The Starship’s Failed Launch: Lessons Learned from One Product’s Failure

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As we pointed out in the previous blog, a thorough market analysis helps take an idea and turn it into a successful reality. Companies like Chipotle and Starbucks, who identified underserved markets/niches in their early stages and developed products that cornered those markets, are examples of this. The examples of success are everywhere, and for obvious reasons — they have staying power. 

But what does failure look like? What does it look like when a company moves forward on the basis of insufficient, faulty, or biased market research? We've explored lessons that can be learned from products that failed before, but there's one more major failure we wanted to address. 

Consider Beechcraft's Starship: after 5 years of planning, hundreds of thousands of hours of paid labor, and over $300 million in R&D costs, Beechcraft only sold a handful of units, resulting in tremendous losses. What mistakes did Beechcraft make when developing the Starship and how can we learn from them?

The Starship

Anticipated as one of the most innovative and sleek personal aircrafts of time, the Starship was launched in February of 1986 after nearly 7 years of R&D. The Starship was notable for several reasons, beginning with its graphite composition which used extremely high-tech materials, unlike the aluminum materials used by its competitors. In addition, the Starship (pictured here) had a sleek, futuristic wing design that set it apart from the rest of its competitors. Lastly, as PilotFriend explains, 

“The pusher design offered a quieter ride, since the gusts of wind and air off the tips of the propellers no longer strike the side of the aircraft.”

With all these innovations and high-tech upgrades, Beechcraft thought they had a product that would revolutionize the market. But, what they really had was a improperly researched idea that would never become a successful reality.  Why was that?

Costly Assumptions

Beechcraft's goal was to create a corporate aircraft the likes of which had never been seen before. They wanted to draw “ooh's” and “ahh's” from their customers and competitors alike. They wanted to turn heads and drive conversations across the aviation world. All of this they did. But amidst all of this, they forgot to ask the question most essential to success: Will people pay to purchase this product? 

The answer was no!

Beechcraft assumed the plane's futuristic appearance would drive demand and sales, but they neglected to ever confirm their assumptions. Primary research — surveys, focus groups, one-on-one interview with potential customers — may have revealed positive comments about the plane's visual appeal but negative comments about the potential for demand and usage. In his book, The Starship Diaries, Dallas Kachan writes, 

“The five-and-a-half-year development program cost more than $300 million and millions of man hours… Production was halted due to poor commercial demand. Of the 53 built, only a small handful were ever actually sold.”

Do not assume! A thorough market analysis would have disproved Beechcraft's assumptions, saving them hundred of millions of dollars in R&D and labor.

Inane Innovation

While the Starship might have looked impressive, it offered very little upgrade in terms of the quality of flight, which in the end is the primary function of an airplane. According to “The Short History of the Starship,” by John Weems,

“The Starship was 89 knots (165 km/h) slower than the Cessna Citation. It was 124 knots (230 km/h) slower than the Learjet 31. The turboprop-powered Piper Cheyenne was also faster than the Starship.”

Despite (or perhaps because of) its high-tech design and innovative wing structure, the Starship actually ended up flying slower than most of its competition. Beechcraft assumed that their customers would sacrifice speed for high-class, high-tech innovations. Once again, they assumed wrong — a problem that both primary and secondary research could have helped solve. 

Poor Pricing

The innovative, futuristic design called for an unprecedented price point, targeted at the very high-end of the luxury market. The Starship debuted at 5 million dollars, a much higher price point than any of its current competitors. Pilotfriend notes, 

“This was way more expensive than the King Air that the Starship was intended to replace and was virtually the same price as an introductory jet at that time. 3.5 to 4 million dollars would have been a more realistic price point for the Starship.”

Executives assumed customers would pay the extra million to fly in high-tech luxury. However, similar jets made by Learjet and Cessna had comparable capacities and range but a much cheaper price point (sometimes up to 2 million cheaper). 

Terrible Timing

Compounding their mistakes with pricing was the economic downturn in the late 1980s into the early 1990s. The Starship was launched at a time when everyone in the country, including the wealthy elite, was pinching pennies. In 1988, the year the plane launched, the country was suffering one of the worst economic crises in more than two decades. Pilotfriend argues, 

“You couldn't give away an executive aircraft during this period, let alone successfully promote an all new design. So Starship sales got off to a very disappointing start.”

The early stages of thorough market research should have revealed the warning signs of a suffering economy, which would lead to a massive dip in private jet sales.

A Final Fatal Flaw

There were multiple fatal flaws in this project, but the basic strategy was built on a conclusion from market research that was incorrect. The initial market research was conducted in roughly 1997, at a time when the price of oil had roughly doubled. In the aftermath of the oil price hike, airplane operators completed surveys with the idea that fuel economy was the holy grail. This led to a chain of error that resulted in a complete collapse.

As it turned out, at the exact same time that Beechcraft was pouring money into the doomed Starship, Toyota Motor Company spent a similar amount and ended up with the Lexus Division. What irony.

Beechcraft had an idea they felt was cutting edge, high-tech, and revolutionary. But ultimately that is all it was — an idea. By ignoring market research and making their innovations based on assumptions, they lost hundreds of millions of dollars and thousands of valuable man hours. Understanding your customer's needs and the current market conditions is incredibly important when launching a new product. Use Beechcraft's failure to ensure your own success!

What other products have failed due to faulty or incomplete market research? Share with us by tweeting @EidsonPartners!

(Image credit: www.rps3.com)

2 thoughts on “The Starship’s Failed Launch: Lessons Learned from One Product’s Failure

  1. Pingback: Think Small to Think Big: How Large Companies Can Innovate Like a Startup | Eidson & Partners

  2. Pingback: Learning Through Failure: Startup Edition | Eidson & Partners

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