The Evolution of Porsche's Business Model

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Porsche's business model evolved by prioritizing performance over design, enabling continuous optimization of performance features with each generation. This allowed them to focus on handling, acceleration, and interior ergonomics, leading to a durable and profitable business model. By abstracting away the design and fixing it, Porsche created a business model that was not hit-driven, as they no longer had to rely on people's preferences for a particular design. This approach also allowed them to make fixed-cost investments in technologies like the PDK transmission, spreading the costs over a larger number of automobiles. This strategy contrasts with other sports car makers who struggled to keep upgrading their models to meet market demand and make necessary investments based on predicting customer preferences.

7 Powers author Hamilton Helmer and his Strategy Capital colleague Chenyi Shi join us again to discuss their latest research on a topic that’s highly relevant to the recent Acquired canon: how to build a second business line. This incredibly important “transforming” question faces every great company who has achieved initial product success (as well as their investors). Do we continue solely along the established path, or do we attempt to grow new branches on the tree? Some companies grow new businesses with tremendous success — Amazon and AWS, Nintendo and video games, Nvidia and CUDA — yet many others fail miserably. For the first time Hamilton and Chenyi share their research-based playbook on how companies should approach this decision and choose wisely. Tune in!

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Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.