• Where do innovations start? CREATIVE IDEAS
  • How can you discover something new? FREEDOM TO EXPERIMENT
  • How can you assert yourself in an established market? SHAPING THE FUTURE
  • How can you propagate your ideas? GRASPING VISIONS
  • How can you preserve the innovative potential of a group in the long term? TEAM EXCELLENCE
  • How do you develop innovations without external investors? ESTABLISHING PARTNERSHIPS
  • How do you make a company strong and attractive? FANS INSTEAD OF CUSTOMERS
  • How do you keep reinventing innovation? TIMELESS DESIGN
  • How do you master challenges in turbulent times? RADICAL RENEWAL
  • Where does the know-how for new ideas come from? NETWORKING INNOVATIONS
  • How do you secure the long-term success of a family business? TRUSTING OTHERS
  • How can companies survive crises? DISCOVERING STRENGTHS


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.


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.


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.


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.


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.


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.


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.


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.


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.


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.


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.


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.