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Michelin PAX Run-Flat: A stillborn revolution

This weekend’s New York Times carried the sad headline, “Michelin Giving Up on PAX Run-Flat Tire.”.  So much for an innovation that was supposed to revolutionize the tire industry, in much the same way that Michelin’s introduction of steel-belted radial tires did nearly 60 years ago.  My colleagues and I were so taken with the concept – a tire that could run for 120 miles even with a flat, eliminating the need to store a spare tire – that we’ve even used it in class.  The example is how a company can innovate by eliminating features that some customer segments view as either negative (having to store a spare takes up space and costs more fuel) or a neutral (we don’t notice it and don’t care about it). 

  What could have gone so wrong with a new technology that promised to change the world?  Indeed, Michelin’s own web site (at least as I’m writing this now) announces that “We haven’t been this proud since we invented the radial tire”.  This was a big-bet innovation, intended to overturn the industry. 

What went wrong?

While it certainly isn’t fair to retrospectively criticize the approach Michelin took to introducing this innovation, there were some trouble signs even early on.  A Business Week article appearing on August 16, 2004, notes that the PAX tires don’t fit into conventionally designed vehicles.  To use them, cars must be equipped with specially designed chassis and wheels.  A PAX-friedly auto can’t take regular tires.  What that means is that to get the tires replaced, customers must find an authorized PAX service center to repair or replace the tires.  The lack of compatibility with pre-existing infrastructure proved to be a contributor to the products’ undoing.  Although the company enjoyed some success, having the PAX tires as the standard on Honda’s 2005 Odyssey Touring minivan, other firms failed to adopt.  PAX, as it turned out, was not a huge advance over other run-flat technologies, required specialized equipment and systemic changes, and was launched into a category that turned out to be a niche.  This situation was a far cry from the promise of a tire that would revolutionize driving habits and totally change the industry.

Frameworks that might have helped anticipate the obstacles

We always advise companies launching innovations to consider not just the technical performance of the product (or service) but the whole chain of experiences customers go through in the course of being customers.  With a tool called the consumption chain (described originally in a best-selling Harvard Business Review article), we suggest that companies work all the way through the total experience a customer has with their offering—from awareness of need all the way through search, selection of a provider, payment and so on through final disposal.  Clearly, the PAX system let customers down at some of these vital “links” in their consumption chains.  They faced difficulty getting the tires replaced and repaired and evidently the competitive separation between the PAX and other run-flat tire designs didn’t overcome those problems. 

Another tool we frequently employ when we’re thinking about the launch of new offerings is to consider all the factors that may cause delay or resistance to the offer.  We featured it in our book MarketBusters and it basically consists of systematically thinking through all the reasons that a customer might not be willing to adopt an innovation.  Among the most serious, we argue, occurs when adoption requires changing expensive, embedded systems.  Indeed, a product that is backwardly incompatible with other products and that requires specialized handling to repair or replace would have to be earth-shattering in its benefits (think iPod) to overcome people’s reluctance to change away from the conventional. 

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