Something to sink your teeth into...

Last week an old friend relayed the following anecdote:

He said that several years ago the Polish division of Wrigley (the chewing gum company) had somewhere on the order of 70% market share of chewing gum sales in that country, almost none of it was the sugar-free variety. 

Part of their sales and operations planning process was to document assumptions and revisit them at each planning cycle.  One of the assumptions they documented was that as people grew older their preference would shift from sugar-based products to sugar-free products, and demographics suggested that the population was aging.  At some point in the future they decided they'd have to change their mix of sugar / sugar-free products, but that time would be many years in the future.

Charles Koch's Science of Success quotes George Will as saying, "the future has a way of showing up unannounced."  And it seems to show up a lot faster than we expect. 

Wrigley began seeing small but meaningful deviations to their expected sugar-free gum sales numbers.  Because they were revisiting their assumptions each month, they got curious and began testing whether the sugar-to-sugar-free preference shift was really as far out as it they'd assumed.  The result of their analysis caused them to recognize an opportunity: people in Poland were looking for sugar-free products, but not many companies were supplying them.

This information caused them to re-think their strategy and they immediately shifted their product mix almost entirely to sugar-free gum.  They captured 90%-plus of the market.

Innovation - identifying opportunities to recognize and take full advantage of changes that can better meet people's wants and basic human needs - is more often the stuff of disciplined, systematic analysis than it is the "big idea" out of the blue or the output of all-night brainstorming by sequestered employees.   Wrigley's innovation wasn't capitalizing on the demographic trend.   The innovation was in the management process: the discipline to document and revisit key assumptions in their S&OP process to recognize and pounce on a change.

Comments

[Stephen Maher]

I am surpised that no one has commented on this BLOG, patricualry as S&OP is a prolific process used to run successul businesses. The ability to bravely look into the future and to not have a myopic perspective is something that many businesses struggle with. Next months results always seem to be more important than next years plan. True innovation needs time and foresight. Only by applying these to the demand can the emphasis on the short term be reduced. Eventually the effect of the long term view will reach us, but by this point the rigour that has been applied will increase the probability of success.