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BMW as we move to a more “Sustainable” world

As I sit here on my flight back from Los Angeles, I’m reflecting on the impact of our changing world.  You see, I was one of the lucky 8 facilitators who just assisted BMW at its Rad Hub gathering, where they brought together approximately 70 experts, from various fields, from across North America and Europe, together with 30 of their internal leaders.

You see, it's BMW’s 100th Anniversary and their goal with this gathering was to try to understand what mobility will look like in the future – not just for cars, but all mobility. Peter Schwarzenbauer, a Member of the Board of Management at BMW AG, open the session.   As he did, I was struck many things relating to sustainability and investors. Here are some of them:

  1. The current transition is the biggest ever seen by the auto industry.  His take on the auto industry to start with.  He acknowledged that the current changes the industry is undergoing are actually the “biggest transition ever seen by the auto industry” and that there is a great need for the industry to work together.  In particular, if they are going to have the financial power to have a chance to be part of the transformation.  He mentioned that the question is no longer about the “relevance” of the auto industry, but actually whether this industry will actually “survive”.

  2. Challenging people when things are good.  He mentioned that he was happy to be part of this open sharing platform they had created as he has become increasingly aware of  “some” of the challenges before BMW since 2007.  But one of the goals of this event was to gain insight into what they’re not seeing – he wanted to be made feel “uncomfortable”.  I’ll admit, this is not something that we heard from leaders very often.

  3. “Why Change When we’re being so damn successful?” He then went on to tell us that it’s really hard to get people to think about changing practices when things are going so damn well. I was struck by his honesty in what is a situation that is all too familiar.  Why change when things are good?  But do the best leaders and visionaries not start thinking about change long before their market does?  I believe so and given the autonomous vehicles that BMW has already designed as prototypes (See photos), they’re not talking about just the next 10 years… they’re talking well beyong that timeline.  I believe this is exactly the kind of long-term thinking that leaders in all industries should be considering.   But yet, I seem to continually come across serious, senior professional in many public companies who don’t even know what “sustainability” or “Environmental, Social and Governance (ESG) issues” are, let alone are looking that far out into their future.

  4. “We need to bring people with us.”  For me, this was one of the most impactful comments of the day.  Given our closeness to Silicon Valley, there were many of the most intelligent people on the earth in that room, working on some of the coolest and most advanced technologies in the world.   But Mr. Schwartzenbauer reminded us that start-ups can do that, but a company the size of BMW has an obligation to bring people with them in this transition. You see there are many technologies that could already be implemented by BMW, but are their customers ready for them?  What about their employees, dealers, mechanics.  Do they need them all?  How do you help them transition to this new world?  They all need to be educated and brought along on the journey as well.  This is clearly part of the challenge for all companies. As investors and citizens, we must understand that these changes take time.  We will need to be patient for the impacts and we need to seriously consider taking a longer-term approach to our investments such that companies can make the investments needed to survive in this transition.

  5. “You need to be stubborn in your vision and flexible on tactics” – And this was the leadership lesson that I think we can all learn from.  In a time of such change and fluctuations, there are many different ways to reach one’s goals, but the vision needs to be clear.  Are we asking these questions of the companies we’re investing in?  Do the Board of Directors have a clear understanding of the vision of the company given the compelling changes happening today?  If we’re not, we should be and we as investors should know that.

Such great lessons to learn from great leaders.  It continues to remind me that we need strong leadership and vision.  As investors, we need to be on top of the issues in our changing world.  If we’re not, we might just find ourselves in the wrong vehicle, driving in the wrong direction.



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