Christopher S. Rollyson and Associates

In the entry on innovation, I mentioned that an excessive focus on the numbers produced irrational behavior, and I found a perfect example of it this morning. Coca-Cola spends millions of dollars on developing new flavors of Coke, most of which have proven to be well publicized, expensive flops, at least compared to projected goals. According to The Wall Street Journal (“U.S. Thirst for Mexican Cola Poses Sticky Problem for Coke“), the growing Hispanic community in the U.S., a large portion of which is from Mexico, thirsts for its home-grown version of Coke, which Coca-Cola refuses to import due to its agreements with U.S. bottlers. Some enterprising distributors manage to quasi-circumvent the system to import just under $120 million of soda into the U.S. each year. Coke threatens retailers and distributors with legal niceties when bottlers cry foul but otherwise looks the other way.

Let me get this right. Coke spends millions on developing product extensions that flop, yet it has a $120 million nascent market for a product that already exists, which it is resisting.. all because of its relationship with its distribution channel. This is a perfect example of industrial economy thinking: restrict and control while putting customers […]