The Power of Failure

I have a question for you:

Was New Coke a failure or a success?

Now, for those of us of a certain age, those who lived through the New Coke debacle, the obvious answer is that it was a complete and utter disaster. But, if you recall your school days, you know that when presented a test question with an obvious answer, it may be a trick question. After all, can it really be so clear-cut?

So, is that the case here? Let’s see.

For those of you who don’t know the story, and for the rest whose memories of New Coke may be a bit fuzzy, here’s what happened:

After World War II, Coca-Cola had 60% of the market share for soda beverages. But by the early 1980s, that number had dwindled to about 25%. While there are all sorts of reasons to account for Coke’s declining popularity, the main one was the rise of its rival – Pepsi Cola.

This was especially true in the early ‘80s since Pepsi was determined to become, as its slogan at the time declared, “the choice of a new generation.” Pepsi was doing all sorts of things right to attract soda drinkers:

  • The Pepsi Challenge was highly effective television ad campaign in which people were given a blind taste test and they would inevitably choose, of course, Pepsi.
  • Michael Jackson, probably the most popular pop icon on the planet at the time, was the spokesperson for Pepsi
  • Even that slogan had the effect of making Pepsi seem new and hip, and making, in comparison, Coke seem old and stodgy

So what did the marketing execs and Coca Cola do? They panicked. Secretly, in their labs, the Coca Cola engineers began to concoct a new version of Coke, which did, in their blind taste tests, prove more popular than Pepsi.

And so New Coke was born.

And soon thereafter, it died.

New Coke was unveiled with much fanfare, but quickly became a marketing disaster. People began to hoard “old Coke”, late night comedians mocked a company that would trash one of the great brands in history, and a vocal backlash against the product soon ensued.

What the ad geniuses at Coke never bargained for was the intense outcry of people who loved the old, classic product; people who refused to give it up. That minority soon became the majority, and within several months, New Coke was off the shelves, replaced by “Coca-Cola Classic.”

So New Coke was a fiasco, right?

All of the hullabaloo resulted in Coke vastly increasing its market share again. With people very vocally proclaiming their love for old Coke, the product burst in popularity. Not only that, but the team that created New Coke, instead of being reprimanded (as they would have been at many other companies) were all given bonuses. Why? Because management liked that they had swung for the fences, even if they struck out.

The lesson for the small business then should be clear: Failure is not all its cracked up to be. Not only does it often produce the seeds of redemption, but the very act of trying something new means that sometimes it won’t work. But sometimes it will.

You will never know unless you risk creating your own New Coke.

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