This car was supposed to change the automobile industry, instead it went down as one of the biggest flops in automotive history. The Ford Edsel lasted only 3 years on the market but left a lifetime of lessons.
Ford saw an opportunity in the middle car market, equivalent to the Accord, Camry or Altima market of today. A fun bit of reference is the middle car market was the $ 2,500 – $ 3,800 dollar range then for a brand new car. (inflation.. sigh) Ford moved Lincoln to the upscale market and began designing a car only known as the “E-car” in 1955. E eventually turned into Edsel, the name of Henry Ford’s son. The car debuted on September 4, 1957, and the day was known as E day in Ford’s headquarters. Edsels sold 63,110 its first year on the market. The result was the second largest car launch for any brand in history, however the numbers were far lower than what Ford estimated. Ford stopped selling the Edsel in 1960. The company ended up losing $350 million on the research, development and production of the Edsel. From such a grand debut to ending in 3 years, what happened?
1. What’s the point of research?
Ford conducted endless hours of research, testing, consultation and polling on the Edsel. When it came time to complete the design of the Edsel, Ford execs threw out all the research and just decided what the car should look like themselves. Surprisingly, one of many issues with the Edsel was its “unique” design.
Why invest millions of dollars and thousands of hours into research if you’re just going to disregard it? This is a mistake you see a lot of executives make. They disregard the advice of the people or experts and just go with their gut. Ford wanted Edsel to be its own division (Think Toyota and Lexus), yet when it came down to the biggest decisions to make about the vehicle, executives went with their gut. It’s not a surprise the Edsel flopped.
2. Jack of All Trades, Master of None
The Edsel tried to be everything to every car buyer. When a product doesn’t have a set purpose or characteristic, it usually ends up not appealing to most consumers. There were 18 variations of the car at the Edsels launch. For perspective, most cars today have 2 or 3 versions of it. The Edsel tried to appeal to Male and Female consumers equally. Ford even had two media previews for the car, one for male reporters and another for their wives. As it turned out, the car appealed little to either sex, and the many versions of the car just made things more confusing for customers. In business, one of the most important mantras is K.I.S.S (Keep it simple stupid). Too many choices cause consumers to default to something simpler, like your competitor offers.
3. Don’t put all your eggs in one basket
When the decision to make the Edsel was made, the middle car market was booming. What Ford couldn’t foresee was the Stock market diving in 1957. Because of the dive, people stopped buying mid priced cars and started buying more economical options. Ford continued on with the mid-price Edsel, and the car flopped.
Ford made the mistake of having an overly sunny outtake on the Edsel, and not having any contingency plans if things failed. The stock market dipped, and Ford had no backup plan and had to go ahead with the original destined to fail plan. Always have contingencies, things never go exactly as planned.
4. Know when to say when
The Edsel debuted to a different market from the one imagined during its inception. Buyers deemed the car too expensive, it used up too much gas, and the press mocked it excessively. Ford felt it had invested too much in the Edsel just to chalk it up as a loss. A redesigned Edsel debuted in 1959. The reviews were better, but the label of failure was firmly attached to the car at this point and no one wanted an Edsel. For every Edsel Ford manufactured, the company lost $ 3,200, basically the price of the new one.
New products flop for various reasons, it happens to everyone even Apple and Amazon. One of the key mistakes not to make with a flop is to fall into the Sunk Cost Fallacy. The behavioral economic term means when one continues a behavior or endeavor because of previously invested resources (i.e. time, money or effort). What happens when you fall prey to the fallacy is that you end up sinking more resources into the endeavor and end up with diminishing returns.
Once the Edsel was deemed a flop, Ford should have reviewed what lessons they could from the project and cut their losses. Most corporations or individuals don’t do this because they become too emotionally invested in the product and don’t won’t it to be deemed a failure on its watch. The losses end up piling up more even after the relaunch or more reinvestment. Never let emotions and pride cloud your judgement about what needs to be done in a business setting.
One silver lining from this story is that Ford used the production facilities it built for the Edsel to build entry level compact cars. That’s one way to learn from your mistakes.
The Ford executives in charge of the Edsel project never took fault for the many mistakes they made on the car. One executive, J.C. Doyle even blamed the American public for the car’s failure. When one doesn’t learn from their mistakes, they usually end up repeating them (i.e., Pinto, Mustang II and Contour).
