Innovating Innovation. David Morey

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      So, the folks at Ford made just about every mistake possible. But even what they could not control moved against them. Conceived in a boom time for auto sales, the car was launched during an economic recession that hit Detroit especially hard. All automakers in 1957 saw sales dip to between 75 and 50 percent of 1956 sales. And Ford managed to make this economic affliction worse by undercutting sales of the mid-priced Edsel with the ill-timed introduction of another mid-priced car, the Ford Fairlane, released just one year before. The Fairlane made no pretense to innovation, but it was a reasonably handsome vehicle that sold for less than the Edsel and was manifestly the better value. Consumers perceived the Fairlane for what it was—essentially an honest car.

      By contrast, the Edsel not only failed to be special, it failed to be good. Its few true innovations served only to make it worse. Pushbuttons replaced the shifter for the automatic transmission. The buttons were mounted on the steering wheel hub, where the horn button was expected. This ergonomic faux pas resulted in many drivers shifting gears when they wanted to honk the horn. Another shortsighted design decision was embodied in the taillights of the 1958 Edsel station wagons. They were shaped like boomerangs and positioned in such a way that they created a terrible problem when the turn signals were operated. From a distance, the left turn signal looked like an arrow pointing right, and the right looked like an arrow pointing left. Oops.

      In 1959, Ford brought in Robert McNamara as the first company president whose name was not Ford. He was supposed to turn the company around, and he began to cut Edsel’s losses by ditching the separate Edsel division and consolidating the line into a single Mercury, Edsel, Lincoln (“M-E-L”) Division. McNamara pushed for a redesign to make the car look more like other Ford models. By 1960, the final year of its production, the Edsel was nothing more than a Ford with Edsel trim. That was just as well, since 1959 saw Edsel sales stall below forty-five thousand and McNamara cut the extravagant Edsel ad budget to near zero for 1960. Only 2,846 Edsels were sold in the automobile’s third and final year.

      Requiem for a Lemon

      With the wisdom of hindsight, what can we innovative innovators learn from the sad tale of the Edsel? Six lessons, to which we will return again and again.

      Lesson One: Remember Perceptions Rule

      The power of using consumer perceptions as your starting point is fundamental to Peter Drucker’s strategic focus on marketing and innovation. It is also at the heart of my argument about today’s need to innovate innovation itself.

      Business Adventures: Twelve Classic Tales from the World of Wall Street, by John Brooks, is among the favorite business books of one of my former clients, Microsoft founder Bill Gates, and of Berkshire Hathaway founder Warren Buffett. Brooks offers a convincing and detailed argument to debunk the legend that the Edsel’s marketing and innovation were based on scientific research. There was research, but nobody paid much attention to it. Then, when it came to manufacturing the car, what little of the research that went into design was mostly discarded so the car could be built on an existing chassis using existing machine tools and assembly lines. At a very basic level, therefore, the Edsel was a failure of both marketing and innovation. While marketing and innovation are together critical, trying to market a product shorn of any consumer-inspired innovation is a forlorn hope.

      The blindness of Ford leadership did not prove temporary. Even after Edsel’s failure, J. C. Doyle, an Edsel marketing manager, steadfastly refused to learn anything about the power of consumer perceptions. Years after the demise of the Edsel, Utah congressman Mo Udall remarked the day after he lost a particularly close election: “The people have spoken, the bastards!” Like Udall, Doyle concluded the people had spoken (the bastards!) and, to his dying day, he blamed the dopey American public for the Edsel’s failed launch. As he told Brooks: “People weren’t in the mood for the Edsel. Which is a mystery to me. What they’d been buying for several years encouraged the industry to build exactly this kind of car. We gave it to them, and they wouldn’t take it. Well, they shouldn’t have acted like that… And now the public wants these little beetles. I don’t get it!”

      If we look at Ford’s large market study of 1952 and the work of its “Forward Product Planning Committee” in 1954, it becomes apparent that, in designing the Edsel, Ford was focusing not so much on what consumers wanted, but on the gap between the company’s offerings and those of its competitors. Ford executives should have been obsessed with potential customers. Instead, they were obsessed with their competitors. In single-mindedly concentrating on producing a mid-priced vehicle, they built a car for their competitors, not their customers. As former Procter & Gamble Chairman A. G. Lafley observed, there is a fundamental difference between competitor-focused companies and customer-focused companies. For example, in phone manufacturing, a competitor-focused company says they are in the business of “making smartphones.” By contrast, a customer-focused company believes they are in the business of “connecting people and enabling communications any place, anytime….”

      In fact, Brooks points out the market research was simply ignored, discarded, and replaced by whim, intuition, personal agenda, bureaucratic politics, plain-old guesswork, and, later, some old-fashioned snake-oil-selling methodologies.

      The lesson: Successful innovation and business growth begin and end with consumer perceptions.

      Lesson Two: Be Different or Be Damned

      As my former client, The Coca-Cola Company chairman Roberto Goizueta, once advised, “Be different or be damned.” Notwithstanding its jarring looks, the Edsel actually represented a whole heap of same-old, same-old—particularly under the hood and from the inside-out. The January 1958 issue of Consumer Reports gave the Edsel its most damaging review. The editors hit it hard for sameness. Worse, they educated some 800,000 subscribers—and potential Edsel buyers—on what made the car tick. It “has no important advantages over other brands,” they wrote. “The car is almost entirely conventional in construction.… The amount of shake present in this Corsair [the next-to-highest Edsel trim level] body on rough roads—which wasn’t long in making itself heard as squeaks and rattles—went well beyond any acceptable limit… The Corsair’s handling qualities—sluggish, over-slow steering, sway and lean on turns, and a general detached-from-the-road feel—are, to put it mildly, without distinction.” Ugh.

      And just when you think it cannot get worse, the Edsel came onto the market with another mortal wound, entirely self-inflicted. The vehicle was offered in eighteen different trim levels—Ranger, Pacer, Corsair, Citation, twenty-four door-hardtop, sedan, wagon, convertibles, six or nine passengers, and so on—smothering consumers in a confusing array of choice, far beyond what any sane buyer could want. Largely consisting of distinctions without differences, the lack of focus left consumers paralyzed, which is not what you want when the object is to get a showroom visitor to reach for his checkbook. When variety becomes a blur, indifference cancels out differentiation.

      The thing is, Ford executives were less interested in designing and refining a distinctive product, image, and character and more intent on making the Edsel everything at once. Think of this as lazy innovation and lazy marketing, a dreary combination if there ever was one, shining a light on everything and everyone rather than focusing the spot on what is core to the success of your mission. The “everything approach” is easier, but doomed. In the words of Prussian monarch and strategic genius Frederick the Great: “He who defends everything defends nothing.” If Der Alte Fritz could have seen an Edsel, he might have noted, doubtless in disgust, that it indeed defends nothing and offends just about everyone.

      The lesson: A lack of focused differentiation will throttle any effort at innovative breakthrough.

      Lesson Three: Innovate Forward

      As bad an idea as it represented, the Edsel’s pushbutton transmission was at least capable of forward and reverse. Nevertheless, the car СКАЧАТЬ