Digital Dealer - January 2020 - 18

DEALER OPS & LEADERSHIP

the local level. We are shifting from the
world of running individual dealerships,
often employing 50-100 to operating and
growing companies of 500, 1,000 and
1,500 employees, which will dramatically
increase operational complexity.
At these larger sizes, successful auto
retailers will need to consciously forge an
organizational culture in addition to an
effective sales culture. This organizational
culture will transcend the sales culture,
and appeal to the many specialist and
internal support roles required of a large,
growing company in a changing industry.
This organizational culture should also
speak to the next generation of employees
who are often seeking different types of
compensation, work/life balance, autonomy in the workplace and social impact.
Effective auto retailers need to be highly
competitive in the war for talent to compete successfully against tech companies,
professional services companies and other
retailers to attract and retain the necessary
level of talent to adapt and thrive. This
work falls on the leaders of the organization
to design and implement organizational
cultures and management structures that
create these competitive and attractive organizations. This is a much higher bar than
what the traditional auto dealership human
resources roles have sought to achieve and
will likely be a requirement for future auto
retail success.

are actively thinking about where they need
to be one year, two years, three years and
even ﬁve years out. This is a critical component for survival in fast-moving sectors
and entails making continual commitments
and investments into where one believes
their industry is headed. Successful bets will
position your organization for the next leg;
unsuccessful bets will put your company at
a distinct disadvantage to your peers. And
the process is ongoing.
Auto retailers will need to start thinking
more actively about their technology strategy, and tie together their internal road map
for how they want to position their organi-

" Technology roadmapping will drive
the conversation and
will impact capital
spending, training,
staffing and a series
of key management
decisions. "

Technology Road-Mapping
After a decade or two of discussion about
change, we now stand at the precipice of
information technology fundamentally
disrupting virtually every other sector of
retail, and automotive retail will sooner
rather than later, follow these trends.
Leaders of auto retail organizations
are making some big bets as to how all of
this plays out and how to position their
organizations for survival in the decades
ahead. In other industries, this is described
as road-mapping. That is to say, actively
planning for the future. Technology companies are particularly aggressive in this
regard, as they know that the lifespan of
their products is measured in months, or at
most a year or two, so they are continually
planning, and updating their plans. They

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zation for the next few years. Technology
road-mapping will drive the conversation
and will impact capital spending, training,
stafﬁng and a series of key management
decisions. This is a level of internal planning that we do not generally observe in
our industry today and will be a hallmark
for how many auto executives position their
organizations in the years to come.
Over the next 10-15 years, auto retail
leaders will need to make a series of calculated risk decisions about how aggressively
they plan to invest in various technology
platforms, which ones to choose, how to
re-train staff and pare costs from the existing real estate-intensive business model.
Being too far ahead can be just as costly as
being behind.

Developing Financial Acumen
In an era of consolidation, successful auto
retailers will grow via acquisition. The average acquisition in the U.S. is now nearly $19
million, including real estate and working
capital. Large, metro stores can easily range
from $30 to $50 million. Managing and
ﬁnancing organizations on this scale goes
well beyond traditional dealership accounting and ﬁnancial statement reporting. The
skill set required here shifts to true corporate ﬁnance.
As an industry, we are transitioning from
the era of the family balance sheet, which
has long been the primary ﬁnancing engine,
to an era of corporate balance sheets. That
is not to say that families will not continue
to play a very big role in industry consolidation, but the historical intermingling
of family and business balance sheets will
diminish. Professional capital will increasingly be the standard by which growth
opportunities are assessed and transactions
are funded. Industry leaders will require far
more ﬁnancial training and sophistication
given the size of these businesses, and the
requirements placed on them by investors
and lenders. These are not skills that most
can learn within today's dealerships.
Tomorrow's auto retail leadership will
likely want to master the three skills
outlined above. The training ground for
many of tomorrow's dealers will be business
school, law school, private equity and
corporations, not simply working through
every role in the dealership.
There is always value in gaining exposure
to an industry early in life. "Table talk"
refers to growing up and possibly working
in an industry when young. As evidenced by
prominent auto retail leaders today, there is
real accumulated value being raised in the
industry. But, that type of training will not
sufﬁce for auto retail leaders of tomorrow.
Though "sweeping the shop" will continue to remain an important aspect of our
industry, there will be a greater emergence
of industry leaders who have supplemented
their leadership skills with experiences outside the shop. Both training grounds will be
key for auto retail's future leaders.
For more insight into industry trends, visit:
Digitaldealer.com/trending-auto-news/

January 2020

http://www.Digitaldealer.com/trending-auto-news/ http://www.digitaldealer.com

Digital Dealer - January 2020

Table of Contents for the Digital Edition of Digital Dealer - January 2020