Renault Rewires Itself for the Digital Era

In 2015, Renault approached BCG for help with their digital transformation. Traditional automotive players dominated throughout the 20th century, but today, fast-moving newcomers pose an existential threat to the industry.

These new entrants have fast internal cycle times, and they use digital throughout all areas of their business. Cars are connected and increasingly feature autonomous-driving options; production plants have implemented Industry 4.0; and marketing and sales teams capitalize on digital channels and precise targeting to better engage with their customers.

To help Renault compete in this environment, BCG assembled a cross-functional team, including experts in the Center for Digital in Automotive, technology and digital, Platinion, and several other units of the firm.

The goal? To work with the company on a massive digital transformation that would deliver double-digit increase in earnings before interest and taxes (EBIT). Roughly half of the gain would come from additional revenues, by improving the customer journey; the other half, from leveraging technology to make internal processes more efficient.

The implementation consisted of three phases:

Phase 1: Vision. The BCG team held a seminar for Renault’s senior leaders to give them a clear perspective on the current state of digital in the automotive industry. The team then focused on creating a digital vision, defining the benefits that technology could bring to key functions and business units, including supply chain, manufacturing, and engineering.
Phase 2: End-to-End Pilots. The team then helped the company develop a set of pilot initiatives aimed at generating real EBIT value in less than one year. For example, a data analytics pilot was launched to boost after-market sales of accessories in one country. The campaign led to a 25% improvement in sales—a larger gain than any previous initiative of this type.
Phase 3: Digital at Scale. In the third phase of the transformation, the BCG team supported Renault to hire and train their own teams to roll-out all initiatives of the program across the entire company at scale. At each step of the journey, the company evaluates specific initiatives against their projected financial target, along with the number of digital talents hired or trained.

Phase 2 (end-to-end pilots) helped realize that several organizational roadblocks would prevent the company from capturing the full value of the digital transformation. Specifically, the company suffered from a lack of internal digital skills, inconsistent digital methodologies across the company, heavy governance and processes not adapted to the speed of digital, as well as rigid legacy IT systems.
To overcome these roadblocks, the BCG team helped set up a digital center for Renault through BCG’s Build-Operate-Transfer model. Initially, BCG helped design and build the center, which would operate as an internal service center, working with business units to steer and deliver digital initiatives. BCG then operated the center hand-in-hand with the company, contributing to key operational decisions like recruiting, staffing, and supporting the business to implement the right governance to maximize the value delivered. During the transfer phase, BCG turned over the operations of Renault Digital to the car company to fulfill its five main objectives sustainably and independently: