Innovating to Grow - Vestas Growth into Wind Power Leader
Theodore Henderson once wrote,
“When a company has an innovative culture, it'll grow easily, despite the fact that the creative process isn't always simple. Tried-and-tested methods may be reliable, but trying out new things is a worthwhile experiment.”
For many companies, innovation is always a goal - but how many can say that over its 123-year history, it’s pivoted its primary product more than six times? Vestas, a global power player for sustainable solutions in the energy industry can… and the changes have more than paid off!
In 1898, coming from a family of blacksmiths, Smith Hansen and his son Peder made steel window frames for industrial buildings in Lem, Denmark. Business boomed until the start of World War II when rationing restricted metal supplies. At the end of the war, Peder re-established the company as “Vestas”, but with a different end product. Working out of wooden barracks left behind by the Germans, Vestas began making household appliances such as mixers and kitchen scales. While successful, Peder dreamed of expanding the company internationally. So, the company pivoted again and bought the worldwide patent for a milk urn cooler in 1950 and began production.
In 1956, at a family party, Peder’s brother told him that a large shipyard in Denmark, Burmeister & Wain, was looking for a partner to develop a new type of cooler for turbochargers. It was a small but creative leap from milk coolers, and the intercooler soon became a bestseller in the Vestas portfolio.
In 1968, Vestas changed course yet again, adapting to the sudden demand for hydraulic cranes for light trucks. This would become Vestas’ first export, with 96% of production output exported to 65 countries.
On October 6, 1973, Syria and Egypt with support from other Arab nations, launched a surprise attack on Israeli positions in territories occupied by Israel. This renewal of hostilities in the Arab-Israeli conflict released underlying economic pressure on oil prices.
On October 12, 1973, then US president, Richard Nixon authorized Operational Nickel Grass, a strategic airlift to deliver weapons and supplies to Israel after the Soviet Union began sending arms to Syria and Egypt. In response, members of the Organization of Arab Petroleum Exporting Countries (OAPEC) announced an oil embargo against Canada, Japan, the Netherlands, the United Kingdom, and the US. This was known as the Oil Crisis of 1973. The embargo occurred at a time of rising petroleum consumption by industrialized countries and coincided with a sharp increase in oil imports by the world’s largest oil consumer - the US. By the end of the embargo in March 1974, the price of oil had risen from $3 per barrel to nearly $12. Vestas, whose primary export was majorly impacted by the oil crises, was once again forced to reconsider its business model. The company began experimenting with wind-generated electricity, and in 1979 established a goal of making wind energy a viable solution to meet the world’s energy needs.
In 1997, Vestas went public with a share of 22.1% of the world’s wind power. Since then, the industry has grown, and even with fierce competition, as of 2019 Vestas still controlled 18% of the wind turbine installation market.
Could you imagine where they’d be if they didn’t take a chance on innovation?