Leadership Series. A Discussion with Lamborghini s Stephan Winkelmann. Vol 4: Issue 5

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1 Boyden s presents discussions with business and thought leaders from organisations across the globe. The series focuses on topical issues that offer executives, political leaders and the media insight into current trends in business and talent management in the global marketplace. This issue features, President and CEO of Automobili Lamborghini S.p.A., headquartered in Sant Agata Bolognese, and manufacturer of some of the world s most coveted super sports cars. He discusses the future of the automobile industry, what is unique about leading a luxury brand, why Italy is the world capital of style and his approach to tough decisions. was appointed President and CEO of Automobili Lamborghini S.p.A., a subsidiary of the Volkswagen Group s Audi, in January Mr. Winkelmann, who was born in Berlin and raised in Rome served for a decade in international marketing and sales roles for Fiat Auto prior to being named CEO of Fiat Auto Austria, Switzerland and Germany. Winkelmann also worked for Mercedes- Benz and for a German financial institution prior to focusing on his passion for the automotive industry. Automobili Lamborghini s growth since Winkelmann s arrival has been recognised as one of the most successful turnaround programmes in the automotive and luxury sectors. Since taking the helm, he has implemented a business strategy based on three major pillars. First, Winkelmann s new product approach has involved significant investments in research and development, which has led Lamborghini to leadership in areas such as light engineering and the development of advanced carbon fibre technology. Second, he has led considerable expansion of the sales network to maximise market penetration, which has doubled the number of dealerships worldwide. Finally, he has launched major brand extension initiatives, including leveraging and building the value of the marquee Lamborghini brand through a line of clothing and accessories. In recognition of his development of this successful business strategy, Winkelmann was awarded the prestigious decoration of Grand Officer in the Order of Merit of The Italian Republic in Winkelmann studied Political Science in Rome, took his degree at the Ludwig Maximilians University in Munich, and spent two years in the paratroopers in Germany, leaving as a lieutenant. Boyden: What is your perspective on the current state of the auto industry, and where is the industry going? Winkelmann: I see three main drivers impacting the global automobile industry. The first and most important is the size of the total worldwide market; the second is how automobile companies and brand groups organise, and the third involves CO2 emissions issues and regulation in short, what kind of engines cars will have in the years to come. I am quite positive about the future of the automobile industry in general because historically the market recovers very quickly from downturns and there is still potential. Of course, it s clear that if you re not acting from a global perspective you will be more and more linked to regional downturns and problems that can cause disruption.

2 p. 2 The second is how automobile companies and brand groups organise. What I see is more brands bundled into groups, sharing common factors within brands and acting to get the maximum synergies out of the group platforms. Most luxury cars manufacturers belong today to large groups. Finally, there is going to be a big revolution in terms of engine evolution and adaptation. These will be huge investments that are going to change the entire car industry. Nobody knows how quickly this will happen. Electrification is going slower than everybody had initially foreseen a couple years ago, but it is clear that the trend will sooner or later lead to much more electrification. Boyden: Though these are challenging economic times, Lamborghini s Aventador is winning lots of awards and recognition. That has to be satisfying for you and the Lamborghini team. To what do you attribute its success? Winkelmann: We won 36 awards since the launch one year ago, and I think that this is because the Aventador really matches perfectly with the values of the brand. The car is completely new. It has no competitors worldwide. It really represents the Lamborghini brand in terms of performance, in terms of design, and in terms of the weight to power ratio. This is exactly what Lamborghini stands for. Boyden: What is the future for the potential Lambo SUV? Winkelmann: Lamborghini now has two model lines, Aventador and Gallardo. We are looking for a third model to help us increase marketability but in a way that will not dilute the values of the brand, which are extreme, uncompromising and Italian. We have always looked at some segments which could be interesting for us like a four-door sedan, a 2x2 coupe, or a high-end luxury SUV, and we think that the SUV is the best fit for us because there is no other luxury car manufacturer for the time being that has entered this market in Lamborghini s class. At the last Beijing Motor Show in April we presented the Lamborghini Urus, an SUV concept car with extreme performance, 600 HP, unique design, interior with carbon fibre innovations and best in class in CO2 emissions. The Urus is a very concrete idea for the future of Lamborghini as a third model line and as the perfect complement to our super sports cars. The immediate response of the media and public after the worldwide premiere has been terrific, very positive so far. There is also good geographical distribution to potential markets in the Americas, Europe, and even Asia-Pacific, and especially China. The strong fit with the brand and even the potential synergy within the Volkswagen Group in sharing an SUV platform are also compelling factors. There has been no decision taken yet on whether we do a third model, but if we do, this is clearly the direction we would go. Boyden: What has been your approach to leveraging Volkswagen/Audi family technology, while maintaining Lamborghini s unique brand and experience? Winkelmann: We limit ourselves to having no more than 10 percent common parts of the Volkswagen group or of Audi in our cars. These have to be hidden parts and they cannot be visible to the customer. To use any of these parts, there has to be an added value in terms of quality and pricing for Lamborghini.

3 p. 3 Boyden: In your company, how do you view merging the distinct Italian and German cultures? Winkelmann: Of course, we have much more than just two cultures here at the company. But it is clear that you have to get the strength out of the different cultures and let them work together. To make this work well you have to have open-minded people with a multicultural mindset even if they have roots in Italy, Germany or wherever, so that they will take a brand-focused and not a regionally focused approach. They have to love the place they re in. When we hire people this is one of the pre-conditions. Boyden: Having both German and Italian roots, what do you most enjoy from each culture? Winkelmann: From the Italian culture it s pretty easy -- it s the creativity and the passion they have, as well as flexibility. For me, on the German side, it s reliability, the level of organisation you get out of even large units, and the precision in the things they do. Boyden: Italy remains the style capital of the world. What s your perspective on how Italy has maintained its style leadership? Winkelmann: This is a very complex question. Ultimately, it is in the DNA of the Italian people and in the history and culture of the country itself. Italians love the outside of things. They are very conscious. This is something that comes before business. It s attention to those things which are essentially Italian it s inside people. It s something you grow up with. Boyden: Like many economies, Italy has been hit hard by the recession and concerns about debt. What is your view on the perceptions and misconceptions on Italy s business and economic environment? Winkelmann: This is something you may have to tell me because I am in the middle of it. I can only tell you from what I see and experience when I m outside of Italy. I think that a lot of perceptions are the right ones. There is a big problem here in the economy with taxes being too high, and a large bureaucracy that should be reviewed, and we have an influence of politics and the state which is widespread. On the other hand, the Italian population is a wealthy population, which is the opposite of many other states. In many places, the economy and the debt go hand in hand with the situation of the single household. In Italy it is very different. I think that we are in the middle of a big change. We will see if the deep cuts that Monti (Prime Minister Mario Monti) and his team are proposing are going to find positive agreement of the parties. If this happens I think it will be very good for the European Union, good for the Euro and good as a start in solving the crisis, which is linked to the debt. It s clear that we entered a deep crisis in 2008 and we never came out of it. Boyden: What s the biggest lesson you learned from the most recent economic crisis? Winkelmann: First of all I learned that it s ongoing. It s not over or even close to being finished. I also learned to always stay alert. Finally, there is no way of looking at the economy only locally. You have to have a global view.

4 p. 4 Boyden: How would you describe your leadership style? And what do most people not know about your approach to management? Winkelmann: This is a question that really should be answered by someone else, but I think I expect a lot from the people I am working with, and they know it. At the same time, I think they know that they can count on me -- that I m there, that I m reliable when collaboration or guidance is needed. That is extremely important. Boyden: What is uniquely required of a leader of a premier automotive brand, and also of a great luxury brand? Winkelmann: Usually in the automotive business, it is about maximising turnover and margins you have to only see that there is a return on investment. For a luxury car company this is very difficult because it is acting in a niche market. You cannot maximise turnover because the luxury business, combined with the car business, is not only very complex but you have a lot of front-loaded R&D time. It could take years to produce a car and then finally sell it, and you always know there is a limit to the amount of cars you are going to sell. So you have to know the automotive industry, but also know that the nature of a luxury business is always to sell less than demand. It s about creating a high image and mystique around everything you do because the brand always has to be much more than the product. Boyden: In recruitment, what do you look for in managers and your direct reports? Winkelmann: They have to be quick thinkers, and we have to have the right chemistry. I take a good look at the CV because I need to know not only who they are, for example, as a good sign-off guy, a production guy or developer. But I also need to understand which kind of company they ve worked for and what type of experience they bring. Then, I need to know that they can be nimble and work effectively in small teams. Ultimately, it is a mixture of the character of the person, their approach to immediacy and their willingness to sacrifice themselves for the company. Boyden: When taking a difficult decision, such as letting an executive go, what is your approach? Winkelmann: Usually I take time to myself so I can prepare a strategy after I run through various scenarios. Once I have made up my mind, I try to find somebody close to me to share and test my thinking with. Once I ve done these two things then I usually act very quickly. Boyden: What is the most outlandish thing you ve had to do to ensure a reluctant candidate accepted a role when he or she had hesitations? Winkelmann: The short answer is that I have never done anything outside of the normal flow of business to entice a candidate. I have worked at exciting companies and at less exciting companies, and I know from experience that if you attempt to trick people in any way at the beginning of an employment relationship, then both they and you are never going

5 p. 5 to be happy. Therefore, I am very straightforward. I am clear about everything work environment, terms and conditions, and everything else from the very first day, even if something I say means that they will decline an offer. From the outside, our jobs look shiny and glamorous. But the complexity of our global approach makes it a very complex and tough job, which can be very rewarding for the right person. But they should always know what they are getting into, so I will never paint a picture for them that is not realistic. If somebody is reluctant then I am not going to convince him or her to join us. Boyden: What is the one piece of advice you d give an aspiring manager trying to move up the ranks in these competitive times? Everyone has a starting point, and if you are there you will have to compete with people who are very much like you in many ways. You need to find the thing or things that make you stand out from them and excel. You should not have to shout out loud that you are better than the others, but you have to work hard and your results will get you noticed. We would like to thank Renato Curti of Boyden Italy for making this edition of Boyden s possible. The views and opinions expressed here do not necessarily represent the views of Boyden; only those of Mr. Winkelmann. Winkelmann: For me, it is important that you have a solid education, and this comes from home as well as the university. To be an effective manager you have to make the most of your starting point. Knowing and excelling at something so well that you stand out from your peers is only a first step.