Former Microsoft Corporation employee, Vern Raburn, founded a company to manufacture airplanes targeted at short trips connecting a vast number of small, less frequented, under used, regional airports/airstrips across the USA. That’s the oversimplified version of the story. He, Vern Raburn, and his company tried to ‘disrupt’ the aviation industry. He was not trying to be the company operating the connecting flights with the airplanes, he wanted to be the manufacturer making the Hardware (i.e. airplanes) and Software (i.e. FMS) for such companies!
In summary: Eclipse Aviation had an idea (to build a particular type of aircraft). A lot of overlapping events occurred. The method of execution the team chose, the genuine technical innovations, disconnect from business reality, the promises that were detached from market behaviours, the decisions to switch components midway into design and development process (actual flying prototype), the industry trends and events, the customers in the said market, the existing players/competitors in the market, the award ceremonies in the industry, the economic situation in the country and the world as a whole, the eventual bankruptcy, the acquisition, the merger after the acquisition. IT’S A LOT OF EVENTS.
To be fare the company was ambitious and pioneering on a technical level. But that alone proved unsustainable in the long run.
The idea, in my opinion, was good. I genuinely think the idea was good for that time period. However, the underlying premise or basis of the argument, to me, comes off as disrespectful and lacking of understanding for the industry it was targeting. This failure carries a lot of lessons. Here are some of such lessons, extracted from this cautionary tale, that will be useful to Product Managers:
There is reality: According to the story, Eclipse Aviation proposed it could out-manufacture incumbent plane makers simply by mass producing light jet airplanes and sell it at less than One Million (1,000,000) US Dollars at THAT TIME PERIOD. Its premise was (in summary) there were lots of millionaires (and company fleets) that would gladly take up the manufactured inventory because it (Eclipse Aviation) made it available to the market and by some means its actions will force market prices down. It hoped to open up an entirely new buyer class and market within aviation. The problem with this was, out of the many Millionaires, only few owned a jet of their own. And that ownership was shared amongst the various aircraft OEMs across every size of airplane. Many were probably, simply comfortable flying commercial first class but Eclipse Aviation’s top brass wanted their assumption to be true. Also that argument was hinged on other layers that were also not as concrete as they appeared on paper. The lesson for Product Managers is this: No matter how much you want something to be true and based on your assumption, THERE IS REALITY! The company also did not consider the detrimental consequences when it changed the engine component at a critical time. The story goes, after the prototype had taken flight, Eclipse Aviation decided to change the engine (Williams EJ22) because, according to them, it did not meet their standards. That claim was refuted by the engine maker/supplier (Williams International) arguing that Eclipse Aviation wanted more than was initially agreed. Apparently, Eclipse Aviation wanted the aircraft to exceed its original, intended design. This change meant a complete redesign, redevelopment of the entire aircraft! Sound familiar? Adding new features and changing scope midway has consequences that affect other aspects of the Design and Development process. That’s the reality. The timeline does not shrink when items are added to the scope of work, it rather increases! That’s another lesson, scope creep kills! Remember: Reality beats personal assumptions every single time!
Business Plan: Continuing with the subject of REALITY, brilliant ideas for solving problems STILL REQUIRE a realistic Business Plan! Even if you are solving a genuine problem with a group of smart people, a business plan is fundamentally important. This Business Plan needs to be based on a solid Business Model. If this model relies on unrealistic calculations, unvetted personal assumptions and pure vibes then it is a disaster waiting to happen! Eclipse Aviation, after my analysis of the story, misunderstood SWOT, Market size/revenue opportunity (TAM, SAM, SOM), production costing, etc. These are all key aspects of a Business Plan (and the model within it). The overall per year manufactured business jet aircraft across ALL OEMs in the space was around Nine Hundred (900) or so aircrafts. Eclipse Aviation’s Business Plan boasted that it could make (and sell) between Seven Hundred and Fifty (750) to over One Thousand (1,000)! The first lesson here: Whatever solution that you come up with needs a viable Business Plan based on a realistic Business Model and a system built for it to thrive. As Product Managers don’t neglect the need for a Business Plan based on solid Business Model. The second lesson here for Product Managers is to always look beyond their Product(s)! Always look beyond the problem being solved.
Problems over Disruption!: Put problems over the craze for disruption! Simple!! There is this notion that ‘if you announce you are disrupting then you will build something terrifically great’. Unfortunately, that’s not how it works. During the time, the helm of Eclipse Aviation, genuinely thought the obvious situation of big airlines and their big airplanes not being able to do short trips between small, underused airports meant that the space was ‘ripe for disruption’ RATHER THAN ‘a problem waiting (and needing) to be solved’. Those are two different things. One has calculations that’s disconnected from reality, detached from sensible reasoning but makes everyone feel good WHILE the other is brutally honest, makes everyone feel uncomfortable about the realities but delights everyone to happily jump right in (regardless of how grim it looks). Read that again. One is varnished the other is unvarnished!! Yes, there was a gap in the market. Yes, there was (also) a genuine market in THAT gap!! BUT they (Vern Raburn, his company and his entire team) did not stop to ask how to genuinely carter to that market realistically! The lesson here for Product Managers is to ask (and aim to answer) multiple questions: What’s the (real/actual/existing) Problem? Is there a gap in the market? Is there a market in THAT gap? If there is a market in the gap (of a certain market) what’s the honest, realistic, genuine way to fill that market? The market and its gaps need to be distinguished! How do we have an unvarnished conversation about the problem? Learn the lesson, Product Managers.
The numbers: There are several categories when it comes to ‘numbers’ that concern a product (and the business, systems around it). Pay attention to the numbers! Money, product specifications, time, staff head count, operations, supplier deliveries, procurement, unit economics, rent, tax, levees, overall economics (global, regional, local) etc. You need to pay attention to ALL these numbers. Also pay attention to how these numbers interact and affect each other as they are not independent when running a business. Changing one thing will surely affect another and then it trickles down to other things. Eclipse Aviation tried to build its own FMS (Flight Management System) when it should have procured one from a tested and trusted supplier. The industry had several at the time. This decision added to delivery time, cost of development. Eclipse Aviation changed the engine that had powered the test flight of its prototype. This meant redesign and redevelopment of the airframe. This also meant additional costs, additional time to deliver, expecting more from suppliers. Over One Billion (1,000,000,000) US Dollars was burned by Eclipse Aviation in its endeavour to build ‘an airplane for the masses’! In a time period of over Nine (9) Years. Money (funds/finance, costs, etc.) is a category of calculation you want to pay close attention to. I am not asking you to be a certified Financial Planning and Analysis expert all I am saying is pay attention to the money! Pay attention to timeline, it is a number you also should not neglect. I am not asking you to switch to Project Management but it is important. By now you get the idea. So that’s the lesson.
Pivot, Kill, Persevere: Know when to do any of the three! If you Persevere when you should Pivot, you will run into problems. If you Pivot when you should Kill, you have an issue. If you Kill when you should either Persevere or Pivot that’s also a problem. Do a situational analysis and know which one is ideal for your specific needs. People think this only applies to entire Products but it is also relevant to components or aspects of a Product. Eclipse Aviation, in my honest opinion, Persevered when they should have Pivoted. Perhaps because they wanted their own assumptions to be true but reality, as I mentioned earlier, had different plans. For instance, Eclipse Aviation did not have to Kill the entire aircraft program or Pivot to making something else. It rather should have killed Avio, changing the engine it had used to design the aircraft program. These are components/aspects of the airplane program that dragged it down. It should have killed its idea to create an FMS (Flight Management System) in favour of having a trusted supplier at least for its first batch of airplanes. It should have killed the scope creep and focused on making a better plane with the engine it tested with, at least for its first batch of airplanes. Much later when it gained ground (and firm footing), then it could have dabbled into doing all those OTHER THINGS. The discipline to make such decisions is very rare! In most cases hubris takes over and then everything collapses. Learn this lesson to avoid being in the same weird position.
It is heart wrenching when genuinely brilliant ideas end up in smoke and just die because of bad decisions, not paying attention, general hubris!
Every week I look at historical events across different industries and extract lessons that will benefit Product Managers. That’s what my newsletter is all about: https://lnkd.in/eZVmuq-7
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H-J Johnson
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