus stop. So let's take a seat back and see what do we have there? And pick up the ones to say, okay, that's an easy one. This initiative we can do easy. This is maybe a little more difficult or this we move because right now we cannot do it because you still have a day-to-day business.
Markus: (37:43)
I mean, you still have customers, you cannot implement 15 initiatives at the end. You'll lose your revenue and no income. And then you just shut down the facility here cause you're successfully implemented 15 initiatives, but you did not do any revenue, okay. But in the end, basically really taking it, [...] this one for the team and implementing one by one. And then you see this is implemented. And also than reviewing this to say, see guys, this is what we had as an initiative. Maybe we adjusted it a little bit, but it's implemented, this is running, this initiative. Maybe we named it, but we transformed this into another, would say the title, and it's still running. And then when the team sees, oh, okay, so we really are starting to implement it. Then it becomes a little bit, I would say, more convincing for them.
Markus: (38:31)
Okay, so that's really part of it. And sometimes as I mentioned, you need to remind them, just guys, this what we do is because of the strategy. And we have also now, for example, one thing we launched this year is talent development. We call this initiative talent development because we saw that the team in China basically is like, what is my career path? How can I develop, how will the company help me to get to another level when I'm a senior in a year, now have a team. How can the company support me to really become certain, to understand my leadership position, to lead the team? Right? So we generated this initiative talent development, where we have people on board and we are of course running. This was the support from our corporate headquarters, from HR. And the thing is when my HR was as [...] why are you doing it actually because it's our initiative.
Markus: (39:17)
We identified as one of the necessary items, we need to implement to get our team to another level. And this is how we address it. That's the program. And it's then helping you also to explain activities that you are running, why you have a program for talents. But for me, really, the biggest thing is really the stop. When you look at all the initiatives that you have to really then start to pick up the right ones and implement them. Yes, I would say that's the biggest challenge because it needs to push. Because the easiest thing is to basically say, yeah, fine, whatever. We just shut it down and everybody knows where it goes, but I think we need in picking up the work and saying, no, we implement this and do it in parallel to the day-to-day business. And as soon as you do the first ones, it becomes like a, a sales running process comes in nature of the company.
Christine: (40:13)
Yes, so basically the biggest point, the biggest bus stop, as you were mentioning it again, implementation one by one. I think talent development, one that you mentioned is also a good one to kind of understand, okay, how are you actually implementing those initiatives?
Markus: (40:28)
Yes, this one is the easy one, you know, because you just start tele development program where you get 15 candidates and you try them to develop in 12 months to become more responsible team leaders and understand our core values. A difficult one is when you say, basically, I have to split, purchasing from the supply chain, because then you go and you pick up a department apart and this basically affect people. And then you need to really do the work to say, how do we come now to the head of the department that he should give up purchasing. Yes. It's like, now you are running two departments. Right? My business card is like, oh, and now you're coming and say, yeah, you know what? Because of our initiative, I think you should give up purchasing. So that's another piece, but he also, itself helps you because you really can pick up the why and basically, like layout the journey and to say, that's why, because from now on, in three years, this will be not anymore making sense of being able, because we need to move purchasing to another level.
Markus: (41:36)
And then the funny thing has become when you're sitting 2020 or 2021 with the team, and then you can basically point to figure out to the purchasing manager and say, you are here just because of our strategic initiatives. Without the initiatives, you will not have this position. Right? But this is something where you need to put more effort into it because that's definitely a disruption also in somebody's professional life. And for the whole organization.
Sasa: (42:03)
I would like to build on this when we've speaking of challenges. So what just said reminded me, I mean, one significant challenge and I'm a leader, everybody listening now who's a leader will be able to empathize. But the hardest part of a leader's job is to acknowledge that one person is maybe not capable or not willing to go along the way. Right. And then what do you do? And I think that's another point where the a was committed to this journey because those that were not willing to go along, actually Alfmeier separated from them. So, those that were not capable yet the Alfmeier leadership invested resources into coaching those team, number one members and getting them on the level required to actually live up to the ambition of the company in China. And again, that's hard to go to somebody and say, Hey, you are not good enough now let's get you good enough. Right. And, again, if you have this vision, if you have this ambition, if you can point to a strategy and have the why to support what is said, then people accept, not always, but it makes the conversation so much easier cause it's not arbitrary. It doesn't just fall from the, there will start behind it and people can typically relate to that
Christine (43:34)
Wow, there are definitely initiatives that are more difficult to bring across than others as you were mentioning, but understanding who's gonna be part of the team, having that vision, and the strategy to kind of back up your decisions. I think that's what you're highlighting here, which is super important. And now if we were to take a step back again and basically look at the whole transformation journey from a high-level perspective, in which ways would you say, was this a typical transformation experience for you or what was perhaps different compared to other transformation projects that you were doing, that you were working on?
Sasa: (44:11)
Something that we have learned over the years and here I would like to give credit to David Whiteing, the COO of Standard Chartered Bank. He was the one, who put this on the words for us and says, "If you start a transformation, you should actually start from the wolf. So, who is your objective benchmarking of success?" So, if you would put down the important people of the company and you would ask them who actually raises the highest, or the lowers standards on your performance? So who is that in an industrial company, in a B2B customer. So you start on the customer, you start from the market. And I think that's something that we have learned over the years to really build the transformation around it, to really ask, OK, why does the company have to transform? And the market for B2B company or B2C company, the market, and the customer are the most convincing drivers of if you can connect your transformation to the market, which is actually about your survival and whether you are prosperous in the coming years. If you can relate it, if you can connect your transformation to the market, it becomes such a powerful driver.
Sasa: (45:27)
Then many of the conflicts that would normally appear many of the leave-based discussions: I believe you should do this, I believe you should do that should disappear. Cause if you have the data from the market, if you have the customer and the customer tells you, you're not good enough, OK, I'm leaving you cause you're not good enough. Then suddenly you have convincing for [...], another beautiful point in case is the transformation of DBS bank. So the bank of Singapore, same thing, [...] client customer score. And they started their journey, which is now 12 years in the making. And now their best in almost all banking categories they too started from the market. Standard Chartered, same thing. So that's something that I would say would be by now, I would say, should be typical of a good transformation process.
Christine: (46:23)
So, really starting from the market, focusing on the market and the customers going from there, that's a really good start for a transformation journey. Good takeaway. And, Markus, anything that you wanna add?
Markus: (46:36)
For me, the typical experience, basically when we started this journey was a little bit the resistance to change. And like I mentioned, in the beginning, a transformation starts also was accepting change and this is something where people are hesitating just by nature. And, it took us a little bit also in the first sessions with Sasa, it took us a little bit basically to kind of motivate or wake to team up to basically also actively participate. It was for them also a totally new process. I mean, normally it used to be something like this, so basically, kind of guiding them on, starting this journey, this was kind of typical experience where people have been pretty reserved at the beginning. But right now I would say we reached a level where there's a much mature, much better strategic thinking and understanding in the company where there's no problem to place topics like this to discuss initiatives or have a little bit of strategic meeting, to think about or how we wanna do it. So people are engaged and are involved in decisions. They're not waiting just basically that somebody from the top will say, okay, this is the way we do it. It's much more fruitful right now. But at the beginning, I would say there was a little bit of hesitation.
Christine: (47:52)
This is probably not uncommon in such a scenario, but actually coming to the point where you are right now, as you were saying, also having those people engaged in the decisions, building those relationships with them. I think that's obviously great to have in such an important and a big project for the companies. And also to see here, how great the communication and collaboration is between you both between Hivetime and Alfmeier. Sasa, what would you say drives you to help clients in the space and collaborate with them in general? How can we imagine Hivetime's overall purpose here?
Sasa: (48:30)
So if you take as a starting point that Hivetime we actually born, as I said, initially, we were born Chinese. So we founded in Shanghai. We spent the first eight years of our still young company in China. And now we have the second location Europe. I think what drives us is we actually want to help our clients to win in China, to succeed in China. And we think from our experience, it is important for two reasons. Number one, this exchange between China and Europe, I think ultimately benefit benefits both. So it benefits China, and it benefits Europe. And we want to do our little parts to actually keep the collaboration going and keep the collaboration actually even thriving and expanding. I mean, I've been in China since 2007, I've seen the hardware change, right? You see the infrastructure, the bridges, the eight-lane highways, do you see all that?
Sasa: (49:34)
But for me, the most dramatic transformation was actually the software. So if I see how the Chinese have developed and how they have become really what becomes the entrepreneurial innovative, this massive ambition to succeed. It's just something beautiful to behold. And I think this is my second point, European companies in particular, and I mean, I see myself as a European citizen, Europe is because of the competition, not despite the competition cause of the competition that actually sharpens European companies. Because if you want to succeed in China and if you want to succeed and compete with Chinese companies, you really have to bring your best self to the market. So I think, yes, it's hard, but it's always good to have a tough competitor. Cause then you really have to bring your best to the market. So that's something that drives us at Hivetime and something that we also like to put into our client work to really make the point that every company with global ambitions needs to have China at the core of its strategy. That drives us.
Christine: (50:49)
That's a super interesting drive. Basically helping clients win in China, which you highlighted, bringing your best self to the market based on the competition that is out there. Helping them to solve those problems then together that they're working on. I think that's beautiful. And now we also wanna look at the future, essentially looking ahead and look at your work in driving transformation forward. Markus, is there anything that's next for Alfmeier that you are looking forward to or anything that you can share with us already?
Markus: (51:20)
For us, the transformation continues. I mean like I described the bus ride is not over. We are just passing by another stop where we are also looking at digital transformation. As Sasa mentioned at the beginning, we are now setting, I would say corporate venture process, a different way of innovating, looking outside automotive, where can we use our core competencies, our knowhow as a corporate to innovate, build ventures to basically address software digital markets. In a corporate as an open innovation fund, to cooperate with other startups, other companies invest in them or basically run projects, pilots and try to identify, product-market fits and problems that we can solve for customers. And therefore basically open totally new or different income stream for the whole company. And that's something that we now initiated out of China. And as Sasa mentioned, without the mature setup and automotive, that will be not possible.
Markus: (52:23)
So that's the consequence that our core business automotive sitting a solid foundation right now that gives me the time basically to look and continue the transformation of other areas with the team here and also in Europe. So therefore I say, we are still continuing to transform and it's a good thing. I think it's just a normal thing that a company looks at the market and at the total situation and tries to explore new things. And, I would say the lean startup approach gives us also the possibility to do it at a reasonable level of cost, because we are doing this totally differently than normally we will do an automotive business. We are really evaluating this at a much higher speed, on a much lower cost level. We are trying really to live up to this lean startup topic to make a very quick decision, it is something that we want to continue to push on how to involve other companies or startups, how to collaborate. It's an interesting journey. It's again, also a transformation for me because I mean, I had to start to read a book again. I never, I even don't know since I had the last time a real paper book in my hands, but it's also, I mean, it's an interesting period for somebody in my position, but also for the whole company itself to open new doors and new possibilities.
Christine: (53:43)
Great. It's exciting to hear that the transformation is not over or the bus ride is not over as you were mentioning. Great to hear about also that innovation funnel, as part of the corporate venture process, that's an exciting outlook for the future. Sasa, Markus, thank you both so much for sharing all about your journey together and your expertise in letting us understand why you're doing what you're doing and how you both drive innovation forward. Also working towards a better world than also enabling that cross border collaboration between Europe and China. It's been a pleasure having you on and thank you both again.
Markus: (54:21)
Thanks also for your time and thanks for having me on the podcast.
Sasa: (54:25)
Same here. Thank you, Christina, and thank you Markus for today.
Christine: (54:30)
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