Porsche CEO Wendelin Wiedeking is leaving the company. Photo Porsche AG.
[FONT=verdana,arial,helvetica,sans-serif]Today (July 23rd), sports car manufacturer Porsche announced it is dismissing its star CEO Wendelin Wiedeking with immediate effect.
Why am I talking about this? This has nothing to do with domain names, does it? True, but although my blog may be domain centric, it is first and foremost the blog of an entrepreneur. And this Porsche story is fascinating for anyone interested in the world of business.
What has my interest so spiked? The lightning fast way in which fortunes can turn around in business. A year ago, Porsche was hailed as a modern miracle. Although a producer of niche sports cars in the premium segment, it was the most profitable carmaker in the world. Period. And yet, when Wiedeking became CEO on October 1, 1992, Porsche was on its last legs.
The miracle turnaround Wiedeking orchestrated reached its pinnacle with the attempted takeover of Volkswagen. In classic David vs Goliath style, tiny Porsche was about to buy one of the biggest automakers in the world.
Then the recession hit and it all went south. Crippled by the debt (in excess of 9 billion euros) that it had run to buy a large enough holding in VW to be able to take control, Porsche went from very top to rock bottom in a matter of weeks. Today, it looks almost certain to be bailed out by VW, set to pay off the largest portion of Porsche's debt and acquire the company in the process.
Wiedeking, considered a few years ago the auto industry's golden man, is now on the dole. Oh don't worry about him, he was the highest paid executive in the industry and he leaves Porsche with 50 millions euros in "severance pay".
But there are lessons to be learned from this. There's an obvious one that all entrepreneurs know only too well. Even when things are going extremely well, disaster may never be far away so you need to adjust your strategy to suit.
I take away a more personal lesson as well: be passionate and knowledgeable about the product you sell. It's not that Wiedeking could have anticipated the recession, but maybe just concentrating on Porsche's core business instead of becoming more trust fund than sports car maker would have helped (just before the downfall, Porsche was making more money from dealing in VW shares than it was from selling cars). No-one will be surprised to learn that Wiedeking, undoubtedly a brilliant CEO, is said to not even like cars! Therein may lie the root of Porsche's problems…[/FONT]
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