IT WAS A MINOR MOMENT IN A Connecticut courtroom a few years ago, but it still spotlights a cultural gap of acute relevance in the innovation wars.
A small Snapple distributor, B&E Juice, was suing Coca-Cola Co. over the transition of Glaceau brands to the bottler system. Coke’s lawyer asked B&E’s owner, Mitch Clyne, to identify the giant placard he’d just maneuvered forward as his latest exhibit.
Clyne confirmed it was a blow-up of his business card — which showed the logo of Snapple, another brand Clyne carried, and not Vitaminwater.
“The same business card you’ve had for 15 years?” the lawyer asked.
“I think I bought 500 in ’92,” was Clyne’s reply.
Well, what more visible way could Coke’s attorneys use to impeach Clyne’s commitment to Vitaminwater, whose departure he claimed he couldn’t survive?
“And you haven’t made any attempt in the last two-and-a-half to three years to go get new business cards to evidence the brand that drives your warehouse, right?” the attorney pressed.
Clyne shrugged. “I still have some left in the old box,” he said.
Though it was an insignificant part of the trial (B&E didn’t win – though it seems to have continued to prosper), the exchange plumbed the divide between Coke-sized companies and agile entrepreneurs. To big companies hung up on process and the trappings of office, it’s inconceivable that the owner of a reputable distributorship wouldn’t constantly update his business cards. Smaller companies – distributors, startup beverage companies, retailers, whomever – have more pressing things on their mind, like keeping their trucks rolling and meeting payroll.
This all came back to me a few weeks ago when BusinessWeek ran a piece about the companies – like Coca-Cola, Oracle and Intel – whose employees headhunters avoid. In Coke’s case, recruiters have concluded, “that the very attributes that make Coke a great company—an iconic brand and an unmatched global distribution system—also make it too easy for young managers to rise without having to develop the entrepreneurial skills necessary to compete in other arenas.”
BusinessWeek focused on Coke execs who left for other big companies, but I think the warning applies even more to those moving to emerging brands. It’s unfair to single out Coke, though. I often caution entrepreneurs shopping for executive talent not to be too dazzled by the resumes of veterans of any of the big players.
No question, there are exceptions. I could name several big company expats who have carved out productive roles running or advising emerging companies. But way more have spent too much time moving cases, appeasing the whims of major retailers, mired in bureaucratic processes. Claims of intimate familiarity with distribution ultimately mean knowing just a single DSD channel, making it hard to make the agnostic choices among independents, bottlers, beer houses, and other options that small brands must weave together to get to market. Worse, they’re disinclined to seek advice, even from those who’ve spent their careers with startup brands. They may know their way around the headquarters and distribution centers of major grocery chains, but it might be quite some time since they’ve set foot in a small mom-and-pop or a natural food store. They’ve had little reason to be attentive to new brands or trends, or to operate nimbly and efficiently. Worst of all, though they may win the job claiming to revere premium brands, they seem to have been programmed to hit the price button at the first sign of retailer resistance.
These habits can be betrayed in subtle ways. A couple of years ago, for instance, the assistant of a big-company vet who’d just joined an emerging brand phoned to say her boss wanted my opinion on the best trade shows. Sure thing, I said, put your boss on the line. The assistant mentioned a date about three weeks out. “Can I put you down for 10:15?” she asked.
Obviously, I wasn’t surprised when I started hearing employees at the company complain of creeping bureaucracy, micromanagement and other issues that can be toxic to a young firm.
Pardon my high horse: the problem isn’t unique to beverages. In years past, at national trade weeklies, my colleagues and I were charmed into hiring veterans of big-city dailies, only to find out the hard way that they were unequipped to aggressively work a beat for a scrappy trade paper. They endlessly complained about resources or calls that weren’t always returned. They seemed disinclined to learn the intricacies of the businesses they covered; they were a lot less fun, after all, than the city hall or crime beats of their glory days. In contrast, my superstar reporters inevitably emerged from other trades, small dailies and alternative weeklies.
The bottom line; Beverage entrepreneurs need to be careful to weigh the broad experience, name value and great retail chain connections of big-company veterans against their ingrained bad habits. And retailers shouldn’t mistake polish and organization for the drive and resourcefulness needed to make a new brand succeed. Again, some big-company execs are able to make the transition smoothly; I’d name some in this space if I didn’t fear alienating all those I don’t. We’re not dealing with a chasm on the order of, say, Martian men versus Venutian women. But it’s a chasm nevertheless, and it can swallow otherwise promising young companies whole.
Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.