Steve Hughes: Only Urgent Action Can Spark Real Growth

Companies Often Need to Shatter the Status Quo to Transform a Brand

By Published on .

Enacting successful marketing action requires a strong sense of urgency. Having fresh consumer insights, superior execution skills and talented people isn't enough -- successful companies consider this table stakes for competing.
Steve Hughes was hired in 1992 as exec VP-marketing for Tropicana. He was subsequently promoted to exec VP-general manager for consumer and commercial operations. Today he is a director of the Cambridge Group.
Steve Hughes was hired in 1992 as exec VP-marketing for Tropicana. He was subsequently promoted to exec VP-general manager for consumer and commercial operations. Today he is a director of the Cambridge Group.

Over the past 13 years, I have helped revive several great brands that had become stagnant, in particular Tropicana. It was a brand that suffered from strategic complacency when I came on board. It hadn't grown revenue or profitability for three years, and, not surprisingly, it was looking at an empty innovation pipeline.

Insular views
And it had an intensely insular view of the competitive landscape. On my first plant tour at Tropicana, I asked, "Why don't we make grapefruit juice?" The VP-operations looked at me as if I had asked the stupidest question in the world and responded, "Tropicana is an orange juice company." In each case, I felt as if I had walked onto the deck of a becalmed sailboat.

It took urgent action to spark new growth. Immediately upon taking charge, I proposed a process to create a new strategy, based on fresh consumer insights, that could make every product and practice obsolete within 120 days. If nothing else it would shake up our complacent view of the world.

Our very first step was to assess the state of the market and develop meaningful intelligence about the demands of our consumers. We would then identify significant opportunities, including those which existed in adjacent space, and aggressively pursue them. Everyone would be allowed to participate in this process, but it was also made clear from the beginning there would be a new, approved strategy in 120 days.

Huge inferiority complex
The Tropicana story demonstrated the power of this model. In 1992, Tropicana was a familiar brand with consumers. It was the No. 2 brand in the market, with 34% share and $1 billion in revenue. Unfortunately, our sales were flat, and even though Tropicana Pure Premium was widely considered the premier brand in the ready-to-drink category, the organization suffered a huge inferiority complex when comparing itself to Coca-Cola's Minute Maid.

We focused our efforts on creating a growth strategy that would shake up the culture and leverage our existing resources, while challenging every product and practice in the company. The launch was set for 120 days from my first day. We had one critical hurdle rate: Every new item had to exceed $35 million in revenue. Anything less would not achieve healthy profitability.

As a first step we set about generating new insights about our most devoted consumers. Many customers loved the Pure Premium product, but were defecting from the franchise for orange juice products with benefits we did not offer, such as added calcium.

Second, we learned that these consumers were huge juice consumers beyond orange juice, and were particularly heavy consumers of grapefruit juice. Our heaviest and most loyal consumers were willing to consider Tropicana a preferred brand for other juices, if only we offered them.

Finally we realized that consumers viewed fresh-squeezed taste as a benefit, not a process. If we could deliver the taste of fresh squeezed in an extended-shelf-life version, rather than the short shelf life associated with physically fresh-squeezed juice, these drinkers would be happy.

Strategic implications
The overall lesson we gathered from the data had dramatic strategic implications. Tropicana had been defining orange juice with the narrowest mindset possible. It could have pulp, or no pulp. The consumer, on the other hand, was open to embracing the brand on multiple dimensions. As a result, within 120 days we launched three ambitious new strategic initiatives. These untapped opportunities were so close to our core competencies that we were able to launch this first wave of products quickly.

The transformation was instantaneous. Within 12 months the new initiatives were generating $400 million of incremental sales. What's more, we produced them on current equipment and leveraged our existing advertising and trade spending, so they were all profitable almost immediately. And so while revenue grew from $1 billion to $1.4 billion, earnings in fact doubled from $60 million to $120 million.

Over the next four years we built on this momentum with a relentless stream of innovation, expanding our nutritional offerings, adding apple and lemonade, and blends such as strawberry orange juice. With but one exception, every new item exceeded our $35 million revenue hurdle and contributed strong annual growth in share, revenue and profitability. A business with a shareholder value of $800 million in 1992 was sold to PepsiCo for $3.3 billion in 1997.

The turning point
The turning point goes back to that first 120-day window between November 1992 and March 1993. It was an exhausting yet crucial 120 days. The urgency to deliver a new strategy based on new consumer insights shattered the status quo and galvanized the organization around a new management philosophy. And that has been the clear lesson learned: The opportunity waits for the management team that approaches its strategy with urgency and a commitment to obsolete the status quo.

In the case of Tropicana, the resulting blueprint for growth lead to a set of new products that helped transform the brand. In retrospect, this phase may appear to be obvious and low risk, but at the time it was dramatic, challenging and, of course, fueled by a sense of urgency. The result was a complete transformation of the orange-juice category that re-energized the Tropicana management team and set the company on a path of sustained profitable growth.
In this article:
Most Popular