The Innovator's Dilemma When New Technologies Cause Great Firms to Fail

[silvrsvt]

the idea that capability must continue to grow has led to a tremendous increase in the mass of compact pickups.

 

an innovator would Try to shrink the capability to match the needs not the dreams of the buyer and work to make the truck true to the what the buyer are looking for which is not to carry 1350 lbs every freaking day. but maybe to carry 750lbs payload in exchange for a lighter vehicle.

 

when you have a compact pickup like the Tacoma with a max payload of 1350lbs, when the "1/2 ton" f150 can max out at over 3000 lbs, you have a issue with this segment.

 

a true 1/4 ton P/U would meet the needs of alot of buyers that have fled into other segments. It is the profitablity of the full size segment that is preventing them from exploiting other options.

 

The issue is that marketing drives the market as much as engineering...If your competitor has a disadvantage you can exploit, aren't you going to use that in your marketing to sell more products?

 

The market doesn't limit itself....its constantly getting bigger and better because thats what consumers demand.

 

Just look at small cars...the smallest Honda you can get is a Fit...compare it with a late 1980s Civic...The Fit looks huge vs a Civic hatchback. A B-class car is roughly the same size a compact car from the 1980s.

 

Yet another thing..look at HP ratings...they keep getting higher and higher, yet still get good MPG numbers in relation to their performance numbers.

 

Overall, I don't think your going to see a serious decline in HP numbers or a comeback of Small pickups unless gas prices spike up over 5 gallons a gallon...then again most of the recreational truck buyers have removed themselves into a CUV or sedan that gets better MPG numbers.

[silvrsvt]

There might be a new market for small trucks worth the investment if they were much more efficient with improved performance.

 

The big word here is MIGHT...but I don't see a huge gain in MPG unless you want a rancho/el camino style "pickup" that is just a sedan with a big open truck and very little capabilities as a truck...

[Edstock]

IMHO, there's a profitable niche for a small FWD pickup that could be made from the TransitConnect, especially with the advent of the 1.0/1.6/2.0 EB power trains.

[Biker16]

10 MPG? Isn't that a bit of a stretch? I mean, with reports of 16-17 mpg in the SD with the 6.2L, that's 26-27 mpg in a Ranger with the 6.2. Considering the 3.0L couldn't get that on a good day, I'm having trouble believing it's a 10 mpg difference.

 

the ranger with the basic 2.3 was getting 22/27 mpg. that was with a a 5spd manual transmission, the engine minus balance shafts, direct injection, TIVCT, or much of anything related to fuel economy.

 

it would have been reasonable to assume that an EB 16 would easily top the economy in the 2.3 while providing 30 more HP and torque. add the new 6spd in the mustang and you would see a further boost in MPGs.

 

but that is the problem lack of investment in declining product cause the decline of the product in some case, this becomes a Self-Fulfilling prophecy. lack of investment begets more lack of investment until the investment required to maintain a product becomes too great to justify the redesign of that product.

 

the key is maintain incremental investments in facilities to prevent the extensive investment needed if you stop investing in the factory. like ford is doing with LAP, SLAP, AAI, and recently to MAP.

[Biker16]

The issue is that marketing drives the market as much as engineering...If your competitor has a disadvantage you can exploit, aren't you going to use that in your marketing to sell more products? The market doesn't limit itself....its constantly getting bigger and better because thats what consumers demand. Just look at small cars...the smallest Honda you can get is a Fit...compare it with a late 1980s Civic...The Fit looks huge vs a Civic hatchback. A B-class car is roughly the same size a compact car from the 1980s. Yet another thing..look at HP ratings...they keep getting higher and higher, yet still get good MPG numbers in relation to their performance numbers. Overall, I don't think your going to see a serious decline in HP numbers or a comeback of Small pickups unless gas prices spike up over 5 gallons a gallon...then again most of the recreational truck buyers have removed themselves into a CUV or sedan that gets better MPG numbers.

 

this is not really about HP but its about weight, more capable vehicles weigh more.

 

another book to read is

 

The Darwin Economy: Liberty, Competition, and the Common Good

 

in this book

 

excerpt

That case rests on Charles Darwin’s observation that competition favors traits and behaviors only when they promote individual success. Darwin recognized that, as in Adam Smith’s invisible hand theory, individual interests often coincide with those of larger groups. But not always. And when interests at the two levels conflict, individual interests generally trump, often resulting in wasteful arms races. My claim is that simple, unintrusive changes in tax policy can mitigate such arms races, producing enormous gains for everyone.

 

The massive antlers of bull elk illustrate Darwin’s point. Like males in most vertebrate species, bull elk take more than one mate if they can. Because relative antler size was often decisive in their battles for mates, mutations that coded for larger antlers spread quickly. The resulting arms race eventually stabilized. But although the modern bull’s huge antlers—which can span four feet and weigh forty pounds—promote individual reproductive success, they are an enormous handicap from the perspective of bulls as a group. When chased into densely wooded areas, they are easily surrounded and killed by predators.

Bulls would fare better if each animal’s antlers were smaller by half. Every fight would be resolved as before, and each animal would enjoy greater mobility. Yet any individual with relatively small antlers wouldn’t leave any offspring.

 

if you were to consider the insanity of the full size market where larger and large trucks come out for no other reason than to out do the competition.

 

if you look at the C-car market in the US

2012

focus 160hp

civic 140hp

corolla 125hp

Elantra 140hp

Cruze 140hp

 

2000 base engine

focus 110hp

civic 106

Corolla 125hp

Elantra 140hp

Cruze/ Cavilier 115hp

 

increases in HP in 12 years

Focus + 50

Civic +34

Corolla +0

Elantra +0

Cruze +25

 

 

lets go to full-size pick ups

2012

ford 302hp

GM 195hp

Toyota 270hp

 

2000

ford 205hp

GM 200hp

Toyota 190hp

 

Increase

ford +98hp

GM -5hp

Toyota +80hp

 

the competition to be the best may not lead to the panacea that the automaker are hopping for.

[Edstock]

the competition to be the best may not lead to the panacea that the automaker are hopping for.

 

That's why it is so very, very important to define precisely just what it is to be the "best" in the light of the fact that marketing competition results in "mission creep": "Most luggage space in class", "Most rear-seat leg-room in class". Sometimes, like with the Mazda 6, this can be un-good.

[akirby]

but that is the problem lack of investment in declining product cause the decline of the product in some case, this becomes a Self-Fulfilling prophecy. lack of investment begets more lack of investment until the investment required to maintain a product becomes too great to justify the redesign of that product.

 

If the ranger was the only product in it's class then that argument might hold water. But even if the Ranger was left to wither on the vine, what about the Colorado, Tacoma and Frontier? Did all of the small truck mfrs conspire together to kill the market? Of course not. The Tacoma especially was a perfectly viable alternative to folks who actually wanted or needed a small truck and the others weren't terrible either.

 

Sometimes the market changes and it's not because of

[Biker16]

Not hokum, but not explained well. Looking at the theory as applied to the automotive business, (US Domestics gave away the small car segment to foreign manufacturers), might be an example of the MBA thought process of trying to improve the business by eliminating the least profitable segment, but the thinking behind the theory is really based on one very faulty assumption. The fallacy is the notion that the segments are related to each other. Manufacturers build products. Grouping those products into A B and C classes makes it easier for pundits to make comparisons, but there is no proof that consumers are locked into the construct. For example, most buyers of Mini Coopers could not begin to tell you what class the car belongs to and they don't care. Further evidence comes in the form of blurring of price points; a heavily optioned B segment car can be much more expensive that the average C car. Hign end features are no longer reserved for higher segment vehicles.

 

The "new" Ford gets it: Each vehicle (product) lives or dies on it's own merits. Each vehicle must be profitable on its own merits. By focusing on the individual product and trying to make each product the best it can be in terms of market acceptance, Ford is no longer handicapping any one vehicle to enhance the sale of another.

 

the most important Thing is to be flexible and to never how too tightly to any startgey or philosophy, becuase that is the path to the "Dark Side" it like pushing for an 100% shared platforms in absolute terms that is an inflexible strategy.

 

in the same mold to force profitablity on unproven or future growth markets or segment like china or EVs misses the point, by defualt unproven technnologies are not profitable. look at how long it took for Google to become profitable, or facebook, both are sucessful companies in new innovative areas of technology.

 

[aneekr]

the ranger with the basic 2.3 was getting 22/27 mpg. that was with a a 5spd manual transmission, the engine minus balance shafts, direct injection, TIVCT, or much of anything related to fuel economy.

 

That particular configuration represents the most fuel-efficient pickup truck offered in the U.S. market in recent years. Thanks to the Ranger's relatively low curb weight, the 2.3L 5MT powertrain was reasonably responsive, if a bit noisy.

[silvrsvt]

That particular configuration represents the most fuel-efficient pickup truck offered in the U.S. market in recent years. Thanks to the Ranger's relatively low curb weight, the 2.3L 5MT powertrain was reasonably responsive, if a bit noisy.

 

The only problem is that some people around here are expecting that powertrain to do what the V6 Ranger could do...which it can't

 

As an example, a 2.5L equipped Escape has the same towing capacities as an I4 Ranger...the EB 2L can do 3500, which is better then what the V6 Ranger could do.

 

Couldn't find any info on payload capacities for the Escape though...

Edited August 3, 2012 by silvrsvt

[StevenCaylor]

The 4.0L Ranger had a max tow rating of 6000 lbs.

[RichardJensen]

And worse fuel economy than the 3.5L EB with a 12,000lb tow rating

Edited August 3, 2012 by RichardJensen

[silvrsvt]

The 4.0L Ranger had a max tow rating of 6000 lbs.

 

Could have fooled me...it goes down to 3000 once you add 4x4 to it!

[StevenCaylor]

IIRC, the only one that had the 6000 lb tow rating was the reg cab long box model, 2WD.

Edited August 3, 2012 by StevenCaylor

[jpd80]

Really, a lot of the Ranger Vs F150 argument boils down to a few would be buyers complaining about width.

Ford has clearly banked on a lot more buyers looking past that issue and buying the F150.

 

On the Toyota side, Tacoma is basically a North American project as Toyota has just refreshed Hilux again in the rest of the world

so there is no intention of combining mid sized Toyota trucks under one global vehicle, so what's the point of selling T6 Ranger in the USA.

[Biker16]

And worse fuel economy than the 3.5L EB with a 12,000lb tow rating

 

and the 4.0 was way past it's prime, while the 3.5 was the most edvanced engine ever put in a ford pickup.

 

It is not fair comparison. it like comparing a Zetec powered escape to a Eco boost powered Explorer. 21/26 vs 20/28. the 130hp Zetec doesn't stand a chance against the 240hp Eco-boost. even in a smaller vehicle.

 

a ranger with a Advanced ecoboost engine would do much better than a F-150. but again does this proof or disproof the Assumption that ford has Innovation dilemma in full-siized trucks?

 

They have done nothing to improve the vehicle which ends up making it more attract to dump the vehicle, not invest in it.

[T-bird]

And worse fuel economy than the 3.5L EB with a 12,000lb tow rating

Agree with having first hand knowledge of the gross fuel mileage for a much smaller vehicle. Other than that I would still buy the Ranger versus my current Ecoboost F150 as it is more than what I need. To me the moral thing to do would be to put that 2.0 or 3.5 ecoboost in the Ranger where should be able to produce a nice practical mix of power and fuel economy. This knowing the term moral can expect a bunch of nasty comments by itself.

Edited August 3, 2012 by T-bird

[akirby]

They have done nothing to improve the vehicle which ends up making it more attract to dump the vehicle, not invest in it.

 

Seriously? This is the stupidest thing you've said in a long time.

[xr7g428]

I found a low mileage '91 Ranger, 2.3 liter 5 speed 2WD long bed. I needed a truck for a remodel project that requires me to drive about 80 miles a day round trip. Other than being a little slow. I love the truck. I had owned a Toyota HiLux many years ago and I had forgotten what a blast these little trucks really are. It could never replace my F 150 Super Crew, but it has its place.

 

MY POINT:

 

If you started with a clean sheet of paper, (remember the thread is about the risks of innovation) is there an undeserved market for a small light weight fuel efficient truck. About a 100 posts back Edstock was suggesting a truck off the Transit Connect platform. I am not sure that it would be ideal but the is a hole in the market right now. I would love to drive an Eco Boost 4 powered mini truck.

[Pioneer]

the key is maintain incremental investments in facilities to prevent the extensive investment needed if you stop investing in the factory. like ford is doing with LAP, SLAP, AAI, and recently to MAP.

 

SLAP has been closed for 6 years.

[Biker16]

If the ranger was the only product in it's class then that argument might hold water. But even if the Ranger was left to wither on the vine, what about the Colorado, Tacoma and Frontier? Did all of the small truck mfrs conspire together to kill the market? Of course not. The Tacoma especially was a perfectly viable alternative to folks who actually wanted or needed a small truck and the others weren't terrible either.

 

Sometimes the market changes and it's not because of

 

the competition which was to force the compact pickup to be larger, more powerful and more capable, basically closed the gap between the ranger and the Dakota. so instead of improving the winning formula, they behaved like compact pickup segment is the same as the full size segment which it is not.

 

So the manufacturers Think that the small pick up is simply a Smaller full size pickup, it is like thinking that the fiesta is simply a smaller Fusion. The differences in size require a different way of thinking, thus it is more practical to have a fiesta hatchback than a fiesta sedan. the decrease in size drives the need to maximize people cargo flexibility, that the larger fusion does not need. The key to the compact segment should have been flexibility not towing, payload or 0-60. think about the compact pick up in terms of flexibility gets you designs like the element,and some other SUVs, that are not driven by performance.

 

It is understanding why the 2nd best selling compact car has 128hp while the focus has 160hp, HP and is not the reason people buy compact cars towing and payload are not primary reasons people buy compact pickups, there is an expectation of loss in capability to improve economy.

[akirby]

the competition which was to force the compact pickup to be larger, more powerful and more capable, basically closed the gap between the ranger and the Dakota. so instead of improving the winning formula, they behaved like compact pickup segment is the same as the full size segment which it is not.

 

So the manufacturers Think that the small pick up is simply a Smaller full size pickup, it is like thinking that the fiesta is simply a smaller Fusion. The differences in size require a different way of thinking, thus it is more practical to have a fiesta hatchback than a fiesta sedan. the decrease in size drives the need to maximize people cargo flexibility, that the larger fusion does not need. The key to the compact segment should have been flexibility not towing, payload or 0-60. think about the compact pick up in terms of flexibility gets you designs like the element,and some other SUVs, that are not driven by performance.

 

You don't understand why most people bought Rangers and other small trucks to begin with. They were cheap utilitarian transportation. Small crossovers and hybrids didn't exist yet and gas was cheap. I bought 2 myself. As small crossovers got better and we got better fuel efficiency on all vehicles small pickup buyers changed to other vehicles.

 

It's that simple. Same thing happened to BOF full and midsized SUVs. The market changed and it's not changing back right now regardless of the products. It may change in the future.

 

It is understanding why the 2nd best selling compact car has 128hp while the focus has 160hp, HP and is not the reason people buy compact cars towing and payload are not primary reasons people buy compact pickups, there is an expectation of loss in capability to improve economy.

 

But Ford can charge a lot more for a vehicle with better performance and/or fuel economy. It's never about absolute sales volume. In fact keeping sales volume within one plant's capacity gives you the best cost structure and spreading sales out among multiple models and segments gives the company more flexibility to absorb market changes.

[MKII]

Has VW shown any interest in offering the new VW Amarok small pick up in USA?

[Edstock]

Has VW shown any interest in offering the new VW Amarok small pick up in USA?

 

IIRC, VW Canada might be importing it . . . maybe.