WHERE DO INNOVATIONS START?
Creative ideas
Innovation starts with the person. In a person who both has
the ability and applies the willpower needed to acquire
knowledge and combine it in a novel way until the
individual components suddenly fuse into new ideas.
Ferdinand Porsche acquired founded knowledge in various disciplines in his
early life. Three things helped him to identify opportunities for the success
of many seminal innovations at an early stage and to implement those
opportunities: a mutually stimulating exchange of information, his
unquenchable thirst for knowledge, and last but not least, his personal talent.
Porsche always sought new knowledge. He started his career as an
apprentice plumber. He attempted to apply his knowledge to electrically
driven vehicles at the Vereinigte Elektrizitäts AG Bela Egger.
Later on, he moved to coachbuilders Lohner to develop a quiet electrical
alternative to loud combustion engines. Following this he went to Austro
Daimler, where he developed a gasoline-electric hybrid drivetrain to serial
maturity; it was used in trains, ships, aircraft and cars.
to the overview
HOW CAN YOU DISCOVER SOMETHING
NEW?
Freedom to experiment
Developing new ideas means probing given patterns of
thought and their limits and transmuting them. Freedom to
experiment is a prerequisite.
Since his early years, Ferdinand Porsche had always asserted himself
securing from his employers the freedom he needed to develop his own
ideas. The findings from these experiments laid the foundations for many of
his innovations.
It was not rare for the costs of the experiments to escalate making them
disproportionate to the financial returns. Faced with the risk of his love of
experimenting being restricted, Porsche brooked no compromise and moved
to a different employer. One who would allow him freedom to experiment.
Without financial impedance he was thus able to acquire new knowledge for
future innovations based on the principle of »trial and error«.
Experiments always involve costs and the risk of failure. The budget for
experiments thus always competes with the company's earnings. If
Ferdinand Porsche was restricted in his eagerness to experiment, he left the
company.
However, the many new ideas and prizes that Porsche gained in the course
of his experiments quickly opened up opportunities for working with new
employers.
to the overview
HOW CAN YOU ASSERT YOURSELF IN AN
ESTABLISHED MARKET?
Design the Future
As a small company, can you play a role in the concert of
the major players while at the same time shaping the
future? Yes, if you change the rules of the game. But how
can you change the rules? With totally new ideas that
radically turn the accustomed landscape on its head.
In the period between the two wars, the major automobile groups closed
ranks and divided the market up amongst themselves: they defined their
own rules; just a few bureaucratic corporations dominated the automobile
industry.
Ferdinand Porsche took a totally different approach. Celebrated for his
successes in international motor racing as the ingenious engineer of the
Type 22, he establishes a niche for himself as an independent designer
between the industry and the market. With his small but punch-packing
organizational structure he thus succeeds in fulfilling the state's demand for
an affordable small car for the people.
The established automobile industry did not want to fulfill the politicians'
call for small car with an extremely low purchasing price. As an
independent designer, Porsche completely rethought the task. He thus faced
the challenge of designing a small car for less than 1,000 reichsmarks,
which originally had to be produced by the established automobile industry
on a state commission. As a mediator between the manufacturing industry
and the customer market, he thus revolutionized the automobile industry.
to the overview
HOW CAN YOU PROPAGATE YOUR IDEAS?
Grasping visions
How can you convince people of a new idea? Easy, you
literally make the idea tangible, with a prototype. This
makes visions more intuitively comprehensible, and you
can develop the idea itself more quickly, honing it until it
finally achieves market maturity.
In Porsche's independent design engineering office, prototype building had
always been extremely important, right from the outset. Prototypes had on
the one hand demonstrated the feasibility of radical new studies to the
automobile industry, while on the other hand making the fundamental vision
tangible to the purchasers.
Two types of prototypes were used for this: technical and cultural.
Technical prototypes are show cars that demonstrate the structure and
design of the new model. Cultural prototypes are manifestations of the
vision. They illustrate the idea behind the model, for whom it was built, and
what use it can be put to in the future.
Shaping the future means converting a vision into reality. This requires
actors who translate the idea of something that still doesn't exist into
something genuinely tangible, but also financial backing or customers who
believe in the feasibility of the idea and bare the financial risk of its
implementation.
Ferdinand Porsche's early designs for a future small car or Volkswagen,
dubbed the Type 60, were visionary from both the automobile industry's and
the market's points of view, and seemed to indicate a lack of understanding
for what was realistic in 1934. Porsche thus used technical and cultural
prototypes.
to the overview
HOW CAN YOU PRESERVE THE
INNOVATIVE POTENTIAL OF A GROUP IN
THE LONG TERM?
Team excellence
Innovative organizations tend to establish a small core
team which defines the fundamental orientation. The
structure of the core team is characterized by
collaboration. This helps the team to empathize with the
culture of innovation lived by the founder, his approach to
work, his beliefs, and his values.
Ferdinand Porsche gathered capable staff over the years and shaped a core
team. Each member represented a step in the design process and could
handle this without support from other professional staff.
In 1947, Porsche was commissioned with building a Grand Prix racing car.
But Ferdinand Porsche was still a prisoner of war. Because of this, the core
team designed the Type 360 on its own. A racing car that laid the
foundations for today's Formula 1. The team also designed the legendary
Type 356 sports car on its own.
But on his return, Ferdinand Porsche happily commented: »I wouldn't have
changed a single bolt.«
Ferdinand Porsche's success is owed to both his ingenuity and to a greater
extent his core team, which accompanied him through the years. It lived and
breathed his ideals and passed them on to the entire staff – no matter
whether the company had just 12 employees or several hundred.
Managed in a fatherly and friendly relationship, the team was capable of
doing everything itself, from a complete prototype, a simple brake, through
to issuing patents, or designing a speed record car. Ferdinand Porsche's
presence was thus no longer necessary to continue developing seminal
innovations.
to the overview
HOW DO YOU DEVELOP INNOVATIONS
WITHOUT EXTERNAL INVESTORS?
Establishing partnerships
When you are creating a new enterprise of your own, you
naturally need money for your own development activities.
Strategic partnerships can lay the foundations for financial
survival and thus assure sustainable innovative force.
After World War II, Porsche didn't want to be purely an engineering office,
it wanted to build cars of its own. As a »start-up aid« for the production of
the Type 356, the company entered into strategic partnerships that secured
three advantages:
1. Use of Volkswagen Beetle carry over parts for
Porsche
2. Start-up funding through down payments and
licensing fees
3. Shared distribution network for Volkswagen and
Porsche
This secured Porsche's basic funding without external investors. It also
secured the development of the original Porsche Type 356.
November 17, 1948, Ferry Porsche, Ferdinand Porsche's son, signed an
agreement with Heinz Nordhoff, the General Director of Volkswagen AG,
with the following content:
1. The Volkswagen works supplies all the parts
required to build a sports car, and Porsche can sell
and maintain the cars it produces via the
Volkswagen distribution network.
2. Porsche advises Volkswagen in design matters
and is not permitted to develop a car similar to the
Beetle for competitors. Additionally, Porsche is
assured a license fee of 5 DM for each Beetle
produced.
3. In addition to this, Porsche becomes the general
representative of Volkswagen in Austria.
to the overview
HOW DO YOU MAKE A COMPANY STRONG
AND ATTRACTIVE?
Fans instead of customers
Positioning a company as a brand offers an inestimable
competitive advantage. Customers identify with »their«
brand, and recommend it to others on their own accord.
They have emotional ties with the company and are far
more loyal.
In its earliest years, sports car manufacturer Porsche succeeded in
establishing a loyal brand community that is unique in the automotive
world. The major pillars of this development were the unmistakability of the
product, targeted maintenance of traditions and rituals, but also the moral
sense of responsibility for the customer lived by the Porsche family. A
unique feeling of togetherness was the consequence, and it still exists today
in a strong feeling of »community«.
How did the Porsche brand manage to attract the world's largest fan
community? The starting point is the Porsche vehicle, equipped with three
essential components:
1. Collective component: You can share the
enjoyment of a Porsche directly or indirectly with
others, at a race for example.
2. Polarizing component: Loyalty to Porsche leads to
tangible demarcation towards non-members, a
feeling of community.
3. Continuity component: Porsche has a history, and
can tell stories – critical for the long-term
establishment of brand communities.
The central theme of the brand community is trust, a stable relationship to
customers and dealers that is founded on trust.
to the overview
HOW DO YOU KEEP REINVENTING
INNOVATION?
Timeless design
All innovations will become a legacy at some time. But
how do some of them manage never to be old fashioned?
Timeless design is born from an interplay of creation and
communication and possesses three fundamental
properties: type-specific, practical, unchanging.
Alexander »Butzi« Porsche created a classic with his design for the 911
sports car. In doing so, he built on designs by his grandfather and father: the
fundamental characteristics of a sports car capable of mastering the
mundane chose of daily life were thus re-interpreted in the third generation.
The car has lost nothing of its contemporary nature in five decades. On the
contrary, it has achieved the status of a cult object. The annual sales figures
demonstrate its timeless constancy.
While developing the 911, the designer recalled the Type 114 from 1937: a
sports car which was outside of all conventions even at the time with its
elongated fastback, crouching front end and raised fenders with integrated
headlamps. The Porsche demonstrated its practicality in terms of its
capabilities in daily use, letting its driver compete in races, but also drive
comfortably on normal roads. Constancy arises through the recurring use of
the type-specific shape, which is re-interpreted in every decade and thus
sacrifices nothing of its validity.
to the overview
HOW DO YOU MASTER CHALLENGES IN
TURBULENT TIMES?
Radical renewal
Many established companies make the mistake of
renewing a good idea step by step in order to
accommodate it for new challenges in the best possible
way. But there is a risk inherent in this of ending up in an
innovation dead-end. Rethinking each challenge from
scratch is the more promising method. Seeking to achieve
the ideal state for a product prepares the ground for radical
renewal.
In 1965, Ferdinand Piëch wanted to win the World Sports Car
Championship. But attempts to optimize the first modern Porsche sports car,
the Type 904, failed. Piëch now ordered a total rethink of the sports car
paradigm. To allow this to happen, he created his own team of designers and
engineers, who had nothing to do with the past. The result of this
development was the birth of the Type 917 in 1969, one of the most
successful racing cars in history. It took several overall victories, including
for the first time in 1970, the Le Mans 24 hours.
Hill climbing had always been Porsche's domain. But the Type 904 was
outclassed by the Ferrari Dino – even after attempts to continue its
development. Ferdinand Piëch had the car totally rethought in order to win
hill climbs once more. This led to the creation of the Type »906/8 Ollon
Vilars«. Featuring an aluminum triangulated tube frame instead of a box
frame, an 8-cylinder engine, and Formula 1 suspension by Lotus.
In contrast to this, Ferdinand Porsche continued to bank on serial production
vehicles: the Type 906 was a modified 906/8 with a 6-cylinder engine. But
Piëch continued to develop the special models for hill climbing. The Type
910 built on the 906 with a Formula 1 chassis.
The Type 907 was a wind tunnel-optimized version of the 910. And it was a
right-hand drive car, because there were more right-hand turns to complete
in the major races. The Type 908 was a 907 with 8 cylinders and a flat
engine. And, at the end of the day, the Type 917 was a development of the
908 with 12 cylinders.
to the overview
WHERE DOES THE KNOW-HOW FOR NEW
IDEAS COME FROM?
open innovation
As product lifecycles increasingly become shorter, the
pressure to innovate grows. To secure new know-how, it is
advisable to open up the innovation process and
implement new ideas collaboratively with partners,
suppliers, or customers.
In the 1960s, Ferry Porsche sought to increase Porsche's share of the market.
The product range lacked an entry-level sports car. The affiliated
Volkswagen group had similar ideas. And thus, the two decided to enter into
a joint development.
In the mid-1960s, the Porsche research and development center relocated to
Weissach. The objective: not just to provide advice and develop mature
products for internal use, but also for third parties – from fast racing cars,
through fork lifts, to punch-packing tanks. In collaboration with
Volkswagen, Porsche released an entry-level sports car in 1970, the Type
914.
to the overview
HOW DO YOU SECURE THE LONG-TERM
SUCCESS OF A FAMILY BUSINESS?
Trusting others
The strength of a family business is its sustainable
orientation and the special motivation of its members. But
family businesses also have weaknesses: differences of
opinion in the family can affect corporate governance. One
promising approach is to combine the best of the
organizational forms family and enterprise.
Four from eight of the Porsche and Piëch families' children were working in
Porsche company management at the end of the 1960s. No company can
take that much family. There were different needs and inclinations in terms
of the future of Porsche as an enterprise. Ferry Porsche reacted and
separated emotion and business. March 1, 1972, all of the family members
withdrew from active management. Today, thirty years later, Porsche has
record turnover, sales, staff figures, and profits.
At the end of the sixties, members of both families, Porsche and Pie_ch, had
forced their way to the top of the company, although a fundamental rule
from the past existed as to who was to manage which enterprise division.
Ferry Porsche became convinced that the only way to assure the future of
the company was for all family members to withdraw from active
management: »So nobody gets to the top.« Since 1972, the company has
thus been managed by people who do not come from either family. They are
selected by an independent committee of neutral, experienced persons and a
facultative supervisory board.
Ernst Fuhrman, the first non-family managing director took a new approach
to make Porsche independent of the 911 monoculture. For example, with the
transaxle system used in the Type 928. In total contrast to the Porsche
tradition, this is first car to have a liquid-cooled front engine that drives the
rear wheels.
to the overview
HOW CAN COMPANIES SURVIVE CRISES?
Discovering strengths
In times of crisis, it is important to rejuvenate an
enterprise. The processes are always the same: improving
efficiency and redeveloping the product range. The
drawback: it takes a huge amount of time. An alternative
and shorter approach is to focus on one's true strengths and
outsource secondary tasks.
In the early 1990s, Porsche found itself in the greatest crisis in the history of
the company. Porsche CEO Wendelin Wiedeking succeeded in restructuring
the company in an extremely short time, while at the same time
considerably boosting turnover and profit. The core of his strategy was to
focus on the development talent and strength of the Porsche brand, and to
outsource production matters to third parties. Low capacity risks, consistent
production management, outsourcing the production of major parts and
components, and targeted use of the brand name quickly took the company
back into the profit zone.
Among German automobile manufacturers in the early 1990s the in-house
production ratio was around 50 %. In times of crisis, restructuring the
company was a fairly slow process.
Porsche mastered its crisis at this time differently – and more quickly. The
Porsche in-house production ratio for the Type 986 (Boxster) was reduced
to less than 20 %. The Finnish Valmet automotive group handled much of
production. The flexible Scandinavians also bore the capacity risks in case
of fluctuating demand.
And Porsche itself introduced strict cost management modeled on Japanese
examples. Thanks to these measures, and the use of the brand name, Porsche
quickly succeeded in achieving enormous returns in just a short time. This
quickly freed up resources for developing new products.