Ford Edsel: Biggest Automotive Failure

Given the long developmental timeline of any automotive product, we will have to start at the point where
the decision makers were brought into the company.

The process started in 1945 Henry Ford was forced into retirement and was succeeded by Henry Ford II.
Henry Ford II hired a group of ten men with degrees in business administration, the group was eventually
known as “The Whiz Kids”. The group included J. Edward Lundy who later went on to become CFO, Robert
McNamara future secretary of defense under president Kennedy and Johnson to get us an idea about the
kind of talent that was in the group. However, these people, for the most part, had a complete lack of any
experience in the automotive industry. The idea was that this would get a fresh vision for the company in
post-war years. A new corporate structure was created which led to the automaker to become a publicly
traded company and later elevation of two of these whiz kids to be the non-Ford family member
presidents of the company. The rejuvenated corporate structuring helped boost sales to get Ford back on
the level of GM in the early 1950s. Ford created four new special divisions, The Lincoln, Mercury and
Continental divisions which would focus on luxury vehicles and a special products division which would
focus on discovering the next great car to launch Ford brand to the top. A study conducted in 1952
concluded that over 75% of Ford’s production was in the economy range of the market. This was a great
position to be in during and after the Great Depression, but with the rising GDP levels after WW2, a
significant fraction of the population was expected to move into the middle-income range. In the late
1950s, the American automotive market was perceived to have four segments: the “upper” class, the
“upper-middle” class, the “lower-middle” and the “standard” class. At that time, three big competitors
were dominating the market after the recession of World War II. Chrysler, General Motors and Ford were
competing in the different segments, except for the “upper-middle” class for which neither Chrysler nor
Ford were supplying suitable products. But it was this very segment which was expected to have the
biggest growth of all segments.

Special products division was to create this theoretical car known only as “the E-car” where e was for
experimental. It was meant to compete as two complete car lines--one priced under Mercury with Ford
components and one priced between Mercury and Ford's top-line Lincoln that shared parts with Mercury.
The E-car would be created by “aggressive strategy” that Ford had only just started using called
motivational research what we now know as market research. It was a novel approach in the 1950s as it
allowed corporations to get closer engagements with the people they were aiming to please. David
Wallace, Ford's director of planning who also had no experience in the automotive industry, hired the
Columbia University's Bureau of Applied Social Research to find out why people bought the cars they
bought. The bureau's researchers interviewed 800 people, inquiring about their preferences in everything
from cars, then produced a report revealing the hidden meaning of cars. Ford symbolized "rugged
masculinity." Wallace concluded that the new Ford should be advertised as "the smart car for the younger
executive or professional family on its way up." Consumers were asked to evaluate many product features
and attributes in isolation. They were asked to choose their favorite body shape, grill, fenders, wheels,
interior features, engine, and colors, all individually, and not with the whole product in mind. Ford took
the “winning” feature in each category and put them together to produce the Edsel. The designers came
up with some interesting ideas. They created a push-button transmission and put it in the middle of the
steering wheel, where most cars have a horn. And they fiddled with the front end where other cars had
horizontal chrome grilles, the Edsel would have a vertical chrome oval in its grille. Ford designers wanted
to make it stand out, so they hit on the idea of a vertical grille. A car's grille has a specific purpose, It allows
air into the engine bay to keep the engine cool. In order to keep the Edsel running, that vertical grille had
to be enormous, which made the entire car look silly in the eyes of critics and consumers. It couldn't suck
in enough air to cool the engine. So they had to make it bigger and bigger.

Next came the challenge of naming the car and as small a task it may seem it became a nightmare for the
executive committee. Wallace laid down some ground rules for coming up with the name, It has to be
short, has to be straightforward but memorable, should begin with C, S or J, should have two syllables and
shouldn’t be anything that can be twisted into a double entendre. The researchers asked random
Americans their reactions to scores of possible names. The responses were tabulated and analyzed and
the results were inconclusive. So Wallace gathered a group of Ford executives in a room, turned out the
lights and flashed scores of names at them to finalize and the results were inconclusive. After that, Wallace
did what any sensible auto executive would do in such a situation an He wrote to Marianne Moore,
America's most famous female poet, and asked her to suggest names. She suggested lots of names --
Intelligent Whale, Intelligent Bullet, Bullet Cloisonne, Ford Faberge, Mongoose Civique and he ended up
picking none of them. Ford asked the employees to suggest names, promising a free "E-car" to the winner.
The employees responded with 18,000 names. The front-runners were Citation, Corsair, Pacer, and
Ranger. The executive committee didn’t like any of these names and outsourced the task to an advertising
agency Foot Cone and Belding in hopes that a better name would come. In order to inspire creativity
among its workers, the agency had their own internal sweepstakes. Everyone in the company was allowed
to pick a name and if the name was chosen they would receive a complimentary E-car and FC&B
employees came up with the names Citation, Corsair, Pacer, and Ranger the same as Ford. The probability
of this happening was 1 in 3.5 million. To add to this complexity Henry Ford II went on vacation so, the
committee had to come up with a name which he would approve after coming back. So, after rejecting
every other name the chairman Ernest declared let’s call it Edsel and everyone agreed out of exhaustion.

Ford started considering the Edsel in late 1952, and it took them almost two years to figure out what car
they want to build, and another two and a half years to actually build it. That means there was a five-year
delay from the moment planning started until the release day which was internally known as “E-Day”.
During that time, the US economy went through two recessions (1953 and 1958), which had a drastic
effect on the car market, but also on user needs, wants, and demands. Consumer preferences shifted
toward smaller and more economical cars.

Ford dubbed Sept. 4, 1957, the day the Edsel debuted, as "E-Day" and spent the year leading up to it
pushing a teaser campaign for the new brand and the new car. Edsel ads were everywhere, but before E-
Day, they never showed the car. One ad pictured a stork holding a birth announcement for the Edsel.
Another showed two ancient Fords, one saying, "Everybody's asking -- what's our grandchild going to look
like?" and the other replying, "I'm not saying -- but there's never been a car like Edsel."

Edsel had its own dealers and compete directly against medium-priced General Motors and Chrysler
autos. At launch, Ford made 18 different versions of the Edsel available — an unheard-of move at a time
when most car companies offered just a few models Ford built not one, not two, but 18 varieties of Edsel,
including a convertible and a station wagon. Prices ranged from $2,500 to $3,800 -- several hundred
dollars more than comparable Fords. The Edsel was supposed to be everything American car buyers
wanted. Edsel didn't have its own assembly lines, so the cars were produced in Ford and Mercury plants,
which caused problems. Every once in a while, an Edsel would roll past workers who were used to
Mercurys or other Fords. Confused, they sometimes failed to install all the parts before the Edsel moved
on down the line. Many car buyers were confused just trying to figure out differences between the top-
line, lavishly equipped, 345-horsepower Citation models and base, shorter-wheelbase, 303-horsepower
Ranger models. it was supposed to be a best-seller. Yet, it couldn’t fulfill the expectations and was sold
only 63,110 times in the U.S. in the first year, far below the supposed numbers. But the Edsel folks did not
give up. After months of sluggish sales, the crack PR team gathered to brainstorm ideas for selling Edsels
an adman named Walter Thomas suggested "Let's give away a pony," The geniuses at Edsel decided to
advertise a promotion in which every Edsel dealer would give away a pony, If you agreed to test-drive an
Edsel, your name would be entered into a lottery at the dealership, with the winner getting a pony. Ford
bought 1,000 ponies and shipped them to Edsel dealers, who displayed them outside their showrooms.
Many of the lucky winners declined the ponies, opting instead for the alternative $200 in cash and soon
dealers were shipping the beasts back to Detroit. In the second year, only 44,891 cars were sold in the
U.S, already indicating the downwards trend of the Edsel. By the time the end of the brand was
announced, less than 50% of the estimated break-even points numbers were sold, leaving a huge financial
damage for the company.

Most of these damages could have been avoided if the company would have taken an alternative
approach in decision making.

There should not be a mixture of different approaches leading to confusing results for instance instead of
taking all the features that customer wanted they could have used Discrete choice analysis and evaluated
preferences of one feature over the other so that in case they have a requirement like air circulation in
the engine, engineer would know what is the preference of customer. Instead, they took preferences of
customers regarding the features and used their traditional methods for designing the car which didn’t
resonate with each other. Ford should have gone with the market research when it pointed that people
liked four names for the car and should have chosen one of them instead of playing on ego and not naming
them so just because some people on board didn’t like those names.

There should be a focus in vision, you can’t please everyone at the same time and that is what Ford was
trying to do by launching 18 varieties if Edsel and ending up confusing everyone and pleasing no one. With
Edsel Ford took a waterfall approach to product development, the waterfall model is considered
appropriate is when requirements are fixed and the product is well understood. Ford certainly knew how
to build cars at scale, and the requirements they set up in 1953 were based on sound reasoning and
research. The issue was that they weren’t learning while they were building the car, and as a result, their
initial assumptions about the car market were no longer true by the time the car launched. Ford should
also have considered failure as a result. They placed themselves in such a situation with aggressive
marketing for over a year that they overpromised and underdelivered and also couldn't pull back the
release date once the stock market tanked.

Post Closure: A restored Edsel is now far too valuable to use as an actual automobile. The car famous for
its ugliness is now a rare and valued collector's item. A fully restored, mint-condition Edsel can sell for
$100,000 and some of the rarest models, like the 1960 convertible, can sell for $200,000.
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