I could quote from dozens of sources that have extensively analyzed the work environment; ranging from immature technologies, lack of executive focus, passing through the rising cost of supporting pension plans, incompetent vendors, unmotivated work force, and on and on.
Instead, I offer one thought that summarizes them all:
"People do not create bad products because they are incompetent;
they create bad products because they cannot tell the difference."
The quality transfusion
My best advice to any business trying to end a losing streak on the market is to expose each employee to a product recognized as the best in its segment. It should not be a competing product; while you are trying to copy their product, they will be busy building something better - not to mention the potential of copyright lawsuits.
During the next department meeting, place an iPod on the table and talk about it. If you are feeling venturous, skip the meeting, and take the people to a BMW dealership to inspect a 3 Series.
Tell them to take their time, turn the knobs, touch the material, operate it. Hint: Do not take your entire department to the BMW dealership if you really want a shot at a test-drive.
Letting them see and touch a product recognized for its excellence will infuse their senses with something new: the feeling experienced by a customer purchasing a great product.
Knowing the difference
The next time your team designs something that does not live up to that experience, they will know. And by knowing the difference, they will go back to the drawing board and will ask what is missing until they get it right.
It may take several trips between prototypes and sketches, but fear not, the losing streak will be over on the first one.