Ingolstadt

Responsible action becomes a competitive advant­age

How can the automotive industry get back into the fast lane? Innovative and agile companies know when the time is right, activate the turn signal and accelerate boldly. In conversation: Bram Schot and Reto Ringger.

03/14/2019 Copy: Janina Weigel Photos: Tobias Sagmeister, Thomas Dashuber Reading Time: 5 min

Worldwide investments in sustainable assets

The interest in sustainability aspects is particularly evident in Europe. 1

Together with Reto Ringger, a value-driven asset manager and CEO of Globalance Bank, Audi CEO Bram Schot looks at how companies can speed up processes and make decisions more quickly – and why the capital markets reward this decisiveness.

Bram Schot und Reto Ringger next to Audi e-tron
The Audi e-tron electrifies: Reto Ringger and Bram Schot after the test drive.

Fuel consumption combined *: 26.2-22.6 kWh/100kmCO₂-emissions combined *: 0 g/km

Fuel consumption combined *: 26.2-22.6 kWh/100kmCO₂-emissions combined *: 0 g/km

At the moment, the capital market has a skeptical attitude toward established car manufacturers. New players, such as Tesla, inspire imagination. Why is this?

Schot:
Without Tesla, we wouldn’t have made as much progress in the area of electric mobility as we have. I have a lot of respect for what Tesla has achieved. With almost two million cars a year, however, Audi exists on a different scale and has a different business model. We have an ambitious Roadmap E, which begins with the Audi e-tron. It is the game changer in the area of electric mobility. Cutting-edge technology in an impressive design – it’s simply irresistible.

Ringger
: I can’t wait. To see the car and find out the extent to which Audi’s long-term success is linked to the success of the e-tron.

Schot: With the e-tron and the e-tron Sportback, which will also appear in 2019, we are opening the door to a new era. It’s not just about how many market shares electric vehicles have tomorrow or the day after. Conventionally powered cars still make up the basis for our success. This will change gradually – depending on how our customers take to electric mobility. However, what’s also clear is that it’s not just the means of propulsion that is changing. In the past, the focus was on the car as a product and everything else was grouped around it. Today people are creating environments for themselves in which the car, although still important, plays an integrated role. This is new.

Ringger: This calls upon car manufacturers to question their own self-image. Building great cars is no longer enough. Car manufacturers need to completely reinvent themselves as providers of mobility. When I see which companies are truly dynamic, innovative and successful, then it’s usually those that are still managed by their founders. Just look at Amazon, Facebook, Google and Alibaba. Apple was like that, too. These entrepreneurially managed companies change the rules of the game. In comparison, companies run by managers seem like plodding giants. How do you avoid this sluggishness at Audi?

Schot:
It is indeed a huge challenge to keep up with this speed. Technology alone is no longer our USP. In this volatile world, the right people and culture are crucial. They allow us to change a lot more than before – the difference between what is conceivable and what is achievable was never as small as it is today. Our imagination is the only limit.

Ringger: Exactly. The challenge for a CEO is to attract employees with these abilities. Out-of-the-box skills – in other words, the ability to think creatively and unconventionally without limits – are becoming more and more important. As an entrepreneur and also as an investor, I notice again and again that the importance of culture exceeds the importance of strategy many times over. The well-known consultant Peter Drucker once said in this regard: “Culture eats strategy for breakfast.”

Schot:
Exactly. The challenge for a CEO is to attract employees with these abilities. Out-of-the-box skills – in other words, the ability to think creatively and unconventionally without limits – are becoming more and more important. As an entrepreneur and also as an investor, I notice again and again that the importance of culture exceeds the importance of strategy many times over. The well-known consultant Peter Drucker once said in this regard: “Culture eats strategy for breakfast.”

Ringger:
Because risk-taking is not the most marked characteristic of large companies?

Schot:
Right. The car industry is not sufficiently willing to take risks and is too complex. We must reduce complexity while speeding up innovations, either in-house or with partners. I am convinced that excessively rigid planning stifles new ideas. Robust, innovative and above all agile companies will be particularly successful when it comes to making the necessary change. The skills and motivation of employees are the differentiating factor.

Reto Ringger im Audi e-tron

Reto Ringger

Reto Ringger (55) was the founder of SAM Sustainable Asset Management. In 2011, he founded the Globalance Bank in Switzerland which he now heads as its CEO. Reto Ringger is an entrepreneur and pioneer at the interface between the financial market and sustainability. He has been involved with topics of the future for over 20 years. Reto Ringger has received numerous awards for his entrepreneurial successes.

Reto Ringger, Bram Schot in Audi e-tron
Reto Ringger tests the new Audi e-tron. The Audi e-tron marks the start of a new era – Audi CEO Bram Schot is convinced of it.

Fuel consumption combined *: 26.2-22.6 kWh/100kmCO₂-emissions combined *: 0 g/km

Fuel consumption combined *: 26.2-22.6 kWh/100kmCO₂-emissions combined *: 0 g/km

How do you ensure the support of Audi employees?

Schot: It’s not about changing employees, it’s about inspiring them. Plan, plan, plan must become play, play, play. A shared mindset is the most important thing. We need to revive the Audi spirit. In order to do this, we need a more flexible organization. Success depends on speed. And speed requires simple processes. Simple and clear processes come from confident people. We need more collective intelligence and less hierarchy. This is what we Dutch are good at: flat hierarchies, being approachable, experimenting …

Reto Ringger, Bram Schot im Audi e-tron

And everything under the watchful eye of investors on the capital markets. Are you annoyed by their current lack of confidence as regards the future of car manufacturers?

Schot: No, the capital market rewards a firm future outlook, especially if company development is consistently geared to it. This creates trust. We are currently working to achieve this clear picture and are consistently aligning Audi with this through our strategy as well as our measures for strengthening the brand. I do not want aggressive volume policies. I would rather sell fewer cars but earn more money with exactly those products that inspire customers. In the run-up to the ­Annual General Meeting in May, we have defined the action ­areas, indicators and corresponding goals which we will use to measure our progress in the years ahead.

Ringger: For 25 years, I have looked at how sustainability is rewarded or penalized by stock markets. The word “sustainability” has unfortunately become just another empty cliché. I prefer the term “future viability.” And the stock market tells us where the future is happening. Stocks are bought because investors think that companies can tackle the new business, social and ecological challenges and quickly adapt their business model. The automotive industry is facing major challenges in this regard, and car manufacturers have to have three responses to them. First: Yes, we have understood. Second: Yes, we can implement that quickly and competently. That is why we – third – will be one of the winners as a result of the change. In the end, it is not words that count, but actions. Then future viability that is demonstrated through action will also be rewarded by the stock market.

Schot: Audi is therefore on the right track. After all, we have understood, we are implementing and we are using the change that is taking place in our industry as an opportunity for our company. It is not just a matter of innovations – it is also about focusing. We will consistently align our business with what customers want. And we need to become more feminine, younger and more international. After all, a large part of our growth will continue to come from China. We need to optimize costs and sharpen the brand. Because Audi is a strong brand. And I am convinced that we will make Audi the benchmark again.

Abraham Schot

Members of the Board

Abraham Schot

Chairman of the Board of Management and Interim Member of the Board for Marketing and Sales

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