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80 THE PRACTICE OF INNOVATION

three small and quite marginal companies saw in this a major oppor-
tunity to innovate: Volvo, BMW, and Porsche.
Around 1960, when the automobile industry market suddenly
changed, the informed betting was heavily on the disappearance of
these three companies during the coming “shakeout.” Instead, all
three have done well and have created for themselves market niches
in which they are the leaders. They have done so through an innova-
tive strategy which, in effect, has reshaped them into different busi-
nesses. Volvo in 1965 was small, struggling and barely breaking even.
For a few critical years, it did lose large amounts of money. But Volvo
went to work reinventing itself, so to speak. It became an aggressive
worldwide marketer—especially strong in the United States—of
what one might call the “sensible” car; not very luxurious, far from
low-priced, not at all fashionable, but sturdy and radiating common
sense and “better value.” Volvo has marketed itself as the car for pro-
fessionals who do not need to demonstrate how successful they are
through the car they drive, but who value being known for their “good
judgment.”
BMW, equally marginal in 1960 if not more so, has been equally
successful, especially in countries like Italy and France. It has mar-
keted itself as the car for “young corners,” for people who want to be
taken as young but who already have attained substantial success in
their work and profession, people who want to demonstrate that they
“know the difference” and are willing to pay for it. BMW is
unashamedly a luxury car for the well-to-do, but it appeals to those
among the affluent who want to appear “nonestablishment.” Whereas
Mercedes and Cadillac are the cars for company presidents and for
heads of state, BMW is muy macho, and bills itself as the “ultimate
driving machine.”
Finally Porsche (originally a Volkswagen with extra styling) repo-
sitioned itself as the sports car, the one and only car for those who
still do not want transportation but excitement in an automobile.
But those smaller automobile manufacturers who did not
innovate and present themselves differently in what is, in
effect, a different business—those who continued their estab-
lished ways—have become casualties. The British MG, for
instance, was thirty years ago what Porsche has now become,
the sports car par excellence. It is almost extinct by now. And
where is Citroen? Thirty years ago it was the car that had the
solid innovative engineering, the sturdy construction, the