Mattias Ulbrich, CEO of Porsche Digital and CIO of Porsche AG, joins the Drivers of Disruption podcast to discuss the motivations of tech talent in the everchanging mobility landscape. He is joined by Stephanie Madner, an associate partner at McKinsey in New York, who focuses her work on organizational performance transformations in tech companies.
In 2022, the US tech sector added nearly 260,000 jobs, the most tech jobs in a single year since 2000, and the competition for highly skilled talent remains fierce.1 Amid the recent high-profile layoffs, a unique opportunity has arisen for tech talent. This group of skilled individuals see recent layoffs as a moment to transition to other industries, and they are willing to wait patiently for the right opportunity. A strong Employee Value Proposition (EVP) can allow incumbent automotive players building new businesses the opportunity to attract and retain high-tech talent in what could be a once-in-a-generation realignment.
In conversation with Allie Medack, co-host of Drivers of Disruption, Mattias describes how Porsche Digital has addressed the needs of high-tech talent as they have grown from double digit to more than 500 employees in the last four years. Mattias emphasizes the importance of putting both employees and customers first while scaling a digital business. He prioritizes growth and development, providing diverse opportunities and enhancing collaboration through agile ways of working. An edited transcript of the conversation follows.
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Allie Medack: Welcome to Drivers of Disruption, a show covering the latest advancements in the future of mobility, current challenges, and potential solutions moving forward. I’m your host for today’s episode, Allie Medack, and the topic is extremely timely: tech talent in mobility companies. I’m very excited about the two guests who are joining us today. Our first guest is Mattias Ulbrich, a technology expert in the automotive industry with leading positions at Porsche, Volkswagen, Audi, and Seat. Currently, he is the CEO of Porsche Digital and CIO of Porsche. Founded in 2016, Porsche Digital is the technology and digital hotbed within Porsche. Its mission is to discover and scale new digital business models and optimize existing products to meet today’s consumers and future consumers exactly where they’re headed. Porsche Digital’s headquarters are in Ludwigsburg but it has offices in nine locations around the world—Palo Alto, Atlanta, Barcelona, Berlin, Zagreb, Tel Aviv, Shanghai, and Beijing. So, when we’re talking global tech talent, they clearly are at the front and center. Mattias, welcome to today’s episode.
Mattias Ulbrich: It’s great to be here. Thank you very much.
Allie Medack: Our second guest today is Steph Madner, an associate partner at McKinsey who focuses her work on organizational performance transformation, specifically within technology companies. She’s a prolific author on this topic and has recently published articles on talent market dynamics—pre- and post-COVID-19 pandemic—how they’re changing, and specifically about how mobility companies can retain and maintain tech talent in today’s ever evolving world. Steph, so great to have you. Welcome and thanks for joining us.
Stephanie Madner: Thank you, Allie, it’s wonderful to be here.
Allie Medack: Steph, I was looking at the news this morning before coming online. And it seems as though every headline today is around a tech company laying people off. But all of my friends who still are in school are talking about coding and jobs of the future, all being around digital technology. There’s just so much going on. Can you help us make sense of this? Tell us about what current things are transpiring in the technology industry.
Stephanie Madner: There definitely are a lot of forces at play these days and high-profile layoffs are hitting the news. But let’s take a step back and think about how this all fits together. Attracting and retaining top digital talent has become a top priority across industries. And the disconnect between supply and demand endures despite these recent layoffs. In February 2023, there were 230,000 unfilled tech jobs in the United States and the US unemployment rate for these tech jobs continues to be at well below that of the national average across industries. So, there are still a lot of organizations eagerly seeking to attract tech talent.
Let me give you some other facts to help contextualize what’s going on. A recent ZipRecruiter survey found that, of all the people who are being laid off, almost 80 percent of them find a new job within three months. There continues to be demand for this talent. And the challenge for many incumbent organizations, or different industries that haven’t traditionally attracted tech talent, is how do they get their selves out in front of this talent and get the talent thinking about them? How do they appeal to the unique needs and preferences of this highly coveted talent? And how can that apply to the incumbent automotive players as they think about building new businesses, and attracting and retaining the talent they need to be successful?
In 2016, we thought that it was very important for us to have digital technology knowledge within our company. Not only within our company, but also for us to build a company that, by itself, serves the needs of digital experts, like digital software developers—because you can't do that in a production company like Porsche AG’s. It’s better to have a whole company that is dedicated to software and digital technology.
Allie Medack: That’s a perfect segue, talking about incumbents becoming disruptors, to Mattias. Porsche is such an iconic company and what an amazing opportunity for you as the leader of Porsche Digital. Can you talk a bit about the genesis behind the decision to launch Porsche Digital and about the journey to where you are today?
Mattias Ulbrich: If you look at digital technology, you can see there’s a power in it to really change things like business models that have disruptive power. In 2016, we thought that it was very important for us to have digital technology knowledge within our company. Not only within our company, but also for us to build a company that, by itself, serves the needs of digital experts, like digital software developers—because you can’t do that in a production company like Porsche AG’s. It’s better to have a whole company that is dedicated to software and digital technology. The other reason is that we’re not looking only to be in Germany, but also to be in markets like China, the United States, and digital hotspots like Tel Aviv, where you find passion for cybersecurity. You can’t find it in any place in the world like in Tel Aviv. So, we decided to have an international company with a network of the best digital experts. That helps, of course, to bring better solutions to our customers right now because we are dedicated to finding the best solution for them.
Allie Medack: You mentioned different locations like Tel Aviv, the cybersecurity hotbed of tech talent. It’s also, I would imagine, a very hard model to manage with so many different types of talent across such a large number of time zones. Can you tell us more about the decision to invest in those different markets and what that journey looked like? I imagine maybe you started in Germany and then branched outward. Can you tell us more about the decisions and process behind that?
Mattias Ulbrich: What we started in Germany was an innovation hotspot where we could use digital technology to try out new business models. But we decided very early in 2018 that we needed to dedicate our power to a solution that brings value to our customers. Not only innovation, but real value. We found out that we needed to look at different locations: for example, China has a totally different digital ecosystem that we had to learn about. And we realized that we needed to collaborate closely with tech giants like Google, Apple, and others in Palo Alto and Silicon Valley, because we believe collaboration is one of the most crucial factors in being successful.
It’s so important to have a good link between business and IT, and also with IT and other partners, because we learn so much about what technology can do when we collaborate closely. That is why it’s very important for us to be in the right hot spot. And in Germany, where the business areas like production, sales and marketing, and R&D work in close collaboration (we call it a digital family), we can really bring those departments’ solutions to the market.
We found out that we needed to look at different locations: for example, China has a totally different digital ecosystem that we had to learn about. And we realized that we needed to collaborate closely with tech giants like Google, Apple, and others in Palo Alto and Silicon Valley, because we believe collaboration is one of the most crucial factors in being successful.
Allie Medack: What are the differences that you’re seeing? When you think about tech talent and the skills they have, what they’re looking for in an employer? Do you see a lot of differences between the markets, like China, the US, Israel, Croatia, or what are the commonalities? And what are regional nuances that you’re seeing with regard to talent?
Mattias Ulbrich: Everything starts with Porsche, of course, and Porsche has a good environment, good products, and great people. This attracts talent to work on things together with other people. And that brings a solution. Porsche has the newest technology, so you have the possibility to work with totally different technologies in different places in the world. This, of course, is a huge factor that attracts people to work with Porsche. And, when you look at our product, production process, R&D, sales and marketing, there are so many opportunities where you can bring a good solution to the market—this helps people feel that their work really matters. This is a very important factor for most people who work with Porsche.
Allie Medack: Yes, it’s that thing that gets you up in the morning, makes you excited, makes you feel like you’re investing in something. Steph, you’ve done some recent research on this, I believe, that is going to be covered in an upcoming article of yours, around what is it that tech talent is looking for. Can you share a bit more about leaders who are recruiting tech talent and what they’re doing to attract those employees?
Stephanie Madner: When we think about attracting talent—and this is across industries, across talent profiles—we start by talking about something called the Employee Value Proposition. This goes beyond how much I’m getting paid and what I do specifically. This is actually thinking about who the people are in the organization. What is the company that I’m working for? What is the whole package? Purpose goes beyond the traditional go-to pieces. When I talk to folks about this topic, a very common response is, “We can’t attract this talent because we can’t pay them what the big, big folks are paying.” Our research revealed that, yes, compensation is important. No big surprises there. But it is not the only important factor influencing the decision to choose where to work. Right up there, and sometimes in a leading position, is the ability to grow and develop one’s career.
So, when organizations are thinking about attracting talent, my encouragement is to think beyond compensation. Yes, it is important, but, no, it is not enough. You need to start thinking about whether there are opportunities for mobility. Can someone rotate across different parts of the organization? Not only does that benefit the talent (they get to work on a cool new product or problem), but also it benefits the organization because you break down silos, build greater connections between parts of the organization, and solve new problems that you may not even have noticed.
When organizations set up different geographic hubs, it opens up the potential for that to be a distinctive part of the Employee Value Proposition—you come to work for us, you work on really cool problems, you have the opportunity to move and grow with us. That is one of the greatest overlooked factors when people are thinking, “How do I attract highly coveted talent?”
Mattias, I’d love your perspective on this. This is the research we’ve done from the outside in, but, thinking about your experience, how does this resonate with how you attract and retain highly coveted tech talent in your organization?
Mattias Ulbrich: I think it fits your research because we see that people are motivated most by the job that they’re doing and the people that they are working with. That’s why we introduced agile ways of working several years ago, because you then can take more responsibility to the team and to each individual, and that can really affect the solution that they would like to develop.
You need collaboration between business and IT to bring the best value and the best solution to the customer. And this, of course, is a motivation factor as well—the fact that you can see that something is happening, that you can influence, that you’re not only programing something that you can’t see anymore, but that you can decide what the best solution is for the customer together with a business area. This is, for me, one of the biggest advantages that we have in Porsche Digital and Porsche IT. We have people within Porsche AG who focus on processes, while the Porsche Digital people are more focused on solutions for the customers. This is a perfect fit and it’s happening worldwide for us.
We see that people are motivated most by the job that they’re doing and the people that they are working with. That’s why we introduced agile ways of working several years ago, because you then can take more responsibility to the team and to each individual, and that can really affect the solution that they would like to develop.
Stephanie Madner: You’ve touched on another piece of the research, which is connecting employees to the meaning and purpose of the work, and being able to see it and to see it through. Can you tell us about some of the learning steps along your journey to build out your tech organization? I think it’s easy once it’s built to say, “These are the things we know now.” But looking back, what sort of advice would you have for yourself from that earlier point?
Mattias Ulbrich: As I mentioned, we started an innovation lab, trying things out with new technologies and thinking about what we can do with blockchain, for example. We came at it from a technology perspective. After a while, we thought it might be better to look from a customer perspective, and look at what we could really deliver. That was a huge change in 2018. So now we are not only looking at innovation but also really delivering solutions to our customers. Then we decided to go abroad to many different locations so that we could have a closer look at what matters in the different markets, especially China and the United States as they are the biggest markets. That was an important step in the right direction, as well, for the perception of Porsche Digital internally. We got better collaboration and we could improve collaboration with all business areas. We started this approach four years ago with about 30 people, and now we have more than 450 worldwide. It shows that this is a brilliant model for Porsche to work with, but that it also gets the best solution for our markets and customers.
Allie Medack: Wow, that’s amazing growth. You guys have figured out the way not only to find the talent, but also attract and retain them. Steph, what advice do you have for executives listening today who want to be like Mattias and grow their digital organizations? What are the short-term things that they can do, the low-hanging fruit, if you will? And then what are some of those longer-term plays, investment strategies, that they should think about as they seek to build their organizations?
Stephanie Madner: In terms of thinking about your tech talent strategy, I believe there’s a need to get creative and go beyond what you’ve always done. There are a few different ways that we’re seeing organizations play with this. One of them is bringing together a diverse team—business leaders, HR leaders, people across different parts of the talent function—to make decisions quickly so that they can experiment and learn. You’re trying to build a new business; you’re trying to attract new talent; you’ve got to learn and quickly figure out what’s working, what’s connecting with the people that you’re seeking to hire, and what’s not landing. This talent is highly coveted; they’ve got lots of offers. You need to make decisions quickly and you need to have people in the room who can make them. The “talent win room” is often a word that’s thrown around, but bringing together the key decision makers so you can move with speed is a key enabler.
Then what does that group do? Coming back to the Employee Value Proposition, it’s time to reimagine it. You’re looking for new talent. You know what they care about. It’s time to experiment with new job descriptions, to see what’s landing this talent, and rethinking the whole interview process. The old way was, “Come on in. We’re having an interview. I’m evaluating you to see if you’re good enough for me.” The tables have turned; there is a different power dynamic. Effective organizations are seeing cultivation from interaction, number one. When we talk about the things that people care about—purpose, meaning, career development—these should be infused into every interaction so that it’s not that just once the person has been given the offer that you switch into sell mode. You’re seeking to invite this talent to your organization from the outset because that is what everyone around them is doing. I think that breaking down some of the old ways of working is vital.
We started this approach four years ago with about 30 people, and now we have more than 450 worldwide. It shows that this is a brilliant model for Porsche to work with, but that it also gets the best solution for our markets and customers.
Allie Medack: Steph, another thing that I think is really interesting in your research is when you looked at why people leave their jobs versus why they say they plan to leave their employer. So, as we think about the challenges of an organization seeking to retain its talent, what interesting to me is that the reason that people end up going is not necessarily the reason why they initially planned to leave. Can you talk more about that?
Stephanie Madner: When we look at tech talent, we want to think about what the reasons are that you are choosing to stay, because that’s based on certain information. You’re in the organization; you know what it’s like there. As you start to look to other organizations, you’re doing that based on incomplete information. We often see people say, “Hey, I think I’d leave if you paid me more money; you could probably pull me away.” But in practice, we say it’s actually opportunities to grow and develop that make people move. That is the real reason why people leave.
So right up there, reinforcing what I mentioned earlier, career development and compensation are both very important elements of the decision-making criteria. But in the conversations I have, there’s definitely one that overpowers the other. My encouragement to organizations is to think about both of these factors. It’s not just about writing a great job description, having a really compelling interviewer, and making the case for great capability building and a career journey within the organization. If reality doesn’t line up to it, that talent is going to leave and you’re going to be much worse off than if they never came—they’re going to tell all their mates that your organization doesn’t hold up to its promise. So, I believe organizations need to think about capability building not only in career development, not only in the attraction, but also throughout the journey of the talent, and the retention. Technology is constantly changing and growing, so you need talent that seek to be at the cutting edge. Creating those opportunities is synergistic for the talent and for the organization as a whole.
Allie Medack: Mattias, I’m curious about your reactions to that. Clearly your organization has grown rapidly, and you have figured out rotating talent. But I’m sure there are a lot of challenges, too, that you’re facing. How are you thinking about what the hurdles on the horizon are and how are you thinking about addressing those?
Mattias Ulbrich: I think that personal development is a very important factor here. We found that, for example, the Digital Academy really must serve the needs of our digital talent so that they can get the best possible courses about new technology, but it’s also about the ways of working. For instance, people with agile ways of working have more power and, of course, more responsibility as well. They need to learn how to tackle these advantages and challenges. We believe it is important to have clear career paths and to support the people in their development within the company. A different aspect is that people realize that they can change their perspectives, and so they can learn a new technology—we work with so many different technologies within our company and we also can move in the business areas. So, with us, you can work on the car, or on the dealership side; you can work for the customer, or within production. There are so many opportunities where you can learn as a software developer and still have a totally different field of action. That makes working more attractive to more people within our company—to have mobility and not having to work for ten years at the same level on the same topics. People have the opportunity to change their perspectives and learn more about the company, society, and technology.
There are so many opportunities where you can learn as a software developer and still have a totally different field of action. That makes working more attractive to more people within our company—to have mobility and not having to work for ten years at the same level on the same topics. People have the opportunity to change their perspectives and learn more about the company, society, and technology.
Allie Medack: I feel that’s especially powerful, too, for an incumbent because I think that, incorrectly, some people might view incumbents as old, slow-moving giants. But what you’re explaining is completely the opposite—for example, I could start as digital engineer on the car and get deep into that, but then after a few years, I might get an itch to try a new job (we hear a lot about the new generation doing this). You’re saying, “Stay with us; you already know us; you like us. We’ve got career development for you to go to the dealer side, to go to partnerships, to go to other areas of the business.” So you’re always within the family, but you’re getting to grow and develop. Is the Digital Academy open only to those in the tech track? Or are you also looking at ways to upskill non-tech employees with tech skills who might be interested in making that transition?
Mattias Ulbrich: Yes, the Digital Academy is open for everybody within the Porsche family.
It’s so important to have a digital mindset, not only on the tech-talent side, but also on the business side. You have to learn what tech can change in your daily work—not only by delivering solutions, but also by using solutions. That was the reason we founded Porsche Digital, to have an environment that fits the needs of software developers and other digital experts. If you are looking, for example, for AI solutions, you will have a totally different approach to understand how you can learn if you have a close collaboration between business and IT. This is not only from a technical perspective, but really looking at it as a business problem and how you can solve it, or how you can support business experts by having an AI that supports their needs. It’s very interesting to see what you can do in the close collaboration between business and IT.
Allie Medack: I imagine that’s another tricky thing: How do you get native digital speakers to collaborate with people in other aspects of the business who don’t necessarily have that skillset? How do you marry the two? And, for non-tech roles, how do you equip them with the technology that they need to do their jobs at the next level? How is Porsche thinking about that? What does that journey look like—to integrate those two sides of the business—the challenges, and the successes you’ve had?
Mattias Ulbrich: As I mentioned, we are focusing on agile ways of working, bringing business and IT teams together to look at the problem we have to solve and to be creative in finding the best solution. It’s very important to have a partnership between IT, digital, and business people. If, as one team, you look at the challenge or what we would like to achieve in the future, then you can achieve the best results. This is working well in the Porsche family, because we have an inspiring culture. Ferry Porsche once said, “I couldn’t find the sports car that I would like to have, so I built it by myself.” This is a bit like the culture that we have—to look for the best solution and finding a way to achieve it.
Allie Medack: I love the use of “family.” In fact, I was reading about Porsche over the weekend and I saw that one of your board members uses the hashtag, #DigitalFamily, a lot when talking about the organization. It sinks back into the mission that you have the ability to be an entrepreneur within this iconic organization.
Mattias Ulbrich: It’s perfect, right?
Allie Medack: I mean, who doesn’t know and love Porsche?
Mattias Ulbrich: Yeah, it’s the best job you can have in the IT business.
Allie Medack: What is the thing that you’re most excited about as you look toward the company’s future?
Mattias Ulbrich: When I look at the past, we were, let’s say, a normal company. But now we have the hashtag, #DigitalFamily. Everybody is looking in our direction. When I started here, there was a big gap between business and IT and now we have closed that gap. We have the power to achieve more than in the past, so we’re looking to attract more people. Right now, we have more than 1,000 open positions for technical experts, not only in IT, but also in other areas. But I would like to have an approach into the future that is to get the best tech experts to have the best solutions for our customers.
I think the most important thing about technology is that you must not think about it first, but think about people first. Some people are missing this objective because you can do a lot with technology. But if you are losing perspective on the customer or employee, you will never get a good solution.
Allie Medack: Steph, Mattias, thank you so much for your time today. Before we close, I would like to pause and see if you have any closing thoughts for the tech talent listening, for executives looking to recruit tech talent, and for incumbents looking to disrupt their organizations and become more digital. Any final advice, words of wisdom, or closing thoughts? Steph, I’ll turn it to you first and then over to Mattias.
Stephanie Madner: We’ve talked a lot today about how to attract and retain tech talent to deliver on new business models. For organizations thinking about their three-to-five-year talent strategy, I encourage them to think ahead: What is the talent that you’ll need in the future? This opens up the solution space for you to create that talent. Mattias, you’ve got an upskilling journey with your Digital Academy. Organizations should think about building new pipelines of talent for the future, think about existing talent that could grow to fill the jobs of the future. That’s a powerful lever that requires foresight for it to work. It takes time; it’s not as quick as a three-week interview process. But, as we think about the long-term solution, it is important to solve the disconnect between demand and supply, and to build folks who are really invested in the organization, some of whom are likely already in your company today. How do you equip them with the skills for the future? I encourage organizations to think about how that could play into their talent strategy.
Allie Medack: It sounds like the Digital Academy is one way that Porsche is doing just that. Mattias, your thoughts?
Mattias Ulbrich: I think the most important thing about technology is that you must not think about it first, but think about people first. Some people are missing this objective because you can do a lot with technology. But if you are losing perspective on the customer or employee, you will never get a good solution. You also need to focus internally on the employee side so that you can give the best tools to your organization, to the people who work in your organization, to the software developers—then you can get the best solution you’d like to have.
Allie Medack: Mattias, if I had to sum up what I’ve heard from you today, it’s all about the people, the mission, the customers, and delivering on those three things. If you focus on them, you can’t go wrong.
Mattias Ulbrich: That’s right. But it’s not that easy.
Allie Medack: It is much easier said than done, but it sounds like Porsche Digital is doing an amazing job of leading on this difficult challenge.
Allie Medack: Thank you, everyone.
Mattias Ulbrich: Thank you very much. It was a pleasure.
Stephanie Madner: Thank you.
