Hardcore Business Planning or “Learning From the Edsel”
Sep 11, 2006
Business planning does not have to be difficult. Every single firm needs a plan, whether you are a five-person architectural firm started two years ago, or a 3,000-employee, 35-year-old engineering and environmental consulting company. But too many of these plans go off-course in their attempts at being sophisticated.
One prominent example of business planning failure from the past is that of the Edsel automobile. Named for Henry Ford’s son, out of 110,000 Edsel cars manufactured, there are only about 5,000 left, in total. For some reason, I have always been fascinated with Edsels. I have two of them— both registered and driven— and it’s amazing the comments I get from people. I even had someone ask me the other day at lunch (an architect) if Edsels didn’t have wooden frames! There are so many misunderstandings and misconceptions about how this car— a totally new car brand launched by Ford Motor Company in 1957 (as a ‘58 model line) and killed off by Ford in late 1959— flopped so badly and became a symbol for business failure.
The Edsel was created to make Ford more like General Motors. GM had five car companies, with Chevrolet being the most affordable and Cadillac the most expensive, with “move-up” brands in between. Ford only had Ford, Mercury, and Lincoln. They wanted two more brands to move Ford buyers into as they became more affluent and Edsel was one of them.
It was the most researched car ever built. Everything from the name to the design was run past consumer clinics to be sure they got it right. But in the end, they didn’t (get it right). The car was much hyped as being all-new but really wasn’t any more than a gussied-up Ford. The name was weird and the styling weirder. The economy went into a recession and the public wanted cheaper cars, not more expensive ones. After $250 million invested in Edsel, Ford cut its losses and quietly killed the brand.
My contention is that many A/E and environmental firms are doing Edsel-like business plans and, in the process, missing the fundamentals. You can have too many cooks spoiling the broth. Ford, at that time, was overrun with a bunch of business school grads (they called them “the whiz kids”— one of them was the late Robert S. McNamara who was later credited for guiding U.S. involvement in the Vietnam War) who thought everything was scientific and could be put on a spreadsheet. It’s not. You need a high level of involvement and guidance from those who DO what the firm sells— the architects, engineers, planners, surveyors, and scientists who are still active in working on projects and serving clients. Business plans need the financial and marketing and IT and human resources people’s involvement also, but they can’t set the overall direction.
Knowing what makes you different from your competition is essential to good business planning. The Edsel focused on styling gimmicks like its huge vertical grille (some say it looked like an Oldsmobile sucking a lemon), though in the early stages of its planning, it was going to use more innovative technology. All the stuff that would have made it different from a Ford or Mercury in a substantive way got killed by the bean-counters.
Getting the simple ideas from the plan on how you will be different out to every employee is the job of the CEO. It takes an evangelistic character who spreads the word every day through many different communication channels to truly do this effectively. Unfortunately, too many firms in our business are headed by introverts who “waited their way” to the top by simply lasting longer at the company than their peers. I don’t think Ford had a clear idea about what made Edsel unique and they then couldn’t communicate that to their advertising agency or dealers. The result is failure.
Last, have some realistic goals. Edsel was supposed to sell 250,000 cars in two years. No new brand had ever done that. When they sold “only” 110,000 cars in two years, it was considered a flop. In reality, that was one of the most successful new car launches ever from a numbers standpoint at that point in time. A/E and environmental firms routinely set goals I know they aren’t going to achieve. I cannot tell you how many times I have seen firms or large units inside firms set revenue goals or labor multiplier goals or utilization goals that you know they can’t hit. They aren’t going to do much different than they ever have, yet set a goal so high, they can’t possibly achieve it. This makes everyone feel like failures and— when repeated year after year— makes the goals meaningless.
Involvement of the right people, knowing what makes you different from your competition, a CEO who spreads the word, and realistic goals are essentials of what I call “hardcore business planning.” These elements have to be there for the plan to be any good. You don’t want your firm to be “the Edsel” of our industry, do you?
Originally published 9/11/2006
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