Disruption through the computer on wheels

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The full length interview:

This text was translated by a machine and clearly shows that we still have a long way to go before we are in danger of being rendered obsolete by A.I..

Markus Petz: Welcome to our new episode of our „How to Kill a Great Organization“ podcast. We talk to people who are critical to the long-term success of their organization. My name is Markus Petz. I’m one of the founders of MetaShift and my guest today is Dr. Markus Tomaschitz. He is Vice President and Chief Human Resources Officer at AVL List and I believe also Group Spokes Man. Welcome, dear Markus.

Markus Tomaschitz: Thank you very much, Markus, I’m very pleased and thank you for the invitation.

Markus Petz: Yes, before we turn to today’s main question, which will be about how to achieve a far-reaching transformation from a globally recognized specialist for combustion engines to a completely reorganized electro-electronics expertise company for all aspects of mobility, I would like to ask you to perhaps say a few sentences about yourself as a person, about your function and perhaps also very briefly about AVL List in Graz.

Markus Tomaschitz: Very, very much so. I’ll maybe start with AVL, AVL is in its 75th year of existence. So we were founded in 1948 by Professor Hans List. Today we would say a spin off of the Technical University. Today, we have about 10,700 employees worldwide, of which about 3,900 are in Graz, where our headquarters are also located. We are active in a total of 96 companies in 26 countries around the world. In fact, wherever the automotive industry is. AVL is an automotive supplier, a classic one, with three main pillars. On the one hand, the development of measurement systems and test benches, where cars or engines, whether with electric motors or combustion engines, or even transmissions and powertrains are measured, so to speak. For example, how efficient is it, can it still be simulated, tested, further tested or how much CO2 or NOx is emitted. The second major area is engineering. Together with our partners, the companies, we try to make the car even more efficient, more environmentally friendly, reduce CO2 emissions, and so on. So this is very much about engineering performance in the run-up to a new generation of cars. And the third area is the whole field of simulation. Because everything we have said is expensive, many methods are used today to approach this differently, so to speak.

And in order to do it differently with cheaper methods, in order to get results, then one simulates. About myself. I studied business administration in Graz and, after a few years in management consulting, I came to the FH Joanneum. My first job was actually with the Styrian Economic Society, where I worked in the area of education and initial training. This is also a hobby that has remained with me to this day. This great love and passion for education, training, continuing education, in other words, everything that is involved in this area. And then I joined the Joanneum University of Applied Sciences, where I was commercial director, and then I was appointed to the Magna board of directors, where I was responsible for research and training. Research and development with a very exciting combination of both, because of course research is always related to further education and further education is also related to research. And I’ve been at AVL List GmbH for nine years, first as Head of Human Resources Development and since 2015 I’ve been in charge of the entire Human Resources department and for the last two years I’ve also been the Head of Corporate Communications.

Markus Petz: Wonderful! Thank you very much for this brief summary of both the company and your career. Now, just as you said, the company has been on the market for a very long time and has established itself. So also in my perception as the specialist. And that can also be deduced from the name for internal combustion engines. Now we know that combustion engines tend to come to an end. We don’t yet know exactly when, but it is heading in a new direction. This means that the framework conditions are changing significantly, or have already changed significantly in some cases. And that means nothing other than that your company is also undergoing a profound change. And now we’re particularly interested in how this profound change is manifesting itself at the cultural level in your company?

Markus Tomaschitz: In fact, it is just as you say, probably one of the most profound changes for the automotive industry, I’ll say that now, in the last 100 years. To part with a proven drive system, such as the combustion engine, or to want to part with it, has such drastic consequences, because it’s not just a matter of taking out the combustion engine and putting in the electric motor, but because it involves a whole range of issues, powertrains, transmissions. Everything that we have today in the after-sales area, just think of workshops, for example, will result in far-reaching changes. Then there is the rise of software. The car of the future will be built around the monitor. It’s about computing power and no longer about engine displacement or horsepower. And the question, of course, is how the car of the future will be and is being used. It will have a computer on wheels with various possibilities and forms of use. I will be able to use it without owning it, for example by granting myself the right to use it for several days. But we can already see that the status symbol of the car, which both of our generations grew up with, working and buying their first car, this passion for mobility, is now taking on a different form, especially among Generation Z. A car no longer necessarily has to be owned by the generation that owns it. A car no longer necessarily has to be there. Today, in many countries of the industrialized world, only every second young person even has a driver’s license. And all this actually leads us into the situation of what is a car needed for and then where is the place for it.

In 2019, and that was practically the day before yesterday, we still made about 80% of our sales with the combustion engine. And we’re going to do just about 30% of our sales with the internal combustion engine this year. Now, this is not the same everywhere, and you also have to differentiate. Europe’s legislation will only allow electric motors from 2035. Or rather, a certain degree of flexibility will have been accepted by then. Of course, this also applies to hydrogen and synthetic fuel. You don’t have that everywhere in the world. In Africa, we will probably continue to drive with the internal combustion engine for a very, very long time. In large parts of Asia, we will continue to drive with the internal combustion engine for a very, very long time. The same applies to South America. In the case of America, we are still very, very cautious as far as forecasts are concerned. It could go one way or the other. But at least in Europe, we are now experiencing a clear commitment. And there is also no question of where this electricity will come from to power these batteries. So we also have a responsibility to ensure that the energy we use to charge our electric cars comes from sustainable sources. Because if we need a coal-fired power plant to charge an electric car, nothing is gained, because the CO2 emissions would then be almost the same. It would be almost better to drive with the modern diesel or gasoline cars.

So, and now I come to the real question, what does this mean for culture? AVL, of course, comes from a strong culture of technology and innovation. We are Austria’s most innovative company for the twelfth time in a row. With our patents, with our utility models, with our ideas, we were able in the past to make the combustion engine more efficient, to make it quieter, to make it more cost-effective, perhaps also to make it more powerful. But we have improved, improved, improved a proven technology that has been around for over 100 years. You could say incrementally optimized. Now it’s all about disruption. And that hits companies in the gut, because from one day to the next. It has to be said that AVL is leading the way in terms of what will be seen on the market in five to six years. Because we are the technology leader. Companies come to us because they get technology here that they don’t see anywhere else. And if the customer says, dear AVL, we’re not investing in the combustion engine right now, because we have many other topics where we are investing, driverless assistance systems, software, electrification of the drive, hybridization of the drive. Then we have options, either we don’t go along or we go along. And the only consequence, in order to continue to drive the business model entrepreneurially, is to say that we will go along with this new technology. And that is a cultural break, because then you have to explain to an employee who has worked for 20 years on the combustion engine that tomorrow we will optimize or tomorrow we will develop electric drives. That’s an exciting discussion.

Markus Petz: Now, of course, that’s the big question. From an abstract point of view, it sounds very rational and also necessary. But when emotions then come into play, of course, and with so many people you employ around the world, I think. How do they deal with it? So the question: What are the conditions that you as a company are trying to create so that this far-reaching change can take place as frictionlessly as possible? And then maybe also, what are the stumbling blocks that you have noticed so far?

Markus Tomaschitz: Well, if I just digress a bit, the car is probably the most emotional product there is. I don’t just associate a car with getting from A to B, but also with a sense of passion and emotion. That’s what connects it to a brand. This branding is particularly strong in the automotive sector. And you can sense this when you think of the leitmotifs Vorsprung durch Technik, Passion for Driving, etc., etc.. You can see how emotional the topic is. And the topic of combustion engines and electric motors is similarly emotional. Of course, there are many people who say, and they give you logical reasons, or comprehensible reasons. Can it pay off? Are there enough rare earths? Are there enough batteries? What will happen to the batteries afterwards? Let’s rely on the internal combustion engine. At the same time, we see and experience new heat records every year. And we also know by now, because we have convinced even the last of them, that the CO2 content in the air is not an insignificant part of the warming of this earth. And CO2 is of course also produced by the operation of combustion engines. So I think it is already clear to most that from a rational point of view something has to be done. Now to the emotion, you raise a very important point. I believe that no serious change, no serious transformation of a company can work without resistance. Not even in our company.  I would rather say that all alarm bells should ring if there is no resistance, because resistance is not a bad thing per se. But it’s more a question of how to deal with these emotions and how to create framework conditions. Resistance must be given space and time to be heard.

It’s very, very important for employees to be able to say to their superiors, even in front of a wider audience, „I’m having a hard time doing this. Because a company has to take a direction. We want to continue to be successful. We have had a very, very successful past. We also want to have a successful future. In order for everything to stay the same, in order for us to continue to be successful, some things have to change. That affects some more than others. And it’s important to create the feeling, so to speak, that we take your objections, your resistance seriously, we hear you. And yes, we also see how everywhere in the world, when such an individual, situation arises, is never everything one-dimensional right. Things always have to be weighed up. But it is crucial that one is heard, that one is understood, but then also has a common direction. After all, we want to go in this direction. And then it’s up to the individual. A person is an adult. Can he go along with it, or can he not go along. It would be terrible if we were to rule out resistance or criticism or arguments from the outset, because then the pressure would be so high that it would lead to tremendous dissatisfaction and probably also to the departure of many, many good people, because they would say that this company does not show any understanding. It’s all about understanding. And that is crucial.

Markus Petz: Now you said that the important thing, and I fully agree with you, is to give resistance space and also to try, I think, to integrate it. There is often resistance, which also makes sense in the sense of moving forward. Using something to develop something further. Can you tell us how you do that in concrete terms? Do you have special formats? That sounds a bit abstract, but how does that work in everyday business life, which is characterized by high pressure, by making progress, by operational advancement? How do you manage in concrete terms to create and maintain spaces where such resistance can be voiced?

Markus Tomaschitz: Well, we thought about many different formats that would make this possible, and at the end of the day we decided on the so-called town hall meetings. We know this from American democracy, where mayors invite people to the town hall. Townhall to really discuss things that are relevant to the community with citizens in front of an assembled audience. We’ve done that very much the same way. We’ve had two years of pandemic now, which means they’ve had to do a lot of things digitally, trying to create platforms for employees to hear and through that also understand and grasp at the same time what’s important to the owner, Professor Helmut List, what’s important to the management and what’s important to the executives and where the path is going. So people need to hear why something is happening. We have to convey the meaning. A „why“ can take many „how’s“. But it has to come out very clearly, why are we doing this? And then, with the platform of Townhall Meetings, we have tried to give as much space as possible and to make a place where people can get frustration or anger or worry off their chest without fear, free of consequences, but really safe. Because there’s one thing you mustn’t forget, employees have worries, too. I will still be there tomorrow. You said it right, Markus, the combustion engine is in our name.

We are the institution for combustion engines List. The employees also have a right to have perspective and meaning. And you have to articulate and formulate that in such a way that it is understood and that you see individual perspectives for yourself. Then you have to get rid of your worries, express your fears, and take these fears seriously. In many areas, and we have communicated this to our employees, we have made adjustments to our change strategy here and there because we have listened to our employees. Maybe not always and probably never sufficiently. And you can always communicate more. But we try to accelerate this change process with transparency, with clarification, also with the topic of explaining meaning, giving perspective, which sometimes works better, sometimes worse. But one thing is also quite clear: a change process is never linear, it is never round. It’s always up and down, there’s always chaos, and it’s not so much about which tools I use, but about one thing above all: change is successful when I succeed in winning the employees over to the change process. And it succeeds through communication, through creating meaning, through giving perspective, but above all through opportunities for exchange. Then it can succeed.

Markus Petz: You have already provided me with a very exciting keyword for my next question, namely this question of why, this purpose development that provides orientation. Many companies are now on this path, precisely in order to reveal their purpose to employees in very, very rapidly changing times, in very rapidly changing environments. If I now ask you quite openly: Are you a purpose-driven organization? And how can I recognize that as an individual?

Markus Tomaschitz: Well, maybe we have it a little easier than some other companies. For us, it is written right at the top that our task is to make this planet a bit greener, more sustainable and healthier. That’s our mission. We don’t do it for ourselves or to please our customers. Of course, that’s also at the forefront. But above all because we know that if we are successful, it will have an impact on the way we work together. The employees have understood that. We are not a company of gasoline brothers with the motto „cubic capacity instead of living space,“ but the people have a very, very high level of understanding for this, and they also know and see that mobility is of decisive importance for the planet and also for the continued existence of all of us. So we have a relatively easy time of it. On the other point, I’m right there with you. The why, in principle, has a relatively simple explanation. As a research service provider, if you will, as a technology-driven research service provider, where you are at the very beginning, you sense where things are heading.

And if we don’t pick up on this trend, then there’s simply no money coming in. So if we were to say, dear customer, all well and good, you want to electrify, but we believe in the combustion engine, then we would die in beauty. We had no choice but to make this rationality on the one hand and this emotionality on the other, to make a very significant contribution to CO2 reduction on this planet with our work. We have a second advantage. The majority of our employees are extremely rational, rational people. These are people who generally have a background in science, mathematics, IT or technology. They are used to solving problems. The technician solves a problem and he enjoys doing it. So we already feel that behind all the emotionality there is also this rationality of the technician, the technician, that she says Okay, I understand. I’ll take the new topic and try to have the solution. That’s where we’re also lucky with our workforce. A huge luck.

Markus Petz: Please, before we get into the direction of the individual, because of course I still have some questions that are of burning interest to me, I first have something that focuses on the organization. Now you have said okay, we, or you have a distinctive purpose, which you also communicate, which people then internalize and also find attractive, and can therefore align themselves accordingly. Now it is also the case that many companies, in the face of, as you mentioned earlier, an unbelievable speed of change, an unbelievable dynamism, are being driven by the word disruption. That these organizations are trying to bring about a decentralization of decision-making power. What is AVL’s position on that as a global company? Where do you stand on that? How do you handle this in your company? This very question of decentralization of decision-making power.

Markus Tomaschitz: It’s also a very, very good point, and it goes quite strongly into understanding what kind of corporate culture the owner wants to have. Professor Helmut List, who is the second generation to run the company, has been CEO and President of the company since 1979. And he is an incredibly happy combination of a, I would almost say, passionate technician who still wants to understand in depth what is going on. And on the other hand, an uncanny humanist. And out of both came the conviction that employees and managers perform best when they are given the greatest possible degree of freedom. So we are a company that gives employees a tremendous amount of freedom, but also thrives on having employees with a high level of intrinsic motivation. Self-motivation. So employees who need guidance, who need a directive management style, have a hard time with us because we don’t have this culture. We don’t have this authoritarian, directive management style. That’s sometimes a disadvantage in change, because sometimes you need a clear message, but that’s just not us. You can’t be against this DNA of a company. And it’s exactly the same outside of headquarters. We have an enormously strong decentralization. The Managing Director in Korea, in Thailand, in Australia, in the USA has a very, very high degree of freedom.

He knows when to coordinate, but overall he knows that he has a high degree of personal responsibility. And it has encouraged decentralization. Now, in peacetime, under quotation marks, decentralization is super because you have to think of AVL like a fleet. It’s not a big ship, it’s a fleet unit. And the shipowner Professor List tells the captains by radio, please go that way now. But we are not the big ship. The disadvantage is decentralization. Exactly in times like these, when things sometimes have to move quickly, when it’s a matter of rapid decision-making. We are not yet a grassroots democratic institution, that would be going too far. But we are a company where individuals know they can make their voices heard, they can make their opinions known, and things can go in this or that direction. And you can only do that if you have people you trust to do the right thing despite everything. But the principle of decentralization is that the individual should decide as much as possible for himself. The owner, who is the driving force behind this culture, doesn’t want to change that. We are anything but a company with micromanagement.

Markus Petz: Now I’ve tried to listen very carefully. Yes, this naturally leads me to ask to what extent diversity is a significant factor in your company. And then of course, especially with regard to the technology-savvy company that I mentioned earlier, very many people with technology training, with an affinity for it. So to what extent do you succeed in having a proportion of women in the company as a whole, but especially at the top of the company, which corresponds to that of our population?

Markus Tomaschitz: So here you hit a very important and unfortunately also sore point. We still have far too few women in management positions and far too few women in technical professions. This is something that has been accompanying us in Austria for decades now, that we experience that already in the HTL and afterwards at the technical universities and at universities in the technical courses of studies of universities of applied sciences we hardly get beyond 10%, 15%. And this is also the case in the companies. I also have 17% of women in AVL, which is far too low. And the Romance countries have 30%. Countries like Iran have about 50% of women in technical professions and also at university. I think it still has to do with very traditional patterns, in education, with very traditional patterns, then also in school education. It is still the case today that we are unfortunately losing many young people, so to speak, who would perhaps even be predestined for technology, who would be talented, who would have strengths, in the natural science subjects. And that should make us think about the fact that the German-speaking countries are lagging so far behind. It’s the same in Germany, and it’s the same in German-speaking Switzerland. Here, we are simply lagging behind. But we have done many, many things. I’m thinking of FemTech and many other activities that have been set. There are also, thank God, a few slogans, examples, if I just think of the great Ms. Angelika, for example, from the Finns and many others. So there are already a few roles, but there must come more, also with us, so that it gains a kind of logic. But you can already see from my lapse in using the masculine form a lot that it’s still the case that when you think of technician, you think of male technician and female technician. And it shouldn’t really happen. So I also thank you for the advice to be more careful with the language here.

Markus Petz: Yes, well, I don’t think that was a bad intention anyway. And I probably feel the same way, still strongly in these images, that technology is identified with man. Even more so than with women. What I’m also incredibly interested in is that this is also something that comes up when we talk about technology. What do you think will be the most important requirements for employees at AVL in the future, beyond technical skills? In other words, what skills do people need in order to be able to successfully contribute to your company, but beyond the technical skills?

Markus Tomaschitz: That’s an extremely interesting question, which I can answer in three parts, so to speak. I’ll start with the methodological aspect. I believe that knowledge of methods, knowing how to convert something into results, is a very decisive ability. Am I able to transform knowledge into benefits, so to speak. This understanding of tools and how to implement them correctly is incredibly important. Because, of course, everything we do is project management, and in the end it’s only the result that counts. And I think that is a very important prerequisite for success in our company, probably in many companies. That’s just the way it is, and you have to be well prepared to really be able to use this knowledge of methods correctly. The second thing is definitely, if I now go to the personality structure, that at AVL very specific characteristics, I have already mentioned, are important. It is to be able to work independently and on one’s own responsibility. You’re always in a team, you’re never alone, but you have to be able to work on your own responsibility, independently and also think entrepreneurially, even if you’re not an entrepreneur, but always in the sense of what helps the company, what else can I do there, what can I do there? How can I perhaps make one or two things even better there? So I think that’s an extremely important gift. Then there’s the issue of education, and then there’s the issue of appreciative cooperation.

Every company is such a complex social system. If you let people be a little bit the way they are and also accept it. That means managers have to learn to accept people as they are, not as you would like them to be. Which doesn’t mean that a criticism meeting, correction meeting or even a feedback meeting is needed here or there. It always needs them, especially when there is obvious misconduct. But that one allows individuality and is also lenient and also accepts it. People are different. One is good at this, the other at that. And this image of acceptance of the other requires an incredibly high emotional intelligence, if you will, also emotional wisdom. To let people be who they are and still be able to demand something. And in third place is the passion to really put in 100%. I couldn’t do anything in life with 80 and 90 percent. I have to give 100%. Always and every time. Just like in sports. The football player at Liverpool FC, who always gives 100% every time, that’s also the case here in our project. And to bring this passion, to burn for the cause and to do it not because I get a salary at the end of the month and maybe also a variable part, but because I do something good for the cause. So we are looking for these people, we have many of these people and we are very proud of that.

Markus Petz: Now you’ve touched on the subject of emotional well-being, of letting someone be who they are. At the beginning of our conversation we also talked about the fact that there has to be room for this, especially in the transformation. To what extent does your company make room for unconscious aspects, such as the subconscious or intuition, and for dealing with body knowledge? Now, in addition, against the background of many technology-savvy and technically trained people who are, as you said, very rationally arrested. How is it with you in the company? How do you deal with these unconscious aspects?

Markus Tomaschitz: Well, that is of course a very, very important point. Because behind all the rationality, there are often emotional blockages. And you wouldn’t believe how much energy a person spends trying to prevent something. Preventive energy is an enormous factor that often comes from the subconscious. Has an inner rejection against something, or something does not correspond to my world view etc.. Now, of course, it must be said that this also goes hand in hand, I say now, to some extent with this authenticity theme of recent years, especially also in management and leadership training. You should always remain authentic. If employees were always authentic in the workplace, then there could be no togetherness. If I’m authentic every day, my colleagues can’t stand it. So I think it takes a healthy amount of rational adaptation. And perhaps it takes what is now called synchronization to be able to synchronize one’s behavior. And by that, I don’t mean becoming untrustworthy or allowing oneself to be bent, but rather also having a certain, if you will, flexibility in the orientation of one’s own values. But these subconscious issues that are inside your questioning often come out of that point.

Yes, life is full of gray areas and that’s something. I’m with you on that now, which is often hard for our executives because they just have a technical background. For a technician, the light is on or off, it’s black or white. But life is made up of shades of gray, and you always have to be especially careful about causal relationships. Life starts with variances, with standard deviations and before any causal automatic causal connection I would be cautious if something is too clear. Life is a gray area. And to be able to allow that, to let five be five, to not always see one’s own needs as the most important and perhaps also to accept subconsciously that togetherness means sometimes giving and sometimes taking. In my view, this is an essential basis for living together in a society. Whether it’s in a company, in a family, in cities or countries. That is part of it. But that is an important point. Not to address that and that too. So there is this world beyond reason and you have to be allowed to talk about that.

Markus Petz: Yes, it’s incredibly exciting to chat with you, to get insights. With a view to the clock, perhaps one last question, because you have now also addressed it, namely in the direction of managers and this view, especially against the technical background. There is only the status on or off. In your view, what is the essential requirement for tomorrow’s managers? And then, perhaps, to conclude with a provocative question, will we still need managers at all in a decentralized organization in the future?

Markus Tomaschitz: Yes, we will need managers. And that’s because there will always be conflicting goals. And there has to be someone who decides which goal is prioritized and which goal is secondary. But the role of the manager, that’s going to change. So this directive, that will become less important. Today, it’s very, very much about community and creating meaning. To create an environment that is enjoyable, to create an environment that is also interesting, and above all that functions in a much more democratic, participatory way, because otherwise Generation Z will simply run away. People today also know they have alternatives. They are looking for a company that offers an environment that is interesting, that is exciting, where you think about Monday with joy on Sunday evening and say, I like doing my job, knowing that not every job is just fun. And it certainly isn’t. After all, there are different requirements at different levels. That you do create an environment where you just enjoy going to work. I create that everywhere, no matter which company or which authority it is. And that will be the task of tomorrow’s managers, to exemplify this togetherness and also to exemplify trust. Those who show trust are usually rewarded. And in the two or three cases where trust is abused, these should be seen as the exception, but under no circumstances as a basis for now leading with mistrust, so to speak. You can’t lead with mistrust, you can drive people away with mistrust.

Markus Petz: Yes, that was a wonderful conclusion. Thank you very much once again for the insights you were happy to provide, into the company and as you said, into a profound transformation that has never been there in this form before. Yes, thank you for being there and all the best for the next steps towards moving forward in this profound transformation.

Markus Tomaschitz: Yes, thank you very much Markus, all the best and to all listeners of your podcast all the best and I thank you very much for your interest and for your interest.

Markus Petz: Yes, dear listeners, thank you very much for listening. Of course, if you enjoyed the episode, we would be very happy if you subscribe to us via your favorite podcast app. We’d be even happier if you gave us a five-star rating or recommended this episode to a colleague or someone in your circle of friends or family who might also be interested. That helps us to continue to attract exciting guests and new topics around transformation, change and change for you at customers to be able to. See you in the next episode. Best regards, your MetaShift team.