New Game in the Automotive Industry

Author: Ling Min

The automotive industry has entered a new game.

James Carse, a management philosopher, talked about two types of games in his book, “Finite and Infinite Games.” Finite games aim to win, while infinite games aim to sustain the game itself.

In this game, we may not know who the other players are, or when new players will join. There is no fixed, universally recognized set of rules, and all players are free to devise their own strategies and tactics. This is like the automotive industry today, where who would have thought that Internet companies would make cars, and companies that sell phones and home appliances also want to sell cars?

Facing the unpredictable “infinite game” of the automotive industry, companies need to innovate and change. This not only applies to products, but also to the innovation and transformation of the entire system, in order to build their own defenses.

This is exactly what Great Wall Motors is doing with its system transformation.

Looking back at the development of Great Wall Motors, innovation has been the driving force behind its progress. Since 2020, with the joint efforts of organizational innovation, talent innovation and cultural innovation, Great Wall Motors has undergone a brand new change, and has transformed from a traditional automobile manufacturer to a global technology travel company. This approach coincides with the IT Internet thinking and architecture of the new era.

Sales figures prove that Great Wall Motors is on the right path with its system transformation.

Data shows that from January to June of this year, Great Wall Motors sold a total of 618,200 vehicles, a year-on-year increase of 56.5%. Among them, its five major brands, Haval, Great Wall Pickup, WEY, Euler, and Tank, all achieved high-quality growth. Overseas sales achieved a year-on-year increase of 200.3%, accounting for nearly 10% of the overall sales and setting a new historical record.

“Based on its global layout, investment in research and development, corporate transformation, and user operation, Great Wall Motors has carried out a comprehensive and thorough innovation and transformation, driving the company towards a global technology travel company. With a global layout as the overall direction, Great Wall Motors is building its global competitiveness.” said Wei Jianjun, Chairman of Great Wall Motors.

Through its system transformation, Great Wall Motors is establishing a direct communication link between users, the company, and its brands, accelerating mechanism innovation, organizational innovation, talent innovation, and cultural innovation, and transforming itself into an industrial Internet technology company.

Embracing Change to Alter DNAGlobal renowned management consultant Ram Charan said that today’s market and external environment bring more and more uncertainty, and to achieve sustained growth, companies need to change their DNA. In the face of such a massive transformation in the automotive industry, automotive companies need to transform rapidly, and even overturn traditional organizational structures and management concepts.

For example, Great Wall Motor has implemented organizational innovation and formed a 3.0 version organizational structure of “Strong Backend, Large Middle, and Small Front-end”. Through the three “platforms”, it forms an organizational form of “One Car, One Brand, One Company” that is user-oriented and management-oriented towards projects and processes. This organizational structure enables every part of the organization mechanism to directly link to users.

Thomas Friedman described the significant changes happening in the contemporary world in his book “The World Is Flat”: the lightning-fast advancement of technology and communication has brought people around the world closer together than ever before, and it also proves that companies must blur the boundaries between departments during their transformation process. Great Wall’s flat system is precisely in line with this major trend.

Specifically, Great Wall Motor’s organizational structure philosophy is that it accumulates a solid foundation for Great Wall Motor’s all-round leadership through high-quality technology, mechanism quality, human resources policies, strategic layout, and capital operations in the Strong Backend. Every small Front-end organization can rely on digital technology to accurately and agilely link users, thus realizing the reconstruction of the business model. With the user-oriented small Front-end as the core, the Large Middle is always ready to provide timely supply and support, creating several operational organizations.

It can be said that Great Wall’s system encapsulates and gathers all personnel related to a car into a combat team with a commanding officer as the leader. Everyone is divided into roles based on the business process, connecting the demand side to the product side and directly linking to users. In this way, Great Wall Motor has built a new business relationship that is based on the industrial Internet, jointly created, shared and won by every partner in the ecosystem, forming a “common expansion” relationship.

This genuinely allows Great Wall Motor to build a structurally robust golden iron triangle system that provides more accurate products and services to users under the unified goal, thereby building an effect of 1+1+1>3.

Connecting Externally and Communicating Internally

A successful corporate system needs close connection and communication.

For a car company, the primary focus is certainly to maintain a close connection with consumers, endowing brand spirit and impact on consumers, and making consumers willing to “stick to one and end” – in other words, “user stickiness.”Long security cars have a natural advantage in this regard, as they have cultivated the Chinese market for many years and understand Chinese consumers better, knowing how to resonate with users at a spiritual level. In 2020, based on the future scenarios and development needs of the automotive market, Great Wall Motor Company determined its new 21-character corporate culture — “Green Intelligence, Trendy Lifestyle”, “Honesty and Trustworthiness, Creativity and Change”, “Every day is a Progress”. Among them, “Trendy Lifestyle” aims to redefine automotive products and services, create exclusive social lives for user communities with common interests, and make automotive lifestyles more trendy.

From the above analysis of the Great Wall Motor 3.0 version organizational structure, it can be seen that this framework is built around the user. For example, Great Wall Motor has built an entire transparent service process where users can view all vehicle statuses in a one-stop-shop for their internet orders. After placing orders, Great Wall Motor will reach out to each customer promptly so they can understand the various scenarios of product production, interaction, and subsequent use.

Of course, the construction of the system requires communication with employees internally, as well as with users externally. Today, Great Wall Motor’s employees are no longer “workers,” but “entrepreneurs,” “partners,” and “benefit communities.”

Noel Tichy, an American scholar in management and organizational behavior, once said that the process of business growth is creative. Achieving growth does not require a degree or license but requires curiosity, imagination, and passion. In most enterprises today, there are many employees who possess these qualities, but their potential is often overlooked. Once leaders unleash these potentials, we will find countless creative ideas and inspirations inside the company being ignited.

In the current 3.0 version organizational structure, Great Wall Motor puts employees in the frontline positions instead of in the rear, allowing them to keep up with the changing needs of users by continuously interacting with the user market.

Today, Great Wall Motor is also focusing on talent incentives and innovation. In 2020 and 2021, Great Wall Motor implemented two consecutive equity incentive plans, granting over 12,000 recipients, becoming the largest and broadest equity incentive plan in A-share history of the automotive industry, providing comprehensive coverage across all job levels, business areas, and key positions. Meanwhile, Great Wall Motor also attracts a large number of outstanding talents from global tech fields by using “Ten Thousand Talents Plan” and “Global Talent Innovation Programme” in the automotive and Internet technology sectors.## Expanding Globally: GWM’s Worldwide Layout

Interestingly, in addition to its innovative approach to branding, organization, and culture, Great Wall Motor (GWM) has also implemented a new internal title “to the boss” to work more effectively on communication mechanisms. Behind this lies GWM’s commitment to creating a more egalitarian corporate culture and helping employees increase their sense of identity and belonging. Only by injecting this culture into the company’s genetic code can capable employees be empowered to propose ideas and innovations and foster vibrancy and combativeness.

At present, GWM has already made its presence known in overseas markets. In the first half of this year, its cumulative sales in foreign markets exceeded 60,000 units, a staggering increase of 200.3% compared to the previous year, accounting for 10% of the overall sales volume. Thus, overseas markets have become an essential component of GWM’s sales.

In order to achieve its global goals, GWM has also established an organizational system that is oriented towards “the boundless universe.” In terms of technology, GWM has formed a “Seven Nations and Ten Places” research and development bureau, while stepping up the introduction of global R&D talent. By 2023, the number of global R&D personnel will reach 30,000, including 10,000 software development professionals. In the next five years, GWM’s cumulative R&D investment will reach 100 billion yuan.

In terms of product, GWM’s Lemontree, Tank, and Coffee Intelligence Technology brands have given rise to dozens of globally-oriented vehicle models. In terms of production, GWM has built an intelligent manufacturing system that radiates globally by investing in new factories in Tula, Russia, and Rayong, Thailand over the past two years.

Thanks to its sound global layout, GWM has rapidly expanded in multiple overseas markets. In early February, GWM officially launched its GWM brand in Thailand and unveiled its core strategic goal for the Thai market – to become a leader in electric vehicles by launching nine e-vehicle models in the next three years to create a new user experience.

In just a few months following the announcement, GWM made its debut at the Bangkok International Auto Show, opened two new retail stores, and achieved a global first by launching the Haval H6 HEV for sale. To support the charitable works of Her Royal Highness Princess Maha Chakri Sirindhorn of Thailand and her organizations, GWM also gifted the first car produced by the Rayong Factory – Haval H6 HEV – to the Princess’s charitable and social organization.

This is a manifestation of Great Wall Motors’ active integration into local society and taking on social responsibility, which further improves the reputation of Great Wall Motors in the Thai market. As an overseas player, Great Wall Motors has built a complete corporate system from R&D to channels and brand in the Russian market.

In the first half of 2021, Great Wall Motors sold a total of 16,235 vehicles in the Russian market, an increase of 144% year-on-year. Its Haval brand has steadily ranked among the top ten passenger car sales in Russia for four consecutive months, achieving qualitative leap in a short time. Currently, Great Wall Motors has a product matrix of 6 models and a dealer network of 101 in Russia, providing high-quality services for local users.

Great Wall Motors’ system competitiveness has been recognized by the industry.

Recently, Guotai Junan Securities released a research report stating that in the future, Great Wall Motors will rely on a new organizational structure to consolidate its leading position in the SUV market and complete the important transformation from a traditional car company to a technology car company. Both existing brands and brands under construction have huge potential and can bring eye-catching performances to the market in the foreseeable product cycle.

Building a corporate system is a difficult task, but doing difficult and correct things can win in this crowded and narrow “infinite game”. The road to building the corporate system of Great Wall Motors not only benefits itself, but also provides a new way of understanding the transformation of the automotive industry for Chinese brands and the automotive industry.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.