There was an interview in Sunday’s New York Times with Worfgang Porsche, the elder statesman of Porsche, about their acquiring Volkswagen.
One statement, the last in the article, was a quote from Mr. Porsche stating: “When we looked at the numbers, it made sense.” How often have botched and misadvised mergers and acquisitions begun life with those very same words?
The real question to answer has nothing to do with the numbers.
No, a more significant statement would have been, “When we looked at the company cultures, it made sense.
Compatible corporate cultures are the keys to success in M&A. Now the article goes on to state that Mr. Porsche’s grandfather designed the original Volkswagen, “the people’s car”, back in the 1930’s. There is a history. And for several years they have been cooperating in engineering and production activities.
But the two companies serve two mighty different market segments, utilizing two different approaches to marketing and the supply chain. Both brands are distinct, VW being the least expensive of the German-designed auto industry and Porsche being the most expensive. Mundane vs performance. Mass vs exclusive.
The brands, both built over time and both adhering to their corporate cores, have ingrained themselves into the conciseness of car shoppers everywhere. How will the acquisition play out in the boardrooms, in the various marketing programs, in the minds of prospective buyers?
We’ve seen the match-mismatch of Daimler-Chrysler and the divorce there-from. But we’ve also seen the success of a company handling two sets of businesses very successfully in the Toyota-Lexus tandem. Granted, there was no merger with the latter and Toyota people became Lexus. There was no culture clash even though the auto lines were successfully branded as separate entities.
My point is just this: Both the VW and the Porsche brands should by all means remain distinct from each other and from their respective competitors.
Having said that, I also believe that successful brands come from the core of a brand’s corporate culture. There must be at least enough continuity within each company for their respective cutures to survive. The minute someone suggests that a Porsche be “economized” for mass appeal, or that the VW be given Porsche-like performance, that’s when both brands begin the dilution that could risk years and years of brand-building efforts.
Diligence in guarding both brands from cross-pollution is essential.