Strategy & Operations » Leadership & Management » Unipart chief on the importance of digital to future prosperity

There can’t be many leaders of major corporates that have decided that in order to develop competitive advantage they must take the time to learn how to code, let alone septuagenarian bosses.

But John Neill, the chairman and CEO of Unipart- one of the UK’s largest private companies – is no ordinary corporate leader. For the past 25 years Neill has been developing a model for raising productivity at its Oxford headquarters with 6,000 staff at its heart.

But with the onset of the digital revolution, Neill has sought to bring a digital lens to that formula called the Unipart Way which has been taken up by many corporates and public sector organisations in recent years.

Neill came to prominence when he took over the parts arm of ailing car maker British Leyland in the 1970s, and eventually led to the management buy-out of the business in 1987.

At just 29, Neill took over the business in 1976, two years after it was launched as state-controlled British Leyland’s Unipart parts and service division by Sir John Egan – who vacated when the group was nationalised 12 months later. An MBO a decade later was led soon after BL, as it was then known, was re-privatised as Rover Group.

The South African born, but educated in Scotland, Neill is credited with turning what was labelled the UK’s worst factory – its exhaust plant in Coventry- to its best in the space of  six years, in a competition run by Management Today magazine and Cranfield School of Management.

Following a previous life at General Motors, he embarked on a crash course of turning Unipart into “the benchmark for after-market and logistics”, after learning from clients Honda and Toyota.

This morphed into the Unipart Way, “an evolving integrated ecosystem” for improving performance using continual assessment at part of Oxford’s giant Cowley plant, once home to British Leyland – that now churns out Minis for BMW.

The company says the Unipart Way “seeks to engage every single employee within an organisation. It aims not only to motivate them, but also to equip with them with the skills to become their own consultants, to diagnose problems and then to create the solutions that will make a dramatic difference.”

In 1993 the Unipart University, described as the UK’s first corporate university, was added. Since 2000, Unipart’s expert practitioners, have been taking the company’s idea into organisations – through a programme of 18 principles, boosting revenues for the group.

The group’s profit before interest and tax and exceptional items in 2018 increased 6.6% to £24.3m from the previous year on revenue, including joint ventures and associates, of £845.4m.

Over the years Unipart has built up a roster of clients including Volkswagen, Jaguar Land Rover, Sky and NHS Supply Chain.

Neill is most proud of a major contract to provide equipment needed by hospitals, including home delivery services. “That’s been a huge success,” he says. “Whatever happens, that market is going to grow, so we’ve put a lot of effort into it.”

Digital revolution

He says a key element to the success of the NHS contract has been applying digital technologies to improve efficiencies, a fixation of Neill’s since the idea of the fourth industrial revolution was first discussed at the World Economic Forum in Davos four years ago.

“At the time the technology leaders as well as the academics and consultants, were talking about the technology but they all pointed out the biggest challenge they faced was cultural change, and that is becoming more and more evident. I think there’s been a trillion dollars invested in digital technology, and 80% of that is in pilot purgatory, so getting the technology translated into actionable steps in the workplace at scale is something many companies are finding difficult,” says Neill.

“The problem enterprises are facing is how to get from a small number of adopters of technology into the mainstream of the business. Our strength is that the Unipart Way has created a culture which is both curious and receptive to and quite keen to embrace change, and the evidence for that is that we run 25,000 problem solving circles, that is a huge number.

“That tells you culturally and pervasively the business is used to trying to discover problems, figuring out what the desired solution to those problems will be, engaging the appropriate people from wherever they are in the company to solve the problem, and implementing the solution, and so the plan-do-check-act cycle has been working here for decades,” he adds.

Neill believes the challenge many business leaders are finding with digital transformation is that “it’s a revolution and I haven’t met a business leader yet that managed a revolution”. He says most have built deep expertise in buying, selling companies, rationalising companies, launching new products, but asks: “How many have run a revolution?”

Ahead of the curve

An area for concern for Neill is that the technology being developed for the present will soon become outmoded. “If you’re building some complex software, it might take you a decade to build all the algorithms, and then guess what: Google just open sourced it. So all of your investment, which was a real competitive edge, is vapourised in a day,” he says.

“You have to change the clock speed of the company, you have to change the decision-making systems,” he says, referencing Unipart’s decision to build its own cloud software. “It’s about building the capability to move at speed and experiment fast,” he says.

In a culture that embraces change, Neill says he learnt to code in order to grasp the breadth of opportunity that new technologies can deliver.  “If you learn to code, you can code to learn, because all of a sudden a whole vista of opportunity opens up. It also enables you to manage your vendors,” he reveals.

“Now we all think about problem-solving through a digital lens rather than an analog lens, we’re training to understand what’s possible, what technologies are available,” he says. “Technologies are coming down in cost at such an extraordinary pace, both individually and in combination. Something that was really difficult or expensive or high risk, is now simple, cheap and available off the web,” he adds. “The default option now is in-source and use open source,” he adds.

Neill offers a rationale for explaining how human and tech can be combined to deliver value. “If you take Moore’s Law which is creating more powerful logic units, what we’ve got to do is create more powerful creative units, by harnessing the logic units.

“We want to automate the boring stuff out of the job and do the things that are more interesting. We’re taking the robot out of the person,” he adds.

When it comes to the degree of digital saviness of most finance leaders, Neill say: “I think an awful lot of CFOs are going to be shocked at how obsolete they are because the CFO of the future has got to be digitally highly literate. That’s highly literate to lead their own function, but also *to be digitally literate to ask the right challenging questions across the organisation, not the wrong ones.

“There was an era of controllers who thought they were doing a great job if they stopped you spending money. It’s another challenge that the organisation can’t always articulate the benefits of a digital project or initiative, and if your finance function has a controller mindset, they’ll stop stuff or it will take too long to get it done. So the CFO of the future needs to be a very different creature to the CFO of the past,” he adds.

On the prospects for the auto industry, on which Unipart is highly dependent, now that there is momentum for the Brexit process to proceed, Neill is positive. But h remains cautious, warning: “Provided our requirements can be met the industry will continue to be competitive in the UK. If they can’t all be met it will become uncompetitive and uninvestible.

“The requirememts are: it’s got to be frictionless- if you put friction into the process you lose competitiveness very fast, tariff-free, we’ve got to get people to come at a drop of a hat to come and service our kit because any modern factory will have equipment that is made all over Europe or all over the world.

“We’ve got to have regulatory alignment because otherwise it will add so many costs to the business and be uncompetitive, and we’ve got to have regulatory influence, to influence the rules, if we can’t that could work against us, particularly the niche producers. If we don’t have all of those things it will just become relatively uncompetitive and nobody will invest in us, you don’t invest in businesses if you don’t believe they can be competitive in the future and that’s a big risk,” he adds.

 


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