It was 2007. The Oreo cookie was 95 years old and a respectable $200 million brand.
But the No. 1 milk-dunking delight in the United States was crumbling overseas. That was the challenge facing Sanjay Khosla, at the time president of developing markets for Kraft Foods.
Today a senior fellow at Northwestern University’s Kellogg School of Management, Khosla guided Kraft’s global markets (now Mondelez International) from 2007 to 2013, overseeing 65,000 people in 60 countries. During this time, he would help more than triple revenues from $5 billion to $16 billion.
Speaking at the summit, Khosla warned companies against trying to do too much, who embrace what he described as “the seduction of more vs. the wisdom of less.”
Though a domestic and global power with venerable brands such as Oreo, Trident and Cadbury, Kraft had underperformed for eight years by the time Khosla arrived. He looked at the portfolio, the expectations and the results, and paused appropriately.
“The first part of your journey is to focus on where you can win, and not be everything to everyone,” he said.
Drawing from a lesson he learned as a young man, Khosla sought to simplify opportunities by looking at one hand. “How many fingers do you have?” The five should represent your core, your short list of where your company should excel. Resources should disproportionately support that nucleus.
But back to Oreo. With the product foundering internationally, Kraft was on the verge of delisting it outside the United States. Khosla assembled a task force to investigate the challenges. Previously, the company relied heavily on data and sought to replicate the American cookie.
The task force focused on China, meeting with consumers in Shanghai and Beijing. Customers complained the cookie was too big and too sweet. The ad campaign did not connect because the American novelty of dunking it in milk was alien to the Chinese.
A truism emerged: create locally, reinforce globally. “Products will be done locally to consumer tastes,” he said. And data, marketing and R&D would be conducted globally.
A new Oreo line emerged in China, one appropriate to indigenous taste buds. And a new line was spawned, including green tea and wafer-shaped Oreos. The company even spoofed itself with a TV spot featuring former NBA basketball star Yao Ming dunking a cookie in his milk—much to the consternation of a little boy sitting beside him.
Patrons of China were delighted by the new tastes. In six years, Kraft shareholders were delighted with the financial results: Oreo’s international sales skyrocketed from $200 million to $1 billion.
Fewer and Bolder
Khosla’s topic at SOI was titled, “Fewer Bigger Bolder: From Mindless Expansion to Focused Growth.” The title was drawn from the 2014 book Khosla co-authored with professor Mohanbir Sawney about how to achieve sustainable growth and profit.
In some ways, the topic is captured in a metaphor: Lady Gaga.
Khosla’s a big fan of the creative vocalist, whose appeal is broadest among millennials, not necessarily that of Khosla’s generation—a point not missed by a parking attendant who asked the professor at a concert, “Sir, are you in the right place?”
Yet when extolling Lady Gaga’s virtues, Khosla paused: “I don’t know if you love her or hate her, but [she has] flawless execution.”
In Khosla’s more than 35 years of international business experience with food, beverage and consumer product leaders, that is his message: flawless execution.
From his view, operators working in a globalized, digitized world should limit their undertaking to five to seven objectives. Even of convenience stores, he said, “probably many of them are doing too much.”
Khosla offered several anecdotes to support his theory. There’s the story of Tang, a venerable beverage mix that reached $500 million in sales before declining.
Ostensibly an overseas brand, Tang lost its mojo. Directing Kraft’s global operations, Khosla asked the company’s overseer in Brazil a startling question about how best to turn Tang around: “What would happen if I gave you a blank check?” The official was incredulous, but the question was informative.
“It’s an attitude, a mindset to think openly,” he said. “The blank check is more about attitude, not money. … It’s freedom and liberation you see in their faces.”
Often, great business thinking is constrained by budgets and self-imposed boundaries. Over a short period of time, the executive’s attitude evolved from skepticism to panic to action. Ultimately, the folks at Tang discovered they had too many tasks not core to the growth of the brand.
Over five years, Tang’s sales would double from $500 million to $1 billion.
Later, Alejandro Lorenzo, head of Tang in Brazil, told Khosla about his fears of suddenly having a blank check and then thanked him. “You made me think differently,” Lorenzo said.
“To me,” Khosla told the audience, “It was an MOJ—a moment of joy. When you liberate people, you can unleash their potential. I’ve never liked superstars. I’ve always preferred teams and collaboration.”
Khosla urged businesses to embrace three imperatives for driving sustainable growth:
- Select high-potential leaders and define goals.
- Establish a short business proposal.
- Monitor milestones and continually adapt.
And don’t get lost in myriad reports and numbers. “The issue isn’t data. It’s what you do with the data, how to convert the data into insights,” he said.
CONTINUED: When Is It OK to Fail?
When Failure Is OK
Khosla didn’t focus only on his success stories: “Guess what: Blank checks don’t always work. Half the time they fail.”
He talked about another experience at Kraft, the effort to resuscitate the Royal brand of snacks in Latin America. The “blank check” team took on the challenge and rolled out a line of affordable, nutritious gelatins and puddings. Despite solid distribution, the products didn’t sell; efforts to change tastes and habits were more daunting than anticipated.
But here’s the lesson: Failure happens even when your team does everything right. “The issue isn’t data. It’s what you do with the data.”
And guess what? Although the product line was discontinued, the Royal team was not penalized. “The team had shown imagination and energy,” Khosla wrote in his book. “Despite the failure, the team leader was promoted to head the snacks business in Brazil.”
Recounting the story before hundreds of c-store executives, Khosla recounted how he publicly called the Royal “blank check” team on stage during an event to thank them. There, he also acknowledged his own failings in the project.
“For a person to get on a stage and said ‘I screwed up’ … the signal was sent to say it’s OK to fail,” he said.
Blank-Check Management
From his book “Fewer Bigger Bolder,” Sanjay Khosla offered several tips for managing blank checks:
- Focus on what matters. Identify the core of your business, the keys of your potential success.
- Create sustainable growth. Don’t focus only on short-term strategies. Build a structure geared for long-term, sustainable sales and profıts.
- Innovate broadly. Establish teams and ensure they look at more than just products. Rather, their task should include packaging, promotions, merchandising and partnerships.
- Simplify everything. “Blank checks should be the enemy of the complexity that often strangles companies,” he writes. Create faster, more nimble decision-making processes.
- Don’t overdo it. Blank checks are time-consuming and expensive short-term investments, albeit for long-term growth. Don’t undertake multiple “blank checks” simultaneously.
- Family spirit. The greater good outweighs personal ego. Establish both individual and team incentives and foster team pride.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.