Overlooking the Spree River in Berlin's trendy Friedrichshain district, Porsche Digital Lab workers move in and out of loosely arranged "scrums." A small team of 14 employees headed by Boris Behringer tests the feasibility of technological innovations for Porsche's business. Coaching is the philosophy here, not management, he explained during a visit, and the goal is cross-pollination with the city's thriving startup scene. Two people working at the communal tables were from one of several new mobility companies in Germany's capital.
Inspecting the premises earlier, Meschke said the lab is an incubator passing on ideas that prove promising to Koslowski's Porsche Digital Lab, which then creates concrete customer applications and business ideas.
Speed here is a necessity. Developers are told not to wait to work out all the bugs, but test possible services on the market once they are 80 percent finished. For Porsche engineers trained to not introduce an innovation until it has been fully vetted, this idea verges on blasphemy. In the digital economy, however, apps often have a shelf life of weeks.
According to Meschke, the industry has little choice but to look for growth opportunities elsewhere once self-driving cars dramatically increase vehicle utilization rates.
"Today it's 5 percent, but [soon] we will be talking over 70 percent to 80 percent efficiency," the CFO said. "That means we will need far fewer cars, so automatically the growth in vehicle sales is limited."
To compensate for the loss of volume, he said more than 30 percent of revenue in the future would have to be generated from new businesses.
"It's a wake-up call," Meschke said. "We need new ideas."
As a result, Porsche is enlisting the help of trend scouts at venture capital firms such as Israel's Magma and e-Ventures, which specialize in providing seed funds to startups before a bank would risk extending a loan. If successful, there is an option for the carmaker to acquire a strategic holding as part of an exit by its venture capital partners. One recent example was Porsche Digital's investment in a German parking solutions startup that will provide the base upon which Porsche plans to establish an ecosystem of services.
Transformations are typically that much harder to execute when a company starts from a leading position, however. German companies in particular struggle when it comes to taking risks. According to a study published in 2015 by Andreas Kuckertz, a professor at the University of Hohenheim, the tolerance for entrepreneurial failure is not only low, it is also heavily stigmatized in the country.
Yet analyst Arndt Ellinghorst of Evercore ISI says changing an entire organization requires no less: "You need to be pretty radical in the way you approach it to transform premium sportiness — everything that has defined the DNA of the brand — into something new."