This article recounts how the Pontiac Aztec, perhaps the most notable automotive failure in recent history, came to be. I suggest reading the whole thing as a lesson in how bad products get made. A few things stood out as significant to me: Targets and goals that aren't grounded in actual user needs:
"Wagoner and the automotive strategy board decreed that henceforth, 40 percent of all new GM products would be “innovative.” That started a trend toward setting internal goals that meant nothing to the customer."
I've emphasized that a clear vision and support from upper management is an absolute necessity, but leading by dictate is often disastrous:
We've all made up our minds that the Aztek is gonna be a winner. It's gonna astound the world. I don't want any negative comments about this vehicle. None. Anybody who has bad opinions about it, I want them off the team.
Adhering to first principles you've established with customer input is critical. And the manifestation of those - the design - is something that's arrived at through a process of invention:
Many people in the car business do not understand that a vehicle has an image. To them, a vehicle is a collection of attributes. If your attributes are better than the other guy's attributes, you're gonna win. It's engineer thinking, along totally rational lines.