Disruptive Automotive Transformation: A CEO Conversation

The CEO of Magna International, with revenue of $37 billion and 174,000 employees, explores disruptive change in the automotive industry. Discover challenges, opportunities, and insights from an industry leader on the future of mobility.

43:17

Aug 18, 2023
16,398 Views

In Episode #801 of CXOTalk, we host Swamy Kotagiri, CEO of Magna International, a behemoth in the automotive manufacturing sector with $40 billion in revenue and 174,000 employees. The conversation sheds light on the rapidly evolving landscape of the automotive industry.

This 45-minute dialogue explores the core of technology-driven disruption in the automotive space, including:

  • The New Frontier of Mobility: The industry is evolving to meet shifts in consumer preferences and regulatory mandates. Electrification is emerging as more than just a compliance requirement.
  • Strategic Balancing in Innovation: Kotagiri discusses Magna's approach to staying relevant through technological advancements, focusing particularly on the transition from traditional to electric drive systems.
  • The Integral Role of Data: How Magna utilizes data for both product and process innovation. The conversation highlights the potential for new business models and efficiencies enabled by AI and machine learning.

Tune in for a comprehensive look at the ongoing transformations in automotive technology, making this episode a must-watch for executives and professionals invested in the future of mobility.

Swamy Kotagiri is the Chief Executive Officer of Magna International and is Management’s sole representative on the Board. With over 30 years of industry experience, including 21 years with Magna, he brings extensive knowledge and understanding of the automotive industry, as well as the company’s culture, operations, key personnel, customers, suppliers and the complex drivers of its success. He previously served as Magna International Inc.’s President (2020) and Chief Technology Officer (2014 2019). Other Magna roles have included: President of Magna Electronics (2016 2018); President of Magna Power and Vision (2018 2020); President of Magna Powertrain Inc. (2017 2019); and various engineering leadership positions at Cosma International (2000 2013). 

Prior to joining Cosma International, Mr. Kotagiri was a Structural Engineer at General Motors. Mr. Kotagiri has been featured in Business Insider’s 100 People Transforming Business and was named by Automotive News as a 2021 all star in the category CEO, Global supplier. He is currently a member of the Business Council of Canada and the MIT Presidential CEO Advisory Board.

Michael Krigsman is an industry analyst and publisher of CXOTalk. For three decades, he has advised enterprise technology companies on market messaging and positioning strategy. He has written over 1,000 blogs on leadership and digital transformation and created almost 1,000 video interviews with the world’s top business leaders on these topics. His work has been referenced in the media over 1,000 times and in over 50 books. He has presented and moderated panels at numerous industry events around the world.

Transcript

Michael Krigsman: Today on Episode #801 of CXOTalk, we're speaking with Swamy Kotagiri, CEO of Magna International. 

Swamy Kotagiri: We are one of the largest suppliers in the automotive space, by far the largest in the United States, fourth globally, about $40 billion in revenue, about 174,000 employees, and about 350 manufacturing facilities all over the globe. We are like an automaker without being one. 

Michael Krigsman: You were CTO of Magna, and then you became CEO. That's a very unusual career path, I have to say.

Swamy Kotagiri: I always look at the automotive industry as a very highly technical, highly complex industry. But I started off in Magna, the automotive industry about 30 years, but really in Magna for about 24. 

I started off my career really as a finite element analysis structural engineer (for those of you who are technically inclined). A little bit in terms of CTO of Magna, in that role we'd have a voice in the product strategy, customer strategy, and the roadmap. You really have a seat at the table in looking at the overall roadmap of the company.

With that said, I think the next step was not very surprising for us internally. Once you have the color and context that I gave you, I hope you find it was not a really surprising step.

State of the automotive transportation industry today 

Michael Krigsman: You mentioned you had a seat at the table regarding project strategy and customer strategy. The automobile industry is undergoing such massive change right now. Can you give us your perspective on what's happening with mobility today?

Swamy Kotagiri: When you really talk about mobility, the reason why we use the word "mobility technology" is really going back into the history of mankind. How people and goods moved from point A to point B really defined the economy or actually shaped the economy and the history. I feel it still continues to play that role.

As we stand back and look at the landscape today, we're really talking about how to continue to make that, like I said, safer, smarter, and cleaner. As we try to address, for example, the cleaner part of it, the automotive industry is playing its role by addressing, call it, the climate crisis by the tailpipe emissions, and the result is the electrification process.

In the past, electrification was really addressed as a means to achieve the regulatory requirements of meeting emission standards and how you manage and maintain that. But really, now it's become a product differentiator both from the consumers as well as from the manufacturers. You see an exponential growth (even in the last two or three years) of how we talk about it, how we are defining the products, so that's one aspect of it. 

From a larger automotive perspective as an industry, it's interesting how the consumers are looking at a vehicle before they buy. When we bought vehicles when I was 16, 17, 18 years old, you were looking at the horsepower. You were looking at the ride and suspension, the handling, the power, and so on. 

If you look at the consumers today, they are looking at a different set of feature functions to make their decision to by the vehicle, which means how the vehicle is going to be designed, how it's going to be manufactured, how it's going to be sold is all evolving and changing rapidly. As the automotive suppliers and automotive manufacturers, we are looking at all of these trends, and that's what I meant by having a seat in terms of the product roadmap and the customer roadmap.

We not only have to understand how the vehicle is going to be designed, made, and sold. We also have to understand the roadmap of various OEMs because we are supplying our customers across the globe, addressing various segments of the market. That's what I meant by having the seat at the table in terms of product and customer strategy. 

What's exciting is we talked about electrification. There is what I call the driver assist functions that are making the driving experience more comfortable and more convenient. And as we head towards autonomous in the long run, that's the next step. 

We are looking at how I would call the transition of the consumer experience from the living room into the car. What music are you listened to? What were you doing before you got into the vehicle? And how do I continue that experience? How do you stay connected? That's the connected piece of it. 

Put all of this together, we are really in a transformative time, but really exciting times.

Balancing innovation, market relevance, and long-term strategy in the automotive industry

Michael Krigsman: Vehicles are so complex, and you've got this intersection of technology, innovation, and advancement with the human factors aspect with the competitive industry pressures. As CEO of this very large organization that is so integral to the industry, how do you balance these competing pressures, opportunities, innovations, and constraints?

Swamy Kotagiri: We've got to look at where we stand today in the market and be self-aware. What is our strongest point? How do we stay relevant going forward? How do we not get complacent even though we have poll positions in various product lines that we are in today?

If you don't disrupt yourself, somebody is going to anyway. As we go through the normal planning process, those are some of the questions we ask ourselves. 

What's happening with the world? When I say the world, it's not limited only to the automotive industry. There are some larger, macroeconomic conditions, like we talked about the global climate crisis. The automotive industry's answer to that or contribution to that is to reduce tailpipe emissions, as an example. 

We start looking at the macro conditions, boil it down to what it means to the automotive industry, and then look at we (as Magna) what role do we play today and how do we stay relevant and continue to add value going forward. Those are some of the big questions that we look at.

Then, obviously, we have to prioritize as we sit back and look. It's equally important to have a list of what to do, but also what not to do because we can't do everything. 

We have the discipline to say, "Here is where we are playing a great role today, but the industry is changing. How can we change?"

A good example would be we are the largest supplier today in the all-wheel-drive, four-wheel-drive systems, in driveline. We bring power to the wheels. But the world is evolving and, as electrification comes into play, we are now transitioning to electric drive system (both primary and secondary). 

We sit back from "these are the nuts and bolts." We look at, "We have a lot of assets that do gears and shafts. They can be flexible, and they can add value going forward into the e-drive systems." 

Then we look at the vertical integration and say, "What are the other pieces that we need to have to stay relevant and bring value?" That's how we do our M&A strategy or our investment strategy or our research and development activities. We talk about doing roughly about $900 million or so per year just to address some of these megatrend areas of electrification, ADAS, and so on and so forth. 

It's a combination of those things. We, every year, go through a buildup, ground-up process (we call the business planning process) where we look at all of these aspects and prioritize things that we need to do not just for the near term but also for the long term. We always look at—we've been around for the last 65 years—how do we stay relevant for the next 65?

Magna's multi-faceted approach to innovation and adaptability in the automotive industry

Michael Krigsman: Obviously, technology is a very important piece of this. Can you talk about some of the technology changes that are going on right now, and especially, what does that mean for Magna?

Swamy Kotagiri: We always look at it in three buckets: innovation in product, innovation in process, and (more, I would say, in the last five, ten years) innovation in data and what does that mean. It's very integral and kind of falls into the intersection of both product and process. If you look back into the history of Magna, a very proud and rich heritage of innovation in product and process. 

We look at the products today, and it goes back to what I said. Look at the customer roadmap, look at the macro trends, and talk about what are some of the high-value, game-changing technologies. But there is an equal importance to what I call the incremental improvements as we go through. 

We are looking at changing the landscape in how the consumers (whether it's the occupants or the drivers) are using the vehicle, so what do the seats have to do? We are talking about health and wellness monitoring, so what can we do there? 

We are looking at legislative requirements, so we are looking at driver and occupant monitoring. How do you not leave a child behind?

We look at the big questions rather than try to articulate a solution and start there. What is the question we need to ask so we can come up with a solution? That's how we start our innovation process from a product perspective.

As I mentioned, we have 350 manufacturing locations. That's our DNA. As anybody who has been in the automotive industry would know, we not only make a very complex, highly engineered product, but have to think of durability. It has to withstand thousands or hundreds of thousands of miles in all types of climate conditions, so it's a very durable product that we have to make.

Interestingly, we put such a complex product in the hands of a 16 or 17-year-old, right? 

Michael Krigsman: [Laughter] 

Swamy Kotagiri: We've got to keep all of this in mind. That means the robustness and the reliability that you need to have in the manufacturing process is really immense, and it's not articulated well enough, I think. That is the other area that we are looking at.

Finally, when we talk about data (whether it's artificial intelligence, whether it's machine learning), how do we use the data that comes from the physical assets to enable better decision-making either to increase the length of the asset or to increase the safety or to improve the things that you really need to invest when it is needed versus just following a mechanical process?

Data in terms of the product; you talk about autonomous driving. Today, we do a lot of structured learning, right? You put on all the sensors and drive the vehicle to learn the perception and to train the driving policy. 

In the future, we're getting to an unstructured learning, hopefully, so we don't have to drive hundreds of thousands of miles to get the optical path of an ADAS system before we put it in. That's the role of data, both in product and process.

We look at all of this and, obviously, we have to look at each of our product lines, and that's the other significance of Magna. We have a very broad portfolio. We are in powertrain. We are in ADAS systems. We are body structural systems agnostic of materials, body and chassis. We are in mirrors, mechatronics, lighting, and, more interestingly, we're also a contract manufacturer of full vehicles for OEMs.

It's a complex task, but very interesting for anybody who is technically inclined and want to have a phenomenal career in this interesting industry.

Michael Krigsman: Yes, I don't think people realize that you manufacture cars such as the Mercedes G Class, their SUV. In Austria, I think, is your plant. 

Strategically navigating the shift to electric vehicles

We have an interesting question from LinkedIn. This is from Naidu Sandrana who says, "What key technology transformation initiatives are you undertaking to address the significant shift from internal combustion engines to electric vehicles?"

Swamy Kotagiri: If you look at the transformation of the industry, I said we look at some broad things, what we call the car of the future. What I mean by that is, how does the car look today? What does the consumer look for in the car? And how is it evolving going forward in the next five or ten years? That's what kind of drives our initiatives in research and development and our thinking of the product portfolio going forward.

Like I said, a good example we just started off was the driveline, all-wheel-drive, four-wheel-drive systems today. They are becoming e-drive systems, and we started this journey about eight to ten years ago. 

Today, we are launching, have launched, and continue to launch both the primary and the secondary e-drive system for BEVs (battery electric vehicles). That is a transition that was planned, so how we allocate capital towards it, where should we be allocated capital are some of the things that we think through this as we put the pieces of the puzzle together.

A lot of our product portfolio is also agnostic to some of these trends. What I mean by that is whether you have an ICE vehicle or an electric vehicle, you are still going to have seats. You're going to have a body structure. You're going to have a chassis structure. 

Of course, it's going to be different. It's going to be designed differently. Materials might be different. But it's a natural evolution for us. That's about 60%, 70% of the business. 

But we look at each of the product lines as we go through this longtail transition and plan for it. There is no black-and-white deterministic answer to say, "Here is A, B, and C. That's how we're doing it." Like I said, it's a multivariable problem that we're addressing.

Michael Krigsman: Please go to CXOTalk.com, subscribe to our newsletter, subscribe to our YouTube channel. We have amazing, really great shows coming up.

Leveraging data to disrupt and refine manufacturing

We have questions coming in on LinkedIn and Twitter. Let's jump over to Twitter, and this question is from Arsalan Khan. He's a regular listener, and he asks excellent questions. His question is about data.

He says, "Manufacturing is highly processed-based. What kinds of data are you collecting not only to improve the process," I'm assuming the manufacturing process, "but to totally disrupt the process?"

Swamy Kotagiri: I like to think of data as an enabler for decision-making, right? Part of the exercise is to start collecting the data. We call it the data lake for simplicity's sake.

The data lake would have information from all areas of a factory, let's say, which means you're looking at data from the ERP systems. We are looking at data from finance. We are looking at data from logistics. We are looking in all aspects that is required to run a factory. 

We call it the single source of truth because a finance person might look at inventory, in working process how much it is, and working capital what does it mean, and start using that data. Uptime, downtime, scheduled maintenance time, unplanned maintenance time will be looked at by the production department differently.

If you sit back—and in my role, for example—we look at this data from various factories to kind of get a guidance of same product. What's SG&A, what's material cost, what is uptime, and start getting benchmark data and so on. 

I think, firstly, it starts off by giving you a set of data so it can enable a good decision-making process. I think we've got to have a balance to say, "Let's not just collect data. Have a little bit of both." One, collect data and see if there are patterns that are coming through that'll help you drive decisions.

The other one, for example, in some machines we put sensors that will give us leading indicators to say we should be taking care of certain things rather than wait for what we call today scheduled maintenance. It's just very deterministic, so we are being proactive about it.

We are going through a digital transformation as an enterprise, and you can imagine the complexity that goes through is defining each of the functional areas. What data do we need and why? Putting them in a platform that can be accessed by interfacing functions so they can use it. Then most importantly, how do you keep this data relevant, clean, and (I call it) the one source of truth so people are using the same set of data everywhere else?

That's a gargantuan task, and we are going through that process right now.

Harnessing vehicle data for enhanced safety and user experience

Michael Krigsman: Swamy, you just spoke about data in relation to essentially internal processes and manufacturing. What about data that is coming in from the cars? Can you talk about automotive and vehicle data? 

Swamy Kotagiri: I'll give an example. We collect data. That is a whole big question of who wants the data, whether it's the consumer, whether it's the OEM, whether it's the system suppliers, and so on.

As I said, we have the privilege of interfacing with different systems in a car. I talked a little bit about the evolution of how the design of the car is going and how the car is going to be manufactured and how the consumers are buying.

As a part of that evolution, we are looking at what we consider to be highly integrated systems. What I mean by that is if you can imagine path planning or mapping of the routes, and you have the overlay of the information in terms of the weather. You have the information that's coming from the sensors, like the ADAS sensors. 

If you can integrate all of these things, the power that you can put in the hands of the consumer, or the ability to improve safety, is immense. If you have a map and if you have the route that is already planned, you have, like in our systems, the Magna System of Primary or Secondary Drives, we provide features like torque vectoring where you have traction. Which wheel needs to have the power?

The ability to say, "I am going to have milliseconds worth of information ahead of time so I can provide the power when needed, where needed, only when needed," is extremely important. It enhances the ability (off the cart) to function more safely but, at the same time, provide the driving experience that we as consumers expect. 

This is what we're talking about, how the data plays a role in the vehicle. In our seats, for example, we are looking at a way to detect if there is alcohol in the breath. Based on the dilation of the pupil and your reaction time, you already have the driver monitoring systems or the occupant monitoring systems, which can be used for various purposes. 

As data comes from various systems in the vehicle, the ability to integrate them, I think the features and functionality that is coming is jaw-dropping. And I think this is going to be exponential in the next few years.

Transforming from physical to digital in the data-driven automotive landscape

Michael Krigsman: What does all of this imply for Magna because, historically, we thought about cars, vehicles as these large, physical objects? Now, you're talking about the world of software, AI, machine learning, driven by tremendous amounts of data. How does a company like Magna transform itself to gain these additional skills that are so different from physical car manufacturing?

Swamy Kotagiri: There are a lot of things that we are defining from a software and a hardware perspective. What we used to call midcycle enhancement is maybe a continuous cycle enhancement going forward. 

But you have to think in terms of systems, and you have to architect the platform in such a way that you can do this continuous enhancement of features and functions in a vehicle, so it's not a remelt, repour every design cycle. That is a paradigm shift that has happened already and it's only going to accelerate going forward.

One key thing for Magna, as we sit back and we are privileged to say we have multiple systems, that means we have multiple interfaces with the OEMs. We get a chance to sit with them, understand their strategic roadmap, and (with most of our customers) we are able to have the discussion rather than wait for a supply-sourcing decision.

What is the problem that they're trying to solve, and can we bring a solution to them? We are able to do that because we are not sitting there just as a body and chassis supplier or a seat supplier or a powertrain supplier. 

Like I said before, we have the privilege to think like an automaker because we design full vehicles. We can manufacture full vehicles for OEMs. So, we have the innate ability to think like an OEM. 

And we also have the deep systems knowledge because we supply systems, multiple systems. So, we can bring them together.

In electric vehicles, for example, we are talking about battery enclosures. The way the underbody of the floor is going to be defined is changing. Can the top of the battery enclosure be the platform where the seat is attached? We also make seats. Can we integrate a bunch of these systems to reduce the redundancy where it's not applicable, bring it forward? 

We make sensors. We have the software in place. We make the mirrors. And that was one good example where we brought a one-box solution, as we called it. 

We already have the rearview cameras. We already have the inside mirror. Should we have two issues or maybe should we just integrate it into one? We created what we call the driver monitoring system. We're not saying we are the only one, but we bring a unique solution to it.

We are talking a lot in terms of material information, material knowledge. I like to always say we make body and chassis structures agnostic of process and materials. What I mean by that is we are not looking at a lift gate or a door by saying I'm going to make it out of steel. We are saying, what is the right product? 

I can make it out of steel. I can make it out of carbon fiber. I can make it out of thermoplastic. I can integrate sensors. I can integrate actuators. By doing this integration in an appropriate way, sometimes we can provide modules to the OEMs so they can better use their manufacturing space. They don't need the longer lines. 

I'm not saying this is one answer fits all, but that is the beauty. We are able to provide the right solution based on the problem description that the OEM brings to us. I think that's the uniqueness of Magna, and that's what we are leveraging.

Michael Krigsman: You're looking, first and foremost, at the ultimate function. From an end-user standpoint, you begin with that problem. Then you figure out the details of the materials, the design, how to manufacture, and so forth. Is that correct?

Swamy Kotagiri: It's always about asking the right question. The outcome or the answer will depend very much on the question we ask.

I've used this example. With your permission, I'll use it again. 

If you go back to the auto industry, we ask the question, "How do you protect the drivers and occupants in the case of an accident?" Here, we already made the assumption there was going to be an accident. We are protecting people, so the answer was airbags, seatbelts, and so on.

Now, with the driver assist functions and autonomy, we're asking the question, "How do you prevent an accident from happening?" And the outcome is very different. 

I believe very strongly in spending a lot of time articulating and framing the problem correctly so we have an enduring solution, a game-changing solution, and a solution that's differentiating us from everybody else. That's exactly how we try to approach the OEMs and say, "What is the problem you are trying to solve and how can we help?" rather than go say, "Here are a list of things I have. What can I sell to you?"

Michael Krigsman: It's the right way to do things, but that can also be an expensive and a slow process because it requires real refinement and communication and iteration takes time. 

Balancing innovation, time, and cost: Agile approach to entrepreneurial culture and commercialized invention

Here's a question from Lisbeth Shaw on Twitter who is asking about how do you balance innovation against shareholder value, and let's throw in the expediency of time and cost. Going back to your point, how do you actually do this, push it through the organization (such a large company), and maintain the cost and time efficiencies that you require?

Swamy Kotagiri: Yes, Magna is a very large organization, but I'm a very visual person and we have tried to make it very tangible internally to talk through this. We pride ourselves in a very agile, very nimble, very entrepreneurial culture in our company.

Rather than look at us as one large ship that moves slowly, we kind of try to look at ourselves as a fleet of speedboats very well-orchestrated but have the ability and nimbleness. A very flat organization, and the compensation structure is geared towards it. A lot of the comp for our business owners at the divisional level. 

When I say divisional, I'm talking about the 350+ divisions that we mentioned. Their compensation is based on the profit and loss they make in their division, so there is a lot of accountability. There is a lot of responsibility. 

It kind of ties to our core values where we say, "Be responsible. Be accountable. Never settle. And collaborate." When we have this individual, entrepreneurial culture, it's equally important to collaborate and communicate openly so we can leverage the scale.

Now turning to innovation, I commonly used the term when I was a CTO (on the stock) is we like to fail cheap and fail fast. We need to have the culture that failure is okay, but we need to balance in such a way that we try a lot of things very quickly and it's acceptable to fail but what did we learn and how quickly can I put a proof of concept and fail so it doesn't go too far.

We ask a lot of questions. We also have a term inside, "True innovation is commercialized invention." How do you take a concept, ask all the questions like, "Who is the customer? Who is the platform? Where can I put it? How are you interfacing with sales and marketing, the product line groups, and manufacturing?" and bring all of this together?

Every group has their top two or three, and they have to prioritize because, obviously, there is a huge list of things. So, we ask which one brings the maximum value. That's where the finance comes into play. 

Not a very simple, linear process. Obviously, there is a lot of iteration that goes through this. 

We encourage an Innovation Challenge Day where we put up a theme and all 170,000 people of Magna can come up with an idea. We help them articulate the idea. And if it gets through, we actually fund it all the way. 

There are different streams of innovation. It's very iterative. Yes, there are failures, but we encourage it. 

Our goal is to mitigate or get to the point of failure quickly rather than too late. But it doesn't mean we don't have failures in the late stage. But if you don't do that, you don't have change. And if you don't have change, you're not growing.

Michael Krigsman: We have another question from LinkedIn. I love the audience questions. You guys in the audience, you're so smart, so intelligent. Thank you for these, for all of these amazingly great questions. 

Electrification strategies: OEM approaches to emission reduction

This is from Koustubh Bhattacharya. He asks a very specific question, but maybe we can generalize it. He says, "While you speak about electric drives for electric vehicles, would you share some light on why Toyota chose not to go for EVs and is going for hybrid instead, being more viable." You may not be able to talk about Toyota, but maybe you can generalize the question.

Swamy Kotagiri: The intent of electrification in the automotive industry was to address the global climate crisis. We did so by getting to zero tailpipe emissions.

The electric drives were one way of getting there. It doesn't mean it's the only way. The hydrogen or other ways are of course being considered, and they'll continue to evolve. 

But specifically to the question, I think, like I said, the industry was primarily driven by regulation and legislation in the past. You had CAFE requirements. You had fleet emission requirements. 

You always balanced that with ICE versus hybrid. In hybrid, we have various forms like micro hybrid, plugins, and only start-stop features to coast and sail functions to 40 kilometers or 40 miles of range in your hybrids. 

This was all an evolutionary process and, over the last two or three years, it accelerated to a point where the industry's thought process is if you truly want an electric vehicle, it cannot be based on an existing platform. It needs to be thought through in its purest form. What is the best way to achieve this? We are seeing the result today. 

I think there are different ways to address the problem. There is, I believe, a longtail. It doesn't matter who you talk to – whether it's take rates of 30%, 40%, or 50% -- there is a significant piece of the nonelectric fleet that'll be on the roads for some time.

I think it's all towards reducing emissions, overall, and trying to make it as efficient as possible. Different OEMs have different strategies.

Michael Krigsman: I heard a reporter say that you're one of the suppliers that, if Apple were to build an electric car, they'd probably be talking to you. Any comment on that?

Swamy Kotagiri: As we are talking about the new entrants, Michael, there's a lot of new entrants, as you know, that are coming into the industry, including the existing OEMs, as they are talking about transitions in their platforms, addressing EVs and so on and so forth. 

All I can say is a lot of them have conversations with us. A lot of them are at the table. And, as you know, we made some announcements on some of the new entrants along with our existing customers.

You talked about the G-Wagon, and we make the Jaguar I-PACE and E-PACE. We make the BMW 5-Series. We just kind of got towards the end of the production lifecycle.

It's a combination of them, so definitely we're at the table with all OEMs, whether they're new or old.

Data ownership and use: Balancing stakeholder interests in automotive telemetry

Michael Krigsman: We have two questions now that are basically the same. One is from Arsalan Khan on Twitter and the other one is from Koustubh Bhattacharya. They're both asking about data and the use of data. 

Koustubh wants to know. He says, "All this telemetry that cars can collect can tell the insurance companies all kinds of different things that can tilt the relationship in favor of the automaker as opposed to the consumer." He wants to know how to balance the use of data and the impact on the participants.

Then Arsalan Khan is saying, "Are there opportunities for sharing this telemetry data with the government for positive reasons such as weather?" Any thoughts on this data issue?

Swamy Kotagiri: There is a war for data. Everybody is trying to put their stake in the ground to claim the ownership of the data, whether it's a consumer who has paid for the car and, therefore, the data we generate while we are driving versus the OEM.

I think this will all lead to what I would consider new business models and who accepts to willingly give data and, therefore, what do I get in return. But there is also pay for service type of thinking. 

I always give a simple example. I think if you are looking for trailer detection when you have all the sensors in the car, you might not use it all the time. But you're using the same sensor suite and everything for your normal regulatory purposes for your normal driving on an everyday basis. But for that one-off or two-off occasions when you need that lining up to your trailer and you use a feature function, you could pay only for that service for that time. 

That's just one example. I think there are a lot more of that coming and how the business model will evolve. It remains to be seen who owns the data and how these models are going to evolve.

Michael Krigsman: Very interesting about the business models and also the impact on a supplier like Magna, which I'm sure you have ideas. We don't really have the time to get into it now. But it seems like there are a lot of potential unforeseen paths into the future regarding this business model issue.

Swamy Kotagiri: Absolutely, Michael. I think it's not just about supplying software or supplying hardware or supplying an integrated software-hardware system. Like I said, we always need to think in terms of what is the end user feature and function and how do you enable it and how do you keep it fresh. Whoever has that answer will have an advantage.

I think the industry is definitely going in that direction, and we all are working towards that.

Advice to Chief Technology Officers

Michael Krigsman: Can we finish up with advice to CTOs? You were a CTO. You have an engineering background. Now you're the CEO of this very large organization. What advice do you have for chief technology officers?

Swamy Kotagiri: I would like to think of a chief technology officer as a leader. Just like any leader, you need to have certain leadership traits.

  • Being able to challenge the status quo. 
  • Having an understanding of what you're doing. How does it impact other functions?
  • Have the humility.
  • I always say, have the continuing appetite to learn and question everything. 
  • And be self-aware. Know your strengths and know your weaknesses. 

If you think you're technically highly qualified, I'm sure there are other areas that you need to learn, whether it's operations or finance or something else. Complement your team with that strength.

And give credit where it's due. When it's time to give credit, you stand back. And when it's time to take—

Especially being a CTO, you're bound to make some proof of concepts that'll not go the way you want it. It's time to stand up and take responsibility for the team. I think that's what gives you the chance to try different things and get noticed by the organization.

Talent attraction: Early outreach and continuous learning opportunities

Michael Krigsman: Swamy, we have a last-minute question that came in. Very, very, very quickly. Shari Novick would like to know about your strategies for building design and innovation capabilities and attracting critical talent to develop the skills needed for transformation – business model, customer-centric, agile, and data-driven." Very quickly, strategies for attracting this kind of talent.

Swamy Kotagiri: I think we start actually trying to get students from the high school level because they are interviewing us as much as we interview them. So, we invest all the way from that time on. 

In terms of talent, the one thing we try to give exposure to as much of the population as possible of the different things you can do in Magna because I think people come to work because they want to feel accomplished at the end of the day and have a wide variety of things they can do. Whether you're marketing, finance, mechanical engineering, or any aspect of education, we like to show them that you have a path in Magna.

That's one way to do it. Keep it simple. Keep the organization flat. 

Whether it's continuous training, continuous learning through various initiatives, that fire to say you need to be constantly learning, if you have that attitude for that, Magna is the right place. That is the message we try to articulate and communicate.

Michael Krigsman: If you're constantly learning and self-aware, go to Magna. 

Swamy Kotagiri: Yes.

Michael Krigsman: With that, a huge thank you to Swamy Kotagiri. He is the CEO of Magna International. Swamy, thank you so much for taking your time to be with us. I really, really appreciate that.

Swamy Kotagiri: Thanks, Michael. It was my pleasure.

Michael Krigsman: Everybody, thank you for watching, especially those folks in the audience who ask such excellent questions. You guys are just an amazing audience. 

Now before you go, please go to CXOTalk.com, subscribe to our newsletter, subscribe to our YouTube channel. We have amazing, really great shows coming up. Check it out, and we will see you again next time. 

Thanks so much, everybody. Have a great day.

Published Date: Aug 18, 2023

Author: Michael Krigsman

Episode ID: 801