Trust (Your Gut) But Verify

Henry Ford never said customers wanted faster horses, but he did agree with the sentiment.

And that was a good thing in the beginning. Ford had an intuition, a vision about how to produce something the buying public wanted — and he was right. The Model T sold like proverbial hotcakes.

Pride cometh…

But Ford got stuck in his ways, perhaps even a little arrogant. He didn’t like the idea that customer tastes change and was slow to react to more agile and responsive competitors, especially General Motors. As historian Burton Folsom, Jr. notes:

Ford’s strategy of manufacturing a good car, putting it on the assembly line, and selling it almost unchanged for 15 years no longer appealed to American consumers. Ford, however, was stubborn and slow to change his ways. The sales of the Model A [the successor to the Model T] dropped steadily during the early 1930s, and Ford fell permanently behind General Motors in car sales. Even his development of the powerful V-8 engine in 1932 did not win him back most of his old customers.

Ford failed to grasp an important point: Customers don’t provide innovative ideas, but they can certainly validate (or invalidate) them once the ideas become productized. While Ford was right that consumers at the time wouldn’t provide any entrepreneur with the idea of a mass-produced automobile, they certainly could provide insight on the qualities of the mass-produced automobile that they valued most. Did they want black (Ford) or a variety of colors (General Motors)? Did they want automatic starters and a more comfortable ride?

Competition as an A/B test

General Motors, by introducing numerous innovations to the basic concept of the mass-produced automobile, should have been doing Ford a favor. Ford should have been looking at what customers, when presented with Ford’s and GM’s ideas about mass-produced automobiles, preferred.

For Ford, this was vital field research because what customers clearly preferred was choice. And Ford wasn’t about that.

The problem was that Ford was convinced he knew best, consumer preferences be damned. Perhaps with Ford in mind, Peter Drucker advised:

…you must be prepared for major change in the future, and you must start now. If someone else’s revolutionary innovation catches you unawares, you must abandon what made you successful and take an entirely different course immediately. If you are not prepared to do this and do not drop the product or the procedure, you will certainly fail as an organization.

Time for a gut check?

As an entrepreneur, trusting your gut may have some value to get you started, but if you’re not learning about how and why your customers are reacting to your products and services, your enterprise will fail to achieve the levels of growth you desire. Indeed, your competitors might execute on your basic idea better than you do!

And as you grow, the lesson is clear: Don’t be like Ford and think the business model that launched your company will be the business model that continues to grow your company.

Spoiler alert: It won’t be.

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