"Our Strategy: Dual Transformation"

Ahu Büyükku?o?lu Serter, President of Fark Holding, had a discussion with HBR Turkey about positioning new ideas and entrepreneurship within the company strategy, how they continue to achieve transformation focused on innovation and design as a family-owned company, her experience as a female leader in the sector, and her initiatives on diversity.

Interview by: Serdar Turan and Yonca Altun

Fark Holding’s core business area can be seen as conventional while also operating in areas where we perceive serious disruptive innovation. How do you see the “today” of your business and what sort of transformations are you foreseeing? 

Fark Holding’s core business areas, as well as a significant part of its activities and turnover takes place in the automotive and white goods supplier industry. The automotive industry is going through a period of significant change due to recent advancements in technology and especially due to developments in our current disposition and new way of living.

This transformation, triggered by recent technological change, is affecting everybody in the supply chain as well as the value creation process. “CASE,” abbreviated as (Connected, Automated, Shared, Electrified), has been affecting the industry these past five years as a key trend in the autonomous shared electric vehicles category.

In the aftermath of these new effects, we see the participation of new players in the supply chain. Evidently, it is obvious that these new players will have an increasing influence in the industry as a whole (technology companies, start-ups, etc.) Therefore, the balance between the automobile manufacturers and the supplier -industry (OEM- Tier 1-2-3) that have been in place for years will be broken due to the entry of these new players. The playing field will be transformed as old players will begin to concede to the rising influence of the new arrivals.

As a part of this, in recent years, we also note a transformation beginning in the automobile manufacturers industry and in due course the supplier industry. We assume that most of the disruptive technologies that will be seen in the automotive industry and supply industry in the next five years will be brought in by outside players. This in turn puts us, active participants in the industry, in a very fragile situation. It is clear from the table here that the industry has to learn 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, but knowledge that we are nevertheless required to acquire due to their importance in transforming the sector. We must familiarize ourselves with these new concepts as soon as possible and be able to assess them quickly.

This situation requires the restructuring of resources that comes along with it. From another point of view, the standards are stable and unchanging in the automotive industry due to reasons regarding security, as it is mostly seen as an area where rapid changes do not occur that often. However, with recently developing technology and the inclusion of more sensors, software, and electronics, the automotive sector needs to propel itself forward and begin rapid transformation. Therefore it is especially important now that newly learned technologies and methods be tested quickly and implemented if found successful. In this stage, it is vital to offer these technologies as general applications as soon as their success is approved, which can guarantee novelty and leadership in the sector. Companies must allocate resources in order to successfully drive the learning and testing process. In addition, they also need to give space for these teams to conduct their testing. I believe that in this stage, large and cumbersome companies who maintain the viewpoint of gradual and cautious transformation will be disappointed, as they will be the ones to get bogged down in the end.

Due to the recent pursuits carried out in these areas, the automotive industry will need to collaborate with other technology companies and startups. This newfound collaboration will then enable more traditional automotive companies to adapt to new business models, collaborate more extensively, and transform with innovation and speed.

With that being said, the companies that gain the entrepreneurial corporate culture and accelerate the long development processes with entrepreneurs and bring innovations into the bodies of companies will be on the winning side of the sector. They would also be the ones who transfer technological innovations from non-automotive fields into this sector, in addition to meeting the criteria of being a reliable supplier / manufacturer required by the automotive industry. 

Geographically speaking, in addition to the recognized Japanese giants of the Far East, China and South Korea have also made their names known with strategic alliances in electric vehicles. Because of their rising influence, they will continue to have a say in the sector.

In electric vehicles, those who provide a platform to address the decrease in parts will shine a spotlight on new manufacturers that are able to produce less quantity, and thus allow them to have a place in the market. In this way, we will also get closer to modular systems according to customer requirements. The idea of “mass-customization,” thanks to these advancements, will therefore become one that is mentioned more often. Even now we get to see players such as Arrival and Moov, which produces multimodal vehicles from Hong Kong and where I serve on the advisory board, 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 be doomed to concede.

How would you evaluate the purpose of groups and companies when it comes to their purpose and the destinations they want to reach within the framework of this 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 already left behind 50 years in our company, and as of 2012, we began leading as the second generation. When we look back at our history, we can see that we have been through four main stages: the Farplas that started production what was not readily available in Turkey in an attempt to localize production between the years 1968-1990, the Farplas that brought its customers’ ideas to life between 1990-2012, Fark Holding creating game changing stories and making a difference between 2012-2020, and the 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 shifted from “What can I produce?” to “What can I produce for you?” and later to one that began asking “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 one that asks, “How can I transform myself accordingly to achieve my goals?”

Of course, transformation requires time and is a long-term process, but as I’ve already mentioned, accelerating the transformation at this current point is the biggest competitive advantage. 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 a tool that can be used not only by us, but also by like-minded organizations. It works just like artificial intelligence; as the user experience and learning increases, its efficiency improves even more. Its only difference is that it is completely powered by organic intelligence, rather than.

In this century, the most critical ability that a company or a person could have is the capacity to learn and adapt rapidly. The faster you can learn and apply a large amount of knowledge with courage, the faster you will achieve positive results.

Not one company or a person can learn everything alone, so a large part of learning depends on learning together, from each other. This is where the “together” in our motto actually derives from. By utilizing collaborative intelligence, everyone can unite what they have learned to reach an even more critical learning point.

It is also necessary to create areas free from large organizational cumbersome and bureaucratic obstacles to quickly test what we have learned, which is why one needs a sandbox like Fark Labs where you can test different levels of business ideas, technologies, and diverse human abilities. If you set up your sandbox only in the “backyard,” then you will only learn about the things that consist in your garden and your neighborhood. However, if you scale your sandboxes in China, Korea, France, the USA, Ankara, and Istanbul like Fark Labs, then you will have the opportunity to share the knowledge of people in those neighborhoods as well.

As we were working towards designing a better version of the 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 they are familiar with. First, we began by asking ourselves the ways in which we could improve in the subjects we already had knowledge of in order to make them a part of a better future. This led us to establish the “mobility” vertical and its vision “FUTURE. MOBILITY. TOGETHER.”

Mobility is broad fields that can help alleviate many of the problems we face today, ranging from air pollution and traffic issues to the inability of some people to receive a proper education due to problems regarding transportation. As automotive professionals, instead of producing vehicles that are used by consumers only 5% of the time, we should start developing solutions to allow for easier, quicker, and cleaner transport for people from point A to point B.

Of course, in addition to these, creating more intelligent technologies, becoming a model factory, and perfecting an ordinary technology were also among our goals. The innovations that we follow and anticipate in the automotive sector, in parallel with the provision of electric vehicles as a platform, directed us to be a creative, innovative and design-oriented company that produces solutions for both issues regarding connectivity and all interior parts of the vehicles. Proceeding in this direction, we started implementing new initiatives in new areas such as sharing economy, connected vehicles, and micro mobility.

We initiated our second vertical on the subject of “Life Sciences”, 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 to be Ankara Fark Labs, located inside one of Turkey’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 in these areas. We just closed one of our investments two weeks ago. We invested in INOFAB, a modern spirometer manufacturer called Spirohome, which measures breath quality.

In the hopes of a manufacturing a better future, we determined our third vertical to be “Sustainable Lifestyle.” In this vertical, we established or became the investors of many initiatives that provide a more sustainable and livable life. Some of these initiatives include Fazla G?da which collects and recycles waste food products, Naturansa, producing consumable protein from insects; the Arya Women Investment Platform, which sets out to transform the world with women leadership; and Zai, the new generation library in Bodrum with the goal of expanding the horizons of knowledge.

By treading in this path, we aim to grow not only in numbers but also by contributing to the world by using our production and design capabilities to expand out of our designated sector into other areas that add value to life. We believe that it is very important in terms of stakeholder motivation that every “difference-maker” working with us knows that they are working to add value to the world in all 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 the glass cabinet standing in our grandmothers’ dining room, with tiny trinkets neatly arranged on its shelves… Those trinkets symbolize the subjects that we are passionate and curious about learning but haven’t been able to verticalize yet. Some examples of these include artificial intelligence, crypto currency, space technologies, data science, cyber security, and blockchain.

In order to verticalize these topics, we are inviting organizations that share our vision and chose one of these issues as their main vertical to join us in using the platform established by Fark Labs. Thus, with the experience that we have accumulated over generations, they will build their verticals and run them very smoothly and faster than ever. We refer to this as the “Minecraft Mentality;” as you can also see, we have had a lot of inspiration from Minecraft in crafting our logo and images. While you are busy building your own world of cubes in one place, you can access a wider world by joining forces with people who have built different worlds elsewhere, without the need for you to create each world separately.

Are you trying to create a unique development and transformation dynamic with Fark Labs? Why are you using this kind of strategy? Isn't it an unusual model for many of the industries you're associated with?

The automotive industry standards are very matured and well-established, and thus, is a sector that implements change in incremental steps. However, developments that have triggered rapid change over the past 5-10 years have completely transformed this pace. We established Fark Labs not only to pursue this rapid transformation, but also to protect and maintain our jobs in this period. In this process, we are applying a strategic approach that we refer to as dual transformation, similar to the proposal in the book Dual Transformation, which inspired me greatly. As we follow novel innovations on one hand, we explore new businesses 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 or our other companies, as it is not feasible to implement substantial projects of today and tomorrow into the agenda of a team that is very busy with production and expect it to attract attention. However, it was possible to create 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 the possibilities and the development areas of Farplas and other companies. Thanks to this, in our transformation tool Fark Labs where we are designing a better version of the future, we adopted a fast-problem-solving approach with a versatile view without losing too much to automotive standards. Today, we are trying to solve each and every problem in a way that is required by its own ecosystem.

Fark Labs, at the same time, is the genesis of collaborative intelligence. It is an open innovation platform that welcomes various partner corporations in addition to people who are in need to transform their careers, who have ideas, courage, business plans, determination, and knowledge, to explore the ideas that are born out of our own organization.

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, actually, is the distinguishing trait of Fark Labs from other organizational innovation laboratories. We continue to expand our collaborative intelligence network every passing day by hosting in-house entrepreneurs from our own companies in addition to our strong ties with the ecosystem. The most recent example to support this claim is our "Think BI?GG" program, in which we were selected as the only implementing industrial organization within the scope of TüBI?TAK’s (The Scientific and Technological Research Council of Turkey) "1512 Techno-Enterprise Capital Support Program" where we offer entrepreneurs with technology-based business ideas the opportunity to receive a TüBI?TAK grant of 200.000 TL.

 With F + Ventures, you are planning to evaluate new ideas and initiatives. What is the underlying strategic cause and purpose for this?

 F + Ventures was established in 2016 as the corporate venture capital company of Fark Holding. In the time span to date, we have studied over 500 initiatives from various countries with the goal of making investments by closely following initiatives that develop disruptive technologies in the field of transportation. As you know, the automotive industry is going through the biggest transformation of the last century for which the leading actors are technology initiatives that are not directly involved in the industry rather than automobile manufacturers. 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 where we used only our own resources, we invested in Chargepoint in the US, Valens in Israel, and Garaj Sepeti in Turkey. We also made the seed investment of Comodif: Turkey's first connected car 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, in addition to our own capital, we will cooperate with companies and funds that are 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, it is also critical for us to create companies that develop various transportation solutions outside of the automotive field. DUCKT, which was formed as an idea under the umbrella of Fark Labs and developed charging stations for scooters and electric bicycles, is a good example of this, as it became an autonomous company by acquiring its first customers. It was a start-up to which we gave birth to ourselves and transformed into a project that progressed from the initial idea to the investment stage in merely 17 months. It became a spin-off in recent months, receiving its first investment from the European Inno-energy fund. It currently sells infrastructure products to NY and Paris municipalities, as well as to major scooter brands around the world.

The connected vehicle platform Comodif is also one of the start-ups that we produced ourselves. Comodif, which connects people and brands with their vehicles, is at the centerfold of projects such as TOFA?'s “Travel Companion” and Renault’s “Motrio.”

 How have you persuaded the shareholders and senior executives of a transformation focused on innovation and design? What kind of resistance has arisen in this regard and how were you able to overcome them?         

This subject is a critical one. I find it very unfortunate to have to spend time persuading someone when that time could be spent on innovation and development instead. Today, people or shareholders who are at the top of their companies are often unaware of the developments taking place in the world and their sectors. Since it’s not easy for them to follow or understand these developments, they are not likely to be very courageous about the ideas that they have on matters that are not easily comprehensible.

I think the structure of organizations should also be reconstructed. It is necessary to transform out of the holding structure that makes decisions about the future based on past data and experience into a laboratory structure that makes decisions by predicting and testing the future. Among our strategies is the idea of Fark Labs becoming the brain of the entire organization in the recent future, and replacing the holding in determining future goals, strategies, and decisions.

I’m guessing that I wouldn’t have been able to convince the person or the board to take an action of this size if I was not personally involved as the president and had not taken credit as the pioneer of these ideas.

In my opinion, the reason why family businesses are so successful in the first generation is because the founder's entrepreneurial structure can be run with a team that is aligned around it without questioning. However, the second and third generations (It’s very rare to come across family-owned companies in Turkey over the third generation) are expected to continue the business as is, rather than developing it further. I think each new generation that enters the family business should act like the first generation by being an entrepreneur who writes his/her own stories by taking the entrepreneurship of the founder as an example. I think the survival of this entrepreneurial mindset is the factor that determines whether the 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 as well as 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 to overstate the effects.

I unconditionally believe in the necessity of this for the future of my company, and although bureaucratic obstacles slow down the process, I taught myself to adopt a start-up 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 effectivity of the method.

I also really like the phrase “Place your money where your mouth is,” which is often used in Wall Street. It is often 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 was able to personally prove my faith and dedication for a project to our board of directors.

 The structure that you are trying to create requires a different model in terms of innovation and competence. However, industries are not the first choice of the talents that you are seeking. How do you plan on closing this gap?

Nowadays everything begins with “Why?” just like Simon Sinek said. You have to provide a good reason for people to come and work with you, and this reason should be beyond the scope of financial support, job security, and all things related. If a person is about to dedicate 30 years of their life to you, they want the company they work for to be beneficial to the world so that they can be a part of that cause.

 The motto of our company is: “BETTER. FUTURE. TOGETHER." Both my senior executive colleague and my forklift operator colleague are in the company for the same reason: We have united to work towards creating a better future. So where do we begin to find like-minded people who believe in this same vision?

First, we need to start by looking inwards into the industry. In our own industries, there are countless talents whose abilities are misunderstood, their ideas not valued, and their initiatives ignored, because they don’t conform to the imposed culture and are stuck somewhere in the process. I call these people “black sheep.” We need to first focus on finding and digging these people out.

We also set out to find people, who were already working with us, do their job well, are open-hearted, open-minded, and open to cooperation and named these people as transformation agent. These people have the ability to change the minds of masses. Young people, women, black sheep, and people who are disturbed by 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 realize that the face of the company also starts changing. 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 their competencies in accordance with your sector. Entrepreneurship competitions and acceleration programs are also good opportunities to accomplish this.

What you need to accomplish true change essentially lies in acquiring competent people from outside the sector and locating the black sheep’s of the industry. Simply finding those who ask "Why?" can ignite a journey towards a success.

Family businesses are on the rise once again. How did you set up the structure of the group in terms of governance? What is the structure in the owner / professional management balance?

Farplas is a company accustomed to being led by professionals since 1983. We have become a company that has managed to professionalize the family and bring in more professionals into the family. Of course, this success was achieved thanks to the visionary approach of our founder, Yunus Büyükku?o?lu. Nowadays, such cases can make a big difference in an environment where there are many family businesses 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 in 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 in the board of directors made considering inclusiveness and women's representation, our rate of women 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 Büyükku?o?lu family companies was always to manage themselves in a sustainable, accountable, and transparent structure. In addition to this, we also aim to convey their material, moral values, and the sense of common purpose to future generations in the best way possible. In order to adopt institutionalization and a principle-based management approach, the "Governance Model", which is agreed upon by family members and professionals managing the institution, is applied. The governing bodies, the way of functioning, and the basic principles of the family constitution were determined in accordance with this model. The basic principles of the family constitution were determined in 2009 and were finalized at the beginning of 2019 after certain revisions. Our family constitution consists of 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 an experience in institutionalization that extends beyond 35 years. As of 2018, we regularly monitor the functioning capability of our board of directors. I tried to express the criteria for our board of directors in the table titled "Development Process,” which was evaluated in line with the principles of diversity, inclusiveness, and global perspective as well as our three-year development period.

What are your views regarding being a female leader in such a male-dominated industry?

To obtain success, you need to be driven with the passion to keep pursuing the better, newer, and more useful technologies, regardless of your gender. You are required to have the confidence to rise back up once you’ve fallen, even if there are doors that are closing for you from time to time (which I have also experienced). In this process, the most important thing is to not give up and keep treading forward.

In short, I have not faced any added difficulties specifically because I am a woman, and maybe even if I did, I saw it as a natural extension of life and kept moving forward. This is especially important because being a truly successful person means developing a leader personality that no difficulty can dare, 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 could it be possible for a part of the society to reach the skies while the rest is chained to the ground?”

The only way to mediate such great changes is through the support of all companies and stakeholders. In the business world, I am in favor of acting as the united identity of a “businessperson” rather than making a clear distinction between men and women. The source of positive discrimination should not be derived from differences in gender, but instead from the belief in the wealth to be gained from gender diversity. I think that no business without women, young people, and diversity would be able to reach its full potential.

In the past, people often talked about market shares in the business world, whereas now, they should be talking about “shared intelligence.” There is now a business world where both men and women have equal rights, conditions, and approaches. This will continue to improve in the future. Women make up an invaluable part of the business world and their values will continue to increase as time goes on. The companies that first begin to see, accept, and support this fact will surpass the others in terms of success.

 For you, what is the purpose and meaning of the ARYA initiative? What are your goals regarding the platform?

My father, who is an Anatolian industrialist, always urged us that working is not the only way to give back to one’s country. 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 was able to determine what I know best: starting a business and making money. Knowing that women are the most valuable resources in business that often go unexplored, I wanted to do something that could support other women in transforming themselves and their jobs. I was motivated to do this with the awareness that women have it the most difficult when it comes to creating opportunities in this field. Inspired by Game of Thrones and the name of my youngest daughter, I founded the “Arya Women Investment Platform”. The purpose of Arya is to transform the world though women leadership… During the pandemic, we saw very closely that the world needs female leadership today more than ever. During this period, we also observed that women-led countries managed this crisis much better than men. Just this experience is enough of a sign that points in the direction of appointing more women to lead countries, and for more women to become company leaders throughout the world.

ARYA is Turkey's first "female-oriented" 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 with their money more courageously; we also aim to raise more women investors by doing so. In Turkey, women comprise less than 9% of investors. The rate of women entrepreneurs who receive investments is consequently very low. The biggest obstacle standing in their way is the lack of funding. Arya unites women-led companies with male angel investors who believe in the power of women and with 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 this date, Arya has invested over $3 million in 11 start-ups. Our mission is to get more people to see through our unique window each day and to boost the participation of women in the economy.

Today, by collaborating with corporate companies and providing training and speeches available 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 that want to include more female voices in their companies or those who want to spread the positive effect that female voices can have on the companies’ successes. For example, with our main business partner Tu?rkiye I?s? Bankas?, not only did we create a platform that benefited employees and customers, but also formed a collaborative network that enabled Arya women to access the services of I?s? Bankas?. We are also conducting the Arya Acceleration Program that we have prepared for women entrepreneurs who are determined to create the future together.