The Even More Curious Case of Leading Companies Without Leaders

The Sapient Leader

Corporate leaders need access to a much richer set of experiences than in the past. They need to shape a broader range of people, experts, markets, projects, across the globe. They need a broader knowledge base in order to do this. And they need curiosity as much as they might need charisma so they can grasp the potential of these disciplines and new global markets. But above all else we say that the sapient leader is not about personalities.

Is there a contradiction there?

To explain what we mean we’re going to look at BMW. The experience of BMW led us to many of the ideas and concepts that have gone into the Elastic Enterprise, so let me explain!

BMW is an extremely successful niche car producer. it is ‘niche’ because its sales volumes are not optimal if you want to drive down cost in the supply base. But it is niche in the very modern sense that we are drawing attention to here – it appeals to a global middle class. In every country in the world where the new middle class is emerging the BMW is in demand. In February 2010 for example sales in China were 98% up on 12 months previously.

Through the back-end of the recession BMW increased its sales volume by approximately 15%. Like Apple, BMW has a knack of creating new categories. The Sports Activity Vehicle (The MX5 and MX3) is a very smart play on the Sports Utility Vehicle. BMW dominates this segment. The Mini was a moribund brand until BMW reinvented the small stylish car by reintroducing it. It was what BMW head of design at the time of the relaunch, Chris Bangle, called an egg waiting for a chicken so it could be hatched.

BMW’s success lies in repeated reframing of its brand and potentially its business model. In that sense it fits the sapient leader model:

# Reframing the market demand profile.  When Bangle took over as head of design at BMW in 1992 the brand and product range was very centred on engineering excellence, typified by the motto The Ultimate Driving Machine. By the time Bangle left in 2010 the car maker still used the motto but BMW’s marketers also emphasised its traction among aspirational women and families. The 3,5, 7 line-up of cars was augmented by a new 6, the 1, the MX3 and 5, the grand tourer, the Z3 and Z4, the Mini and the Rolls Royce family of cars, as well as an extensive motorcycle range. It now sells more cars in the USA than in Europe and appeals as much to women and families as it does to its old core. When Bangle began taking BMW on its new design odyssey a number of websites sprung up asking for him to be fired. He undoubtedly alienated a core customer group but BMW kept growing. Now BMW is as much about joy as it is about engines.

# Reframing the car. BMW has consistently innovated across the technologies in its cars. But is has also been more radical than that. In extending its range it became the largest mid-car car in corporate fleets across Europe. It was a luxury car that was also a fleet car. BMW’s traditional dependence on engineering excellence was also reframed. In correspondence earlier this year former head of design Bangle told me that BMW’s competitive advantage came from its metal shaping capabilities. In other words shape and line replaced engine. Even at the time of writing BMW is exploring the new generation of ultra-light cars which will transform the auto-industry from 2014 onwards. In 2008 they exhibited a fabric shell on a concept car, the GINA. It might seem laughable to make cars from fabric but the next generation of fuel efficiency relies on us rethinking the car, and BMW is already there prepared to rip up its advantage in metal pressing and move onto the next generation of materials where the car becomes an adaptable shape.

# Reframing the brand. BMW has managed to maintain the impression of brand unity when in fact it is a very diverse brand with a diverse range of activities.  It has a huge range of cars for a small producer and it manages to combine its appeal to all segments of its fan base, from petrol heads in Germany to surf seekers in California, from owners of the Rolls Royce to owners of the Mini, seemingly without effort. From the ultimate driving machine it is one of the ultimate brand experiences, now emphasising joy where once it had to emphasise engines. It is also taking the brand into the connected drive, connected car meme. BMW was one of the first car companies to use social media, the first to podcast, and has long been a sponsor and supporter of the arts with its BMW art car series. At the same time BMW has provided design services to an array of leading brands, through its ownership of DesignWorks, a California based design house. Early on BMW introduced internal competitions to pit DesignWorks against its own designers. The other side of the coin though is that BMW designers have worked on train interiors, concepts planes yachts and even coffee machines, bringing a much wider experience of customer needs with them back to the car.

# Reframing Ownership. Part of BMW’s leadership skill is to constantly relate to changing consumer demand. in the second decade of the 21st century some consumers are not demanding ownership. they want to share. BMW was one of the first OEMs to develop its own car sharing project, Drive Now,  along with rental company Sixt. Prior to that BMW pioneered mass customisation of its vehicles. 1. 5 million people a year get to customise a BMW via the worldwide dealer network.

# Reframing mobility. At the same time BMW has set up a new $100 million venture fund in New York to pursue new concepts in personal mobility. A car producer today BMW could become something quite different in future, though it is not clear what. This ability to reframe though can be seen in action with its new mobility fund.

It is probably unfair on a talented cadre of managers to label Bangle the leader of this movement, though his belief in context over dogma is surely influential.

But the point we believe BMW illustrates is that sapient leadership does not have to be embodied in one person like a Jobs or a Bezos. It can be a team effort.

In constantly reframing its approach to the auto sector and mobility BMW has had to master all the car technologies, the transition to shape and line, the introduction of eco-cars, the connected car, the mass customisation platform and customer data analytics, car sharing platforms, deep customer centricity and social media.

Its mass customisation work is the nearest it comes to a modern ecosystem but BMW is headed in that direction having hosted an interiors design crowdsourcing project this year, creating a customer dialogue around the future of mobility as well as, on a fun note, crowdsourcing the world’s best drives. It is trying hard to push into the customer ecosystem model and a developer ecosystem. BMW embraced customer co-creation early on. Its connected car concepts are cloud-centricand its mass customisation process was built on a global business platform, as its high-end concierge service.

Probably its greatest advantage in this journey has been the support of its main owners, the Quandt family (lead don’t follow). Whereas Apple has been dominated by the personality of Jobs, BMW has a dominant owner that creates the conditions for its management team to continuously reframe, to fight dogma.

Entrepreneur researcher Steve Klepper tells us that the biggest danger facing large companies is their inability to take ideas from inside the organization and build new business from them. he attributes that to the structure of ownership of large companies – they are not able to make radical decisions. Clearly Apple can and so can Amazon. But BMW can too – because it has strong ownership, an advantage that is comparable with Amazon and Apple’s strong leadership. The magic ingredient is hard-earned wisdom, best gained across disciplines.

One thought on “The Even More Curious Case of Leading Companies Without Leaders

  1. Pingback: Have We Reached Peak Apple? - Forbes

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