There is a quote in capitalism that says “The market always wins.” It does. I was trained as a mechanical engineer. For 12 years I had design responsibilities. I used CAD. I knew how to design parts that had to be molded in plastic, cast for metal, stamped, assembled with clips, screws or adhesive, extruded and coated. For years, I took the styling inputs, our testing requirements, and manufacturing requests and then balanced those with cost, weight, investment, performance and packaging to design the optimal parts worthy of being on a Honda. I didn’t question what I worked on. I didn’t know why. I simply designed.
Then I became curious. Why did we design specific things and not others. How did we make trade offs? What did our customer want? I went back to grad school, not for engineering, but for business. How could I know what we should be working on? During my MBA program, I took every elective related to defining and understanding the market.
I was exposed to our own market research process while in b-school. During development for the Model X, our code name for the project, I participated in focus groups as we sought feedback on several concepts for this all-new vehicle. We were targeting the college and young adult population so we visited several college campuses with our sketches and mock ups. We had three concepts: Lifeguard, Triathlete and Adventure Sport.
Despite generating the most conversation, attention and approval, Triathlete, a CRX on steroids, our marketing team pushed for the least-discussed model, Lifeguard. I couldn’t understand why. There were clearly no Gen Xers, male or female, that wanted it. The team pushed forward anyway, studying surfers, skiers and other outdoor sports fanatics to create this segment buster. With a price of $16k, youth would flock to the dealers to get it.
Executives were unsure. It was quite different than anything we had done. Our team was small and we had several other vehicles competing for resources. It wasn’t convincing enough. The work was shelved for several months and then suddenly development was restarted and accelerated. Toyota presented a similar concept at the ’99 Tokyo Auto Show. We had to beat them to market.
We did beat them, launching the Honda Element at the 2002 New York Auto Show before the Scion xB (which was a full year later). The Element was not a raving success. Teenagers and twenty-somethings did not flood the showroom floors. There was no clamoring for keys by the much-needed younger generation. Outdoor sports enthusiasts, dog owners and small businesses bought it, most older.
(The entire Scion brand, birthed out of Toyota’s ’99 Project Genesis, also failed to connect meaningfully with the younger generation, eventually succumbing to business pressure, was shut down in ’16.)
Element sales only hit the annual target for two years, dropping to less than 20% of the original target by its last model year. The Element never hit its intended audience and never saw a redesign. It was canceled after a single, albeit extended, lifecycle. (This product launch was my first and hopefully last major mistake with the press–see article here.)
I left the small world of Honda and the global automotive market. Since then, my job has exposed me to one industry after another: medical device, financial, education, industrial, military, government and healthcare. For over ten years, I’ve been a consultant on new product/service development. Clients pay me to improve their development output and the corresponding contribution to corporate profitability.
I always start with understanding the market. There’s nothing worse than improving a development team’s process just to have them release stuff that misses the mark. It just makes the corporate financial problem get bigger faster. The Element was my real world lesson on this.
If you’re going to invest money, time and limited resources on developing a new product or service, make sure you know what the customers are really wanting. Nothing screams waste more than giving them something they don’t want.
Sure, the Element made money. Many products and services I’ve seen launched fail to do that. But what could have been in its place? The Acura MDX, Acura TL and Honda Pilot are three vehicles that were and continue to be huge successes, also launched as brand new when I worked on them. When you have limited development resources, your company needs Pilots, not Elements.
It may be easy to say “Adam, you have to have failures. Fail fast.” After market launch isn’t the time to fail, especially with physical products, the tooling ramp up is too long and expensive, especially in regulated industries. Software can do that, doing simple A/B testing on a portion of their user base.
Fail before launch. I saw the rejection signs years before the Element launched–when it was still a foam core cutout–that it wasn’t going to be what product managers expected. The Acura RDX was in danger of the same fate before it was fixed for Gen 2. The Acura ZDX was an utter failure as well. Honda was pushing product to market not responding to pull.
(Still, Honda remains one of the premier mobility companies in terms of profit. I only pick on them because of my familiarity with them. Where is Pontiac or its hideous Aztec, Saturn and their plastic-bodied cars, Fiskar, the Tesla Roadster or any other of many auto brands and cars that failed to deliver, losing billions of dollars.)
My advice, from seeing this over and over again is simple, take some time, maybe a lot of time, and deeply understand what the market needs. Your future depends on it, whether it’s a product or a service. Customers can’t always articulate what they need, but their pain points become obvious after close observation. I’ve never seen a thoroughly researched segment that was well executed fail.