General Motors (NYSE:GM) is a global company focused on advancing an all-electric future that is inclusive and accessible to all. At the heart of this strategy is the Ultium battery platform, which will power everything from mass-market to high-performance vehicles. General Motors, its subsidiaries and its joint venture entities sell vehicles under the Chevrolet, Buick, GMC, Cadillac, Baojun and Wuling brands. GM is launching into the Chinese market under the ‘Durant Guild’ platform, referring to William C. Durant, who is a co-founder and key advisor to General Motors.
General Motors symbolizes the American way of life as much as the American way of doing business. This includes regular reports, number-heavy business forecasts and detailed activity reports. But how can such detailed insight and outlook succeed in an agile startup? The Chinese subsidiary of the US car giant – General Motors Premium Import – which is currently being set up, uses a Hoshin Kanri methodology specially adapted for GM by Staufen AG.
The Chinese automotive market poses particular challenges for manufacturers from Europe and the USA. Difficulties include very high customer demands, strict government regulation, high price pressure, and the huge geographic and economic market, which has to be developed with the company‘s own dealer network. This is one of the reasons why, in the past, international corporations accepted previously state-mandated market entry in cooperation with a Chinese joint venture partner.
“Brand ambassadors” replace traditional car salespeople
General Motors is breaking new ground with its recently established General Motors Premium Import unit. The goal is to single-handedly import select GM models from the premium segment and sell them via direct-to-consumer channels. Traditional marketing is to be omitted, as is a traditional dealer network with elaborately designed showrooms. Instead, Felix Weller, GM Vice President, Premium Import China, is relying mainly on the power of the digital community to sell luxury vehicles in the world‘s largest vehicle market.
“The idea of community is very strong in China, and a lot of value is placed on currents and opinions in the community. Customers use social media to get information and like to get advice from community experts,” says Weller. That is why the organization is rethinking the customer journey. With so-called “brand ambassadors” and the establishment of a GM community, the company wants to better address the peculiarities of the Chinese market.
Vice President Premium Import
General Motors China
The Corvette on the racetrack and the Tahoe in the wilderness
GM Premium Import does not see itself as a car manufacturer or seller, but instead as an “energizer of expressive lifestyles,” where product, experiences and community form a complete package. The customer is sold an individually curated product, emphasizing or enhancing the customer‘s lifestyle. Take Corvette, for example: In the future, the sports car could be sold as a package with regular laps around the racetrack, including professional paddock support. And for an adventurous family, the up to 5.4-meter Chevrolet Tahoe with corresponding glamping tours is a great choice.
The focus on such lifestyle packages requires a high degree of flexibility and willingness to learn. GM has mastered “traditional” core business, i.e., production, import and homologation, from the inside out. Now, though, it is about getting to know the customer better and understanding how communities work. To achieve this, the company uses the full range of modern customer loyalty tools such as social platforms and artificial intelligence.
Another advantage of the exclusive community approach is that GM is not just another carmaker in the highly competitive market, but also acts as a lifestyle brand in China. The company thus wants to avoid tough price wars with high discounts, and instead present itself with confident sales and price levels.
Finding common ground for start-up and company
The information about customers and communities required for this cannot be obtained via traditional sales and marketing pillars. At the same time – especially during the critical build-up phase – common industry KPIs are not meaningful.
Instead of being guided by processes and profitability, GM in China operates like an agile start-up and faces business case issues, MVP (Minimum Viable Product) and high investments. The big difference to classic start-up: GM Premium Import knows exactly with which products it will enter the market with. The question of what the business model looks like in detail and how scaling must take place remains open.
This investment-intensive and at the same time open-ended approach normally jeopardizes the cooperation between a parent company, which is oriented towards fixed structures and processes, and an agile start-up. Many start-up projects founded from an existing company have failed because the goals and processes of the two ventures were simply too contrary.
(Jap. for “compass management”)
Hoshin Kanri focuses on leadership and development of employees towards the vision. Hoshin Kanri creates a connection between the vision, objectives, projects, and success factors using tools and forms. The X matrix is a tool used to link breakthrough targets, annual targets, improvement projects and enablers. Involving all levels of management across all organizational functions helps align the organization and is a key component of Hoshin Kanri. Management agrees on the goal and common path (horizontal alignment) and speaks to the organization with “one voice”. Hoshin Kanri can only be fully effective in the organization (vertical alignment) if there are no conflicting messages in the strategy.
Always thinking to the future with Hoshin Kanri
For GM Premium Import, attention was paid from the outset to ensure that different processes could run simultaneously:
- Development of import logistics for premium vehicles
- Establishment of a brand community
- Planning a functioning business model (including a digital ecosystem that can be exported to the real world, e.g., via experience offers, both digital and physical)
- Regular and detailed reports to the US parent company
These targets, which were not always congruent, and the enormous complexity of the project forced those responsible to adopt a structured approach that provided sufficient room for agile adjustments and extensive freedom. The management and automotive experts at Staufen Germany and Staufen China therefore revised and specially adapted traditional Hoshin Kanri methodology for the GM China project to make room for planning and forecasting aspects.
“We chose Hoshin Kanri because GM is completely rethinking the future. There are no experiential values yet. Nevertheless, specific, and ambitious breakthrough targets must be derived from this attractive vision and then implemented,” says Uwe Vogel, Partner at Staufen, summarizing the challenge. To do this, individual steps and points would be closely examined to determine which drivers have the desired effect.
The GM headquarters in Shanghai and Detroit also want questions answered from the company‘s own start-up regarding the current status of investment and reliable profitability forecasts.
Normally, automakers approach the question retrospectively and use known metrics. But we have no sales volume here yet, and do not have a traditional business model. So, I need a feedforward approach to get answers to the questions from the US.Felix Weller,
Vice President Premium Import, General Motors China
Hoshin Kanri can play to its strengths in this scenario, because it lays the right foundations for various future scenarios: “If I follow a logic in building my business that is sustainable even in the growth phase, I can scale much more easily than if I had to change horses midstream. In addition, new colleagues grow through the same processes that employees who were there at the start are familiar with,” says Weller.
For the GM start-up General Motors Premium Import, Hoshin Kanri, customized by Staufen, provides the perfect tools and processes to identify success factors and offer a comprehensive overview of the current status at all times. GM Manager Weller: “Like any start-up, I don‘t have 100 percent certainty, that I‘m doing the right thing. But I have a much higher probability of success.”
Executive Vice President and President of GM in China
Interview with Julian Blisset
How excited are you in this time shortly before the launch?
We are very excited about the launch of our Premium Import business. This is a completely new business created for the Chinese market. Activities such as the annual China International Import Expo in Shanghai, third-party studies and our own research have shown that there is tremendous desire among China’s consumers for premium imported models.
What are the biggest challenges to find your footing in the Chinese market?
The Chinese vehicle market is highly competitive across segments, with arguably the greatest number of automakers anywhere in the world. The speed of the development of a product or technology, from ideation to launch, is unbelievable. We therefore need to embrace the culture of innovation and collaboration in an agile manner to keep ourselves in the leading position.
How appealing do you rate GM’s product portfolio for the Chinese consumer and why?
We are taking a differentiated approach toward our products that is unique and has never been seen in the market. We are introducing an innovative business model led by a highly diverse, agile and talented team that will operate like a startup. It will focus on addressing the lifestyles of our customers and delivering a truly customer-centric experience.