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Lessons You Can Learn from Big Business
 Running
and planning for a small business can be
difficult, and it can be easy to make a
mistake or go with a badly flawed strategy;
but even with more staff, time and money,
big businesses often get it wrong too!
Here are some examples of big businesses
problems that you can learn from:
McDonalds
For several years McDonalds has suffered
from slowly shrinking sales, much of which
has been caused by bad publicity about the
contents of their food and its potential
effects on people’s health. (Not that you
need to be a genius to work out that eating
20 hamburgers a week from any
restaurant is going to be bad for you!)
To combat this, McDonalds started to focus
on salads and healthier foods; selling fruit
and providing healthier options. Yet despite
this change in strategy, sales have not
improved as much as expected (partly due to
claims that some of their salads were
actually almost as unhealthy as other fast
foods!); and competitors like Subway are
rapidly gaining ground on the food giant. So
now McDonalds have declared a back to basics
approach, refocusing on their core product
(I.e.: Burgers).
Instead of combating negative publicity by
improving their core product, McDonalds
tried to change; but are now left having to
change again to recover lost ground.
The Lesson: If your
business is best at one thing, be very
careful before you focus on something else.
While it is dangerous to stay still and not
develop; it is even riskier to change a
successful product/service without
thoroughly planning and testing the changes.
This is also part of the lesson you can
learn from Coca Cola’s mistakes in the
1980s, described below.
Carphone Warehouse
The mobile phone store Carphone Warehouse
recently introduced a combined phone and
broadband offer; which effectively provides
free broadband. The offer was so successful
that they signed up over 340,000 customers
in 2 months, more than double the demand
they expected.
The problem was that their systems were
unprepared for so many orders, leaving a
backlog of customers who may have to wait up
to ten weeks to be connected. This could
create a lot of unhappy customers, and may
also end up with lots of people choosing to
go elsewhere.
The Lesson: If you have a
special offer, a new product or a new
service; then make sure you have the
stock/capacity to deal with the potential
demand. Of course, you need to beware of
ordering too many supplies, and risking
leftover stock; but with some careful
planning you can order enough to fulfil your
orders, whilst being prepared to get extra
supplies in quickly if demand is higher than
expected.
Coca Cola
One of the most famous blunders ever was
caused by one of the biggest brands in the
world; but it still has several important
lessons for small business owners.
In 1985 Coca Cola had been experiencing
several decades of slowly falling market
share; to combat this they developed a new
improved taste which launched in America on
the back of successful blind taste tests.
Initially things went well and sales
improved despite a negative reaction from
some consumers who wanted ‘their’ Coke back.
After a couple of months the complaints were
so strong that Coca Cola were forced to
bring back the original taste; which they
launched as Coca Cola Classic. The ‘classic’
sold well while the ‘improved’ product
gradually disappeared.
However, despite the huge blunder; in this
particular case, Coca Cola may have actually
ended up gaining from the problems. They
boosted sales of a product that had been
declining for decades, and learnt an
enormous amount about the strong attachment
customers had for the product.
There are plenty of conspiracy theories that
suggest the move was designed to increase
sales of the old style Coke, or was to hide
the smaller changes in the formula that Coca
Cola was making anyway; but whatever the
real truth, there is plenty to learn:
The Lessons: Many
businesses treat research as being absolute
fact, but the truth is that no research can
ever be 100% accurate. Even if the research
towards your new product is positive, how do
you know that when it launches in 3 months
time your customers will feel the same way?
You need to plan for different possible
outcomes, and be ready for changes (or
unexpected factors) in what your customers
want. For Coke, they failed to see the
remarkably strong loyalty and attachment
that consumers had in their existing
product; which went beyond just the taste
and image. Even though the new product was
consistently rated as better, it did not
have the same attachment for their
customers.
As with McDonalds, the story of ‘New Coke’
heeds strong warnings about changing your
core product without thorough planning.
Whilst the idea of improving their core
product with a significant change was good,
Coca Cola simply did not plan or research
well enough to discover their customers’
true thoughts and feelings.
A positive lesson from this story is of how
being prepared for failure can help you
succeed. If you know how to react when
things go wrong (low sales, bad publicity
etc), then you can start to put them right
again before they cause too much damage. By
taking action to reintroduce the old drink
quickly, Coca Cola managed to minimize the
negative impact on their business; had they
not been prepared and quick to act, it could
have cost them much more drastically.
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article. Would you like more lessons from
big businesses, or is there any subject you
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