Remember when “The Best Just Got Better!” and Coca-Cola introduced New Coke in 1985? For those readers too young to recall, it was a disaster. The 80’s were a time of cola wars and Pepsi was winning. Their market share was increasing and in blind taste tests people preferred the taste of Pepsi. Unless a change was made, Pepsi would soon outsell Coke. Following two years of research, Coca-Cola introduced the reformulated “New” Coke on April 23, 1985. There was an immediate and thundering public outcry – scores of American people hated “New” Coke and they hadn’t even tasted it. A mere 79 days later executives at Coca-Cola announced a return to the original formula. A few years after this fiasco, a client of mine used these events as a counter-argument to my statement that the “If it ain’t broke why fix it?” mentality found in many successful companies creates a slippery slope for decline. As an employee of a company that had known success for many years, he was questioning whether that was true. What about staying the course? Why change when there's a backlog of customer orders? Couldn’t innovation prove disastrous as in the case of “New” Coke?
As you know, over two decades later, the failure of an innovation – “New” Coke – did not sound the death knell of Coca-Cola. Nor did it stop the company from risking other innovations. Diet Coke was another new product introduced by Coca-Cola in the 80s, and it was a runaway hit. Ironically, Diet Coke was part of the reason that the sales of the original Coke had declined; customers had switched from a sugar cola to the newly created diet cola. It was an example of successful customer segmentation – a marketing strategy that Coca-Cola continues to experiment with today as evidenced by energy drinks, sports drinks and juices.
A paradox of business growth is that a successful company has to change in order to survive. Success tends to lock people into a pattern, and they have the attitude, “If it ain’t broke why fix it?” This attitude prevents them from experimenting and trying other approaches that in the long run could be very beneficial. When people feel successful and powerful it’s tantalizing to look at their own viewpoint and believe they have the one right answer. Different ways of thinking and proposed alternatives are dismissed out-of-hand. Employees with another viewpoint are seen as having bad attitudes or not being a team player. To paraphrase futurist Joel Barker, strongly held paradigms can lead to paradigm paralysis, a terminal illness of certainty. Many companies have it. So how does a company maintain its success while shaking loose from its traditional patterns in order to innovate?
In Built to Last authors Jim Collins and Jerry Porras wrote about companies that recognized the paradox of success. These businesses saw the need to obliterate complacency so they institutionalized powerful mechanisms to create discomfort. The point was to stimulate change and improvement before it was imposed upon them by the external world. One example was Merck, a global research driven pharmaceutical company. As early as the 1950s Merck embraced a strategy of consciously yielding market share on products that had become low-margin commodities. This forced the company to produce new products in order to grow and prosper.
Designing mechanisms to obliterate complacency and stimulate innovation is a necessity for companies to remain successful for the long haul. One such mechanism should be a forum for dialogue that has inquiry and reflection at its base. Inquiry and reflection are not a part of most companies’, or most people’s, skill sets. It takes discipline, time, and patience. It requires the art of listening without making assumptions. It uncovers paradigms, erroneous data and incomplete thinking. It’s a heavy duty, high-powered springboard for innovative thinking. A provocative first question for a forum designed to fuel expansive, original thought is Barker’s Paradigm Shift Question:
What do I believe is impossible to do in my field, but, if it could be done, would fundamentally change my business?
Here’s an example of the type of answer you can hope for. It comes from Katsuaki Watanabe, a man who has called complacency a danger of Big Business. When he made the following remarks he was the new president of Toyota Motors. “I don’t know how many years it’s going to take us, but I want Toyota to come up with the dream car – a vehicle that can make the air cleaner than it is, a vehicle that cannot injure people, a vehicle that prevents accidents from happening, a vehicle that can make people healthier the longer they drive it, a vehicle that can excite, entertain, and evoke the emotions of its occupants, a vehicle that can drive around the world on one tank of gas. That’s what I dream about.”
Watanabe’s dream is definitely a paradigm shift; it seems impossible but if it could be done it would fundamentally change the business of transportation. What an exciting suspension of conventional thinking and a stimulating call to innovation.
This article first appeared in The Eastern Pennsylvania Business Journal in August 2007.