OUR STRATEGY: DUAL TRANSFORMATION
Harvard Business Review Turkiye spoke with Ahu Büyükkuşoğlu Serter, President of Fark Holding, about positioning new ideas and entrepreneurship within company strategy, her experience as a female leader in the sector, her initiatives on diversity, and how Fark Holding manages to achieve transformation focused on innovation and design as a second-generation family-owned company.
Interview by: Serdar Turan and Yonca Altun
Fark Holding’s core business area is fairly conventional, but the business also operates in areas where we’ve seen serious disruptive innovation. How do you see the “today” of your business, and what sort of transformations do you foresee for the future?
Fark Holding’s core business areas are the automotive and white goods supplier industries, and a significant part of its activity and turnover takes place in those industries. The automotive industry is going through a period of significant change due to recent advancements in technology and new developments in our disposition and way of living.
This transformation, triggered by recent technological changes, is affecting everybody in the supply chain as well as the value creation process. “CASE”—which stands for Connected, Automated, Shared, Electrified—is a key trend in the autonomous shared electric vehicles category that has been affecting the industry these past five years.
In the aftermath of these new developments, we are seeing new players entering in the supply chain. These new players—technology companies, startups, etc.—will have an increasing influence and break the balance between the automobile manufacturers and the supplier industry (OEMs and Tiers 1 to 3). The playing field will be transformed as old players begin to concede to the rising influence of the new arrivals.
As a part of this, in the upcoming years, we will also see a transformation in the automobile manufacturers industry, and, in due course the supplier industry. We can assume that most of the disruptive technologies we will start to see in these sectors in the next five years will be brought in by outside players.
This puts us, active participants in the industry, in a very fragile situation. It is clear already that the industry has to learn more about some technical issues that are not within its capabilities yet. The only way to tackle this problem is by identifying the issues that we are not knowledgeable about, and then rapidly assessing and familiarizing ourselves with these new concepts, as they will be vital to the transformation. In this situation, resources will have to be restructured alongside the other changes being made.
From another point of view, standards in the automotive industry have long been stable and unchanging due to security reasons; it has been an industry where rapid changes rarely occur. However, with recently developing technology and the inclusion of more sensors, software, and electronics in its products, the automotive sector will need to propel itself forward with rapid transformation. Therefore, it is especially important now that newly learned technologies and methods be tested quickly and implemented if they are successful.
At this stage, it is vital to integrate these technologies into current manufacturing processes, and reward innovative thinking to demonstrate leadership in the sector. Companies must allocate sufficient resources to drive the learning and testing process. They also need to allow their R&D teams space to conduct their testing. I believe that under the present conditions, large and cumbersome companies that are slow to embrace change will be disappointed, as they will be the ones to get bogged down in the end.
As these changes develop, the automotive industry will also need to work together with technology companies and startups. This newfound collaboration will enable traditional automotive companies to adapt to new business models, collaborate more extensively, and transform with innovation and speed.
That said, the companies that adopt an entrepreneurial corporate culture and accelerate their lengthy development processes with innovative technologies will end up on the winning side of the sector. They will also be the ones who introduce technological innovations from non-automotive fields into the automotive sector, even as they continue to live up to the high standards of reliability required for suppliers/manufacturers by the automotive industry.
Geographically speaking, in addition to the recognized Japanese giants in Asia, Greater China and South Korea have made a name for themselves with strategic alliances in the electric vehicles market. Because of their rising influence, they will continue to have a say in the sector.
As electric vehicles that need fewer parts become more popular, the spotlight will be on new manufacturers, who will be able to get a foothold in the market even with smaller, more specific production capacities. In this way, we will also get closer to a modular manufacturing approach, where products are customized to customer requirements. Thanks to these advancements, “mass-customization” will be the future. Even now, we are seeing players such as Arrival and Moov—a multimodal vehicle startup whose advisory board I serve on—take on the field with this new trend.
As of today, companies and countries that are still not involved in these fields, and that are not open to taking steps towards transformation, will have to concede.
How would you evaluate the role of corporations, their purposes and goals, in terms of this new transformation? For example, what kind of business model do you dream of transforming the automotive supplier business into 10 or 20 years from now?
We have already celebrated our first 50 years as a company, and, as of 2012, the second generation took the reins. When we look back at our company history, it’s clear that we have been through four main stages: the Farplas that started producing what was not readily available in Turkiye in an attempt to localize production from 1968 to 1990; the Farplas that brought its customers’ ideas to life between 1990 and 2012; Fark Holding, creating game-changing stories and making a difference between 2012 and 2020; and our unique company in 2020 that strives for a better future together.
If we analyze these time periods meticulously, we can see that as a company, our main focus has shifted from “What can I produce?” to “What can I produce for you?” Later this shifted to a mindset that allowed for the question, “And what about my dreams and ideas?” Now, we can say confidently that we have transformed into an organization that asserts “I want to work towards a better world” and asks, “How can I transform myself in order to achieve my goals?”
Of course, transformation requires time and is a long-term process, but as I’ve already mentioned, accelerating this transformation now is the biggest competitive advantage we could have. This is how Fark Labs came to life in 2019, as we were pondering potential approaches that could fuel this sort of transformation.
Fark Labs is our tool for designing a better version of the future, and it is not only available to us, but also to like-minded organizations. In this century, the most critical ability that you can have is the capacity to learn and adapt rapidly. The faster you can learn, apply new knowledge, and take risks, the faster you will achieve positive results. No one can do this alone; a large part of learning is learning from each other. This is where the “together” in our motto comes from.
Fark Labs works just like artificial intelligence: as learning and user experience increase, efficiency improves. The only difference is that it is completely powered by organic intelligence, rather than AI. Everyone brings their skills and knowledge together to reach the most optimal learning point.
It is also necessary to create spaces free of corporate bureaucracy to quickly test what we have learned. This is why you need a “sandbox” like Fark Labs to test different business ideas, technologies, and diverse talents. Of course, if you only set up your sandbox in your own « backyard, » then you will only learn about the things that are in your garden and neighborhood. However, if you scale your sandboxes in China, Korea, France, the USA, Ankara, and Istanbul like Fark Labs, you will have the opportunity to learn from people’s knowledge in those neighborhoods.
As Fark Holding was designing a better version of our future, we began by asking “What is required to design the future?” Just like organizations, people also tend to make their most courageous transformations in areas familiar to them. So, first, we asked ourselves how we could improve on subjects we already knew and make them a part of a better future. This led us to the “Mobility” vertical with the vision, “FUTURE. MOBILITY. TOGETHER.”
Mobility is a broad field that can help alleviate many of the problems we face today, ranging from air pollution and traffic issues to transportation disadvantages that lead to difficulty accessing education, employment, and essential needs. As automotive professionals, instead of producing vehicles that are used by consumers only 5% of the time, we should start developing solutions that enable people to get from point A to point B easier, quicker, and cleaner.
On top of this, our immediate goals were integrating fully digital production technologies, becoming a model factory, and perfecting our day-to-day standards. In parallel with the rise of electric vehicles as a platform, other innovations we follow and foresee in the automotive industry have led us to become a more creative, innovative, and design-oriented company that produces solutions for connectivity as well as vehicle interiors, exteriors, and lighting. We also started implementing initiatives in new areas, such as the sharing economy, connected vehicles, and micro-mobility.
We initiated our second vertical in the area of life sciences, a subject which is indispensable for a better future and has gained immense importance, especially with the pandemic. We decided on the motto “HEALTHIER. FUTURE. TOGETHER.”
We established our headquarters for this new vertical at Fark Labs Ankara, located in one of Turkiye’s leading technoparks: ODTÜ Teknokent. In this new vertical, we began designing new jobs and products related to health, and invested in competent startups affiliated with these areas. We just closed one of our investments two weeks ago, investing in INOFAB, which manufactures a modern spirometer called Spirohome, which measures breath quality.
In our third vertical, “Sustainable Lifestyle,” we established or became the investors in many initiatives that provide a more sustainable life. Some of these initiatives include Fazla Gıda, which collects and recycles waste food products; Naturansa, which produces consumable protein from insects; the Arya Women Investment Platform, which has set out to transform the world with women’s leadership; and Zai, the new-generation library in Bodrum with the goal of expanding the horizons of knowledge.
By following this path, utilizing our existing capabilities, and expanding out of the automotive industry into other areas that add value to life, we aim to grow in numbers and contribute to the world. We believe that it is imperative for stakeholder motivation that every “difference-maker” working with us knows that they are adding value to the world with all of their work.
Every new generation who comes into the family business should learn from the first generation and act like entrepreneurs who write their own stories by taking the entrepreneurship of the founder as an example.
We also have what we call our “Curiosity Cabinet,” which resembles those glass-door cabinets always standing in our grandmothers’ dining rooms, with tiny trinkets neatly arranged on its shelves. Those trinkets symbolize the subjects that we are passionate and curious about but haven’t verticalized yet. Some examples of these include artificial intelligence, cryptocurrency, space technologies, data science, cybersecurity, and blockchain.
In order to verticalize these topics, we invite organizations that share our vision and have chosen one of these issues as their main vertical to join us in using the Fark Labs platform. With the help of the experience that we have accumulated over generations, they can build their verticals and run them more smoothly and faster than ever.
We refer to this as the “Minecraft Mentality.” As you can see, in crafting our logo and branding, we took a lot of inspiration from Minecraft. While you are busy building your own world of cubes, you can access a wider world by joining forces with people who have built different worlds elsewhere, without the effort of making each world separately.
Are you trying to create a unique development and transformation dynamic with Fark Labs? What made you choose this kind of strategy? Isn’t it an unusual model for many of the industries you’re associated with?
The automotive industry’s standards are very matured and well-established, and thus, it is a sector that changes incrementally. However, new developments have triggered rapid change over the past 5 to 10 years and completely transformed the pace. We established Fark Labs not only to pursue this rapid transformation, but also to maintain our leadership position during this period of change.
To do this, we use a strategic approach that we refer to as dual transformation—similar to the premise of the book Dual Transformation, which inspired me greatly. As we follow novel innovations on one hand, we explore new business opportunities by managing risk factors on the other, and incorporate a step-by-step progress that will perfect the work that we do today. Thus, we are able to vitalize both incremental and exponential innovation at the same time.
At first it was difficult for us to establish Fark Labs within Farplas and our other companies, as it isn’t feasible to start substantial projects, add them into the agenda of a very busy production team, and expect it to attract attention. However, we made a problem-solution match very quickly with the talents that we transferred to Fark Labs both from within and outside of our companies. These talented people were able to envision possibilities and development areas for Farplas and other companies.
Thanks to this, in our transformation tool Fark Labs, we adopted a rapid, versatile problem-solving approach without being too locked in to automotive standards. Today, we are trying to solve each and every problem as required by its own ecosystem.
At the same time, Fark Labs generates collaborative intelligence. It is an open innovation platform that welcomes various partner corporations, as well as people who want to transform their careers—people who have the ideas, courage, business plans, determination, and knowledge to explore the ideas that our own organization produces.
In order to sustain this diversity, we aim to develop innovations with entrepreneurs in the fields we have chosen in collaboration with F + Ventures, our corporate venture capital arm.
This is what distinguishes Fark Labs from other organizational innovation hubs. We continue to expand our collaborative intelligence network every passing day by hosting in-house entrepreneurs from our own companies on top of our strong ties with the ecosystem. The most recent example is our « Think BİGG » program. Fark Labs is registered as an official organizing partner of BIGG, the entrepreneurship program of TÜBİTAK (the Scientific and Technological Research Council of Turkiye), where we offer entrepreneurs with technology-based business ideas the opportunity to receive a TÜBİTAK grant of 200.000 TL.
With F + Ventures, you are planning to evaluate new ideas and initiatives. What is the underlying strategy and purpose behind this initiative?
F + Ventures was established in 2016 as the corporate venture capital arm of Fark Holding. To date, in order to invest wisely, we have we have analyzed and closely followed over 500 initiatives worldwide that develop disruptive technologies in mobility. As you know, the automotive industry is going through the biggest transformation of the last century in which the leading actors are not automobile manufacturers themselves, but technology initiatives that are not directly involved with the sector. Therefore, as a group of companies whose main activity is supplying the automotive industry, we had to adapt to the changing value chain as quickly as possible.
In our first fund, we invested in Chargepoint in the US, Valens in Israel, and Garaj Sepeti in Turkiye, using only our own resources. We also provided seed funding for Comodif, Turkiye’s first connected vehicle technology platform.
In 2021, we are working on a second fund. The size of this fund will be around $40 million, and it will also invest heavily in mobility technologies. This time, along with our own capital, we will cooperate with companies and funds willing to invest in this field with us.
In addition to being an automotive industry supplier that grows steadily by embedding newly researched technology into our DNA, we must also create companies that develop various mobility solutions outside of the automotive field. DUCKT is an excellent example of this; the startup, which is Fark Labs’ very own project, develops and operates universal docking, locking, and charging infrastructure solutions for micromobility.
DUCKT moved from ideation to mass production in just a year, acquired its first customers and progressed to the investment stage in merely 17 months. Furthermore, the startup recently received its first investment from the EIT InnoEnergy fund, closing its first investment round with a valuation of 4M Euros. Now that it has spun off from Fark Labs to continue its journey in the corporate world, the company currently sells infrastructure products to NY and Paris municipalities and major scooter brands around the world.
The connected vehicle technology company Comodif is another startup that we developed ourselves. By “empowering the driving experience, increasing the driving quality, and reducing the carbon footprint with fuel optimization,”Comodif has placed itself at the center of projects such as TOFAŞ’s “Travel Companion” and Renault’s “Motrio.” In addition, the company was selected as the connected vehicle technology company of the year by the Autotech Breakthrough Awards in 2020.
How did you manage to persuade shareholders and senior executives of the need for a transformation focused on innovation and design? Have you encountered any resistance in this regard, and if so, how were you able to overcome it?
This subject is a critical one. I find it unfortunate to have to waste time persuading someone when I could spend that time focusing on innovation and development instead. Today, when people at the top levels of their companies are not personally following and participating in the global technological developments in their sectors, it gets more challenging for them to understand these developments. And therefore, when they receive breakthrough ideas from other people, they are not likely to be very courageous about implementing them because they don’t fully comprehend the topics.
I think how organizations are structured should also be rethought. It is necessary to switch from a corporate holding structure, which makes decisions based on past data and experience, into a laboratory structure that predicts and tests the future. In the near future, we’d like to see Fark Labs become the brain of the entire organization, replacing the holding in determining future goals, strategies, and decisions.
If I had not been personally involved as the president and the pioneer of these ideas, I don’t think I could have convinced the president or the board members to take such an action.
In my opinion, family businesses are so successful in the first generation because the founder’s entrepreneurial vision can be implemented by a team that is fully aligned with all goals without question. However, after that, the second and third generations—it’s very rare to come across family-owned companies in Turkiye past the third generation—are expected to continue the business as-is, rather than developing it further. I think each new generation who enters the family business should act like the first generation by being an entrepreneur who writes their own stories by taking the entrepreneurship of the founder as an example, because the survival of the entrepreneurial mindset will determine whether a family business is sustainable or not.
The chair of the board should assume the role of director in the company’s entrepreneurship programs, constantly thinking about the future of the company and new business opportunities.
Unfortunately, innovation is not a definitive process where you are able to invest today and reap the benefits tomorrow. If that were the case, many companies with extensive resources would apply this equation to continue outperforming the others. Innovation is both a learning process and a game that is won by those who can learn and apply the fastest by forming connections between different sources and improving their effects.
I unconditionally believe in the necessity of this type of innovation for the future of my company, and although bureaucratic obstacles have sometimes slowed down the process, I taught myself to adopt a startup mentality. This basically means that I behaved just as an unrelenting entrepreneur would, not accepting no as an answer for a solution that I truly believed in, and striving tirelessly to prove the effectiveness of the method.
I also really like the phrase “put your money where your mouth is,” which is often used on Wall Street. It can be important to ask, “Are you investing in the investment idea that you’re trying to sell or not?” By investing in all of the ideas that I was defending at Fark Labs, I validated my faith in and dedication to them to our board of directors.
The structure that you are trying to create requires a different model in terms of innovation and competence. However, these industries aren’t always the first choice for the type of talent you are seeking. How do you plan on closing this gap?
Just like Simon Sinek said, nowadays everything begins with “Why?” You have to provide a good reason for people to come and work with you that goes beyond the scope of financial support, job security, and everything like that. If someone is about to dedicate 30 years of their career to a company, they want it to be beneficial to the world so that they can be a part of the cause.
The motto of our company is: « BETTER. FUTURE. TOGETHER. » Both my senior executive and forklift operator colleagues are in the company for the same reason: to create a better future. So, where do we begin to find like-minded people who believe in the same vision?
First, we need to start by looking inwards in our own the industry. There are countless talents whose abilities are misunderstood in the automotive sector—they get stuck somewhere in the process, their ideas are not valued, and their initiatives are ignored because they don’t conform to the imposed culture. I call these people “black sheep.” We need to first focus on finding these people and digging them out.
We also set out to find people who were already working with us who did their jobs well, were open-hearted, open-minded, and open to cooperation. We call these people transformation agents. These people can change the minds of the masses. Young people, women, black sheep, and people who are dissatisfied with the current order and have the motivation to seek change should also join the caravan. As the number of women and young people in your company begins to increase, you soon see the face of the company changing as well. Polyphony, democracy, and empathy begin to permeate every part of the company.
People who join from outside the sector are also an invaluable resource. Instead of joining the sector itself, they should be joining you to work towards a common purpose, where you’ll highlight competencies of theirs that fit your sector. Entrepreneurship competitions and acceleration programs are good opportunities to accomplish this.
What you need to accomplish true change essentially lies in detecting competent people from outside the sector—finding those black sheep and those who ask « why » can ignite a journey towards success.
Family businesses are on the rise once again. How did you set up the structure of your family-owned business in terms of governance? Have you established a balance between owners and professional management?
Since 1983, Farplas has been accustomed to being led by professionals. We have managed to professionalize the family and bring more professionals into the family. Of course, we succeeded at this thanks to the visionary approach of our founder, Yunus Büyükkuşoğlu. Nowadays, such cases can make a big difference in an environment where many family businesses are trying to survive despite their bosses.
As the second generation of the family, we didn’t break the rule of professionalism that we learned from our fathers. None of us are directly involved in the operations, and we all have our roles on various directory boards. In addition to this, we also have two independent board members with a two-year term of office in each company to act as our own system of checks and balances.
With the changes we’ve made to the board of directors considering inclusiveness and women’s representation, our rate of women’s participation in the board of directors is 42%.
The first generation of management professionals who have been serving our company for 35 years are also preparing to hand over the task to the second-generation professionals.
The primary focus of the Büyükkuşoğlu family companies was always to manage themselves in a sustainable, accountable, and transparent way. We also aim to convey the family’s material and moral values and a sense of common purpose to future generations in the best way possible. In order to adopt institutionalization and a principle-based management approach, we apply the « governance model,” which has been agreed upon by family members and professionals managing the institution. Our governing bodies, our way of doing business, and the basic principles of the family constitution were determined in accordance with this model in 2009, and we finalized them at the beginning of 2019 after certain revisions.
The final family constitution includes central themes such as corporate governance bodies, authorities, family values, corporate governance principles, family asset management, income and expenditure management, and social responsibility approaches.
We have more than 35 years of experience in institutionalization, and, as of 2018, we regularly monitor the functioning capability of our board of directors. I’ve tried to express the criteria for our board of directors in the table titled « Development Process,” which we determined to align with the principles of diversity, inclusiveness, and global perspective, as well as our three-year development period.
Summary of Fark Holding’s three-year progress on various governance topics
|Board of Directors Evaluation Criteria||2018||2019||2020|
|Percentage of family members on the board||100%||68%||68%|
|Percentage of women on the board||33%||42%||42%|
|The frequency of annual family council meetings||0||100%||100%|
|Planned/actual board meeting rate||90%||83%||91%|
|Level of participation in board meetings||100%||90%||90%|
|The president’s work experience (not related to family-owned businesses) in years||4 years||4 years||4 years|
|Average work experience of family board members in years||40 years|
|13.8 years||14.8 years|
What are your feelings about being a female leader in such a male-dominated industry?
To succeed, regardless of your gender, you need to be driven by the passion to keep pursuing better, newer, and more beneficial business outcomes. You must have the confidence to rise back up once you’ve fallen, even if doors close for you from time to time—which I have definitely experienced. The most important thing is not to give up—to keep pushing forward.
In short, I have not faced any added difficulties specifically because I am a woman, though maybe, even if I did, I saw it as a natural extension of life and kept working to achieve my goals. Being a truly successful person means developing a leadership personality that no difficulty can dare challenge, be it gender discrimination or another issue.
Mustafa Kemal Atatürk has a very beautiful saying: « Society is based upon two types of individuals referred to as men and women. How can a society move forward as a whole when one part of it is supported while the rest is overlooked?”
The only way to mediate such great changes is through the support of all companies and stakeholders. In the business world, I favor acting under the identity of a “businessperson” rather than following gender labels. I believe businesses can gain great value and wealth from gender and age diversity. Furthermore, no company will reach its full potential without diversity, inclusivity, and equity.
In the business world of the past, people often talked about market shares. But now, they should be talking about “shared intelligence.” We currently have a business world where men and women have equal rights, conditions, and approaches, and it will continue to improve in the future. Women make up an invaluable part of the business world and their value will continue to rise as time goes on. The companies that first begin to see, accept, and support this fact will inevitably surpass the rest.
For you, what is the purpose and meaning of the ARYA initiative? What are your goals for the platform?
My father, who is an Anatolian industrialist, always urged us to give back what we took, and said that doing business is not the only way to benefit our country. So, when I accumulated enough experience to lead others in my professional life, my first question was, “What can I do now? How can I transform those around me?” First of all, I determined what I knew best: starting a business and making money. Knowing that women are the most valuable resources in the business world that often goes unexplored, I wanted to do something that could support other women in transforming themselves and their jobs. I was motivated by my awareness that women have it the hardest when it comes to creating opportunities in business.
Inspired by Game of Thrones and my youngest daughter’s name, I founded the Arya Women Investment Platform. The purpose of Arya is to transform the world through women’s leadership. For example, in the response to the pandemic, women were shining examples of vital and effective leadership. As a result, women-led countries effectively handled the crisis much better than those led by men. Just this experience is a perfect sign that the world needs more woman leaders today more than ever, whether managing governments or companies.
ARYA is Turkiye’s first female-focused investment platform and a product of collaborative intelligence.
Arya is trying to create success stories by investing in women-led companies while also aiming to help women with capital management. One of our goals is to provide women with a platform that allows them to invest their money more courageously, and, by doing so, to raise more women investors.
In Turkiye, women comprise less than 9% of investors. The rate of woman entrepreneurs who receive investments is consequently very low. The biggest obstacle standing in their way is the lack of funding. Arya connects women-led companies with male angel investors who believe in the power of women, as well as with other women who can add value beyond financial resources by investing in “smart money.”
Women who are members of Arya’s Challenge Club, while investing in themselves, also get the opportunity to participate in our investment programs, investment club, and the fund we will establish this year. To date, Arya has invested over $3 million in 11 startups. Our mission is to get more people to see through our unique “window” each day and to boost women’s participation in the economy.
Today, by collaborating with corporate companies and providing training and speeches to all women regardless of collar color, the Arya Women Investment Platform continues to spread its influence and popularize the “Arya Effect.”
We would also like to cooperate with organizations who want to empower women in their ranks and spread the positive effects of female voices being heard. For example, with our main business partner Türkiye İş Bankası, not only did we create a platform that benefited employees and customers, but we also formed a collaborative network that enabled Arya women to access the services of İş Bankası. We are also conducting the Arya Acceleration Program that we have prepared for women entrepreneurs who are determined to create the future together.