Ford put a lot of effort into the Edsel. They had lagged behind GM for a few years, and the Edsel was supposed to put them back in front. Ford sunk a lot of time and effort into product innovation for the Edsel, and into market research as well. They launched one of the biggest marketing campaigns ever.

And the Edsel sold miserably.

Steven Johnson has followed up Where Good Ideas Come From (discussed here) with another book on innovation, this time, an edited volume called The Innovator’s Cookbook. The first chapter is by Peter Drucker, who remains one of the best management thinkers we’ve seen.

Drucker outlines seven sources of innovation opportunity: unexpected occurrences, incongruities, process needs, industry & market changes, demographic change, changes in perception and new knowledge. The essay was originally published in Harvard Business Review, and one way or another, it’s worth tracking down to read.

In discussing unexpected occurrences, Drucker has an interesting take on the Edsel story:

Everyone knows about the Ford Edsel as the biggest new-car failure in automotive history. What very few people seem to know, however, is that the Edsel’s failure was the foundation for much of the company’s later success. Ford planned the Edsel, the most carefully designed car to that point in American automotive history, to give the company a full product line with which to compete with General Motors. When it bombed, despite all the planning, market research, and design that had gone into it, Ford realized that something was happening in the automobile market that ran counter to the basic assumptions on which GM and everyone else had been designing and marketing cars. No longer was the market segmented primarily on income groups; the new principle of segmentation was what we now call “lifestyles.” Ford’s response was the Mustang, a car that gave the company a distinct personality and reestablished it as an industry leader.

In other words, Ford learned from the failure of the Edsel. Here is how Matt Haig describes it in Brand Failures:

As Sheila Mello points out, between 1960 (when the Edsel was phased out) and 1964 (when the Mustang was launched) Ford, along with most of the car industry, had shifted its focus towards what the consumer actually wanted. ‘The success of the Mustang demonstrates that Ford Motor Company did learn from the Edsel experience,’ she writes. ‘The key difference between the ill-fated development of the Edsel and the roaring success of the 24 Brand failures Mustang was the shift from a product-centric focus to a customer-centric one.’

Here are some key points from this story:

• Failure is only useful if we learn from it: we often talk about the need to fail in innovation, however, there is only value in failure if it helps us learn.
• Try to fail as cheaply as possible: the main problem with the Edsel isn’t that it failed – it’s that it failed so expensively. There is a hierarchy of failure, and we need to figure out how to fail as early in the process as possible. One way of doing this is through prototyping.

The lesson from the Edsel is to learn from ideas that don’t work. And also, if you’re knocked over, get back up…