Our CEO Sanjay Kucheria sat down with Rich Hook, CIO of Penske Corporation, earlier this year to discuss his leadership role, digital trends, and more. Rich provides a thoughtful and candid perspective on his journey to Penske and the challenges he faced along the way.  

SANJAY:

Hi Rich, thanks for your time today! To get things started, why don’t you share your background as well as your journey with Penske?

RICH:

It’s a pleasure speaking with you, Sanjay. I started my career at Arthur Andersen where I joined a practice that performed cybersecurity/IT audits and grew it from 3 people and to 70 when I left. It involved a lot of recruiting, working on a lot of projects, and it eventually got to the point where I felt I really needed to complement the skillset I had gained and I wanted to do more.

I then ran information security for a small brokerage firm for a short period of time, before moving to Federal Mogul, a global automotive supplier. I was there for about 7.5 years, changed roles about seven times, got plucked out of Security into Enterprise Architecture, and then got involved in SAP and Microsoft, covered about 30 countries and had responsibility for 135 people. In 2009 an opportunity came up at Penske for a VP of Infrastructure which also included creating a security organization for Penske Automotive Group (PAG).

Prior to my arrival at Penske and over the course of time, the CIO of Penske Corporation and my predecessor, convinced Roger Penske to move PAG’s IT function to Detroit and that is ultimately how my position even became an option there. My predecessor needed a couple of things; he needed someone to fill this role and eventually find a successor.  In 2015 I was fortunate enough to be promoted to CIO. But I really play 2 roles now: CIO of the holding company Penske Corporation, which is a different and fun job involving collaboration with all of our companies, business development and relationship management with motor sports sponsors, and technology buying power for the group. We have a lot of technology companies getting into racing and more and more every day so I’m pretty involved in all of those from inception all the way through management. This is my smaller role, but unique and exciting.

Penske Corporation has four primary pillars. Pillar number one is the Penske Automotive Group (PAG, a public company with over 20,000 employees), and being its CIO is my bigger role. PAG has mostly automotive retail, commercial vehicle retail, as well as commercial vehicle and power systems distribution in Australia and New Zealand. I’ve got leads in each country and an outstanding team.

We’ve got common layers for our technology and security, while our application stacks are very different because of differences in the underlying businesses. A dealer management system in the US cannot run the UK business or the Italy business for example, so we’ve got some things that are very bespoke to those countries.

Pillar number two is what a lot of people know us for, which is Penske Truck Leasing (PTL) and Logistics, now known as Penske Transportation Solutions. This business manages over 300,000 trucks and has over 3,300 locations. PTL is based in Redding, Pennsylvania where we’ve got a CIO, who runs the IT operations, and then CTO who runs logistics technology landscape out of Beachwood, Ohio for Logistics. Both of them report through the operating CEOs and I have connections with them as needed in our businesses. They have some tech debt that they’re working on and doing some cool things related to telemetry and IoT with the fleet.

Pillar number three is Team Penske, and that’s our IndyCar and NASCAR teams. We now have four drivers in IndyCar as well as a three in NASCAR Cup Series and another in the Xfinity Series. Team Penske has 18 Indianapolis 500 wins, 19 championships, and 2 Daytona 500 wins. We have 3 championships in Australia with Scott McLaughlin, who is coming over to IndyCar Racing as a rookie. There is a lot of customer-employee-business partner interaction that happens around the racetrack. Roger Penske built the business around “partners in business” and “partners in racing”, so it is very consistent with what we do. We have an IT Director that oversees this part of our business on a day-to-day business that has been with us for over 25 years.

Our fourth pillar, which turned a year old this year, is called Penske Entertainment. It comprises Indianapolis Motor Speedway (IMS), IMS Production, which is the video feed that feeds NBC for IndyCar, and the IndyCar Series. Roger was the strategist for various Team Penske IndyCar drivers over the years and on the box every weekend prior to this acquisition. He’s as hands on as anyone I’ve ever met and is an amazing mentor and leader. In 2020, we pulled off 14 races even during the pandemic, but we also did a lot of “iRacing”, or virtual racing during the lockdown days which was a lot of fun to watch. This last year has been interesting; we have taken a lot of cost out and invested a lot of money into the track. I have a CIO who runs Penske Entertainment that does a fantastic job and has a great team.

SANJAY:

What would you say are your big concerns or challenges for the various Penske businesses, particularly when we are talking about digital transformation, all the change that’s happening in the industry? Keeping aside the pandemic which is going to go away at some point.

RICH:

Our various pillars all have different challenges, but I think one of the things that we always think about as an organization is our employees and our customers. If I think about our automotive retail business as an example, the customer expectation and journey is evolving. I would have said five years ago everybody wants to buy a car online but the market wasn’t really there. There are companies pushing our industry into used car online buying over the past several years, which is good and will ultimately help all good operators, especially as the technology commoditizes itself.  However, some of these companies operated with significant losses as they ramped up their business. So, despite some of the new market entrants having a strong market cap, we like to run our business on a strong balance sheet and be a fast follower where appropriate.

 

I think the evolution of the customer experience has resulted in our industry going omnichannel. Because at the end of the day, people want to buy the way they want to buy. I should be surprised but am not that people still want to come in and kick the tires. And I think we do a better job than anyone else when we talk about retailing vehicles. It is a great experience if done well. For example, we have put technology in place that digitizes the in-person finance experience so the whole finance process is seamless. It doesn’t have someone spitting out a new piece of paper changing numbers on you. If you want to change anything it’s all done on the fly, on a tablet that’s built into our desks. Our customers can go through videos and different presentations. In fact, we’ve actually seen that we’re making more money per vehicle when we started to do that because the technology helps to build trust and transparency with customers. A year ago, you couldn’t get any customer or employee on a videoconference, and now my mother’s happy to jump on Zoom in a second. So the customer’s engagement preferences have changed, and we see that in the way they’ve adopted video. But we are also building out the customer journey so it can be completely hands-off if they desire.

 

Interestingly enough, buying a vehicle is a lot more complex than buying a house because none of the documentation or forms have been standardized nationally. Everything is still localized; it can vary state to state even local at some point. It’s a pretty complex transaction still, and it’s a big transaction for most people. You’re going to see us continue to push more into the omnichannel experience. So that’s one piece, figuring out how the customer engages on the sales side of our business. On the service side, we rolled out a product in the pandemic that takes a shopping cart approach. It shows the various repairs that a customer could review through pictures, video and textual description, and approve those repair items she wants performed on her vehicle, all through texts. We have also gone touchless for repair orders and invoice signatures using DocuSign. We added electronic invoicing which can be signed on the phone and rolls the customer right into our online payment platform. It is about making the experience for customer very convenient and seamless.

 

A few years ago we invested in a car-sharing platform company called RideCell. We partnered with Volkswagen for the cars and ran a pilot in the DC market called Penske Dash. We were excited to put our toe in the mobility market to see if it was a viable business, but ultimately we ended up shutting it down because of a variety of factors, the pandemic being a significant one. We want to try things, but we also don’t want to lose focus on our business. Our focus is on how we can make things better for our customers and associates, how do we make things frictionless for them. There’s also a wall to climb to get people to use some of the newer applications and technologies. So it is about striking a balance between serving our customers’ and associates’ needs using technology while running a strong, viable business.

  http://vboda7.org/calendar/?yr=2019 END PART ONE.