Batuhan: The power of intuition

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By Allan S. B. Batuhan

Foreign Exchange

Friday, May 16, 2014


APRIL 23, 1985, stands as one of the most significant dates in business history — the date the 99-year-old Coca-Cola company announced it was scrapping its original soda formula for a newer, sweeter version. In blind taste tests, consumers generally preferred ‘new Coke’ over the original drink and competitor Pepsi, but the company severely underestimated the nation’s sentimental attachment to the iconic American brand — especially in the South, where Dr. John Pemberton first concocted the fizzy drink in 1886. After being flooded with phone calls, 40,000 letters and reams of bad press, the company backtracked three months later, announcing the return of Coca-Cola ‘classic’ — news that TV anchor Peter Jennings interrupted General Hospital to bring to the nation. Sales for the original Coca-Cola surged, restoring it as the dominant leader in the nation’s competitive soda market. The reviled replacement drink stuck around and was later rebranded ‘Coke II’ before eventually fading away.”

(TIME, Top 10 Bad Beverage Ideas)

The daring move to reformulate “America’s drink” was not really that daring to begin with, given all the research that accompanied its launch. It was a move that Coke initiated, in response to the “Pepsi Challenge,” its main competitor’s widely-publicized and advertised campaign, which pitted Pepsi against Coke in a head-to-head blind taste test, where random people are asked to taste two unlabelled glasses of beverage, and asked to pick out which they preferred. To Coke’s dismay, six out of every 10 drinkers tested preferred their rival’s product. In response, Coke conducted extensive market and product research, which eventually led them to conclude that their drink’s flavor was going out of favor with drinkers, who now seemed to prefer sweeter-tasting beverages, which Pepsi was.

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Predictably, they set out reformulating their drink, and introducing it amidst much fanfare, as their response to the “Pepsi Challenge.” As we now know, this turned out to be one of the biggest disasters in business history. Despite all the research, and notwithstanding all the number crunching that preceded it, none of these prevented the fiasco that ensued. Fact-based management, as it turns out, had severe limitations.

In contrast, one of the world’s most successful entrepreneurs, Sir Richard Branson says: “I research new ideas very thoroughly, asking a lot of people about their experiences and their thoughts. But on many occasions I have followed my intuition; you can’t make decisions based on numbers and reports alone.”

Likewise, Steve Jobs famously said in his biography – “I began to realize that an intuitive understanding and consciousness was more significant than abstract thinking and intellectual logical analysis.”

Fact-based management has held sway on the business landscape for quite a long time now. Ever since the management innovators like Frederick Taylor, Abraham Maslow and the forerunners of modern scientific management came on the scene, conventional wisdom held that everything in management can be measured, and decisions were not valid unless they were backed up by reams and reams of reports and analyses, supporting one’s course of action.

But Coke ran the numbers, lots of numbers; and yet, its grandiose plan to relaunch the product failed miserably. In contrast, successful people like Richard Branson and Steve Jobs candidly admit that sometimes, to trust in your own instincts and intuition is the best way to ensure success.

As Sir Richard Branson concludes, “It’s important to have the courage to follow through on a project if you truly believe it’s worth pursuing. We all have an intuitive sense of what’s best -- follow it! This approach has never let me down.”

(http://asbbforeignexchange.blogspot.com & http://twitter.com/asbbatuhan)

Published in the Sun.Star Cebu newspaper on May 17, 2014.

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