Innovating Innovation. David Morey
process failed to contemplate, much less understand, how innovation must be adopted by the larger ecosystem into which it is delivered. Michelin’s 1990s innovation was a technological breakthrough, but the innovation fell short of commercial breakthrough because repair shops, auto dealers, and auto manufacturers were not prepared to accommodate run-flat tires. Failure to innovate beyond the confines of your business model—failure to innovate the required platform out in the ecosystem—will doom success.
Return to the Edsel. The “car of the future” brought with it widespread confusion in terms of workers, parts, and processes. Moreover, self-sabotaging mistakes—the misguided attempt to build the “new” Edsel on assembly lines also assigned to turn out “old” standbys—landed right inside the Edsel engines and drive trains, which became proverbial for their unreliable mechanics, missing parts, and other failures of engineering and quality control. It got so bad that Ford began selling Edsels with a kit of extra parts packed in the trunk, along with instructions to dealer service departments on how to use them.
And, oh yes, the dealers. Ford wanted to brand the Edsel as special. Instead of making it special, however, Ford snatched away ownership of the Edsel from its own dealership system and added a new category of dealer to sell the Edsel exclusively. This uniquely self-inflicted orgy of cannibalism ate away at Ford’s own long-established selling system. One thinks of the ancient Roman emperor who, when the people turned against him, settled into a warm bath, sliced open the veins in his wrist, and bled himself peacefully to death. Just so, Ford sapped away the force of synergy by not merely failing to leverage its existing dealer network, but by making such leverage impossible. This setup heaped inertia where momentum should have been at the very moment of the Edsel’s launch.
And for those cars that did manage to drive off the showroom floor and into some suburban garage, their owners were quickly confronted by two things: electrical and mechanical problems plus dealer mechanics unequipped to handle them. The much-ballyhooed and universally hated “Tele-Touch Transmissions” presented customers with problems and dealers without solutions.
Amid the unfolding scenario of disappointment, Ford pressed dealerships to pre-order large quantities of Edsels in anticipation of a crush of demand. When the demand failed to materialize, retreating, and finally turning into outright rout, dealers rebelled, and the entire system, along with Ford’s business model, seized up like an Edsel leaking dry of oil.
The lesson: In today’s hyper-change environment, wide-angle, continual strategic transformation of your business model is not optional, but mandatory to marketing and innovation success.
Lesson Five: Remember—Context Is Everything
As with so many failures of marketing and innovation, the Edsel was launched without proper regard for context. Two adages apply:
1. Timing is everything.
2. You can do the right thing at the wrong time, and it will be the wrong thing.
In a failure to understand the context into which they were selling, Ford made the mistake of moving heaven and earth to maintain consumer secrecy in conducting its market research. This was the same error The Coca-Cola Company made in designing and executing research for “New Coke” in the mid-1980s. Both Ford and Coke focused on what was for them “today,” but it was, more accurately, “yesterday.” In both cases, Ford and Coke failed to imagine, anticipate, and market test the consumer world of “tomorrow,” the context into which they will be selling. They failed to undertake pre-search.
And it was even worse. The companies not only failed to look ahead to anticipate where their markets were heading, but both Ford and Coke failed in all their market research to test, analyze, and understand fully the larger context of how their product was to be positioned in its marketplace. Their obsession with secrecy meant they did not want to risk revealing and testing with consumers in market research the fundamental and complete offering that was Edsel, or the idea that New Coke will completely replace Coke Classic. In quest of secrecy, executives denied their company the real-world consumer insights that are the very reason for market testing. Secrecy superseded context.
Coca-Cola focused its research mainly on the “Pepsi vs. Coke” dimension of blind taste tests. And executives discovered the sweeter New Coke began faring better against its Coke archrival Pepsi than did Coke Classic. But, by omitting the key fact that New Coke will take away Coke Classic from its loyal drinkers, the company robbed itself of any meaningful measurement of consumer preference within this larger, crucial context.
Some thirty years earlier, Ford made the same mistake with its Edsel research. Like Coke, Ford was obsessed with secrecy, and so the company’s endless market research never presented the entire Edsel package to respondents. The look, feel, brand, name, technical features, mechanics, drive dynamics—none of this was laid out. The equation was presented in fragments.
The absence of context left one thing both companies had in abundance: self-centered arrogance—a belief that top executives knew better than anyone else or any kind of market analysis. In the end, it was upon this commodity that most of the key internal decisions were made. Ford, for instance, failed to factor in a market and economy clearly changing during the months leading up to Edsel’s release. Rather than adjust to the market, Ford released the car exactly as planned in the context of a different time, a different economy, and a different marketplace. More than three decades later, The Coca-Cola Company Chairman Roberto Goizueta faced a hostile press conference at which he announced the arrival of New Coke. Here, for the first time, the company’s leader learned that media and consumers were uniting in their outrage at having something iconic taken from them without so much as an if-you-please.
In both cases, corporate arrogance was as hard to shed as a poker tell. It polluted any sense of the marketplace and descended on corporate vision like an old-school London fog. Arrogance, not the consumer, permeated all aspects of developing and marketing the Edsel and New Coke.
In addition, part of understanding and defining context involves the strategic principle that everything communicates. Even the smallest detail of marketing or innovation communicates loudly and profoundly. A single contradiction between promise and reality, once noticed by consumers, can undo hundreds of millions of dollars of marketing. In the case of Edsel, glaring assembly line errors, consumer confusion between the horn button and gear shift, misdirected turn signals, early and chronic oil leaks, sticking hoods, trunks that failed to open, buttons that needed a hammer to push them, and a pre-production average repair cost of $10,000 per car communicated more loudly and profoundly than any Edsel advertisement.
The lesson: At minimum, test, recognize, and understand the larger context into which your product, service, brand, or company competes. Better yet, develop and drive a strategy to control the dialogue and help define this larger context—and remember that everything communicates.
Lesson Six: Always Think Anew
Edsel was a failure of imagination, a failure to think anew, to “think different.” If Ford’s intention had been to build another run-of-the-mill car, well, they certainly knew how to do that, and it might have cost the company a lot less money and grief. Instead, they faked innovation, and their Edsel ended up an eternal punchline.
Edsel’s demise was all about the way Ford framed marketing and innovation. The roots of the car’s failure grew from how people initially thought about the Edsel, how they imagined it, went about inventing it, refining it, marketing it, and ultimately failing with it. From the beginning, company executives and Edsel designers failed to understand that the 1950s was a decade in which everyone made their case based on newness. Therefore, these executives and designers were obliged to think anew and act anew. But they did no such thing.
Nevertheless, the Ford organization did learn from the Edsel episode. The failure of the Edsel helped produce Ford’s legendary Mustang. Open your browser and click on some pictures of Mustangs through the fifty-four years of the car’s production history. Compare the look of the Mustang to the Edsel, which limped across the earthly sphere for a mere three years. In both the Mustang and the Edsel, everything communicates. It is just that they speak entirely different languages.
One very important lesson Ford learned