Corporate Heritage in Change Initiatives

Corporate heritage is a company’s intangible legacy. It is its history. It is the sum of its employees’ stories, which reflect the company’s values and culture. Anyone planning a restructuring, a post-merger integration, a culture change, or other changes should conceptually incorporate corporate heritage from the very beginning. This is because it plays a key role in helping employees identify with their company. This, in turn, is crucial to ensure that they do not lose their loyalty to the organization during the upcoming changes or, in the case of mergers and acquisitions (M&A), quickly develop it. We have illustrated this connection using the example of the aerospace industry in Germany. Porsche AG offers a prime example of a distinct and exemplary corporate heritage. We visited the company on-site and analyze it in more detail in this blog post.

How are Porsche and Volkswagen connected?

Let’s take a brief look at history: Without realizing it, Ferdinand Porsche laid the foundation in 1934 for two of the world’s most renowned companies. That year, the young, independent engineer designed the first Volkswagen on behalf of the Reich Association of the Automotive Industry (today’s VDA) and according to specifications from Adolf Hitler. To enable the mass production of this VW Beetle, the Nazi regime built the Volkswagen plant in what is now Wolfsburg in 1938. Today, Volkswagen AG is the world’s largest automobile manufacturer. Dr. Ing. h.c. F. Porsche Aktiengesellschaft (Porsche AG for short) enjoys similar global renown. The sports car developer and manufacturer emerged in 1945 from Ferdinand Porsche’s engineering firm. That’s the brief history.

To this day, both companies remain closely linked through family ties and corporate law via the Porsche and Piëch families. For example, Porsche AG has been part of Volkswagen AG since 2009, in which Porsche Automobil Holding SE (Porsche SE for short) holds 53.3 percent of the common stock as the largest single shareholder. The CEO of Porsche AG, Dr. Oliver Blume, has also been a member of the Volkswagen AG Board of Management since 2018.

When should companies start focusing on corporate heritage?

Porsche itself proves that corporate heritage is not just a topic for companies with a long tradition. Since the 1950s – just ten to fifteen years after its founding – Porsche AG has been collecting vehicles it used, for example, to compete in motorsport events. The collection now comprises over 700 cars, including 200 motorsport vehicles. And since 1976, Porsche has been publicly exhibiting its show cars, development vehicles, and production vehicles – some of which are legendary. Since 2009, it has been doing so at the then-newly built Porsche Museum at its headquarters in Zuffenhausen. The company’s archive, which dates back to its very beginnings, is also stored there, comprising two kilometers of files and 2.5 million photos.

Today’s startups and young companies can take a cue from this timely development of Porsche’s corporate heritage. Even if they don’t yet know what purpose the documents and the stories shared on social media or in company publications might serve one day, they should preserve them carefully. Of course, it’s easier to do this if, like Porsche, you produce attractive products with global cult status. But that’s only partly true: even patents with less sex appeal, such as Arthur Fischer’s dowel or the Fraunhofer Institute’s MP3 player, have what it takes to form an identity-defining corporate heritage, an intangible corporate legacy.

Why is corporate heritage part of communication?

One thing is clear: corporate heritage is a long-term endeavor. And eventually, even startups and young companies reach the point where they must entrust the systematic curation of their intangible heritage to professional hands. These can be external partners or internal departments. At Porsche, for example, the “Heritage and Porsche Museum” (GO-H) team within the Public Relations, Press, Sustainability, and Policy department handles this area. The team has made it its mission to anchor heritage work sustainably within the corporate strategy.

“No future without roots.”

We viadoo Change Guides recommend exactly that to our clients – regardless of their size – and have always summarized this advice under the motto “No future without roots.” According to its own statement, Porsche views heritage in a multidimensional way. The company incorporates formative social, cultural, and societal influences into this and seeks to engage in dialogue on topics such as identity, respect, or cultural sensitivity, to experience other cultures, and to learn from them. For Porsche, corporate heritage is “the lived self-image of the identity of the entire company.”

What role does corporate heritage play in change initiatives?

Employee identification with their company – especially during change initiatives that are often unpopular – is a key criterion for success. Any leader who loses the loyalty of their team or the majority of the workforce at this stage might as well abandon their planned change initiative right away. Not least for this reason, we at the change consulting firm viadoo always recommend integrating collective memory and company history into the change architecture being designed. To do this, we use narrative methods such as storytelling. This also allows us to determine whether all employees have already fully processed a previous change emotionally along the change curve. And to assess their motivation and morale in order to derive recommendations for action.

What did the most recent cultural transformation at Porsche look like?

In this context, let’s take another look at Porsche and Volkswagen and their cultural transformations. In the past, both companies were strongly hierarchical, and in some cases patriarchal. The corresponding corporate culture included obedience and an unshakable belief in technical omnipotence. True to the motto “Nothing is impossible!” and a “no” was not tolerated. In such a corporate culture, the diesel scandal was able to take root, though Porsche was significantly less affected (only the diesel Cayenne) than Volkswagen.

“Stretegy 2025”: Passion, Pioneering Spirit, Sportiness, One Family

With “Strategy 2025,” Porsche then ushered in cultural change in 2018. This gave rise to the new “Porsche Code,” which defines the company’s future characteristics: Passion, Pioneering Spirit, Sportiness, One Family. Managers had to learn to break down rigid hierarchies, collaborate agilely in networks, and lead virtual teams. Digitalization and lifelong learning were also part of the new strategy. Porsche developed an online learning platform specifically for this purpose. Easy-to-understand instructional videos, online workshops, and basic and advanced training courses enable the workforce to acquire new knowledge in bite-sized chunks.

During this period, corporate heritage helped ensure that employees continued to identify with their company and remained loyal, despite the damage to its image caused by the diesel scandal and despite many changes in their personal work environment. The cultural shift is still ongoing. However, by incorporating the company’s intangible heritage into the design of the change process, this transformation is sure to succeed in the end. This approach can work just as well for startups and young companies that, for example, need to adapt their processes and structures as part of change projects due to rapid growth.

Picture: © Faust / viadoo GmbH