Old School

Old School

    From the few comments I received regarding the last post, I by no means meant to downplay the world of small business and entrepreneurship in today's world.  Quite the opposite; new ideas and new products seem to be thriving. And I'm well aware of such exciting ventures as Utab and Slack, Shopify and Shyp.  Even GoFundMe and 3D printers make getting out one's product or prototype virtually risk-free (or at least at a much lower personal cost).  No, what I was describing about my product was old school, the old ways of getting the money and the vendors and the suppliers together.  Back then, it was the way of manufacturing...remember manufacturing?  Ask that question in a crowded bar and you'll likely see the room divide into age groups.  That'd be me on the old school side (which is why you wouldn't want me or my age group running your company--or perhaps even your government; just as Robert deNiro did in the movie The Intern, we as a group could give creative ideas and insight into your new venture but it would be old school ideas, viewpoints that might have some merit but wouldn't be as fresh and as adaptive as the view emanating from a younger crowd...Generation Z, who is that?, we'd ask).

    But for many corporations, this transition from old school into hitting the pocketbooks of new school (and new money) is a never-ending quest.  Coke, McDonald's, Taco Bell, Nestle...each is making the news and for all the same reason...old school clashes.   For some companies and people, the answer is to try and bring new ideas into an old brand.  In an article in Fast Company, Taco Bell was highlighted as a refreshing innovator from the old school: Fast food has never been faster than at today’s Taco Bell.  CEO Brian Niccol encourages his team to, as he puts it, "break a little glass."  The Tex-Mex chain rolls out a new menu item every five weeks; the longevity of those products depends on their market success, a mirror of the test-and-iterate approach that drives Silicon Valley.   Niccol wants to be at the forefront of everything, from ordering to delivery.  All the activity has energized the company internally and made the brand more relevant to its target youth customers.  Adds the magazine: Along with KFC and Pizza Hut, Taco Bell is owned by Louisville, KY-based Yum! Brands and serves 42 million customers a week at nearly 7,000 restaurant locations worldwide...In the last decade, the company has honed its focus on the millennial market, doubling down on social media across its many platforms with its signature uber-conversational voice...The restaurant chain has tapped into technology to improve its service from order to pickup.  Its mobile app--which has been downloaded 4.9 million times--makes it easy to place a custom meal order and pay before you arrive to skip the line.  Some restaurant locations are testing touchscreen-ordering kiosks. 

    Contrast this with McDonald's at almost five times the number of locations as Taco Bell.  That brand recognition is everywhere, much as with Starbucks.  But maintaining that "same everywhere" menu is difficult at best.  Back in 2015, Bloomberg Businessweek asked "Why Is It So Hard for McDonald's to Change?"  And a recent story in the same magazine brought out part of that reason...the franchise.  In an article titled "McRevolt," the magazine said: There are 5,000 McDonald’s franchisees around the world.  They run 82 percent of the chain’s 36,000-plus restaurants and generate a third of its $27.4 billion in annual revenue...For the first time in at least three decades, McDonald’s this year will close more restaurants in the U.S. than it opens, for a net loss of 59 locations.  Same-store sales in the U.S., where McDonald’s gets 30 percent of its revenue, have declined in eight of the past 10 quarters.  It’s a number that Wall Street watches closely.  The company’s shares have underperformed the Standard & Poor’s 500-stock index for the last three calendar years.  Sure, says the article, the owner of a McDonald's franchise could clear over a $100,000 salary annually; but when the company puts something new on the menu, the franchisee will likely have to absorb the cost of the equipment (fancy coffees are just one example, the machinery slow and costing between $15-20,000).  Try to be creative and well, good luck...you might face the wrath of the company (and lose your franchise)...old school.

    Same with Nestle, now facing a growing public awareness of just how much sugar their products contain.  How do you keep consumers eating sweets that are basically your bread and butter (tobacco faced this same dilemma and solved it by successfully targeting areas such as China and countries in Africa).  For Nestle, the solution seemed to be to add a healthy line to their groupings and attempt to reduce sugar (once a link to sugar and obesity and Type 2 diabetes has been confirmed, says the company, something the company still doesn't accept as proven)...but it's turning out to be difficult, said  Confectionary News.  So why not throw in a few vegetables and make the product seem healthy, even with the sugar?  That's what's being tried in Japan, where over 200 flavors of Kit Kat candies are sold.  Said PRI: The potato Kit Kat was only sold in the country's northern Hokkaido region, an area known for spuds.  A nestle spokesman says the limited edition flavors stay on store shelves for average of two months before they're replaced with new ones.  Fiorella (advertising expert Mike Fiorella) says that the marketing cycle in Japan is unlike anything in the US.  New school or old school?  Or as with chocolate, a blend?

    What seems to be happening is something as old (school) as history...things change.  New products come out and with them, new ways to make and market the products.  What I wrote about in the last post was something that happened to me and is for the most part gone, and that's probably a good thing.  In today's world, less inventory equals less waste.  Less time spent producing a product means more flexibility.  Less old school means more innovation.  What I went through to produce my product is now history, a method as old as mining coal...but at the time, it was quite the education for me.  It was school, even if now it seems it was old school.