Innovation for growth: a case study on the strategic shift of Poggipolini S.p.A. from the Motorsport sector to Aerospace

Alessandro Grandi, Azzurra Meoli, Federico Munari November 13, 2023 6 min read

In the fast-paced and competitive context of engineering and manufacturing, companies must be ready to navigate through sudden storms and radical changes. The story of Poggipolini S.p.A. is an emblematic example of how innovation and strategic vision can turn a crisis into an opportunity.

Poggipolini S.p.A. is an innovative, family-owned SME with a history dating back to 1950. A leading name in the design and manufacture of high-precision mechanical components and special titanium fasteners, it has become an official supplier to the Formula One and MotoGP sectors, working with customers such as Ferrari, McLaren, Porsche, Brembo, Ducati and Aprilia. However, a regulatory change in Formula One, in 2010, led to a drastic reduction in turnover, such as to put the future of the company at risk. The strategic turn Poggipolini took to overcome this crisis has become a Bologna Business School case study that is also a lesson in resilience, diversification, and technological and strategic innovation.

In 2010, as organizations and companies continued to come to terms with the consequences of the global financial crisis, FIA (Fédération Internationale de l’Automobile) introduced major regulatory changes aimed at reducing costs and balancing opportunities among teams. A decision that resulted in a significant reduction in demand for titanium screws and special machining, Poggipolini’s core business, leading to a 60 percent loss in turnover, from 11 to 4.5 million euros. In response to this “crisis within a crisis,” CEO Stefano Poggipolini substantially involved his son Michele, who was only 26 years old at the time, in the process of defining a strategic shift. Michele, in fact, had already gained valuable experience in the motorsport sector, working, among others, with Scuderia NCR Ducati and later taking on responsibility for NCR Factory, later on acquired by the family business. The long-term vision behind the necessary renewal process was summed up by Michele Poggipolini (who later became the company’s CEO) in these words, “To be the first in advanced and structural fastener applications, worldwide.” It was a vision that guided a change that was as winning as it was gradual, which developed over a decade and was based on few key elements, pillars of the new strategy.

The first of these elements was the need to diversify. Titanium is known for its strength, its lightness, and its corrosion resistance, making it stronger than steel while weighing up to 40 percent less. These properties have made it an element of potential interest in several industries, including aerospace, aviation, marine, oil & gas, automotive, and medical. Each of these, then, could have represented an opportunity for expansion, but after careful analysis, Poggipolini identified the aerospace and automotive industries as the most promising alternatives for corporate growth outside the core motorsport business. The company was already present in these markets, but with a limited share of revenue.

The aerospace industry comprises two main sectors: aeronautics, which deals with aircraft within the Earth’s atmosphere, and space, which deals with vessels outside the Earth’s atmosphere. The global aerospace market is segmented by type (aircraft, aircraft component manufacturing, and repair services) and by geography, with North America traditionally accounting for the largest share. To increase its presence in aerospace, the company focused on two challenges in particular: the first was the relevant barriers to entry-among them the need to obtain NADCAP accreditation for special processes such as chemical treatment, coatings, heat treatment, and nondestructive testing-the second was the need to become attractive in order to be qualified by leading businesses, finding a unique value proposition to differentiate itself from competitors, given that many titanium component manufacturers were already present in the industry.

The automotive market, particularly the high-end segment of hypercars, supercars, and premium cars, represented another promising avenue of growth for Poggipolini, because it was already connected to the market traditionally served by the company. In addition, there was a need for manufacturers to find specific solutions to increase fuel economy and reduce emissions, and one possible solution, for both electric/hybrid and internal combustion engines, was precisely to reduce vehicle weight. Poggipolini’s engineers had estimated that replacing steel structural screws with titanium ones could lead to a weight reduction of 20 kg per car without compromising safety, since titanium and its alloys are perfect for the body structures and components. However, even in this case the business analysis highlighted a new challenge to overcome: titanium is more expensive than steel and aluminum, due to the costs of raw materials and specialized manufacturing. Suffice it to say that while a standard steel screw costs a few cents, the corresponding titanium screw can cost up to dozens of euros, affordable for hypercars but still too high for the premium car segment. The company therefore needed a process innovation that could drastically reduce the cost of titanium screws-a long-term challenge, highly risky for an SME, not least because it would have required new technologies, outside intervention, and significant investment during a financially complex period.

The board, having acknowledged the priorities and challenges, set about defining a vision and strategic focus, identifying a roadmap for short-, medium-, and long-term choices, and launching new R&D projects, with a focus on the requisite skills and resources to implement the new strategy. 

The goal? To bring radical innovation in the production of titanium fasteners on which to base growth in newly identified industries.

Crucial to the success of the project was precisely the choice to set the new strategy in these terms. Indeed, the roadmap helped identify the long-term vision, market opportunities, product/process development, and technologies needed to achieve the defined goals. The innovation roadmap also highlighted key existing competency gaps that could have limited the company’s progression toward its goals. Bridging these gaps required a mix of internal and external initiatives, leveraging Open Innovation approaches.

In summary, the case of Poggipolini illustrates the complex interplay between regulatory changes, market dynamics, innovation, and strategic decision making. The company’s experience offers valuable insights into how SMEs can leverage innovation to grow their business, even in the face of unprecedented challenges.

Exploring new markets, such as aerospace and automotive, required careful consideration of technological synergies, barriers to entry, cost factors, and the development of unique value propositions, while the pursuit of process innovation to reduce costs further underscored the importance of adaptability and strategic thinking. Finally, the success of Poggipolini’s strategic turnaround highlights the importance of setting a long-term vision supported by a well-articulated innovation strategy, especially in times of great crisis, precisely when it is most difficult to maintain clarity and vision.  

This article is based on
Poggipolini S.p.A.: how can SMEs leverage innovation to grow their business?
Azzurra Meoli, Federico Munari, Alessandro Grandi