It's been a really hectic month for this author. The current economic crunch is pretty much a zero sum game for most salaried workers. If you get laid off you are thrown out to the street. If you do survive the headcount slashing you end up working a lot more than your fair share, with the same remuneration or less. Anyway let's hope things will settle into a more predictable rhythm in the coming weeks.
Biggest news in the past few weeks - Wendelin Wiedeking's departure from Porsche. It is such an irony that the same man who was responsible in rescuing from near bankruptcy, pulling it away from those corporate vultures in the form of private equity funds group that were circling Porsche in the late-80s, ended up biting more than he can chew by attempting to engineer a takeover of Volkswagen. Under Wiedeking's leadership, Porsche remained the only independent sports car company in the world while at the same time became the world's most profitable car company.
I have a lot of respect for Wiedeking as the boss of a car company. Unlike the typical German boss, Wiedeking is more willing to learn from those outside his own cultural sphere. One of the cornerstone in the turning around of Porsche's fortune in the 90s is Porsche's adoption of Toyota's famed Toyota Production System in their plants and vehicle development. There aren't many German bosses who are willing to go that far in admitting the superiority of their Asian counterparts. Until today, those German boys from Stuttgart or Munich are willing to admit to the rivalry of their fellow countrymen but are quite sensitive to being compared to the senseis from Nagoya (think Lexus). However I need to stress that this is not a criticism directed particularly to the German race. Japanese bosses too, expect to be treated like they are of a superior race and that they have nothing else to learn from others, especially when dealing with their less developed Asian neighbours. The issue is more about pride and ego rather than ethnicity.
Wiedeking showed that he is not one who is bounded by the typical "Zis is how wee do it" German superiority when he recognised the chronic inefficiency of Porsche's plants and the lack of commonality amongst 80s era developed Porsche models, he sent his engineers to Japan to learn from TPS trainers and hired consultants from Toyota to retool Porsche's factories and rationalise their new model development.
When he pushed hard to have the Cayenne SUV approved by Porsche's board, I have to admit that even I myself was skeptical. An SUV Porsche? Won't that be detrimental to the brand? Today, the sales figures speak for themselves as nearly half of Porsche's total sales are contributed by the Cayenne. Sure the minority purist Porsche-philes may moan and cry, but the reality is that without money from models like Cayenne and Boxster, and now the Panamera, Porsche can never hope to continue developing its iconic 911.
Wiedeking said this in an interview with Businessweek some years back.
Q: A lot of auto makers are seeking to stretch their brands, such as Volkswagen with the upmarket Phaeton, or BMW going downstream with the 1 Series. How does one successfully manage the risk of stretching the brand or moving into new product sectors that don't fit the company's brand image?
A: You have to make sure every decision to go into a new segment isn't destroying the brand image -- that's the core of the company's future potential. A lot of big players are going into new segments -- it's not easy to get right. It's especially difficult. You can try to find out what the market wants through a lot of surveys around the globe. But on the other hand, you have to have the management skills in the organization. People who know the brand and make decisions. At the end of the process, only a few people make the final decision.
From his answers, I take it as he is a very rare breed of managers who are able to read between / beyond market research data. Mediocre managers make decisions by completely relying on hard data, using it as a crutch for poor decision making skills rather than as a support to guide business decisions. Good managers have a very instinctive understanding of their customers and their brand and able to read beyond the numbers. Hard data is only as good as the one who reads them.
Models like Cayenne, Boxster-Cayman and Panamera were very risky decisions made by Wiedeking that paid of huge returns. Now that Porsche is part of the greater VW, it is unlikely that we will continue to see the sort of controversial management decisions being made. Wiedeking is an unconventional manager. Businessweek calls him is loud, outspoken and boorish, while successor Michael Macht is described clean-shaven, sophisticated and quiet. Macht is an equally talented manager, he was after all Wiedeking's right hand man, but he is not the sort of fighter Wiedeking was and is unlikely to do anything that will cross VW's supremo Ferdinand Piech and the rest of VW's executive supervisory board. Independence was something fiercely defended by Wiedeking when he was Porsche's CEO, specifically because of these reasons. At the moment, Macht is seen as a very capable technocrat whom VW will trust completely in keeping the financial wheels of Porsche oiled and turning. But he is not the same kind of visionary like Wiedeking, and it was a visionary like Wiedeking who transformed Porsche into what it is today - the world's most successful sports car maker.
Michael Macht.
The above is just my opinion. I also came across a very interesting editorial by the editor of Automobilwoche, a German auto industry publication.
Porsche must be like Audi. By Guido Reinking, editor of Automobilwoche
For not a few Porsche drivers, the thought of owning a car from Volkswagen is a frightening one.
Being a small, independent automaker has been as much a part of the brand's image in the Wiedeking era as the six-cylinder boxer engine, the sound of a Porsche turbo, and the ignition keys on the left side of the steering column.
It's being the David who shows the Goliaths of the world what he can do.
That's all over. Gone. History. From now on, David is working in Goliath's sports car department.
That's one more result of Wendelin Wiedeking's and Holger Haerter's strategy: They turned an ailing sports car company into the world's most profitable automaker and then drove it to the edge of the abyss with their attempt to acquire VW.
At the end, Porsche found itself precisely back where Wiedeking found it in 1992: caught in a trap, floundering helplessly, dependant on outside help.
Seventeen years ago, the rescue succeeded under its own power. In 2009, however, Wiedeking gambled away all the company's independence. Anyone who finds Wiedeking's and Haerter's departure unjust should bear that in mind.
What is to become of Porsche? The brand's fans shouldn't grieve for it.
Audi's example reveals the success that is possible under the VW roof. The Ingolstadt automaker is now overtaking BMW and Mercedes. It has become the most desirable brand in the premium segment.
Porsche must do what Audi has been doing: Defend its independence where the essence of its brand requires, but seek cooperation everywhere that makes sense operationally.
The appointment of Michael Macht as Wiedeking's successor should not be overlooked as a signal that VW and Ferdinand Piëch, its supervisory board chief, really don't want to bypass Porsche's management.
From his position on the Porsche supervisory board, Piëch could have propelled a close associate to the company's top job.
Instead, a dyed-in-the-wool Porsche exec was named. He was even part of Wiedeking's inner circle. The signal is clear: Porsche will stay Porsche, and it won't be just an extension of VW operations. If there is anything that Wolfsburg doesn't need right now, it's a candidate for restructuring.
The auto industry is still mired in the most difficult crisis of its history. Weak demand and high development costs will continue to burden VW's cash reserves for a long time.
Even at this early stage, that's the reason VW needs a strong subsidiary in Stuttgart. One like Audi.
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