Portions of this update were originally posted on my LinkedIn Weekly newsletter on September 26, 2022.
In an interesting piece written by Cristina Recchia, she outlines four methods for organizations to respond to disruption occurring in their industry. Recchia outlines one response as an “architectural” response option. This option is driven by leadership understanding the disruption, and recognizing that it could be a threat to their business. The solution for this type of disruption is to either 1) push the existing organization toward responding to the disruption, or 2) form a new group outside the existing organization to develop a response. According to Recchia, the second solution overcomes what she defines as “status quo bias.” This is a type of bias where organizations push back against implementing solutions to the disruption because they believe the solution “will not work here.”
The Ford Model e business unit is an example of classic ‘adopt and separate.’ - Cristina Recchia
Interestingly, Recchia believes Ford is executing an architectural response to today’s electric vehicle disruption by forming a new organization outside of Ford’s traditional business structure. Earlier this year, Ford restructured by dividing up company operations into three separate business units. One business unit, Ford Pro, is targeting commercial business customers. Another business unit, Ford Blue, is the internal combustion engine (ICE) group. Ford Blue creates gasoline and diesel engine vehicles, which essentially is the traditional legacy Ford business. The third business unit is Ford Model e. This is the business unit that develops electric vehicles. It’s this third business unit that Recchia calls a “textbook adopt and separate” strategy by Ford.
It seems most other legacy automakers have not implemented an ‘adopt and separate’ strategy in response to the EV disruption primarily driven by Tesla. Does Ford have a better organizational solution? Or does one size truly not fit all, even for legacy automakers trying to respond to the major disruption occurring in the automotive industry?
General Motors has integrated its EV development into the existing organizational structure without using an adopt and separate organization strategy. As mentioned in the Emily Dreibelbis electric vehicle article in PCMag, GM’s ‘Zero Crashes, Zero Emissions, Zero Congestion’ initiatives under CEO, Mary Barra, are pushing GM to be fully electric by 2035. In fact, GM shifted the engineers who developed the mid-engine Chevrolet Corvette to electric vehicle teams to insure GM’s future EVs would have some of the Corvette’s “sports car high-performance panache” as Automotive News described.
Again, what might be the right structure for Ford to address the industry’s disruption, could be inappropriate for GM addressing this same disruption. And vice versa. Time will show which company best survives and thrives in the new automotive world that is quickly approaching.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.