Creating the Conditions for Change, Part 2, The Cola Wars

Don't forget to check out Creating The Conditions for Change, Part 1: Dynamite and The Nobel Prize.

It was the late 1970s, and the beverage industry stranglehold was slowly slipping away from Coca-Cola. The Pepsi Challenge was proving that consumers preferred the sweeter-tasting rival, Pepsi, over the 800 lb. gorilla that was Coke. By 1983, Pepsi surpassed the giant, outselling Coke and sending their leadership into a panic. Coke decided to take what was arguably the biggest risk in consumer goods history and change the fabled secret formula (known as “Merchandise 7X”) for the first time ever in its storied history.

The top-secret plan, codenamed Project Kansas, was underway. Coke retained the renowned agency, McCann-Erickson Worldwide, to lead the launch of New Coke. It was so confidential that McCann executives working on the project had to sign legal contracts prohibiting them from speaking a single word about the change to anyone, including co-workers and family. An entire wing of the agency was blocked off and guarded with a high-security detail. Cans of New Coke were carried around in briefcases.

Then on April 23, 1985, Coke’s CEO Roberto Goizueta unveiled New Coke to the world.

However, this day is a day that would live in infamy to Coke fan across the world, as they dubbed it “Black Tuesday.” Consumer protest ensued. 5,000 bottlers shook their head in unison at this sugary fiasco. The Coke hotline and company headquarters received 1,500+ calls per day with customer complaints. Pundits proclaimed this was the biggest brand blunder of the century.

Protest groups quickly formed, such as the “Society for the Preservation of the Real Thing” and “Old Cola Drinkers of America,” (which reportedly gained a staggering 100,000 loyal members in a short period). A single sign that was spotted captured the sentiment of Coke fans everywhere: “Our children will never know refreshment.”

In just 79 days, the beverage rebellion reached its height, and Coke folded under the pressure to bring back the original recipe. They announced its return in July of 1985, and order was restored. The people were given back their old recipe, which was rebranded to “Coke Classic”, and New Coke was later changed to Coke II before its distribution in the US was ceased altogether.

What Are You Really Changing?

How could Coke have been so wrong?

What Coke did not realize was that people were motivated by more than taste – they were buying memories, nostalgia, and what Coke meant to them. Coke stood for something, and by changing, Coke confused the consumers’ identification with and to the brand. Finally, by being so secretive and not giving their customers a choice, Coke took the voice of their customers away. Together, the physical change and the emotional change all at once was too much for consumers.

But, try not to feel too bad for Coke. To their credit, in the end, they listened to their consumers and quickly gave them the original recipe back. Many marketing experts say the resulting press and campaigns around “Coke Classic” is more than any advertising budget could support. Heck, I’m even giving Coke more free press right now.

In Creating the Conditions for Change, Part 3, we explore the Innovation Equation, and how you can leverage it to create effective change in your organization.