New Coke: The debacle turned blessing 39 years ago

Source #2: Coke company website

Thirty-nine years ago today, one of the most famous mistakes in business occurred. New Coke was introduced April 23, 1985.

Roberto Goizueta, Coca-Cola’s CEO, announced New Coke saying this was, "one of the easiest decisions we've ever made.” (Source)

Seventy-nine days later, the original Coke returned. New Coke faded into oblivion until it was discontinued years later.

New Coke is viewed by marketing gurus as one of the biggest marketing blunders in history. But the numbers reveal a different side of the story.

The introduction of New Coke made sense. Coke was a big company in 1985, with access to all the research. You know they did taste tests, surveys, and focus groups about the product and promotion. They did not make a gigantic move like removing a 100yo beverage without considering every nuance.

The data was clear:

⚫ Coke was losing market share to Pepsi and needed to do something to gain share.

⚫ Customers clearly liked New Coke better than Pepsi and original Coke in pre-launch taste tests.

⚫ The introduction of New Coke increased Coke’s revenue…for a few days.

Then the backlash began. There were thousands of calls daily to headquarters, lawsuits, community groups, protests. The changed soda formula was talked about repeatedly on every news channel and at kitchen tables and office water coolers all over the country.

Loyal customers weren’t mad about New Coke though.

They went berserk over the removal of original Coke. With all the hours and dollars spent preparing for the launch of New Coke, the company had not expected that level of backlash.

What Coke missed was not about the product or marketing.

What Coke missed was how their customers felt about their product.

Customers felt betrayed when the original Coke was replaced. The company underestimated their relationship with their customers.

Company president Donald Keough said at the time there had simply been no way to gauge the “deep and abiding emotional attachment to original Coca-Cola felt by so many people.” (Source)

There was so much backlash about removing original Coke, that ABC’s Peter Jennings interrupted soap opera General Hospital to announce when it returned less than three months later.

Customers cheered for the return of the original Coke, now labeled as Coca-Cola Classic. Wall Street was happy too, as shares of Coke reached their highest levels in twelve years on the news of the returning beverage. (Source 3)

The biggest mistake in the history of marketing turned out to be a blessing for Coca-Cola. Their customers were bonded with the company deeper than before New Coke. In fact, the debacle turned out so well for the company, there are conspiracy theorists who believe that was the plan all along. Keough denied that was the plan though, saying they weren’t smart enough to pull that off.

On this anniversary day, think about Coke’s decision to launch New Coke, remove original Coke, and bring back the original.

⚫ What can you take away from their experience?

⚫ What does it teach about resilience and mistake management?

⚫ What is your company considering that could use a fresh look to be sure nothing is missed?

⚫ What errors have happened within your company that could use a review for lessons learned?

⚫ What is the bright side of a major change you have been through?

The bright side for Coke was the deepened bond with their customers. They haven’t taken that for granted in the 39 years since.

So, congratulations to Coke for New Coke!

May all of your mistakes turn out as well.

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(SOURCE 1: What We Can Learn From Coca-Cola’s Biggest Blunder, Time Magazine)

(SOURCE 2: New Coke: The Most Memorable Marketing Blunder Ever?, Coke Website)

(SOURCE 3: Introducing New Coke Case Study by Susan Fournier, Harvard Business Review, 2001)

3 Reasons to love failure

Demanding proof that the dog died signals serious leadership failures

If you’ve managed a restaurant, or retail outlet, customer service center, or nearly any company lately, you might be able to relate to an Olive Garden manager’s frustration with people calling off work.

Fed up with staffing challenges, a manager of an Olive Garden restaurant sent the email below to restaurant employees. The manager writes…

“If you’re sick, you need to come prove it to us. If your dog died, you need to bring him in and prove it to us. If it’s a “family emergency” and you can’t say, too bad. Go work somewhere else.”

“Do you know in my 11.5 years at Darden how many days I called off? ZERO. I came in sick. I got in a wreck literally on my to work one time, airbags went off and my car was totaled, but you know what, I made it to work, ON TIME!”

“If you don’t want to work here don’t.”

The email was posted to Reddit yesterday, December 7, 2022 and has nearly 9,000 replies.

Olive Garden saw the obvious leadership failure of the email and a spokesperson said, “We strive to provide a caring and respectful work environment for our team members. This message is not aligned with our company’s values. We can confirm we have parted ways with this manager.”

There is more to it than this one email, however. The email reveals leadership failures beyond the one manager or location.

Here are six additional issues the $4.1 billion company should dig into:

1)   What is causing so many employee call-offs? Olive Garden would benefit from deeper exploration of what employees need in today’s world. Life is different today than it was in 2010 when the fired manager joined the company. Has Olive Garden adapted enough? For example, some local restaurants offer shortened shifts that were not requested five years ago. They adapted. Olive Garden needs to as well.

2)   Do other managers take time off? Why would a manager feel it was brag-worthy to get in a serious car crash on the way to work and still show up on time? There is a mentality that even a car wreck does not earn a break. It is obvious that anyone would be impacted by a car wreck, right? Perhaps physically, but definitely mentally. Managers need breaks too or they will burnout, as evidenced by the email.

3)   How well does messaging from senior leadership align with the company’s core values? What kind of senior leadership messaging tells a store manager they cannot even take an hour to get themselves together after a car wreck?

4)   Why was the fired manager’s extreme attitude supported for 11.5 years? Darden liked this manager’s pushy ways because it helped make money during the good days when people were eager to work there. Now that the email got out publicly, the style is not accepted. I highly doubt that email was the first time someone in upper management ever heard about the manager’s style. Who let that go for 11.5 years? Olive Garden’s parent company, Darden, should be worried about how the people who tolerated that attitude treat other managers and employees.

5)   What kind of leadership training had the manager received over 11.5 years? What kind of mentoring had the person had this year? Everyone knows about the challenges restaurants face. Olive Garden needs to change the way it leads—as far as role modeling, mentoring, expectations, performance management, and more. A manager got so frustrated, they sent that email to everyone. The email sounds like the author is speaking for the location’s team. Perhaps other managers agreed with and supported the message, if not the actual email, before it was sent? Is Olive Garden doing something now for the other burned-out managers at that location? At all of their locations? The managers need help!

6)   The company cut loose a manager they let burnout. Olive Garden failed the employees, other managers, and the email author by allowing the manager to continue leading the restaurant. No doubt there were signs of burnout—why were the signs not acted upon? When the manager reached an unreasonable boiling point, Olive Garden cut them loose. The email was horrendous, but it was just an email to one location’s employees after all. No one died or went to prison because of the manager’s action. Was there no room for empathy and compassion for the burned out manager?

Number One on Olive Garden’s Five Principles is: Hold Each Other to High Standards and Treat Each Other with Respect. Their spokesperson said the manager’s message did not align with their core values. The company’s treatment of the manager did not align either—for years, not just this week.

I love Olive Garden as a customer. From my experience, they have that Principle (“The Guest Wins”) nailed down. Hopefully, the company works on the inward-facing Principles, learns from what happened this week, and does something about it for the sake of all employees.

Look at the list of leadership issues above. Those are not unique to Olive Garden. Are they? Every leader can learn from the tough lesson Olive Garden is learning this week. I hope you do and that you do better for all of your people—managers included.

If you need help, give us a call. The Voyage team can help you prevent the leadership failures Olive Garden is experiencing. We can help repair them too.