Innovating Innovation. David Morey

      Why don’t we just call it “Edsel”?

      —Ernest R. Breech, Board Chairman, the Ford Motor Company

      In the history of modern business, there is one failure that burns above the rest in symbolizing utter defeat. The trouble begins with the name—the name Henry Ford gave to his son, who had served as Ford Motor Company president from 1919 until his death from metastatic stomach cancer in 1943. For a person, the name was unusual, but not as bad as, say, Egbert or Poindexter. But for a car, Edsel rhymed with Lemon.

      Remarkably, Ford Motor management put a lot of thought into it—or, rather, paid Foote, Cone & Belding to put a lot of thought into it. The advertising giant put so much thought into it that they came up with a laundry list of 6,000 names, and, as if that were not enough, Ford marketing research manager David Wallace asked avant-garde American poet Marianne Moore to make suggestions. These included “Utopian Turtletop,” “Pastelogram,” “Turcotinga,” “Resilient Bullet,” “Andante con Moto,” “The Intelligent Whale,” “Varsity Stroke,” and, my personal favorite, the “Mongoose Civique.” In the end, Ford chairman Ernest Breech, who complained that he had hired Foote, Cone to come up with a name, not 6,000, ended the search by surrendering: “Why don’t we just call it Edsel?” Even the Ford family objected. No matter. Edsel it became.

      Even today, if you send your browser in search of “Edsel” and gaze upon a picture of the car, you will find that an uncomfortable chill runs down your spine. It just looks wrong. Feels wrong, awfully wrong, like a high school chem lab experiment gone dreadfully, stinkily awry.

      So, cast your imagination back to the late 1940s for the rarely told story of one of industry’s most earnest misfires and America’s single most famous innovation and marketing failure—a seventy-year-old inability to think anew.

      The abridged narrative goes like this: The Ford Motor Company set out to create a car affordable for middle-class Americans that offered “futuristic” technology and looks to match. Great notion, but the two-lane blacktop to hell is paved with good intentions. Timing, design, marketing, and the cold dead hand of corporate incumbency transformed laudable aspiration into an unexpected, catastrophic, but well-deserved flop. Intent on innovating, Ford failed to follow through and thereby turned an innovative intention into a malignantly half-assed automotive punchline. Produced for only three years, which turned out to be three years too many, the Edsel achieved immortality as a symbol of marketing and innovation misjudgment.

      Let’s turn back to 1948. Henry Ford II and his top executives order what will later be called the “Forward Product Planning Committee” to begin researching design and production of a new medium-priced car to capture as much market share as possible from industry front-runner General Motors. Ford management’s theory is that GM’s wide range of price offerings is contributing to its success. The Korean War, between 1950 and 1953, breaks Ford’s momentum on the project, but, nevertheless, the company performs a marketing study in 1952 that confirms an opening in the automobile industry’s middle market. It is a gap of opportunity between the bottom-priced Ford and the higher-priced Mercury.

      Over the next two years, the company founded by the innovator of innovators, Henry Ford, seeks to design and manufacture this “medium-priced” vehicle for somewhere between $2,000 and $4,000—a target lying in the crease between discount and luxury buyers. The category Ford has in mind is one the company terms “young executives.” Bogged down during the uncertainty of the Korean conflict, work chugged back into motion in 1954, when leadership on the project is transferred from the company’s engineers to its stylists.

      From the beginning, then, the project is more about styling than technical substance, more about sizzle than steak. The point is that as Americans enjoyed their postwar mobility, they also came to crave symbols of status and success—emblems of affluence. So, more than ever before, style is selling automobiles. Little wonder that 1955 is labeled “the Year of the Car.” In America, manufacturers sell a record 7,169,908 automobiles. And in this Year of the Car, Ford’s rival, General Motors, sees its stock roar. It is in this desperate context that Ford focuses on what it calls the “E-car,” short for “experimental car.” Figuring that it will take something “special” to beat GM, on April 18, 1955, management assigns the task of design, development, and launch to its “Special Products Division.”

      Headed by executive Dick Krafve, eager to make a name for himself, the mission is to innovate a car to match or exceed the Ford Thunderbird, a model then enjoying excellent sales—something executives believe is at least in part being driven by the car’s name, itself a product of extensive scientific research.

      Strike one. Behind Thunderbird there was thought. Behind Edsel there is Henry Ford’s prematurely dead son.

      After two years of work and at least a quarter of a billion 1957 dollars (the equivalent of 2.187 billion 2018 dollars), the Edsel is born in September of 1957. It brings with it a daunting ROI. Ford needs to sell 200,000 cars during the first year to begin to recoup its investment. The number sales actually hit is far different. Over the next two years and two months, the company sells roughly 100,000 Edsels, losing some $350 million. In fact, in a period of fewer than 800 days, Ford manages to lose $3,200 for every Edsel sold—basically the cost of the car itself.

      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.

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