Sunday, November 18, 2012

Post Mortem for
The Twinkie



For those of you who follow economic and business news worldwide, Hostess Brands Inc., the makers of Twinkies, Susie Q's and Wonder Bread filed for bankruptcy last week, after failing to win concessions on union contracts.

But the nail in the coffin is management announced today that Hostess will seek permission to pay out bonuses to its key managers—a total of $1.75 million, while closing operations, leaving the majority of its 18,500 workers unemployed.This is 4 days before a major U.S. holiday called Thanksgiving. For those of you outside of The United States in other countries around the world, I cannot emphasize enough how big a deal this is...

This is the death of an American icon

 




















You see, Hostess is as much a part of the business history of The United States of America as Ford Motor Company, Hershey Foods and McDonald's. Many of today's high profile brands are a reflection of our Industrial Age history of growing prosperity. Brands like Bethlehem Steel and General Electric ARE America in many ways! (just watch The Men Who Built America).

Now growing up in Pennsylvania, I have to admit, Hostess is not as important to me as Tastykakes. I have an emotional connection from childhood. We did eat Wonder Bread once in a while, BUT, my father being the first generation of Hungarians born in the United States, went to the local Hungarian bakery for loaves of pumpernickel and rye bread. So you can understand why I have eaten a total of 5 Twinkies in my entire life. Same thing with Hostess Cupcakes, Snoballs, and HoHos.

Some will say the unions caused Hostess to go bankrupt, while others will say that executive compensation was way off the charts.
But I have a different argument...


The truth is Hostess should have gone out of business years ago because they never evolved

 

Yes, the obvious problems were excessively high compensation costs for executives while pension obligations have grown off the charts. Hostess went through 7 CEOs in 10 years! OUCH. But, how hard would it have been for executives to take a 20% pay cut and let bakers on the front line get a 20% pay increase? Well, pretty hard obviously. With unions playing hardball it became the straw that broke the camel's back. And who really suffers? The 18,500 workers who are now out of work just before the holidays.

This is part of a bigger picture rampant amongst traditional brands...it isn't the obvious argument before us of unions, front-line workers and management, but instead, companies like Hostess are ignoring a growing shift in what customers want!


For years Hostess has been relying on a Baby Boomer sense of nostalgia to sell their products. Ask anyone the last time they had a Twinkie and most will admit it's been years. Over time, customers expectations have changed dramatically—demanding healthier snack alternatives—and yet Hostess refused to evolve.  

Here is a short list of brands that refused to evolve fast enough as well:

Spiegel's Catalog
The Sharper Image
Borders
Fortunoff
RC Cola 

Smith Corona
 

I specialize in Generational Behavior and how that influences management and especially sales. Why is this so important? Because if you do not understand the behavior of a new customer, you can't sell anything to them. And here is where the rubber meets the road: if employee culture and behavior has changed dramatically over the years, wouldn't that impact management interaction and expectations as well?

You are darn right it would.

 

How much longer will you wait to change and evolve?
When bankruptcy is right in front of you?


There are 2 things looming on the horizon for all businesses:

1) The Impact of The Digital Native—those comfortable with using technology to do everything—are changing the marketplace by making brick & mortar storefronts OBSOLETE!!! This, impacted by mobile commerce AND a cashless society will be at the forefront of ALL businesses within the next 5 years.

Think about it! You can buy a house online, or order groceries, or buy clothing without leaving your home. Where does that leave your company's marketing when your customers habits have moved to a different platform?

And 2)  Seventy-one percent of the workforce is disengaged...bored with their jobs they spend on AVERAGE 2 hours on Facebook during work!!! REGARDLESS of economic conditions, your workers are dying to quit. Wall-Mart employees on average make $22,000 a year. Think you could live on that?

In order to stay employable until their big break, most people are suppressing their true nature. What if you could inspire people to work harder and give 100% of themselves to the organization? That requires a big shift in management strategies. Rules versus results is the new battle-cry for a more adult work environment (call me, I specialize in ROWE environments).

If the corporation is evolving, and technology is helping to bring about that change, while people's behavior has shifted dramatically, shouldn't management change as well? Or do you believe it doesn't matter?

You might want to look at that list of companies again.

Time for the corporation as we know it to evolve. Your survival depends on it. Someone WILL buy the Twinkie brand, along with Hostess CupCakes, Suzie Qs etc...but it will never be the same.

Thank you for reading,











Brad Szollose

PS: Interested in a white paper entitled: 

What Every Business Needs to Know About Generation Y:
Understanding How Technology Transforms Culture and Behavior, and Impacts Management, Interaction and Expectations

Email us with your name, title and email address. Your information is confidential. Ask me how I can help your company evolve into the 21st Century of Management.


Web Pioneer Brad Szollose is the *award-winning author of Liquid Leadership: From Woodstock to Wikipedia which explores the subject of new leadership styles – mainly how to get the tech-savvy Generation Y and analogue driven Baby Boomers working together. ISBN-13: 978-1608320554

But this is not based on management theory:
Brad is a former C-Level Internet executive who went from entrepreneur to IPO in 3 yrs – co-founding K2 Design, the very first Dot Com Agency to go public on NASDAQ. His Results Only management model was applied to the first wave of Gen Y workers producing great results– 425% profitable growth for 5 straight years and winning K2 the Arthur Andersen NY Enterprise Award for Best Practices in Fostering Innovation among his employees!

Today, through his workshops and keynotes, Brad helps Fortune 500 Companies close the Digital Divide by understanding it as a cultural divide—created by a new tech-savvy worker...and customer.

Mr. Szollose also writes a monthly column on business and marketing techniques that reach Generation Y for A Captured Mind newsletter and is part of The Mind Capture Group faculty.

* 2011 Axiom Business Book silver medal winner in the leadership

* #1 Amazon Best-Selling Author

"I just had my mind blown..." - A.S., Vistage, New York

Liquid Leadership by Brad Szollose is available at all major bookstores and for Kindle, Nook, iPad and Sony ereaders. Internationally published in India and S. Korea.