RESISTING CHANGE AT BMW – CORPORATE

When CEO Harald Kruger took over the job at BMW in 2015, the company was doing well – “firing on all cylinders, ” so to speak.

However, this is the age of disruption in the luxury car business with worries about the impact of electric vehicles on the market, and, in the case of BMW, for concern about its rival Mercedes-Benz’ recent come-back.  Kruger had a reputation for operational competence but turned out to lack vision and, even, “star power” in the face of the industry’s disruption and its population of “big personalities” among its corporate leaders, (ref WSJ).  In the face of his challenges, he has resigned his position.  It’s said that the German auto industry is seeking “drivers,” (that is, CEOs) who have a stomach for radical change and an ability to negotiate terse labor arrangements.  One of Krueger’s competitors for the position appointment in 2015 was Herbert Diess, who, after losing out to Krueger, moved from BMW to become CEO of Volkswagen AG and immediately set about jumping into the electric vehicle arena with both feet.  Krueger, on the other hand, demurred, and, thus, let the BMW opportunity for a lead in electric vehicles slip away.  It’s anticipated that the future of BMW might well be challenged by hedge funds with take-over intent – similar to the recent situation with Osram Licht, a headlamp and lighting manufacturer that was spun off from Siemens in 2013.  If so, not only will the new CEO need to be someone with a strong stomach for radical change but also someone who can manage both unions and hedge fund owners with diplomacy and effectiveness.  We’ll continue to follow the changes at BMW – with a wish for the best to the company and its new leader.

All the moving parts – the CEO is the first among equals of the five elements of a company.

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