The Cultural Clash: Traditional Automakers vs. Digital Companies – Can They Work Together? Transformation of Business Culture in the Digital Age

The Cultural Clash: Traditional Automakers vs. Digital Companies – Can They Work Together? Transformation of Business Culture in the Digital Age

Mikhail Bakunin (Moscow State University, Russia) and Mikhail Y. Kuznetsov (Moscow State University, Russia)
DOI: 10.4018/978-1-7998-2011-6.ch006

Abstract

Until recently, traditional automakers and digital companies have been working separately at their own pace, preserving their cultures and ways of doing business and driving innovation. In the early 2010s, younger generations of customers were spoilt by seamless ecosystems in digital and started wondering why they are still operating knobs while seated behind steering wheel. From this point, the process of interpenetration of two industries started, provoking transformation and cultural shifts in the traditional automakers industry. How far will it go? What are the main challenges of this transformation? What forms and principles of corporate culture will appear and dominate in the industry in the future?
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Background

Corporate culture is one of the keystones of strategic development of any organization. As Yuval Noah Harari states, «Huge masses of people unfamiliar with each other are capable to cooperate successfully if they are united by a myth. A limited liability company is separated from the people who founded it, and from those who invested in it or who manage it. Over the past centuries, it was these companies that became leaders in the economy, we got used to them and began to forget that they exist only in our imagination» (Yuval Noah Harari, Sapiens: A Brief History of Humankind, 2014). A famous phrase, attributed to Peter Druker and often quoted, states that “Culture eats strategy for breakfast.” And in practice we often see, that a company's culture, based on common values and behavioral patterns of employees normally can thwart any attempts to implement a strategy that is contradictory to it’s culture.

The topic of corporate culture influence on strategy execution has been investigated from different dimensions. Hofstede's Cultural Dimensions Theory (Culture's Consequences: International Differences in Work-Related Values. Geert Hofstede, SAGE Publications, 1980.) long ago has suggested a framework for cultural assessment, and proved, that human beings think, feel and act from their own cultural perspective, and cultural differences could become significant barriers to change.

Five sorts (dimensions) of differences/value perspectives between cultures by Hofstede include Power distance (the degree of inequality among people which the population of a country considers as normal), Individualism versus collectivism (the extent to which people feel they are supposed to take care for, or to be cared for by themselves, their families or organizations they belong to), masculinity versus femininity (the extent to which a culture is conducive to dominance, assertiveness and acquisition of things. Versus a culture which is more conducive to people, feelings and the quality of life), uncertainty avoidance (the degree to which people in a country prefer structured over unstructured situations), long-term versus short-term orientation.

The phenomenon of corporate culture influence on strategy implementation has been investigated by Henry Minztberg (Strategy Safari: A Guided Tour Through The Wilds of Strategic Management. Henry Mintzberg, Bruce Ahlstrand, Joseph Lampel, 1998.). He looks at the strategic process as fundamentally collective and cooperative. Strategic process is viewed as very much influenced by the power of culture. Common interests and integration are the main important drivers of the process.

The influence of culture is widely acknowledged as one of the main factors, important for the success of the company. In the Deloitte research (Global human capital trends 2016. The new organization: different by design. Deloitte university press.) (figure 1), culture, leadership and organizational design were named the main human capital trends.

Figure 1.

The 10 trends ranked in order of importance (compiled by authors)

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Key Terms in this Chapter

Implement (Implementation): Something used in order to accomplish a particular thing, especially a tool, device, or instrument to perform a task.

Computing: The use and operation of computers.

Valley: A long area of relatively low elevation, often having a stream bed at the bottom, surrounded by mountains or hills.

Behemoth: A huge beast, perhaps a hippopotamus, mentioned in the Book of Job in the Old Testament.

Strategy: A plan, method, or series of actions designed to achieve a specific goal or effect.

Interpenetrate (Interpenetration): To penetrate throughout; permeate.

Industrial: Of or pertaining to the production of goods and services by industry.

Transportation: The act or process of transporting.

Unstructured: Lacking strict regulation or planning.

Revolution: The internal, usually forcible, overthrow of a political system or legitimate government.

Corporate: Of or relating to a corporation.

Silicon: A chemical element that has fourteen protons in each nucleus, that is found naturally only in compounds such as silica, that composes one fourth of the earth's crust, and that is used in many industrial applications (symbol: Si).

Investigate: To systematically examine or search into.

Cycle: A circle of events that repeats in a regular pattern.

Externalize: To manifest or make external.

Acknowledgment or Acknowledgement: The act of admitting the truth or existence of.

Stakeholder: Someone who holds the money that is bet by one or more persons and who pays it to the winner of the bet.

Intelligence: The capacity to learn, reason, and understand.

Artificial: Created by human beings.

Automated: Able to operate without the help or work of a human.

Ecosystem: A community of living things, together with their environment.

Limit (Limited): The line or point at which something ends.

Conducive: Tending to produce or cause (usually followed by “to”).

Liability: The condition of or potential for being held responsible.

Humankind: Humans collectively; the human race or species.

Dimension: Size as measured in a particular direction such as height, width, or depth.

Shareholder: A person who owns stock in a business organization.

Carmaker: An automobile manufacturing company.

Pay Back: To return what is owed or borrowed; repay.

Dominate: To control or govern by the use of power or influence; rule.

Vehicle: A device used to transport people or things.

Capability: The characteristic of being qualified or able; capacity.

Connective (Connectivity): Serving or tending to connect.

Cultural: Of or pertaining to culture.

Simulation: The act or process of pretending or imitating.

Technology: A field of knowledge concerned with the use of industrial arts and applied science to achieve practical objectives, or the various inventions and means of solving problems that result from research in this field.

Autonomous: Free and independent, as a state or an organism; self-governing.

Collectivism: The doctrine or practice of centralized economic control, especially of the means of production.

University: An educational institution devoted to learning and research and authorized to award degrees on both the graduate and undergraduate levels.

Implementation: The act, process, or way of carrying (something) out or putting (something) into effect.

Transformation: A significant change in the form, structure, character, or nature of something or someone.

Boom1 (Boomer): To make a prolonged, deep, resounding noise.

Behavioral: Of or concerning the actions and reactions of a group, person, animal, or thing.

Compute (Computing): To calculate by mathematical operations.

Automate (Automate, Automated): To convert to a mechanical or electronic system of operation.

Exodus: A departure, usually of a great number of people.

Culture: The sum of the language, customs, beliefs, and art considered characteristic of a particular group of people.

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