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A seduction to be avoided
By Anoop K Menon
Picking up a winner for the most impactful advertisement can be a difficult exercise, what with thousands of creative masterpieces making their appearance in various media every year. Yet it is difficult to better McDonald’s’ ‘I am loving it’ campaign, appealing as it did to a huge swathe of its target customers. Perhaps what is even more striking is how the advertisement, and a revolutionary strategy, helped change the restaurant-chain’s fortunes.
In 2003, McDonald’s’ performance in the US had hit an all-time low, courtesy the negative perception people had about McDonald’s being a ‘fast food’ leader at a time when much of America had switched to healthy food (as opposed to unhealthy fast food). Exacerbating the problem was the fact that McDonald’s had become too complacent about its success, allowing all the elements of its marketing mix to slide into disarray—so much so that its stock market price had slumped from $50 a share in 2000 to a low of $12 in March 2003.
The new campaign was launched as part of a new strategy to woo new customers and retain existing ones. Acknowledging that the company had lagged behind in the trend toward healthy foods, McDonald’s overhauled its menu and announced healthy alternatives like salads, which, incidentally, had bombed four times in the past. The turnaround in 2004 saw McDonald’s posting same-store gains of over 10 percent, a performance the company had not achieved for 30 years.
Robert J Herbold cites the McDonald’s turnaround as an example of Trap 3—Boredom, for McDonald’s clung on to its once-successful branding formula even after it became stale and dull, but, at the decisive time, recognized the danger and took corrective action. In his book, Seduced by success: How the best companies survive the 9 traps of winning, Herbold details how success can unwittingly lead companies to skid off the right track. According to Herbold, when businesses or individuals experience meaningful levels of success or periods of stability, they become trapped by legacy practices and thinking, and end up wearing blinkers instead of building on their best practices.
The nine traps Herbold talks about are Neglect, Pride, Boredom, Complexity, Bloat, Mediocrity, Lethargy, Timidity and Confusion, in that order. Herbold uses the tried and tested case- study approach to explaining the dangers of each trap and how different companies have overcome the challenges. Almost all companies discussed are familiar Fortune-500 names, but one can’t help feeling P&G and Microsoft have been cited too often, largely as examples of success rather than failure. The catch here is that Herbold spent a substantial part of his career with both companies, and he was COO of Microsoft from 1994 to 2001 before moving on to start his own consultancy outfit. A company he could have devoted more pages to is Dell. While he discusses Dell’s early successes, he merely mentions in passing that Dell’s famed supply chain management advantage is under challenge from competitors.
Interestingly, Herbold has devoted an entire chapter to General Motors to explain how the automobile giant became a victim of the nine traps of success in various degrees. The historical context he provides is invaluable in understanding how seemingly unassailable giants trip and fall, and how, once they fall, the giant-ness, so to speak, becomes an unbearable burden. Toyota’s success story, discussed in the Trap 2 section, reinforces the contention he makes at the start—there is no everlasting formula for sustained success.
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