Learning from outside
A view from Dave Trott

Learning from outside

In the 19th century there weren’t any motor cars, just a few horseless carriages.

Primitive vehicles made by bicycle manufacturers with unreliable little engines.

They were just a novelty, a toy for rich people.

The entire world was powered by horses pulling carts.

But Henry Ford had a vision: what if he could replace the horse and cart with a motor car that was just as cheap and reliable?

And in 1903 he began manufacturing the Ford Model T: simple, tough, reliable.

He wanted everybody in America to have one, so he set about growing the market.

He kept the same basic model year after year but made it cheaper and cheaper.

Ford was in a market growth situation: he was building the market for cars.

By 1913, he invented the assembly line so he could build them even quicker and cheaper.

By 1914, there were half a million Model Ts on the roads.

By 1923, half of all the cars in America were Model Ts.

Ford had done what he wanted – he’d replaced the horse.

But in 1923 he began to have a real competitor, General Motors.

GM president Alfred P Sloan saw that he wasn’t in a market growth situation, Ford had already done that – he was in a market share situation.

As Ford already had half the market, the way for GM to grow was to take share from Ford.

But what did Ford have that could be turned into a weakness and exploited?

Well, as usual, the competition’s strength can be turned into a weakness.

Ford had one single model, the Model T: it had been its only model for 20 years.

So its strength, consistency and simplicity could become its weakness.

GM was a holding company with several automobile brands.

Sloan saw that for people who were fed up with the Model T, he could offer choice.

GM offered a range of cars you could stay with as your age and budget changed.

You could begin with Chevrolet as the cheaper, entry-level car.

Pontiac was the sportier car for younger people.

You could trade up to Buick as you began earning more.

Oldsmobile was for older people who wanted comfort without ostentation.

Cadillac was the luxury brand to show you’d really made it.

And his market share strategy worked, as the market Ford had created matured into one looking for choice.

That’s when Sloan began to look for other ways to create even more choice for the public.

Which is when he did what the smartest people always do.

He looked outside his own market for inspiration.

He looked where no-one else would have dreamed of looking – he looked to Paris and the world of haute couture.

He saw that every year there are fashion shows, and every year people demand new fashions.

What if he did that with cars, so every year the public would demand the latest model?

And that’s exactly what he did, he launched the concept of a new model every year.

And for the next 50 years it was exactly what the public wanted.

In 2008, GM sold 8.5 million vehicles in 35 countries.

Of course, once GM owned the market it became vulnerable to someone else taking market share.

GM grew by making bigger and bigger cars, so that became its weakness.

It became vulnerable to smaller, cheaper cars, strangely enough starting with one very like the original Model T: the Volkswagen.

But that’s the thing with fashion: it’s always changing.

Dave Trott is the author of Creative Blindness and How to Cure It, Creative Mischief, Predatory Thinking and One Plus One Equals Three

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