New coke: an innovation case study
There was a report today of Coke employees selling trade secrets, which reminded me of the New coke saga, a tale of failed innovation.Most who were around in 1985 recall this as a huge fiasco, where a bad drink wasrejected by the public. But the details are much more interesting, as Coke did manythings right from an “innovation as strategy” perspective.What went right:* Coke chose to move forward in response to real market pressure, rather thandefending their existing products.* They had their best R&D & flavor people design the new product.* Extensive taste testing and veteran approval were sought, and all pointed to themhaving a better product.* They put big $$$ behind a major rollout campaign.What went wrong:* The press conference (April ‘85) was a disaster. Coke failed to explain why theymade the change and did not acknowledge Pepsi taste test, or any taste testing done byCoke in R&D.* Pepsi attacked with counter-ads, including a full page ad in the New York Times.* According to Gladwell’s Blink and other sources, the successful taste tests of Newcoke didn’t suggest people wanted an entire 12 oz. portion of the new formula.The result:* There was initial acceptance and the product did well it’s first weeks, sales up 8%compared to previous year.* However public outrage grew, with groups protesting New Coke (especially strong inthe south).* By June ‘85 there was enough public pressure and complaints from bottling suppliersthat Coke execs were under pressure.* In July ‘85 Coke brought Classic Coke back to the market.It’s a great story of the risks of innovation. Coke did many things right - their greatestmistake was underestimating their customers lack of interest in innovation: they weresurprisingly happy with how things were.(See wikipedia’s excellent entry on the New Coke saga).