May 10, 2016

In Product Development, Let Your Customers Define Perfection (HBR)

In an era of high-stakes innovation, there is no clearer illustration of how to develop new products the right way (and the wrong way) than a tale of two car companies.

The first company is Porsche, which in the early 2000s launched the Cayenne sports utility vehicle — a vehicle very different from the high-performance sports cars for which it was famous. The second company is Fiat Chrysler, which introduced the Dodge Dart compact in 2012 with great fanfare, and even greater expectations. The company’s CEO, Sergio Marchionne, said at the time that “of all the cars I can get wrong, it ain’t this one.”

The Cayenne became a huge profit-maker for Porsche. The Dart never took off and was finally killed by Fiat Chrysler this year. Their divergent fortunes show what happens to companies that do and don’t develop products with a clear understanding of exactly what customers want and what they are willing to pay for it.

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