How To Build The Greatest Thing Since Sliced Bread, And Still Go Bankrupt Remember the phrase ‘The greatest thing since sliced bread?’ The company that actually pioneered sliced bread, and made that phrase popular, just went bust. This while still selling 500 million of their iconic Twinkies (named after dancing ‘Twinkle Toes’) every year. What happened? When did sliced bread stop being the greatest thing? When did the toes stop twinkling? HOW TWINKLE TOES TURNED TO LEAD BOOTS… Hostess, which is making news in the US as one of the most public bankruptcies this year, is another victim of ‘economies of scale’ losing to ‘economies of speed’. Which way is your business heading and what’s the lesson from this? Wonderbread debuted in the 1920s and pioneered sliced bread loafs in the US, rapidly making Continental Baking the largest baker in the US. One of their bakers, James Dewar, came up with ‘Twinkies’ to keep their strawberry shortcake machines busy when strawberries were out of seasons. They began with banana filling and then, when WW2 made bananas short in supply, Twinkies switched to vanilla filling and sales took off. After its early innovative years, Continental (now called ‘Hostess’) spent the next 70 years gobbling up other companies to build economies of scale. All the gobbling finally led to incurable indigestion. It was a slow death. At the beginning of 2012, the company had over $2 billion in liabilities from both the unions and the financiers the company was in debt to. This month, Hostess employees went on strike. The company warned ‘Get back to work or everyone loses their jobs’. No one listened. No one came back. On Friday the company threw in the towel and the CEO, Gregory Rayburn announced “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.” Throughout all this time Twinkies have inexplicably held their sales up at the half billion mark year after year. Through no fault of the Twinkies, the company went from Twinkle Toes to Lead Boots. THE NEW TWINKLE TOES! Compare the woes of Hostess to fast growing food brands like Innocent, Bare Fruit, Plum Organics and Chobani (which now has $634 million sales 7 years after launch). The difference? They are all focused on being ultra-responsive, delivering great products to growing markets. Hostess, on the other hand, is still relying on products like Twinkies, that haven’t changed for decades, and has been spending all its effort trying to manage its size. These fresh, lean companies are the new Twinkle Toes. The days of the big ships are over. The days of the fleet of fast-moving racing yachts are here. Jettison your legacy issues and any weight that is making you bigger instead of better. Put on your dancing shoes and change moves often. Economies of speed are beating economies of scale from one industry to the next. While it’s sad days for Twinkie lovers (but someone will buy and resurrect the brand) and
the workers of Hostess (but they will step into new dancing shoes), this shift in business is a big positive for every entrepreneur as it levels the playing field â€“ from the biggest to the most nimble. Itâ€™s the greatest shift since the industrial revolution. In fact, it could be the greatest thing since sliced bread. Story by: Roger James Hamilton Powered by: http://www.rogerhamilton.com
Published on May 31, 2013
Remember the phrase ‘The greatest thing since sliced bread?’ The company that actually pioneered sliced bread, and made that phrase popular,...