Author: Xu Daren, Chen Chi, Chen Zhen, Miao Ruoyu, Li Chenmeng
In the article "Seven Magic Weapons to Comprehensively Help the Transformation of Auto Dealer Groups", we mentioned that auto dealers are responding to internal and external challenges through the Seven Magic Weapons and promoting the transformation road.
This article mainly focuses on the "standardized process, cost reduction and efficiency increase" magic weapon mentioned above, based on the current population trend, that is, labor-intensive jobs are facing a "labor shortage", high mobility, and the overall downward trend of the automotive industry, the impact of changes in consumer demand, combined with the three stages that we mentioned in the "digital labor transformation" series of articles from the "new format" of digital employees to the "new normal", to describe how enterprises can improve operational efficiency and optimize service experience through digital labor means. By sharing the cases of helping a large domestic automobile dealer group to promote the transformation of digital workforce and achieve cost reduction and efficiency improvement, we will explore the key factors for the success of digital workforce transformation in depth.
With the entry of subversive players such as new car-making forces into the industry and changes in consumer demand, the traditional automobile trade and service industry has been greatly impacted, and the overall profitability has shown a downward trend. In 2017-2019, the average profitability of the automotive market fell from about 3% to about 2.4%. New car-making forces (such as Weilai, Tesla, etc.) and players from other industries (such as technology companies) have entered the market, making market competition intensified; from the perspective of consumer demand, more and more consumers have begun to pay attention to the experience of offline channels, and merchants have realized the online circulation of customer car purchases, after-sales maintenance and other businesses through digital means, which helps to enhance the store consumption experience. According to a McKinsey survey, more than 60% of respondents believe that online booking, payment and other services are very innovative. In this context, auto dealers urgently need to improve their operational capabilities through digital transformation, reduce costs and improve efficiency, and optimize experience.
In the face of the above trends, an automobile dealer successfully achieved digital transformation through six major grasps, and finally achieved a cost saving target of about 40 million yuan, and the business efficiency was about 40%. From the perspective of transformation capability, the dealer set up a transformation vanguard team, from scratch to establish a force of change, led by its daily management and implementation of digital workforce transformation, cultivated supplier identification, negotiation, management and other capabilities; from the perspective of digital capabilities, the dealer gradually transitioned from the original professional operation to digital operation, through process mining (Process Mining), robot process automation (RPA) and other means to standardize business processes, breaking the business, Data silos between systems such as finance are interconnected.
Six starting points for digital workforce transformation:
1
Strategize to embark on a journey to digital workforce transformation
Develop clear, comprehensive digital development goals and capture leadership support for transformation. Some enterprises have short-sighted behaviors aimed at scattered local optimization, such as only solving point problems, lacking global guidance, and there is often resistance within enterprises to change the existing operating mode. Therefore, if the transformation is to be successful, the leadership needs to reach an agreement, develop a transformation strategy from the group, and communicate from the top down.
After gaining insight into industry trends and identifying pain points such as the continuous compression of its own profitability and the high labor cost (about 50% higher than the industry average), the leadership of an automobile dealership established the strategic transformation goal of "taking digital transformation as the core to build a leading customer consumption journey and lean operation capabilities" by benchmarking with external advanced practices.
2
Business-driven, digital workforce transformation planning
Take a strategic vision as a starting point to drive the business transformation that your business really needs. Due to some historical reasons, such as changes in direction and poor promotion, many enterprises' business planning has blurred boundaries, lack of unified and standard business processes as support, and there is no way to start if they want to transform. Therefore, enterprises need to start from the overall business, combine the top-down, bottom-up approach to sort out the front, middle and back office business scenarios, determine the business model, and establish a group-wide transformation blueprint. According to this, the business processes are sorted out, the efficiency improvement goals are determined, and the process specifications and efficiency improvements are realized with the help of digital means and efficient management mechanisms.
By decoding the strategic objectives, analyzing the financial trends of the past 3-5 years, and combining the performance targets formulated by the headquarters and submitted by various business departments, a car dealership determined the goal of improving efficiency by about 40% from the front, middle and back office scenarios such as sales, after-sales, store back-office, finance, and human resources.
3
Optimize your organization's talent and lay the foundation for success in your digital workforce transformation
Timely organizational optimization, talent development and incentives should be gradually developed with the transformation. A full-time transformation backbone team (SWAT) directly under the jurisdiction of CXO can be established to cultivate its sense of ownership, and the team can lead the overall planning and supervise the implementation of efficiency improvement goals; at the same time, optimize the organizational structure based on business needs, clarify key positions and their responsibilities, improve the existing training and incentive mechanism, and select and retain digital talents.
An auto dealership supports digital transformation through organizational talent optimization through the following four initiatives:
Job function optimization: After the brand efficiency improvement goal is achieved, the effectiveness of people is released through concurrent work or transfer. For example, after optimizing the work efficiency of the sales manager through digital means, a store redefines the job responsibilities and requirements, and asks the brand manager to concurrently assume the responsibilities of the store sales manager.
Optimization of talent training mechanism: improve the training system for different positions. For example, the previous training system of a dealer was relatively single, only based on teaching, and lacked pertinence. By sorting out the talent needs of different positions, the dealer has improved the training mechanism, such as digital marketing training for sales positions, in addition to adding professional coaching, personal mentors and breakthrough project participation to help employees improve their marketing capabilities.
Improved incentive mechanism: Adjust existing policies and focus on incentives for middle-level personnel. A dealer group only had a short-term incentive plan before, lacking a long-term mechanism, by adjusting the project dividend ratio and setting up incentive tools such as long-term follow-up investment, the group retained backbone talents.
Through the cultivation of the transformation backbone team (SWAT), gradually precipitate the CoE capabilities of the digital excellence management center: when the transformation project is launched, a transformation backbone team is established to report to the CEO in a straight line, and the main responsibilities include centralized processing of digital management and operation work, empowering finance, personnel, operations and other departments (including key topic counseling, performance management, efficient communication, backbone training, supplier management and other functions), helping the team to establish a sense of purpose, increase cohesion, and regularly review the progress of the goal. Ensure the smooth implementation of efficiency improvement goals. After refining the capabilities of each business unit, the Digital Center of Excellence CoE was established, and each business unit was automated and the CoE provided support in the background.
4
Technology precipitation, to establish a solid guarantee for digital workforce transformation
Build technical capabilities to support the long-term sustainability of your business. Enterprises can use advanced digital means such as robot process automation (RPA), chatbot (Chatbot), process mining (Process Mining), machine learning (ML), intelligent document processing (IDP), natural language processing (NLP), etc. to standardize business processes and improve operational efficiency. When building digital capabilities, enterprises can provide guarantees for business development through independent research and development or the establishment of ecological networks.
According to the cost reduction goal of a dealer, combined with its current IT technology development capabilities are relatively weak, we recommend the introduction of external high-quality suppliers through brand pilots, and gradually establish a supplier ecological network in the process of brand development to build technical competitiveness. At the same time, the dealership used the automotive business as a precipitate, forming solutions for each digital transformation initiative and extending it to other business units.
5
Mechanism guarantee to promote the smooth implementation of digital labor transformation
An efficient project management mechanism can improve the efficiency and quality of transformation from both the way of promotion and the way of working. Starting from the project promotion method, we believe that we can achieve a three-step approach through the optimization of measures to excavate, verify and plan, implement and land. Starting from the way of working, we recommend aligning everyone's promotion goals, identifying potential risks and resource needs, and discussing solutions in a timely manner through daily station meetings, weekly transformation team (SWAT) meetings, supplier weekly meetings, and weekly leadership reports.
Taking the sales scenario as an example, a dealer designed an optimization measure for the flow of sales documents and implemented it through the above mechanism.
Optimization measures mining: After interviewing frontline personnel, combing the business process and identifying its pain points, through the form of co-creation seminars, frontline personnel and managers are gathered to brainstorm and form a series of optimization measures. For example, through interviews, we found that when selling a new car, salespeople need to manually fill in 897 fields, process up to 22 paper forms, and repeat multiple systems and the same field, which is time-consuming and affects the customer experience; at the same time, the sales process of different brands varies greatly. Through the co-creation workshop, we discussed with the distributor to develop an optimization initiative for sales document flow – establishing a centralized database to optimize paper forms and addressing this pain point with process automation robots (RPAs).
Optimization Initiative Validation and Planning: Conduct a preliminary analysis of a series of optimization initiatives resulting from these actions, consider their feasibility, return on investment (ROI) and risks, screen out feasible initiatives, identify advance team members, set milestones, and identify trackable key performance indicators (KPIs). For example, after analyzing the ROI of the sales document flow optimization initiative of about 50%, after leadership approval, the distributor determined that the headquarters IT staff, brand sales director, sales manager, etc. formed a promotion team, formulated a standardized sales document flow related process, set up implementation milestones such as clarifying suppliers, developing development plans, testing digital tools and going online, and identified the person responsible for each milestone. At the same time, the initiative takes the full-time staff time (FTE) spent filling out each form as a key performance indicator, and is tracked by comparing before and after optimization.
Optimization initiative implementation and landing follow-up: Enterprises promote "athletes" as optimization initiatives, implement initiatives and continuously track progress. For example, the dealer headquarters transformation backbone team (SWAT) and members of the brand optimization initiative team hold weekly meetings every Monday to confirm the weekly goals and assign weekly tasks; every Wednesday, the supplier weekly meeting is held to align the progress of the implementation of the sales document flow initiative and identify potential risks; every Thursday, the weekly summary is conducted to discuss the solutions to the potential risks and develop a work plan for the next week; the members report to the leadership on Friday; and the members also summarize the completion of the day's work at the daily station meeting every day. This approach ensures that optimization initiatives progress smoothly and that adjustments can be made flexibly and in a timely manner, even when risks arise.
6
Empower people to cultivate awareness and capabilities for digital transformation
In the process of transformation, McKinsey, as a "coach", has accompanied customers for a long time, gradually helping customers to establish transformation awareness and transformation capabilities. In terms of transformational awareness building, we believe that the leadership should first strengthen confidence and pass this confidence from the top to the front line. This process is difficult, time-consuming and long-lasting, and it is necessary to repeatedly publicize with front-line personnel and cooperate with a reasonable reward and punishment mechanism to stimulate the enthusiasm of employees. In terms of transformational capacity building, we believe that we can take a layer-by-layer approach, with McKinsey providing guidance to assist core team members in capacity building, and then empowering core members to frontline employees layer by layer.
In terms of transformation awareness, the early project promotion has encountered great difficulties. The Transformation Backbone Team (SWAT) and front-line workers lack digital capabilities and are less resistant and confident in changing the way they work. McKinsey has been with and mentoring managers at multiple key levels, driving their mindset change and helping them build strong confidence in transformation. After successfully changing the thinking of managers, it is led by managers and regularly carries out top-down publicity to promote the concept of transformation to penetrate the hearts of the people.
In terms of transformational capabilities, in the process of promoting the sales document flow initiative, the car dealer found that a certain brand had the problem of not being able to optimize paper forms, which was due to the difficulty of the team responsible for the initiative to jump out of the long-established mindset. Under the guidance of McKinsey, the backbone team members of the transformation began to think about the problem from a new perspective, and through on-site research and communication with the person in charge of the initiative and the front-line personnel, it was finally found that the crux of the problem was that the front-line personnel of some stores of the brand were not familiar with the manufacturer's operating system, and believed that a form of the brand could not be entered into the online system, thus successfully solving the problem.
Key Takeaways:
The digital workforce transformation of auto dealers is not only a single point of transformation of functional departments, but also requires enterprises to start from a higher and more comprehensive perspective, gain insight into industry trends, formulate long-term sustainable development strategies, and implement them in an environment of leadership support and stable military mentality; take the business as the core to undertake the strategic vision, plan the end-to-end all-scenario transformation blueprint through a top-down, bottom-up approach, and determine the business efficiency improvement goals; take the organization and technology as the cornerstone, optimize the organizational structure, and formulate a reasonable incentive mechanism. Precipitate digital capabilities, support the implementation of business transformation operations and management activities, and gradually establish the transformation capabilities of enterprises with efficient management mechanisms and personnel empowerment as the guarantee, timely feedback and solve problems encountered in transformation, and ensure that the transformation is completed on time and with high quality.
About the Author:
Xu Daren
Global Managing Partner of McKinsey & Company, based in Hong Kong
Chen Chi
McKinsey & Company Is a Global Associate Managing Partner based in Beijing
Chen Zhen
Miao Ruoyu
Director of McKinsey & Company Blue Leap Consulting, based in Shanghai
Li Chenmeng
McKinsey & Company Blue Leap Consultant, based in Shenzhen
The author sincerely thanks Karel Eloot, Ye Hai, Huang Xin, Xie Xiaozhou, Fang Haoxiang, Lu Yun, Wei Jie, Su Jian, Shen Jia, Zhu Yingyi, Zhu Ying, Wang Xilin, Zhao Cong, Cao Liu Xingyuan, Ren Meng, Zhao Yijin, Liang Fengxuan, Ye Ziling, Lv Jinwen, Wang Yiduo, Li Yutong, Wang Yaxing, Lin Lin and Rena for their contributions to this article.
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