x3 Tough Lessons about Quality Pepsi Learned the Hard Way but You Won't

x3 Tough Lessons about Quality Pepsi Learned the Hard Way but You Won't

" ...I can't believe it", he screamed on the TV, "good things happen, thank you, Lord." The neighbors gathered to see what goes on, but he didn't care. His body and brain are full of adrenaline; he can feel the blood rushing in his head. Finally, his luck transformed:?he just won 1,000,000 pesos. "I must go out to breathe some air," he murmured, feeling the house gets smaller and the walls closed on him. His neighbors followed him with envy, hoping to get some of his luck. Then, they noticed many other in the neighborhood are out in the streets celebrating their 1,000,000 pesos?winning. A lucky day!

Now, imagine the next day. All these happy people are going to collect their 1,000,000 pesos winning. But, instead of the grand prize they expected, they got a consolations offer of 500 pesos and an apology - from a successful, rich company like Pepsi. Oh, the rage. Can you imagine it? It is eating your stomach up.?

The year is 1992. Location is the Philippines, and Pepsi is responsible for that situation - an example of what?NOT?to do in your business, or at least do less. Pepsi aimed to increase market share by holding a draw with daily prizes, up to 1,000,000 pesos. It was, probably still is, a lot of money for the average citizen. Equivalent to a lifelong earning - hence very desired. This story is a hidden trouser with a significant potential saving of your time, energy, and money.

Yet, being the human beings we are (yes, I included), we are mentally coded to ignore it. Would you believe it? So many unfortunate quality failures happened in the last decade and more, Pepsi number fever included - you could learn a ton out of it and improve your business, quality system, and processes tremendously. Yet, you choose to re-invent the wheel every time and ignore what others had to learn the hard way. This toothbrush syndrome (also known as the Not Invented Here effect) costs us twice. At first as business leaders and second as consumers of products that produced by people similar to us.

In the aftermath, Pepsico mistakenly printed the winning number of the day, 349, on 800,000 bottles cups, instead of only 2; yet, without a required security code. This simple mistake costs the life of 5 people; x3 company employees and a mother and child - by a grenade thrown at Pepsi properties in two different locations. On top of these devastating results, protests and boycotts against Pepsi, damage to over 30 trucks, and thousands of lawsuits. Have someone could imagine that a simple act of a draw will end like that? Probably not. Will a proper risk management process and rigor quality control plan could have prevented the failure? Maybe. At least highlight the potential risk and the ability to detect the computer error in advance.

The right question now is what can we learn from it, and how can we get better and avoid similar failures in our business??

#1: The Fact the Something Didn't Happen Yet, Doesn't Mean It Won't.?

Many of us live with a type of illusion, a self faulty confidence that if we did something and nothing seriously wrong happened, it will never happen. Try it. Just remember how many times you raised a concern, merely to hear back a similar message: "Did it. Nothing bad happens. Not a real risk." It is an irrational yet widespread way to look at the world. But, crucial decisions are taken based on that widely spread cognitive bias. Pepsi, for example, held a draw in Latin America before this one, and it was successful. So why not assume the next draw will follow the same path? We did it once. It went well. No risk here, right? Pepsi should have all reasons to be confident they have the right decision. Not only did they succeed once, but the current draw we are discussing was very successful in the beginning and increased Pepsi's market share from 4% to 25ish%.

Back in our times, you probably know by yourself that such a type of cognitive bias is widely dominant. Many organizations are still base their strategic planning, processes, and future new projects on this fallacy thinking pattern. Nothing seriously wrong happened before, so it is safe to continue on the same path. But, let me remind you that we are living in an ever-changing world. Even if it looks insignificant, minor deviations accumulate and evolve to be a significant factor. Here are few common examples for changes that you will barely notice at first: new-hired people might be less trained, hence not following the processes as you expect them to. Knowledge might be lost, and machinery might have deteriorated. Raw material might vary, the humidity is changing between seasons - you won't believe how much each of these, not to mention a combination of a few, can impact your product for the worse. But the mindset is that we did it before - it was successful, so we don't need to re-evaluate our processes - and that's a mistake. We are missing new risks that recently arose. The lesson learned here is to review your processes: performance vs. requirements and evaluate risks in a fixed cadence -no matter what.

#2: Establish a Rigor Quality Control on Your Business Processes

Quality control is more than the reoccurring act of inspecting a product, physical or digital, and verify it complies with committed requirements and specifications. It should also be applied to monitor internal business processes. Not shocking news, quite logical and intuitive conclusion, right? But in practice, business processes tend to be left aside and not always controlled on the same rigor a product is. Honesty, how many of your current business processes are being executed in a repeatable way across different functions and teams? It can be your MRB, Change Management, New Design Release, Risk Management, Customer complaints, Order Processing, or other processes. Even if all requirements are crystal clear, without a mechanism to confirm compliance, you will face a significant deviation between teams, which will make it hard for you to assure consistent quality (eventually, it will impact product quality as well). You will be surprised to learn that many organizations?don't?have such a mechanism to enforce compliance with the process.

Back to the Pepsi case; We can only assume that applying rigorous quality control on the preparations for the raffle could have potentially made this article irrelevant. The lesson learned here is to build a strict yet scalable mechanism to check performance vs. expectations, identify gaps in your?business processes?- and of course, mitigate them.

#3: Don't Ask What the Worst Can Happen, Ask What Can Go Wrong

Whatever can go wrong will be wrong - sound familiar? Although I wrote before that Murphy law is, in fact, a quality escape, I have to say that many of us forget it. I doubt if someone ever assumed that Pepsi's raffle results in 5 dead people, violence, and litigation claims. We all learned that we need to be optimistic - optimistic people are better leaders and are more successful. Even without intention, many organizations reward optimism and develop resistance for pessimistic people. Because, you know, "What's the worst that can happen?"?

Nature has its way of showing us the worst, and in many cases, none of us could have ever imagined it. But there is one thing we can do. We can invest some effort in mapping the potential failure scenarios and mitigate them. Pepsi taught us that while we don't have much control over the results once a failure happens, we can control the likelihood of that failure. Yet, in many cases, we don't. But, if we will ask ourselves that right question: "what can go wrong" instead of "what's the worse that can happen," we will get better results. That's the lesson learned here. Try it.

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I am dedicating the last three lines to you- to remind you that not only do you have the power to initiate a change and lead your organization toward better quality. It is your responsibility for your organization and your customers.

Noam Cohen

Director of Engineering and Manufacturing

3 年

Read it. It's great.

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