You can learn a lot by watching smart people in giant organizations wrestle with the most profound changes to hit their business in 50 years. That's exactly what's happening today in the auto industry. In just a few short years, the Web has become an indispensable part of daily life for tens of millions of people around the world. It has reshaped the logic of countless industries, from personal computing to travel. But within the next few years, the Web is expected to make its greatest impact yet. That's because one of the most powerful and most important industries on the planet — the design, assembly, and sale of automobiles — is finally ready to get with the digital program.
Lee Sage, 50, global leader of the automotive-industry consulting practice at Ernst & Young LLP, the world's leading consultant to auto companies, puts it this way: "The Internet is going to have as much of an impact on the automobile industry as Henry Ford's mass-merchandising and production methods did in the 1920s."
The digitally driven transformation of the automobile business is a fascinating story in itself. But what makes it truly compelling is that the lessons being learned in Detroit, Tokyo, and Wolfsburg are relevant to people making Web-driven change in virtually every industry. Put simply, the Web has become the most potent laboratory for business experimentation ever devised; the auto industry, meanwhile, is where many of the most high-stakes experiments are now being conducted.
Thor Ibsen, chief (and first) Internet activist at Ford, is leading an all-out campaign to change the game at the company. "We want to use the Internet to give consumers total choice, whether that means finding the vehicle they want — new or used — on a dealer's lot, on the way to a dealer's lot, or in production at one of our many factories, or specifying exactly what they want and having us build it. Our vision is one of total choice. Our job is to help bring that total-choice model to market."
Peter Dames, whose electronic-commerce strategy team practices a sort of intellectual viral marketing to win Web converts at Toyota, offers this glimpse of the future: "We use the Internet as an enabling technology to sell community, collaboration, loyalty, time to market, and better information delivered sooner. We have to convince the rest of the company that those things have an impact on everything else — our budget, our strategy, our margins. Half the work we do here is evangelizing."
The Volkswagen Group also doesn't deny the importance of the Net. Indeed, Volkswagen built one of the first auto Web sites to offer owners an online community in which they could swap opinions and spare parts. But the company is putting more of its resources behind strengthening its relationships with customers. In June, VW will open the gates to Autostadt, a nearly $500 million theme park next to its headquarters in Wolfsburg, Germany. Here, customers will be able to take delivery of new cars — or simply stroll the grounds, watch 360-degree films, and experience high-intensity driving simulations. The focus is on "high touch" rather than high tech. "In the past, Volkswagen sold four wheels and an engine," says Jack Rouse, an American theme-park designer who has played a leadership role in the German project. "With Autostadt, the company wants us to bring emotion to the customer. We bring customers to Wolfsburg, where they can see the source of their cars and make the link between the product and themselves."
What follows, then, are three profiles of cutting-edge reinvention set in one of the world's most powerful industries. The profiles are rich with ideas and practices for rethinking strategy, winning converts, and making change.
Have You Reinvented a Ford Lately?
"Okay, folks, this is the lightning round. Hands on your buzzers," says Bill Frykman, a 32-year-old new-business-development manager at Ford Motor Co.'s Consumer Connect Group. He's leading this Monday morning's meeting in Detroit. "Let's go clockwise. Ron, you wanna start?"
"We've got 1,700 dealerships out of 5,000 with sites now, linked to ford.com," announces Ron Merbler, 38, strategy manager for the Consumer Connect Group. "We're adding 100 a day."
All 14 heads in conference room 6N-478 turn to the person who's sitting in the next seat down the table. "We'll soon be announcing our partnership with a major Internet portal," says David Sanabria, 33, new-business-development manager.
"The prototype of the build-to-order system is on track," adds Tom Cornellier, 36, the Internet retail-strategy manager. "We're getting ready to do a test of the live inventory feature with our Lincoln-Mercury dealers in Atlanta."
And on it goes. The weekly meeting of the eConsumer Group, formerly called the Internet and New Media team, runs a brisk 90 minutes, from 8 am to 9:30 am. Every minute is explicitly allocated to issues like acquiring new domain names and looking for a place in Europe to host an additional ford.com server. The lightning round is supposed to take place from 9:10 am to 9:29 am, and Frykman, a recent addition to the team, is sticking to the schedule. Nearly everyone in the room is wearing an item of blue clothing, some with Ford logos; from the looks of things, it could be school-spirit day. And though most Internet groups inside big companies operate with a measure of unrestraint — not unlike punk-rock bands making an appearance at Radio City Music Hall — this group operates with the precision of a marching corps.
"We want to be a disciplined organization," Cornellier explains after the meeting, sitting in his cubicle in one of the two orderly rows that house most of the team. "We want to keep moving fast, but as we grow, it's important that we don't lose discipline. It doesn't win us much respect inside Ford if we're running amok."
Inside Ford, the automaker that makes 5 of the 10 best-selling vehicles in the United States and earns an estimated $150 billion in annual sales, the eConsumer Group has discovered that discipline and efficiency enable it to take giant steps into the future — including some that are jarring for the company in the short term. But those giant steps, like adding new applications to the ford.com site or forging alliances with companies like Microsoft, compel managers throughout the 345,000-employee company to wrestle with the central issues of Ford's role in the Internet economy. "A big part of what we do," says Cornellier, a 14-year veteran of Ford, "is to force issues to the top. The stuff we develop and the deals we sign force conversations that may not be comfortable. What's the role of the dealer? How can we build to order in a timely way? Should our divisions be autonomous on the Net, or should we move to develop a consolidated strategy?"
The guiding vision for the eConsumer Group, which falls under the auspices of the larger Consumer Connect Group, is to become the first automobile manufacturer capable of replicating (or approximating) the build-to-order business model that rocketed Dell Computer to the forefront of the PC industry. It strives to emulate Dell in spirit, even though building a vehicle to order is something that the company will do only if the specific car or truck doesn't already exist somewhere in the factory-to-dealer channel. Lead times in auto manufacturing are simply too long to do build-to-order service for every customer.
To encourage a build-to-order framework and to ensure that Ford has a commanding online presence, the Internet team must coordinate the efforts of technology and marketing employees not just within Ford but at all the newer additions to the Ford family — brands such as Jaguar, Volvo, Mazda, and Aston Martin. Ibsen's group is supposed to serve as a central support resource for all of the brands. But from the beginning, the brands chafed at any interference from Ibsen's crew. "Their feeling was that they were so unique, and that anything that was good for the parent company was bad for their individual identity," says Sanabria. Even as of last fall, the Aston Martin site, for example, made no mention of Ford's stake in the company.
"We understand what it takes to turn a large ship," says Ibsen, 43, who spearheads the Internet effort at Ford. "It's a huge challenge." But that's where Ibsen's giant-steps strategy comes into play. He's wasted no time in establishing himself as Ford's Internet thought leader. A native of Iceland, he started at the company in 1996 after earning his MBA from the University of Texas at Austin. For about a year, he worked on a project to help Ford dealers reengineer their sales and service processes. In 1997, he became the first Ford employee to be assigned full-time to marketing and sales strategies on the Internet. The next year, Ibsen began building the Internet and new-media team, and shortly thereafter started launching applications that let buyers find nearby dealers, get price quotes on any package of options, get financing approval in as little as one hour, and browse used-vehicle inventories. Three years after joining Ford, Ibsen was promoted to VP of the eConsumer Group. "I've never seen a career track like it before," says Cornellier. "But I've never met anyone like Thor before."
On a shelf behind Ibsen's desk is a "Mighty Thor" action figure that was given to him as a gift, complete with a tiny plastic hammer. The real-life Thor has no patience for organizational strictures and boundaries, and it's not hard to imagine him swinging away at them with a hammer. He tries to avoid scheduling formal meetings with high-level Ford execs because, he says, "you get on their calendar two or three weeks from the time you schedule the meeting, and by then, either you can't remember what you wanted to talk about, or it has become irrelevant." Instead, he simply drops by or tries to catch them in the hall. Or he calls them on their cell-phones. "I found out where Jim's soft spot is," Ibsen says, speaking of Jim Schroer, VP for global marketing. Schroer is one of Ibsen's staunchest supporters: "I call him in his car on his way home. He's out of all the noise, and we can have a substantial conversation."
People who work for Ibsen know that he expects the same kind of no-holds-barred communication from them. "He is the furthest thing from a micromanager that you could imagine," says Frykman. "If he finds out that you waited for him to make a decision, he tells you never to do it again."
Ibsen explains his management style this way: "The only way we can keep so many balls in the air is to have a lot of jugglers and to trust them — not always checking to see whether they're juggling in the right way. Once we establish a common vision and a shared purpose, I don't want to know what my team members are doing day to day. I trust them."
Ibsen believes that his approach frees up the team to take giant steps. Like partnering with the women's site iVillage.com to let that Web site's users collaboratively design a Mercury Villager minivan, which was shown at last year's convention of the Specialty Equipment Marketing Association. Or enlisting the "godfather of techno music," Detroit's Derrick May, to write a soundtrack for the ford.com site.
This year, the pace will quicken further. The Internet group plans to roll out something called ePrice, which instead of only offering car customers the manufacturer's suggested retail price will also reveal the average price paid in their local market, which is usually lower. A project with Ford of Canada will test most of the key elements of the company's build-to-order system with consumers, and Ford will begin using a Web site that lets businesses and other large customers configure their fleet orders. In North America alone, Ford has 60,000 fleet customers that collectively generate $28 billion in revenue a year. "If we could put 60% of that online, we'd be exceeding what Dell does," Ibsen muses.
Those numbers, along with the marquee partnerships that the Internet team has established, are forcing Ford and its divisions to pay attention. "While senior executives here were having difficulty hitting the 'reply' button on their email, Thor built this whole team," says Jim Schroer, 48, one of Ibsen's executive sponsors. "They didn't know what couldn't be done, and they were too naive to know what needed approval. The secret was, Let 'em run, and make sure that none of the organization's white blood cells got in the way."
Now, Schroer says, the momentum that the Internet team has generated is impossible to ignore. "We have an enormous opportunity as the industry shifts to e-business. The power goes to consumers. They'll have all the information they want. They'll know pricing, terms, margins — it all will be out there on the Web. We understand that, in part, thanks to Thor's work. And we intend to lead the industry in e-business."
The Internet team's quick pace is also encouraging Ford's newer brands to get on board. Ford.com is a major source of traffic to Web sites of its divisions, such as Mazda and Jaguar, reports Jamie Allison, Internet marketing manager for the Consumer Connect Group. That's hard to ignore, as are partnerships with Internet heavy hitters like Microsoft. Within Ford, an Online Partners Forum meets weekly to hear pitches from potential Web partners.
As the Internet effort grows at Ford, there is a need, of which Ibsen is acutely aware, to continue pushing into new areas, at whatever risk to the status quo. "The reason we had leverage from the beginning was that we were working in a new, unfamiliar dimension," he says. "We have to keep operating outside of this organization's comfort zone." He acknowledges that this won't be easy to do in a company of Ford's size. "It's a difficult challenge. But for somebody who thrives on challenge, you couldn't find a better zone to work in."
Toyota Creates the Ultimate SneakerNet
The four members of the electronic-commerce strategy team at Toyota Motor Sales USA Inc. don't mind being a hub of activity. Their shared office, on the first floor of Toyota's IT building in Torrance, California (headquarters of the Japanese company's U.S. sales and marketing arm), has windows on three sides. Colleagues heading to or from the parking lot knock on the glass and wave hello; engineers visiting from Japan pop their heads into "the Lab" to see what the team is working on; executives from Toyota divisions around the world stop by to surf the Web on a giant, 50-inch Sony plasma screen. The only part of the IT building that could rival the Lab for popularity is the corner that houses the soda and candy machines — but you can't become entranced by techno music there.
Peter Dames, the 32-year-old leader of the e-commerce team at Toyota Motor Sales and a 9-year veteran of the company, is like a Zen mutineer. His head is shaved and slightly stubbly. His eyes are intense. And he doesn't waste words. Despite the unwritten shirt-and-tie dress code on the Toyota campus, those on Dames's team wear jeans and suede sneakers. He swapped the team's old plasma screen for the prime office space — even though they didn't own it (it was on loan from Sony, as is the new one). Without asking permission from anyone, team members designed their own business cards, which are much edgier than the standard-issue red, black, and white Toyota cards. On the back, they sport slogans like "better to shoot yourself in the foot, than have a competitor shoot you in the head."
There's a reason Dames wants his team's rebelliousness to be visible within Toyota: His top priority is to show the rest of the organization that the Internet economy doesn't favor companies that revere tradition, adhere to familiar processes, and play by decades-old rules. That's a tall order at the proud and history-rich Toyota, founded in 1918 — even more so because the company, which earns $100 billion in annual revenues, is already comfortably profitable. "Every month is a new record in sales," says Dames. "We can't build enough cars. So one of our biggest challenges is to create a sense of urgency around e-commerce."
What's a bit strange about the existence of Toyota's electronic-commerce strategy team is that no one can remember who gave it permission to exist. Certainly, no one granted it any formal authority or influence over Toyota's Internet strategy. Yet Dames's crew has been instrumental in setting the direction for the parent company — globally and for the U.S. marketing arm, which accounts for about a third of global sales, as well as for operations in other countries where Toyota sells cars and trucks. The team practices intellectual "viral marketing": promoting the spread of ideas through casual conversations in the Lab and in the hallways; making presentations at company off-sites; having random encounters with high-level execs; and hosting something called a "sneaker meeting," a condensed dose of information about Internet culture, along with scenarios about how Toyota fits in.
Dames started at the company in 1990, right after graduating from UCLA with a degree in Japanese studies. He's fluent in the language and lays claim to being part of the first wave of Americans hired by the company to work at its Tokyo headquarters. Working in Toyota's North American sales-and-marketing division, Dames immersed himself in the company's culture, learning its nuances and boundaries. He brought the first Windows 3.1 laptop into Toyota Japan, for example, and remembers the 26 stamps of approval it required before he could use it on the corporate network. With his own 14.4-kb modem, he became one of the first staffers in the office to gain Internet access. Back then, executives would gather around his desk to look at Web sites.
In mid-1996, Dames returned to his native California, planning to get his MBA from UCLA's Anderson School of Management, but Toyota Motor Sales derailed his plan by offering him a short-term job that turned permanent in the technology department. He was surprised by the lack of Net savvy. "Very few people had Web access," he remembers. "We didn't have an intranet at a time when most large companies were starting to get with it."
In December 1996, when Toyota Motor Sales hired former MicroAge Inc. CIO Barbra Cooper as its own chief information officer, Dames was curious to see whether an outsider like Cooper might support his desire to get Toyota up to speed with e-commerce and the Web. While everyone in the it group was slightly wary of the new exec, Dames seized the opportunity to introduce himself.
"On my first day here," recalls Cooper, "Peter knocks on the door, pokes his head in, and asks, 'Do you have an open-door policy?' " Cooper's office is an orderly, serene place, with a massive mahogany desk and soft classical music playing in the background. Even now, Dames's entrance — with his jeans, dark pullover, and green Simple sneakers — seems to destabilize the place. But Cooper instantly identified Dames as an ally, and his directness won her trust. "This was a very traditional culture," Cooper explains. "The IT organization was one of the most formal I'd seen, and the people here seemed like they'd been isolated for a long time. I saw that we needed to reinvent the IT organization and to educate the business side about the importance of e-commerce."
To lead the e-commerce charge, Cooper knew she needed someone who wasn't content with the status quo but who "could break the rules while keeping our business goals and strategy in mind." Dames convinced her that he was that person. "I had enough confidence in Peter and his team that I could stay away," Cooper says. "As it turned out, they operate best in a manager-free zone. Peter reports to whomever he needs to. You could say that he reports to the CEO, because when he needs to talk to him, he calls him up. He's got the combination of personality, experience, and attitude that makes me comfortable with that. He understands that the mission isn't to deny the executive body, or to go around it, but to bring it along."
Working with two colleagues, Gen Kanai and Richard Kanno, Dames began laying the groundwork for a corporate intranet that would eventually be called Toyota Vision. The mantra throughout the project was "build it simple, get people using it, then start tackling the heavy-duty stuff" — like scheduling travel and ordering office supplies online. But Dames was determined to include some e-commerce features early, because he felt that one of the team's most important goals was to get fellow employees to engage in online transactions; how else could they help shape, execute, and support Toyota's e-commerce strategy?
So before long, in addition to seeing a running tally on Toyota Vision of how many Sienna minivans had been sold in North America, employees could see what books were recommended by Yoshi Ishizaka, president of Toyota Motor Sales at the time, and then go ahead and buy them from barnesandnoble.com. They could also buy discounted PCs from Dell through the site, order replacement parts for their own Toyota vehicles, or buy what Dames wryly refers to as "trinkets and trash" — Toyota-branded hats, golf shirts, and mugs. Employees could also enter their "resource-commitment requests" digitally — requests for work from another department within Toyota.
"The goal was just to get people comfortable with doing transactions over the Net," says Dames, who regards Toyota Vision as a success, albeit a continually evolving one. "Before long, we started hearing about executives buying books online and teaching their secretaries how to buy books online. We got a call from one department asking if we could put its business-card request form up there." But the intranet project, which CIO Cooper regards as a "proof-of-concept that showed that we could move quickly and deliver quickly," was also an educational experience for Dames's team. "For us, doing the e-commerce parts of Toyota Vision has been useful for learning about security protocols, structuring deals with barnesandnoble.com and Dell, and setting up a storefront," he says.
Still, Dames and his team felt that Toyota's top management was still apprehensive about e-commerce. Why? "Our executives associated e-commerce with selling cars directly to consumers online," he says. They felt that would jeopardize the company's strong dealer relationships, not to mention violate franchise laws in the United States. Dames decided his team needed to help frame the discussion about e-commerce. "We said, 'Let's focus on business-to-business, not business-to-consumer. Business-to-business is the much bigger piece, anyway.' "
Dames knew that the most compelling near-term benefits for Toyota involved digitizing its interactions with suppliers, distributors, dealers, business partners, and even far-flung parts of the Toyota enterprise. That's how the "sneaker meeting" was born. The goal isn't just to get attendees thinking about business-to-business e-commerce but to plunge them into Web culture, and, ideally, to spark some ideas about how Toyota can take advantage of the medium. The e-commerce team invited Ishizaka, then president of Toyota Motor Sales, to the first sneaker meeting in November 1998. That simple invitation violated a deeply ingrained cultural practice at Toyota: nemawashi. Nemawashi means that when you have an idea, you present it to your manager, and if he thinks it's a good idea, he presents it to his manager, and so on, up the organizational chart. Often, ideas get smothered or warped beyond recognition by the time they get to the upper echelons of the company. "We did reverse-nemawashi," says Dames. "We called the president's office and said, 'Can we get an hour with him?' And they said, 'Sure.' "
"We had a lot of issues we wanted to bring to his attention," says Johanna Buurman, 29, the e-commerce team's chief thinker (members of the team invented their own titles for their new business cards; Dames's is "chief dreamer"). "Usually, people are hesitant to go to senior executives without an answer or a fully thought-out plan. But it didn't stop us. Afterwards, the president urged us to talk to the rest of the top executives and take them through the same discussion, the same experience." Once the e-commerce team could boast about conducting sneaker meetings with senior management of the U.S. operation, people at all levels of the company began clamoring for invitations. "We've done hundreds of sneaker meetings by now, with people at Toyota Australia and Toyota Europe, engineers in Japan, dealers, the company's chairman, the board, the CFO — everyone," says Buurman.
Most of the sneaker meetings are held in the Lab, with its floor-to-ceiling whiteboards and informal atmosphere. One section of wall is papered with newspaper clippings about the digital future, "Dawn of the Online Icebox" and "A Computer Chip in Every Shirt Collar?" among them. There's no conference table, just a random smattering of chairs. "The presentation isn't portable," explains Dames — most of it exists only on the whiteboards in the Lab. Barbra Cooper observes, "The difference is amazing when you break down the rituals of PowerPoint presentations in the boardroom. They're having a totally different communication experience. It's the fastest way to educate, build awareness, and get Toyota executives to move in the right direction."
The sneaker meeting has no script and only the loosest agenda. Dames, Buurman, and Kanai alternately stand at the front of the room or sit on nearby tables, interrupting one another every few sentences. The scenario feels something like a fifth-grade class project, but the unpredictability of it makes it impossible for participants to zone out. A centerpiece of the meeting is the iceberg diagram, basically a triangle on the whiteboard, with a horizontal line that intersects it a third of the way down from the apex. "Business-to-consumer commerce is only the tip of the iceberg," says Kanai, 26. "Business-to-business commerce is all this stuff below the waterline. Intranets, extranets, connecting dealers, suppliers, affiliates. It's about taking every business process and doing it electronically."
When an attendee asks a question about the technological implications of using the Net to communicate with distributors, Dames is quick to answer. "We've been involved with every major Internet initiative at the company, and technology has never been the problem," he says. Kanai picks up the response. "It's always been about getting people to work differently and redefining business processes. That's the toughest nut to crack."
The sneaker meeting pushes the e-commerce team's agenda of creating global business-to-business and business-to-consumer portals (something they're working on with other groups at Toyota Japan), and it ends by sketching out the team's long-term vision of "the networked person."
"Manufacturers are putting the Web into refrigerators," says Dames, pointing to one of the clippings on the wall. "Qualcomm Inc. has just come out with the pdQ Smartphone, which combines a PalmPilot and a cell-phone." "Why not have the Net in the car?" Kanai cuts in. "Engineers already put global-positioning systems in the car, or diagnostic computers. Now, they're starting to think about two-way communications." Several of the attendees have quizzical looks on their faces. Richard Kanno, 30, chief artist (and the quietest member of the team), sits down in front of the plasma screen, dons a headset, and begins to demonstrate My Car Universe.
My Car Universe, a prototype 3-D Web site, began last year as Project Revelation, a partnership between Toyota, Intel, Hewlett-Packard, Compaq, and Spike Australia, a design agency. "Project Revelation was like an auto-industry clay model," says Buurman, a native of the Netherlands who commands tremendous respect from her teammates, in part because she put herself through business school by driving an 18-wheeler. "It helps you envision the future, and like a clay model, you can reshape it as you go, or break it up when you're done with it." Project Revelation was completed in just two months, and My Car Universe debuted in February 1999, at the launch of Intel's Pentium III processor.
Kanno boots up My Car Universe, and the computer starts talking, informing him that his brake pads are low. It asks if he wants to book service now at his Toyota dealership; he says he will book it later. In another demo, the car notifies him that concert tickets for a band that he likes are going on sale, offers to plan a route to buy tickets, informs him that he'll need gas, and shows him where he can fill up along the way. Yet another module can broadcast a range of security messages to a pager or PalmPilot, notifying the owner that someone is lifting the door handle repeatedly, for example. Ideas on the drawing board include real-time traffic data and an MP3-based jukebox.
"It's obvious to us that all these things are going to happen," Kanai says, after the sneaker meeting is over. "We're trying to make sure others in the company think it's obvious too. The challenges here are cheerleading, rallying, educating."
It's hard work, Kanai admits, "feeling like you have to drag a big company into the Internet Age." At any given time, the group consults on several projects and presents at an unending series of company meetings and off-sites. And the group will sometimes invite itself along, as when the parent company was planning a meeting in Japan to articulate a global Web strategy. "We went to Japan because the United States knows more about the Web," Dames says matter-of-factly. "It was important for us to be there." That kind of chutzpah wouldn't work for just anybody in the organization. "Personal relationships are really important," Kanai says. Buurman agrees: "You've gotta have angels."
Early signs indicate that the team's efforts are paying off. After My Car Universe debuted, Toyota execs began talking about the possibilities of Internet technology in their vehicles. Last summer, the company's scattered Web groups were organized into a single Office of the Web, reporting up to a senior vice president and board member; the electronic-commerce strategy team became the Innovations Team, the only one of five teams in the Office of the Web with global sway. (Dames & Co. kept their unorthodox titles.) And the company has abandoned its fearful stance on e-commerce; talk to anyone at Toyota today, and you'll hear that e-commerce doesn't necessarily mean selling cars directly to consumers — the more significant piece is business-to-business.
"The rest of the company used to be Internet skeptics, and now, for the most part, they're believers," Dames says. "But we're not looking for a pat on the back. The thing that makes us happy now is hearing the things that we've been whispering in people's ears all this time circle back to us."
Volkswagen Gets Physical (and Emotional)
Jack Rouse is navigating a muddy construction site in Wolfsburg, Germany, trying to spare his ostrich-skin cowboy boots serious damage. The 62-acre patch of land is swarming with cement trucks, forklifts, and front-end loaders that lurch forward without warning. Workers in red coveralls scurry around building scaffolds. Cranes are putting the finishing touches on a pair of 20-story cylindrical glass towers that will eventually hold 400 cars each. The future home of Autostadt, the Volkswagen Group's automotive theme park and new-car pickup center, is about as far from virtual reality as you can get.
"You can already use a computer and double-click to shop for cars," says Rouse, 60, ceo of Jack Rouse Associates. His Cincinnati firm has done theme-park design for clients like Universal Studios, Six Flags, and Legoland Windsor. "What companies are finding they have to do is create experiences that simply can't ever be replicated on the Net—showrooms, tours, theme parks." For the Volkswagen Group—which includes not just the Volkswagen marque but also Audi, Bentley, Bugatti, Lamborghini, Rolls-Royce, Seat in Spain, Skoda in Czechoslovakia, and a line of trucks—"there is a mythology behind these brands. The goal with Autostadt is to emphasize that mythology—the emotional connection that can really affect purchase decisions and loyalty."
The scale of the Autostadt project is impressive, even when viewed against the backdrop of Volkswagenwerk Wolfsburg, the sprawling brick factory complex that the automaker describes as the world's largest single-site car-manufacturing facility. Approximately 800 construction workers are toiling at the Auto City, which Volkswagen expects will attract more than a million visitors a year after it opens in June.
The company will spend about $500 million to erect 12 buildings, including a 174-room Ritz-Carlton hotel in the shadow of the smokestack-topped plant that generates power for the factories. The juxtaposition couldn't be more telling. The 20th-century Volkswagen manufacturing colossus is sharing a stage with the 21st-century Volkswagen, purveyor of fine service, compelling experiences, and, of course, high-quality cars. By inviting customers onto its home turf to pick up new cars—or simply to while away an afternoon strolling the landscaped grounds and thrilling to driving simulations— Volkswagen thinks it can make that link between corporation and customer stronger than any Web site ever could.
The town of Wolfsburg, about 100 miles west of Berlin, hardly existed before the Volkswagen factory was built in 1938, under Adolf Hitler's regime. Hitler helped Ferdinand Porsche, the legendary car designer regarded as the father of Volkswagen, launch the factory with the production of the populist Kraft-durch-Freude Wagen ("strength-through-joy car"), but only 200 of the cars were produced before World War II started, and the factory turned to producing things like personnel carriers and amphibious vehicles. During the war, more than two-thirds of the production facilities at Wolfsburg were destroyed. Unfortunately, the Autostadt project adheres to the Disney doctrine of avoiding history's darker moments, and it won't address Volkswagen's wartime saga.
Volkswagen spent several years rebuilding after the war and soon started producing the first generation of Beetles. The car came to America in 1949, and by 1972, Beetles surpassed Ford's Model T as the car with the longest production run. Throughout the 1960s, many American students traveling through Europe would stop in Wolfsburg, buy a Beetle, drive it around the Continent, and then have it shipped back to the United States; Jack Rouse did it before he started college. But as the Beetle fell from favor in the late 1970s, the tradition ended, and only Volkswagen employees could pick up their new cars at the factory.
In part, the Autostadt project was born of civic pride. Wolfsburg has always been regarded as a charmless industrial town—the only true landmark is a 14th-century castle on a hill—and Volkswagen, to coincide with the Expo 2000 World's Fair in nearby Hannover, wanted to create a draw for tourists. "The idea was born in late 1995, to make the region more attractive, as part of the reunification of Germany and the reinstatement of Berlin as the nation's capital," explains Otto Ferdinand Wachs, 42, the Volkswagen executive in charge of Autostadt. But the company is also seeking ways to "strengthen the relationship between the auto producer and the final customer," according to Wachs, a regal-looking former public- relations executive at the company who favors shirts with French cuffs. "It will be a unique mixture of communication, product information, and fun—fun is one of our biggest factors."
Inside the completed office building that will eventually serve as Autostadt's administration and support building, Rouse and Wachs stand over a seven-by-eight-foot architectural model of Autostadt, populated by tiny plastic people who cross bridges stretching over bright-turquoise water. "There's nothing magical about going to a car dealership," says Rouse, a Montana native who taught opera and musical theater before getting into the theme-park business in the early 1970s. "This will have a much more emotional context. This is Bethlehem. This is Mecca. This is where the cars come from."
Although those kinds of pronouncements may seem a tad overheated to the uninitiated, true Volkswagen fans have always regarded a visit to Wolfsburg as something of a pilgrimage. Wachs says that group tours of the factory are typically filled up six months ahead of time, and the pre-Autostadt Volkswagen museum is a popular stop. Autostadt will play to that audience while also seeking ways to recruit new Volkswagen enthusiasts.
The formal planning for Autostadt began in the spring of 1996, and construction started in May 1998. By the fall of last year, the pedestrian bridge from the Wolfsburg train station over the Mittelland Canal was nearly complete, leading to the Piazza, the main entrance to Autostadt. Workers were installing tall, transparent, winglike panels that would let the Piazza be open to the elements on temperate days and closed off from them otherwise. The high ceilings gave the Piazza a hangarlike feeling. "Everything's designed to be open and welcoming," Rouse explains.
Near the Piazza is the new home of the car museum, which will include Fords, bmws, and Mercedes-Benzes, in addition to vintage vehicles made by the Volkswagen Group. Between the museum and the delivery center, at the far end of the property—marked by those two glass cylinders—is a series of pavilions dedicated to the various Volkswagen brands. "These aren't car showrooms," Wachs says. "They're more like embassies, and they'll all be very different. The feeling of Skoda in Czechoslovakia is different from Bentley in Great Britain. When you go to the Bentley building, you'll be able to see, hear, and smell the British countryside."
Elsewhere, visitors will be able to try driving simulators; take part in interactive exhibits that, for example, reproduce the experience of cruising down California's oceanside Highway 1; and watch movies in Europe's first high-definition 360-degree cinema. Rouse says the average visitor will spend four to six hours at Autostadt. Wachs expects that about half of the visitors will come as casual guests, and the other half will take delivery of a new Volkswagen. (Other makes won't be available for pickup in Wolfsburg; Audi, though, has its own pickup center in Ingolstadt, Germany, designed by the same architects working on Autostadt.)
At the far eastern end of the park is the CustomerCenter. Even with raw concrete floors, the building has a palatial feel, with a wide, shallow set of stairs leading up to the main level. This is where Volkswagen buyers will pick up their fresh-from-the-factory cars, as many as a thousand a day. The cars will be stored, like gum balls, in two glass cylinders that will appear to float atop a pond nearby. A system of underground tunnels and conveyors will transport the cars from the glass towers to the CustomerCenter, where Volkswagen employees, trained in customer service through a partnership with the Ritz-Carlton, will orient the drivers to their vehicles. "There will be a lot of excitement surrounding it," says Wachs. "Like Christmas." Simulators at the CustomerCenter will offer drivers the chance to test their new vehicles in extreme conditions, such as ice, snow, hard rain, and a hot desert environment.
Volkswagen doesn't intend for Autostadt to cut its dealers out of the picture; like the other automakers, it acknowledges their importance in maintaining healthy customer relationships, especially after-sale service. "In our industry, we need the dealers, so that every customer can have a direct agent, a person to talk to," Wachs explains. Two floors of the CustomerCenter, in fact, will be dedicated to training salespeople employed by Volkswagen dealerships. In Wach's view, Autostadt "will support our dealers in creating an image and by giving information about the assembly process. It is a huge place for information about our brands."
Eventually, Wachs hopes that visitors to Autostadt will be able to order Volkswagens directly from the CustomerCenter, using a phone or computer that will connect them to a dealership in their area. But he and Rouse insist that their new park won't be about the hard sell. "This isn't about, 'Come here, buddy, let me sell you a car,' " Rouse says. Instead, by creating an immersive theme-park experience, Rouse believes that some guests will want a T-shirt or a key chain to remember their visit. Others will want a Jetta.
When it opens in June, Autostadt will fit into a larger strategy at the Volkswagen Group to offer consumers more opportunities to interact directly with the company, rather than through intermediaries like Web sites or even dealerships. Last summer, Volkswagen of America held its first-ever "DriversFest" to celebrate the 50th anniversary of the first Beetle imported to the States. The DriversFest was a daylong party at Jones Beach State Park on Long Island, complete with live music, vintage vws, food, and the chance to test-drive the newest cars. Organizer Sue Wogan, 37, Volkswagen of America's team leader for owner communications, expects it to become an annual event.
About six months after Autostadt opens its gates, Volkswagen will inaugurate a factory in Dresden, Germany for its new, as-yet-unnamed luxury model. Architect Gunter Henn calls the factory the Crystal Palace, because of its extensive use of glass; car buyers will be able to gaze at the assembly line as their vehicle is put together. The factory in Dresden will also have a gallery, a cinema, and a driving simulator. "What we are doing in Wolfsburg and in Dresden is very different from an Orlando theme-park experience," says Henn, 52, who runs one of Germany's largest architecture firms, with offices in such cities as Berlin and Munich. "These are authentic locations, not just an isolated theme park. Every day at Wolfsburg, close to 50,000 employees make about 3,000 cars. You're opening that to the public, and to the town of Wolfsburg, and that helps you open communication with the customer. It helps you make a connection between the company and the market."
Henn believes that the Internet, though powerful as a tool for delivering information and managing transactions, is limited when it comes to forging connections. "The solution is a combination of the Internet and in-person experiences," he says. "I like to visit the Museum of Modern Art in New York on the Internet, but I still want to go there and have an experience with many people. That will be the main experience at Autostadt—to meet other people who think or feel as you do. It's an agora of the Greek days. The buildings at Autostadt are tools to create that opportunity."
Contributing editor Scott Kirsner (email@example.com) drives a Jeep Cherokee. Contact Thor Ibsen (firstname.lastname@example.org), Peter Dames (email@example.com), or Otto Ferdinand Wachs (firstname.lastname@example.org) by email.
A version of this article appeared in the Jan/Feb 2000 issue of Fast Company magazine.