Inside Renault’s Digital Factory

Patrick Hoffstetter came to Renault in 2010 to direct an effort called the Digital Factory — which is not a Web-enabled auto plant, but a playful name for the company’s Web, mobile and social media efforts. He was later named Renault’s chief digital officer. In both roles, he held responsibility for Renault’s digital strategy and operations across its three major brands, Renault, Dacia and Renault Samsung Motors in South Korea, a joint venture with Nissan, with which Renault maintains an alliance. Renault by itself is the tenth largest carmaker in the world (combined with Nissan, it would be fourth).

While it is considered primarily a European carmaker, Renault’s business outside of Europe now exceeds that in Europe, and Brazil is one of its top three markets, along with France and Russia. Hoffstetter also works closely with his counterpart at Nissan, and the two companies are in the process of bringing their digital efforts into closer alignment. Hoffstetter spoke about his role at Renault and the role of technology at the company with Michael Fitzgerald, MIT Sloan Management Review’s contributing editor for Digital Transformation.

What does your job entail?

More and more advertisers, especially big advertisers, are creating this new role of CDO. Very often, the CDO is in charge of strategy and benchmarking and KPI and dashboard, but it’s very rare when he has got hands on the operation. At Renault, the CDO has got an actual digital factory, a digital team to manage strategy, all the way from strategy to implementation. I cover the whole spectrum of digital from platform to content. We’re not only doing the brain, but the hands and the feet. At Renault, the CDO role and the role of the digital factory are quite unique.

My role covers Renault, Dacia and RSM (joint venture in South Korea with Nissan). I’ve got a colleague based in Tokyo in charge of the three Nissan group brands, Nissan, Datsun and Infiniti. During this year, we have been working very closely together in order to deliver synergies between the Nissan digital strategy and the Renault digital strategy. We’re in the middle of a joint project, a RFP that we launched last summer to create a common digital ecosystem between Renault and Nissan.

What does it mean to have a common digital ecosystem?

Today, Renault and Nissan are organized very differently. On the Renault side, we’ve got a very centralized approach with a global platform managed here in Paris by my team. Nissan is very much organized around regions. Here, the idea is to work on the next-generation platform by having one unique, global partner to develop and manage the platform of both Renault and Nissan and put in common the whole hosted piece.

It’s a big shift for us, a big breakthrough in terms of alliance strategy on the sales and marketing side. As you may know, there are already very strong synergies on the upstream part of the business — factories and engineering and R&D, and so on — but on the sales and marketing side, it will be a major breakthrough.

From central HQ we’re managing, maintaining and developing all our digital platforms. The website, the mobile platform, the different mobile applications, some global digital marketing campaigns, coordination with marketing departments. For example, we produce guidelines for social, for mobile marketing and for dealers. We’re also centralizing digital initiatives for cars, for new cars and for used cars.

While we have centralized strategy and platform management, we need to have very efficient interactive operational links with the regions and the local countries to make sure that anything we’re developing from here in Paris is compatible with the market situation in Argentina, in Russia, China, or in the U.K.

That covers two topics, coordination with Information Systems on all the internal digital tools, collaborative tools. Last year, for example, we launched an internal social network. A second topic on that is direct e-commerce initiatives; we are working on commerce for new cars, for used cars and for after-sales. We are addressing B to C, B to B, and B to E, [which is] B to employees.

Who do you report to?

Initially I was reporting to the CMO of the company. And then last summer, there was a big reorganization in sales and marketing. Our COO decided to create a new department in between marketing and sales, with the creation of the global customer division. Since July, I’m now reporting to the head of this new division, and working very closely with the CMO team.

What’s that shift been like?

At car companies, people internally are very focused on the product. The idea with this new organization is to focus more on the customer. By creating this new division, with roughly — a bit more than 150 people, these guys are totally focused on the customer. We have got all the different customer touch points: Digital Factory, CRM, the call centers, the network. You’ve got Renault Academy, our in-house training department. You also have some people who are focused on the customer experience between private consumer, used car consumer and corporate consumers.

Obviously a big organizational shift. What’s the potential for transformation within Renault? How does it affect the efforts your team has been making?

The ultimate goal is to have this 360 [degree] customer vision and customer experience. Along with my colleagues from global customer division, our role is to make sure that we provide either guidelines or physical solutions to get this 360 experience. That’s where you stand between technology, [information systems] marketing and communication. You need to make sure databases are talking to each other, that all the data the customer is giving you or that you’re giving to customers are managed in a seamless way. We now have a whole strategy around “create once and publish everywhere” that is at the heart of what we’re trying to do with the Internet.

What were the challenges of creating this new division and working in a different way?

As with any new strategy, it’s a change. Humans don’t like changes. So the first goal is that you need to explain what you are doing, and explain the reason why. One of the challenges is that with digital being quite complex and evolving so quickly, the level of strategy and training is increasingly important. Number two, we have to come up with figures, KPIs, benchmarks, and so on to show you are not pushing them to do that to look modern or because it’s trendy but because it’s really impacting the business.

We have already a combined 200 million users coming in our websites, with over 12 million fans on our Facebook pages, with 1 million leads we’re sending to the network per year. That’s starting to be really impactful.

One thing I commonly say, internally, is that for 115 years we have been focused on the dealers and the experience of the consumer at the dealership. Now with digital transformation you don’t need to get rid of dealers; on the contrary, you need to pay as much attention to the digital touch points as to traditional media or brochures.

Here in the U.S., carmakers have to have dealers. Is that true for other countries?

We never sell directly to the consumer, meaning bypassing the dealer. What we’ve been developing and testing for the past two or three years, is B to B to C, such as Renault Shop or Dacia Online, and in a few weeks a used car e-commerce tool we’ll test in Italy.

We’re answering a consumer trend, where all across Europe we saw that consumers were eager to do most of their customer experience online, and basically buy online and just pick up their car at the dealer. So we’ve been developing this Dacia Online tool whereby you can buy your Dacia online with your credit card and pick up your car at the dealer. We did that in three countries. We’ve been open in the U.K. for nearly a year now and sold over 2,000 cars like this.

Where do you see the program going?

We’re using these tests and pilots to expand to other countries. We did it on the Dacia brand. We’re launching this offer on used cars that will be both on the Web and mobile as of early next year. We’re also working on a big project for e-commerce on after-sales that hopefully will come up by end of 2014. We always apply the same principle, working with countries in pilot then expand with the support of dealers.

I could see this causing concern in other parts of the organization. What were the hardest parts of getting it up and running?

Talking digital innovation at large, it’s a new expertise for what has been a famous carmaker for the past 115 years. The expertise was on conceiving, producing and distributing cars through dealers. Now we’re talking about digital expertise, e-commerce expertise and payment online, if we extend that to connected cars, we’re talking telecom expertise and so on, which are quite new for Renault. So the first complexity is expertise.

The second complexity is the car life cycle, five to seven years from initial thinking all the way to sales. With digital, it’s not five or six years — it’s daily or weekly. When you’ve got a manufacturing culture, you spend a lot of time thinking about what you’re going to do, and then managing it from A to Z. You want to make sure at the end it’s 100% perfect. In digital, it’s the opposite. You try to develop something as quickly as possible, you test it, you learn from the test, and then you deploy or you stop. From a habit or cultural point of view, it’s very different.

The third thing is that, by essence, digital is global. You can’t do something on YouTube or Facebook in France without any potential impact in Brazil or India. Whereas car markets are quite different from one country or region to another. That’s the other difficult thing. You need to make sure that all the people in HQ working on digital have got this global thinking. Which sometimes can be a challenge because, honestly, there are some local specificities. So you need to make sure you’re really well plugged in with the local markets.

How different is it being at Renault, versus your background at Internet companies like Yahoo! and Lastminute.com?

It’s quite different. But compared to my experience at the SNCF, the French railroad, Renault is not that different in terms of size, and finding the right way and right process to shake the boat and make things move. Based on my background at Yahoo!, the main difference is, I was working in the local markets, while here I’m in the HQ position.

What was your experience coming into Renault as a digital guy, not a car guy?

A lot of people were quite interested in getting my views, getting a sense of information coming from the outside, and also interested in what was the view of the newcomer after a few weeks or few months. On some topics, especially when you’re starting to enter fields which are quite crucial, you sometimes have people who say, “Well, that’s not the way it works at Renault,” or “In the car sector, that won’t work.” It really depends on the topics, and also on the people you’re talking to.

On social network strategy, it’s so fresh and so new, everybody internally is kind of trusting the expert and saying basically, “If you say so, we believe you, and just tell us what to do with our organization, our strategy management,” and so on. On topics such as e-commerce, which have a direct impact on traditional business, that’s where you get more of an internal fight between traditional and the modern. The reaction can be quite different from one country to another depending on the situation of the market. I sometimes use examples or feedback or views of some of my colleagues who are working outside of Europe to challenge the European team.

Could you be specific?

For example, in social and mobile, countries like India or Brazil are much more advanced than most of our countries in Europe. If you look at our fan base, of those 12 million I was talking about, 70% is coming from outside of Europe. Turkey, for example, is very, very much on social. In India last year, locally, they developed a mobile sports car game [that] was very well done and got some traction, because mobile is very big in India.

Are you able to bring some of those ideas back to Europe?

I’m quite strict in terms of global strategy, and the necessity of having global platforms, and so on. At the same time, I’m trying to push this bottom-up internal communication and trying to push countries to learn about what their colleagues and neighbors are doing in other countries and develop and leverage best practices. We organize digital days, where all our local digital managers coming in Paris a few days and share best practices. We do this, so far, on a yearly basis.

Talk about the connected car and how that is emerging. How much impact can you have on the car as a digital platform?

I’m not at all involved in the car piece. Where we get involved is where it comes to marketing and promotion and customer experience. We are making sure that we are optimizing the customer experience once the customer is using the car. So using Renault R-Link, a connected tablet/application we launched over a year ago, to get services to drivers through the tablet but also through the Web and through the mobile, thanks to My Renault, developed with the CRM department.

For example, based on your driving and your use of the car, we will warn if you need a check-up, or if you’re talking about an electric vehicle, your level of battery charge. We’re also connected with startups, looking to feed the Renault R-Link application, to provide interesting services for our consumers. We want any type of infotainment services, with geo-localization and use of things like text to speech to make the service easy to use while driving.