Thursday February 04, 2016
Small Move, Big Gain
This episode explores how small moves can result in huge business gains. While much of the business world spends its time looking for the big idea, many companies enjoy massive results with tiny moves and subtle tweaks.
One day in Afghanistan, a small troop of American soldiers found themselves involved in an exchange of gunfire with a small group of Afghans.
The skirmish goes on for days.
It's a gun battle with no end, as each side just keeps firing shots in the other's direction.
The other group isn't associated with the Taliban, so the Americans aren't sure why they are being fired upon.
Finally, the American Lieutenant in charge has an idea.
He says, why don't we just ask them?
So the Lieutenant signals a ceasefire.
When the shooting stopped, he slowly walked over to the Afghans and asked, "Why are you firing at us?"
They tell him it's because the Americans are not paying rent for the land they're on.
The Lieutenant says, "Oh, OK, so we'll pay rent."
The Afghans say that's fine, but we have to warn you that another group will start shooting at you.
When the Lieutenant asks why, the Afghans tell him that the other group believes they own they land.
Then the Lieutenant asked this one simple question:
Is there a place we can move to where we won't have to pay rent?
The Afghans point to a place just 180 metres away.
So the American squad picked up their equipment, moved 600 feet to the left - and the shooting stopped.
That was all it took.
It was the smallest move that resulted in a surprisingly big gain.
It's surprising how many small moves in warfare can result in a huge advantage.
Especially when that warfare is marketing.
Some small moves are the result of keen insights, some are born of practical necessity, and still others materialize out of sheer luck and thin air.
But here's the interesting thing: It doesn't matter how small the move is, because if it's smart, it can result in a big, big gain.
Small moves are often deceptive.
They appear so innocuous, that many businesses can't see them, or choose to overlook them, or don't trust them.
Most companies only focus on the big, disruptive ideas.
Yet tiny moves can be little earthquakes that can result in huge changes.
By 1991, McDonald's business had grown stagnant.
Revenues had slowed down, and only grew 1%, down from the robust 10% and 20% it had enjoyed in the '70s and '80s.
Then one day, an account executive from Coca-Cola approached McDonald's with an idea.
He suggested that the fast food restaurant bundle a hamburger and fries… with a Coke.
It was a somewhat self-serving suggestion, as Coke stood to benefit greatly from the bundling.
McDonald's resisted the idea at first, because creating a food bundle meant lowering their margins on three items. But due to their weak revenue forecast, and pressure from the stock market, the fast feeder eventually came around to the notion, combined a Big Mac, a large fry and a medium Coke - and called it an "Extra Value Meal."
While the bundle offered customers a 20% price discount, McDonald's hoped to make up the difference with big-time volume.
It was a good bet.
Within three years, Extra Value Meals accounted for close to 50% of McDonald's revenues.
By 1997, McD's called the Extra-Value Meal their most successful item of the past 10 years. Revenue increased 11%.
But Ronald McDonald wasn't the only winner. One year after the introduction of the Extra Value Meal, Coke announced record profits.
All due to the simple suggestion of adding a Coke to a bundled meal.
Small move, big gain.
I won't beat around the bush. I think Roll Up The Rim was a pretty good idea.
In the mid-1980s, Tim Horton's was on a roll.
The chain was expanding at a record pace, and the number of stores was close to doubling every five years.
According to founder Ron Joyce in his book Always Fresh, an outside supplier came to Tim Horton's in 1985 with an interesting suggestion.
The supplier was the Lily Cup company, which was one of two companies that supplied Horton's with all their paper coffee cups.
Roger Wilson of Lily Cup was trying to gain a larger share of Tim Horton's business, so one day he approached Horton's management with an idea.
His company had developed a new cup that allowed for a message to be printed under the rim. He said it might be a good place to print a contest message or something.
Tim Horton's was intrigued. Printing under the rim didn't add to the cost of the cup. Plus, a contest was a great way to stimulate coffee purchases in the Spring, when sales were traditionally soft.
So Ron Buist, Tim Horton's marketing director, was assigned to come up with a way to use the rim in a promotional campaign.
He came back with "Roll Up The Rim." It was to be a contest where customers could roll up the rim to see if they had won a prize. The promotion debuted in 1986.
The biggest prize that year:
Yup. There was only a slight rise in sales that first Spring, but it really took off in year two.
Roll Up The Rim became so popular, that just two years later, Tim Horton's was giving away automobiles.
The promotion really became memorable when the tagline was said in commercials with rolling R's.
Roll Up The Rim will turn 30 years old this year, and the promotion has given away over 500 cars, and hundreds of millions of coffees and donuts since 1986.
It results in a huge sales gain for Tim Horton's every year.
All due to a small move – the simple suggestion to print a contest under the rim.
Remember this jingle?
Back in 1945, naval engineer Richard James was developing springs to add stability to shipboard instruments, when he accidentally knocked one off a shelf, and watched it "walk" across a stack of books.
Sensing that the spring could be turned into a toy, he showed it to his wife, who christened it Slinky.
James then got a $500 loan, and made 400 Slinkys. He managed to convince retailer Gimbel's to let him demonstrate the new toy at their counter.
But a Slinky at rest isn't very exciting, and the toy got no real interest from shoppers for hours.
So James asked Gimbel's what turned out to be a very significant question:
He asked if he could use the end of their counter.
That allowed him to show customers how Slinky really worked.
Within 90 minutes, all 400 Slinkys were sold.
As Richard James' wife told CNN many years later, "If it hadn't been for Gimbel's giving us the end of a counter to demonstrate, I don't know what would have happened."
60 years later, over 300 million Slinkys have been sold.
A small request. The end of a counter.
Back in the late 70s, producer Brian Grazer had an idea for a new movie.
It was a about a Mermaid washing up on the shore in New York City. The tentative title was Splash. He pitched it to every studio in Hollywood.
And every one of them turned him down.
For seven years, he kept pitching his mermaid story. But movie executives just couldn't get their heads around the idea of a mermaid walking the streets of New York.
Grazer kept striking out.
Then one day he realized there is a lot of information in a "No" – so he decides to listen more intently. He pitches Splash again, gets turned down, and realizes the reason is because he was pitching it too much from the perspective of the mermaid.
So he decided to slightly alter his pitch. Instead of a movie about a mermaid, he begins pitching it as a love story between a man and a mermaid, saying the movie was really about finding the right love for yourself – as opposed to the love people would choose for you.
Same movie, different framework - he just changes the pitch. So he presents the love story angle to Disney, and the studio buys it on the spot for its new Touchstone division, which was created to allow Disney to do grown-up movies.
Splash not only becomes Touchstone's first feature, it becomes the fastest money-making movie in Disney history up to that point.
And made stars out of Tom Hanks and Darryl Hannah.
Same idea. Small pitch change.
Remember when President Obama sang a little Al Green during a fundraiser in 2012?
By just singing six words of Al Green's song Let's Stay Together, sales of Green's song shot up 490% that week. It was downloaded 16,000 times – more than it has ever been downloaded before.
Small move. Big gain.
But Obama is no stranger to making a small move to reap a big gain. When he was campaigning against Senator John McCain back in 2008, he employed a small tactic that had a sustained, compound impact.
Every time he met McCain at a debate, or was asked about McCain, Obama always thanked the senator for his "half century of service."
He wasn't just paying his respects, it was a small but powerful strategy to paint McCain as old. Obama's platform of hope and change was based on youthful optimism, and he wanted to leverage the 25-year age difference between him and his opponent.
By framing John McCain as old at every opportunity, and by hiding that jab inside a compliment, it fed into Obama's platform and the country's hunger for change.
It was a small but effective move that helped bring about a historic gain.
Sometimes, a small move isn't about generating profit or votes, it's about persuasion.
In the early days of Lasik eye surgery, people were unsure about the procedure.
Just the thought of having surgery on your eyes was enough to make people uneasy.
But there was one surgeon who employed a small persuasive tactic to convince his patients to go through with the surgery.
When they came in for a consultation, he would tell them all about it, how safe it was, and how quick the procedure took.
Most patients were still very unsure.
That's when the surgeon would say, "See" and point to a basket full of discarded eyeglasses.
The patients saw, and booked the surgery.
A small move that produced big gains.
When Hurricane Andrew hit in 1992, it was the most destructive hurricane in U.S. history up to that time.
Beyond the usual damage of a Category 5 Hurricane, Andrew also caused some unexpected issues.
One of those involved an aquarium in Florida.
When the storm started to level buildings in South Florida, a major aquarium tank burst, and one foreign species was swept into the Gulf of Mexico then into the Caribbean Sea.
That species was the Lionfish.
Foreign to the Atlantic, Lionfish come from the tropical waters around Indonesia.
It is an intense predator. While it is strikingly beautiful in its own way, it is aggressive and has venomous fins.
When it was released into the Atlantic, it began to reproduce quickly. One female Lionfish can produce over two million eggs per year.
When the Lionfish invaded the Caribbean Sea, it began to devour local fish populations – with each Lionfish capable of eating as many as 30 fish in 30 minutes.
The decimation of local fish species threatened the environment and the economics of Columbia, much of which depends on fisheries. The Lionfish had no natural predator, and it was destroying the coral reef balance.
That's when an advertising agency had an idea.
Ogilvy & Mather Bogota looked at the situation like a business problem.
The ad agency decided the solution was to tempt the hungriest predator of all – humans.
The simplest way to rid waters of Lionfish… was to eat them.
So Ogilvy & Mather joined forces with the top chefs in Columbia and had them create Lionfish recipes.
Even though a Lionfish was poisonous to touch, its meat is safe and very tasty.
The agency created an advertising campaign titled "Terribly Delicious."
It was a play on how terribly evasive the Lionfish was, and how delicious its meat is.
A beautiful Lionfish cookbook was created, full of desirable gourmet dishes. A pamphlet was distributed full of Lionfish recipes.
In effect, the advertising agency and the Columbian Ministry of the Environment generated a cultural shift by turning the Lionfish – previously unheard of in Caribbean waters – into an everyday fish dish.
A supply chain was created with fishermen and local fisheries. Famous hotels and top restaurants began serving it.
Lionfish was put into supermarkets.
But traditional media wasn't enough to get the message out.
They had to aim higher.
That's when they made a small request.
To the Catholic Church.
There are 48 million people in Columbia, and 84% of them are Catholic.
Much fish is consumed on Fridays as well as during Lent and Easter in the Catholic faith, so the Church was asked to suggest Lionfish to their congregations.
The Church understood the urgency, and during sermons, priests began asking parishioners to choose Lionfish when eating fish.
Even the President of Columbia tweeted that he was eating Lionfish during Lent:
That additional element – recruiting the Catholic Church – pushed the program into overdrive.
Today, indigenous fish species are returning, and the Lionfish population is declining.
For every single Lionfish eaten, 34,000 fish, 6,000 crustaceans and 3,500 other species are saved.
All due to the smart, Terribly Delicious solution of eating Lionfish.
And the small, additional idea of mobilizing Catholics to do the eating.
Small move. Huge gain.
There is a long and interesting list of small, lucrative moves in the world of marketing.
For example, there is a reason why milkshakes are so thick at McDonald's. It takes a while to drink them, and the longer people linger, the greater the chance they will spend more money.
A direct mail copywriter once simply changed the word "fix" to instead say "repair" and increased response for a roofing product by 200%. Fix sounded like work. Repair sounded like a solution.
Proctor & Gamble didn't know how to demonstrate the softness of Charmin Bathroom tissue on TV. So their advertising agency came up with the idea to tell women to squeeze the Charmin in grocery stores, the way they would squeeze a tomato. But then they worried store managers would go crazy – so they invented a fictitious store manager named Mr. Whipple who would say, "Please don't squeeze the Charmin!" That small addition kept store managers happy, and sales went through the roof.
Merv Griffin once pitched a TV network on a new game show idea he had. But the network wasn't interested in yet another show where contestants guess the answers. So Griffin changed it to be a game where contestants are given the answers and have to guess the questions. Hello Jeopardy.
One of the main reasons the use of toothpaste, shampoo and laundry soap are habits is due to one small element:
As Charles Duigg points out in his book, The Power of Habit, there are dozens of daily rituals we ought to perform that never become habits.
Like eating more veggies, and less fat.
Or applying sunscreen – which only 10% of us do on a daily basis.
The reason these things don't become habits is because they don't create cravings.
Toothpaste, laundry soap and shampoo manufacturers understood this fact many years ago.
That's why they made a small change to their products early on… by adding a foaming agent.
When you brush your teeth, the toothpaste creates a foam. When you shampoo your hair, it lathers. When you use laundry detergent, it creates soap bubbles.
There is no cleaning benefit to foaming.
It is there for one reason and one reason only:
To make you feel good. And to create a habit.
When your toothpaste stops foaming in your mouth, you stop brushing. If your shampoo stopped lathering, you would change brands. If you added laundry soap to the washer and it didn't bubble, you would think it isn't working.
As crazy as it sounds, foam creates a reward.
That reward creates a craving. And that craving creates a habit.
Such a small move. Such a big gain.
When O.J. Simpson was tried for the murders of his wife Nicole Simpson and her friend Ronald Goldman, Judge Lance Ito made a controversial decision to allow TV cameras into the courtroom.
The trial was televised for 134 days.
While watching the trial on television, advertising agency Goldberg, Moser, O'Neill noticed that the camera focused on Judge Ito at his bench every three or four minutes.
And any product on his bench would get massive – and free – exposure.
One day - as recounted in Fred Goldberg's book titled, The Insanity of Advertising - an attorney asked for a recess so a pizza could be ordered, prompting Judge Ito to sarcastically ask for a broccoli pizza.
As it so happened, the advertising agency had a client that sold a product called Broccoli Wokly. It was a bag of pre-cut, pre-washed broccoli heads, ready to eat.
So the ad agency sent a small Broccoli Wokly package to the judge containing a bag of broccoli, a Broccoli Wokly coffee cup and a tee-shirt.
Sure enough, the Broccoli Wokly coffee cup ended up sitting proudly on Ito's judicial bench, and every time the camera zoomed in for a close-up, it panned over the Broccoli Wokly logo.
A few days later, the agency received a letter from Judge Ito requesting another Broccoli Wokly tee-shirt.
And Broccoli Wokly got free national airtime every day during the most-watched trial of the 20th century - and sales soared.
Just when you thought the O.J. trial couldn't get any stranger.
Small move. Broccoli Wokly gain.
Charles Darwin understood the power of small.
He proved that the tiniest variations between animals and plants gave them a winning edge. That even the smallest of advantages led to the survival of the fittest.
Many times in business, the power of a small move is overlooked in the mad search for the big idea.
But often, it's the subtle tweak that opens the floodgates of profit.
When a Coca-Cola executive suggested adding a Coke to a bundled value meal, that simple idea not only rescued McDonald's revenues, it gave Coke record profits.
When a cup supplier happened to mention to Tim Horton's that it could print on the inside of the rim, a famous 30-year promotion was launched.
When the problem of eliminating Lionfish needed one more element to be a success, the simple idea to enlist the Catholic Church made all the difference.
And when toothpaste and shampoo added foam, it added a few extra zeroes to the profit margins.
You never know where a lucrative idea is hiding. It could be on the end of a counter or in a bag of broccoli.
The trick is to find the big in the small…
…when you're under the influence.