Welcome to the VANTIQ Q&A Blog Series, where we bring the top IoT, real-time business, event-driven architecture and digital transformation thought leaders and ask the questions you want the answers to.
We are excited to have Falk Bothe from Volkswagen joining us today. Since this interview was conducted in 2018, Falk has taken on a new role at Volkswagen in the office of HR Top Management. In this role, he researches Executive Leadership Development, organizes Adaptive Leadership Interventions, and brings together people to better understand today’s challenges and complexities. You can find him on Twitter and LinkedIn. Without further ado, let’s get into it!
Tell us about yourself, your role at Volkswagen, and your path at Volkswagen that eventually brought you to the Digital Transformation Office.
I started with Volkswagen 17 years ago in financial services in the fleet customer department, as my background is in banking. I began developing products for fleet customers and private customers and then found my way to the Volkswagen consulting unit (internal consulting), where I did six years of business consulting, change management, strategic development and digital transformation.
We did a lot of process improvements, which most of the time meant converting paper processes into digital processes. Two and a half years ago, I started to work for Mr. Jungwirth, the group CTO, that came from Apple to Volkswagen and practically built this organization for digital transformation.
What does digital transformation mean to you?
We first must differentiate between digitalization and digital transformation. This is quite important, because digitalization, or industry 4.0, is something that Volkswagen and the automotive industry has done for the last 40 years. Everything that is replaced by robots, or by digital processes, is digitization.
Digital transformation is something more. It’s a transformation of the whole business model. In the past, if you wanted to have a meeting you had to meet everybody in person. Now, if you want to collaborate, you can work in a document in real-time with people from around the world.
Transformation, to me, means that you can work anywhere, anytime, with whomever you need to. And, it means that you make use of digital possibilities and re-transform your business to offer your customers services that better fit their needs and go beyond the hardware products that you deliver.
Would you say that digital transformation is more about creating or enabling new business models and driving new streams of revenue, whereas digitization is more about efficiency?
Yes. That’s true. Digitization, to me, is just making what you do more efficient so that you can get your resources to do other things. If I free employees from paper and long decision processes and replace this with machine learning, algorithms, or a computer, then these people have more time to care about customers, or to develop new products. Humans are much better at creative thinking than machines.
How successful do you feel these initiatives are and where are we in the transition towards a true digital transformation?
I think what we can agree on is that everybody accepts digital transformation as the first step to evolving and staying in business. This holds true for every part of society, not just the corporate world.
Due to technology development, new business models are suddenly possible that have never been possible before. Like Uber or Airbnb, you can make use of other people’s assets and earn money without even owning them; just because you are providing a good platform and/or good software.
On the other hand, collaboration between multiple companies is now much easier due to new digital technologies. In terms of where we stand, I think we are past the stage of accepting that digital transformation is necessary.
What is going on at Volkswagen in terms of digital transformation, what initiatives are you driving?
We want to transform as a company. This includes digitizing our processes, creating offices that provide space and room for creation and making sure people want to come into work every day at Volkswagen.
We’ve been building cars for over 70 years and we need to digitize our products. We’re going to get our cars connected with the internet so that we can provide services within and around the car. You can already get packages from Amazon or DHL delivered to the trunk of your Volkswagen. This is just one example of how we are developing services that have not been possible before.
In addition to that, we think beyond the car. We want to create services that add on to just getting from A to B. We are creating an ecosystem of mobility and services that you need while being in transport.
How did the Digital Transformation Office at Volkswagen come into being?
The Digital Transformation Office is an answer to needs that arose while building up the transformation unit at Volkswagen. When Mr. Jungwirth joined, he needed someone who knew the organization. I first acted as his executive assistant/chief of staff, handling digital committees and board members, change management, developing programs to engage every employee and developing the strategy for the transformation division; meanwhile tracking all of this and seeing how Volkswagen’s brands interacted with this initiative.
The job became so huge that the Digital Transformation Office was born, as one person could not handle this alone. We wanted the office to have a mixture of program management and change management and be able to organize all the committees out of one department.
It took less than one year from ideation to implementation. We were created one and a half years ago and have been quite effective in that short amount of time. For example, we have a digital transformation simulation where we bring people from all over the world to let them live through one hundred and thirty years of automotive industry development. This lets employees see first-hand the impact Volkswagen has had on technology in the automotive industry and puts everybody on the same page on understanding what digital transformation is. This allows us to develop the right products with the right processes faster than ever before.
You’ve mentioned change management as being key to the challenge of digital transformation. Tell us a little bit more about how critical change management is to digital transformation initiatives.
If you want people to work on new things, or on digital transformation, you need to help them understand what it is really about and how they can benefit from what’s happening.
In my experience, people don’t resist change. They resist loss. If you say to them, “Right now, you don’t have to do this anymore. You must sit in another office with other colleagues and do Skype conferences. You are not allowed to use the phone anymore.” The implementation of new software, new processes, new things to do or letting people not do what they have done for the past twenty years is a loss.
You need to explain what they are gaining in adapting to these new challenges, technologies and collaboration systems and how they can implement the knowledge they have gained over the last twenty years into these processes. This is why I think change management is a critical part of the transformation process.
It’s not just saying, “Hey guys. We’re digital and we’re done.” The announcement itself will not transform the company. You need to have a strong vision which people can follow but you also need to explain how this vision can be achieved. Most importantly, your actions need to follow your words. Vision without action is daydreaming.
Is Volkswagen trying to become a real-time enterprise?
I think we already are. The moment you order a car a process is started. Materials are ordered by suppliers and delivered to our production facility, so we are a real-time business in terms of facilitating all our production processes.
What we are working on right now is implementing this real-time attitude across the services we want to develop; we want to expand this to the entire Volkswagen network.
Imagine in the future you have mobility as a service. A special day is upon you, it’s your wedding anniversary and you want to take your partner out to the opera and dinner. You get yourself picked up by a self-driving luxury car. On your way to the opera you are given extra information on the show you are seeing tonight, there’s good music, champagne and you don’t need to bother driving the car yourself back home. This is the future that I dream of.
Are there any elements of technology that you’re particularly interested in or focused on at this point?
What really intrigues me the most is quantum computing in combination with artificial intelligence. Volkswagen is the first automotive company that is tapping into the possibilities of quantum computing.
For example, we implemented a project to develop a better battery and used quantum computing to simulate how batteries of the future can help us with the electrification of our cars.
This is one of the most fascinating projects that our CIO, Martin Hofmann, is promoting right now through our data lab in Munich. These are the guys who work on the crazy, nerdy stuff that really helps us develop the technology that we need to create sustainable mobility in the future.
Is there any topic in business or technology where your thinking may be different than the crowd?
Yeah, there’s one. The most common mistake you can make in digital transformation is talking about the old and the new business. If you want to transform a company, you need to respect what has been done in the past. The company that you’re in was built by the people who have worked there for twenty, twenty-five or event thirty-five years in some cases.
You’re using the money and resources that they brought in to create other, new, or more advanced technologies/services. Volkswagen has existed for over seventy years. Over the years, brands have been added to the group to make us the fantastic company we are today. So, I never talk about the old and the new, it’s just Volkswagen Group.
We have always developed new technologies and services, but it’s one company, and it’s the people that make the difference. To talk about old and new would not be fair to the people who have been here for a long time, and it divides the company. Digital transformation is about uniting together, internally and externally, with the right partners, to create the services that will help your business start the next decade or even century of its journey.
Got someone in mind who is leading the charge when it comes to digital transformation? Are you that person? We would love to learn more about what thought-leaders in the IoT industry are doing to solve the challenges of today and share that expertise with our readers. Reach out to the editor at: [email protected] for more information.