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Case Studies

The Model T Ford
Henry Ford did not invent the motor car – in fact he was a comparative latecomer to the scene. Although he had started producing cars back in 1903 he had little success until the Model T. The first production Model T was built on September 27th, 1908 in Detroit and production continued until 1927. The key contribution which he made was to change the approach to manufacture and marketing of cars. Prior to his activities cars had been a specialised luxury product available only to the wealthy; his vision of producing ‘a car for Everyman’ and at a price which Everyman could afford resulted in a revolution in the marketplace. Importantly the ways in which the vision was realised extend beyond cars to thinking about a whole range of consumer products and even services; again Ford did not invent ‘mass production’ but his efforts around the Model T ushered in the era in which this mode of thinking predominated. It’s possible to think of innovation taking place along several different dimensions – the ‘four Ps’ of ‘product’, ‘process’, ‘position’ and ‘paradigm’. (See chapter 1 of ‘Managing innovation’ for more detail on this). In the case of the Model T Henry Ford and his team moved the frontiers of all four at the same time – and in doing so created a completely new system for thinking about manufacturing. Product innovation – involved rethinking the design of the car. Earlier car manufacturing had been like bespoke tailoring, hand building a car to suit the wishes of a particular client, offering extensive variety and choice around a basic engine and chassis. Ford’s contribution here was to work to a target cost – aiming to bring the Model T within the purchasing power of a large market by designing and standardising – essentially applying what we would now call ‘value engineering’ approaches – not only the whole car but the constituent elements within it. Position innovation – involved rethinking the target market for the product. Instead of working with the small wealthy niche which his contemporaries had been doing, Ford saw the potential of reaching a much bigger market of people who wanted personal transportation but could not yet afford it. This vision took a lot of effort to realise but effectively Ford did for personal car ownership what the low cost airlines would do a century later for personal air travel. Henry Ford said of the vehicle: I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be low in price that no man making a good salary will be unable to own one - and enjoy with his family the blessing of hours of pleasure in God's great open spaces. Paradigm innovation – although his early efforts at car making were typical of those used by his contemporaries the vision Ford evolved was much broader – nothing short of a revolution in thinking about the car as product and the manufacturing process which would deliver it. It required a change at the level of the whole system of product, process and market. His underlying business model was essentially one of low cost, high volume producing for a mass market – something which we take for granted today but which at the time was a little applied concept and one fraught with technical difficulties in actually making it work. Process innovation – the key to realising the new paradigm lay in process innovation – how the car would actually be built. In order to deliver on his target cost and make the product ©2009 Joe Tidd, John Bessant www.wileyeurope.com/college/tidd

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Case Studies
widely available at a low cost Ford and his team of engineers needed to rethink the entire suite of production operations. The model which he (and his gifted team of engineers) developed and systematised was based on a...
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