Moving from Invention to Innovation at Ford: The Redesign of the F-150
The Model T was an invention that made the automobile accessible to the middle-class, mostly male, consumer 100 years ago. The recent trend in the pickup industry, which is both male - and female-driven across many economic segments, required an innovative solution that would reestablish the F-150 as the undisputed leader in the pickup truck market. The F-150 has been the best-selling vehicle in America since 1982, having sold almost 30 million units. In 2003 alone, 850,000 F-150s were sold. Every seven years or so, the company undertakes a major redesign of the vehicle. Because Ford makes a significant percentage of its profits on its wildly successful F-150, why should it mess with success? why redesign it? well, there are many reasons. Three main ones are Chevy, Chrysler, and Toyota, and a fourth is Nissan. Each of these competitors must adapt to changes in the marketplace. Industry styles change, and a vehicle begins to look dated. Lifestyle trends change, so the expectations of the customer base change with regard to features and performance. New technology becomes standard on vehicles and must be incorporated into the design. Manufacturing technology changes, requiring the design to change to maximize the effectiveness of the production capabilities. Regulations change, requiring new fuel-efficiency standards with new engine technologies and new use of materials to lighten the vehicle. Perhaps the most important change during the 1990s was that the truck as a workhorse evolved into the work and play stallion. The SUv lifestyle trend started to extend into the truck market.
Ford was being attacked by Chevy’s more aggressive designs, Toyota's quality, and Chrysler’s muscle theme with Ram trucks. If Nissan creates a more exciting and better-performing truck, which it has in its Titan, Ford loses market share and its core profit. So the product development team at Ford had to innovate to compete. If they failed, the company would lose its cash cow. if the team succeeded, however, they could regain market share and gain a significant part of the new number of buyers in that evolving truck segment (mostly upscale). The challenge was to develop an innovative approach to re-creating and extending the concept of “Ford Tough,” and the solution was evident in the 2004 release of the F-150.
Ford designed models for five different market segments. Instead of relying on geographic, age, and income segmentation, Ford studied how F-150s were being used and created product user segments and scenarios. The base model F-150, the XL, is the basic workhorse for farm and construction. The STX is for a younger “wheels and tunes” crowd, those who customize their trucks and prefer certain features to be base-level and expendable. The XLT is for families, with the option of a spacious supercrew cab, complete with a full - size back door. It has all the functionality of a truck. At the same time, a two-car family does not have to compromise their ability to haul the kids, because the work truck is also a family mobile.
Kapur’s team went beyond these three traditional truck markets and identified two additional segments. These segments were composed of people who buy trucks because they are cool and provide the fantasy of off-road driving and safety. The FX4 is for bragging rights, for those who want a truck that stands out. It has options that are not available on other models, such as the black leather interior complete with leather-wrapped steering wheel and chrome-clad floor shifter. Its flashy look weds truck strength with sports car style. The fifth model is a luxury truck, the Lariat, with an interior more closely related to a living room than to a vehicle. Although still a truck, it provides the essence of comfort, even having power-adjustable foot pedals so that the huge dude and the tiny wife can both call this truck theirs. The reality, however, is that this “pickup” truck will likely never stray from an asphalt road and never carry more than antiques and the family suitcases.
Dee Kapur, who is highlighted in Chapter 1, “The New Breed of Innovator,” led the beginnings of the F-150 redesign. At a time when Ford had tarnished its “Quality is Job 1” badge as a result of the Explorer tire fiasco, Kapur kept his eye on the challenge ahead of him. He was faced with maintaining the number-one position for the F-150, the center of profit for the company. He sheltered the team from the major external problems the company was facing and provided a forum for innovation. He supported the ambitious tiered - segment approach because of innovations he saw in the marketing research and analysis. Innovation resulted in both the external and interior aesthetic and feature design to create a distinctive new look. Kapur challenged engineering to meet the demands of the new design while maintaining a commitment to quality and craftsmanship. Kapur knew that the status quo was not good enough, and Ford retained its leadership in the small truck market with the introduction of the new line.
Although Ford did its homework to assess its customers' desires, even its own expectations have been exceeded. In the months following the new F-150s release, 57 percent of buyers bought the FX4 and Lariat versions of the pickup, models that have the highest profit margins, whereas Ford had expected that these premium models would account for only 40 percent of sales. Although automobile sales were slow in early 2004, the F-150 was on target to set a sales record.
on top of these five models, Ford maintained a flagship, signature vehicle that it created as a rolling advertisement for its brand. The market size was not as important as who purchased the truck and what statement they made with it. The King Ranch version of the F-150, mentioned in Chapter 1, has seats made from saddle leather. No two seats are identical in look, and owners are responsible for treating the leather as they would a saddle. Ford produces only 20,000 of these each year, but they meet a premium-priced market and enrich Ford’s brand equity. Ford also chose to increase visibility and brand equity at the upper end of its pickup portfolio with a cobranded model with Harley Davidson. The Harley truck, designed in collaboration with Harley legend Willie G. Davidson, captures the look and feel of Harley’s renowned bikes. These special models, the King Ranch truck and the Harley truck, are outcomes of insights based on extensive customer research, the result of an innovation process in which product developers became so familiar with real people that they could design those customers’ dreams in truck form.
