Wednesday, April 8, 2015

Know What You're Good At and Go From There

Among the many reasons why Southwest and GE have succeeded is that they know what they are good at and what they are capable of.  They don’t venture too far from the formula.  They adapt, but their core business remains the same.  For Southwest, this entails outstanding Customer Service combined with low-fares and reliability.  GE strives to be a well-integrated and diversified company that aims to make the world work better.  Southwest is still in the airline business.  GE is still making “things” that are useful in many sectors.  Both keep the Customer Experience front and center.  Clearly, none is suffering from flawed strategies.

On the other hand, some large companies are heading into questionable territory.  Take Coca-Cola for example.

The Coca-Cola Company has recently ventured into milk, Fairlife , with extremely mixed reviews. Nutritionists  say the “super milk” is unnecessary and expensive, but it’s no wonder Coke moo-ved into milk: Americans are drinking less soft drinks.  The US is facing an obesity pandemic and public enemy #1 is soda, quickly followed by high fructose corn syrup (a main ingredient in Coca-Cola products).  

It could work out and this could be the next “it” beverage, even though it’s been around longer than we have.  Americans are willing to pay for “premium” products, nudge, nudge Starbucks, but it can also turn out like when Coca-Cola detoured into the wine business.  We are all drinking Coca-Cola wine, right?  Although Coca-Cola was known for its “knowledge of consumers, its marketing and branding expertise, and its superior distribution capabilities,” they did not have the ability to make quality wine

Coca-Cola was not acting in a coherent way.  Was wine what Coca-Cola could do better than everyone else?  No.  I think France or Napa Valley clearly take the cake there.  Can Coca-Cola make better milk than everyone else?  Is milk a product that competitors can’t beat?  Personally, I think Coca-Cola is out of their minds.  I buy Organic milk, but I don’t think a milk with “50% more protein, 30% more calcium, and 50% less sugar” is really going to solve my nutrition problems.  A false sense of invincibility can lead to bad business ideas.  I’m only picking on Coca-Cola because of: 1) the Cola Wars, 2) they can handle it, 3) I don’t agree with Fairlife. 

I could be completely wrong – I’m in Healthcare after all and this milk adventure could turn out like the Walt Disney Company.  Disney diversified from its core animation business into theme parks, live entertainment, cruise lines, resorts, TV broadcasting, etc. (and probably planned trips to Mars at this point).  All of this is still in line with Disney’s vision: to make people happy.
Maybe milk is part of Coca-Cola’s vision as a “quality beverage brands that anticipates and satisfy people's desires and needs.”

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