A Failure of Creativity: the Demise of Hostess

June 26, 2013 at 7:54 pm 2 comments

When I was growing up, Twinkies were more or less a staple in my experience.  While I sort of shudder to think about it now; I also have to admit. . .I really liked them.

I heard of the Hostess demise first on Facebook and my curiosity was inexplicably captured.  I dropped what I was doing, and started researching the story.  I just HAD to find out what happened.  Then I stopped and realized – WOW.  They had done a fabulous job of marketing back in the day.  Even though I hadn’t touched one of their creations in decades, apparently I was still a psychological customer.  The video I watched of a woman weeping – yes, sobbing – that her daughter would never know the joy of Hostess products, confirmed my theory.

Regardless of how you feel about the company and its product line, there are business lessons to be learned here.  Once so successful that most every American kid’s lunch box contained their products, they ultimately failed after 82 years of operation.

Why?

The answers are a study in what contributes to a successful enterprise.  I submit that a core feature of the Hostess collapse was a failure of creativity.

What happened to Hostess?

Fresh ideas drive business success

Fresh ideas drive business success

There were a lot of things going on at Hostess that led to the closing of the iconic company.  In a Newsweek article entitled “R.I.P Twinkies”, Daniel Gross identified many:  serious, ongoing disputes between labor and management; two Chapter 11 bankruptcies; huge debt load ($700 million).

Bad enough.  And here is the observation in the article that got my attention:

“Hostess Brands is a story of what happens when businesses. . .focus too much on financial engineering to the detriment of innovation [italics mine]. . .Hostess stuck with a 1950’s world view. . .The unwillingness or inability to update its business strategy and products for a changing world was more damaging to Hostess than the. . .strike. . . ”

In short, a key aspect of this business failure was a systemic leadership – and therefore the corporate culture’s – inability to keep up with changing times, customer preferences and food trends.  This demands an ability to innovate.

Change and creativity

Whether we like it or not, change in our world is accelerating.  Everywhere.  At the dawning of century, Fareed Zakari (then the International Editor of Newsweek magazine) predicted:  “The 21st ChangeButtoncentury will be the century of change.  More things will change in more places in the next 10 years than in the previous 100.  Most. . .aren’t ready for the dizzying ride. . .”.  In retrospect, this seems a bit of an understatement!

The call for creativity reaches into all aspects of our business and society.

  • Even when it comes to our security, innovative thinking showed up as critical as long ago as the 9-11 tragedy:  “What we can say with confidence is that none of the measures adopted by the U.S. government from 1998 to 2001 disturbed or even delayed the progress of the al Qaeda plot.  Across the government, there were failures of imagination [italics mine], policy, capabilities, and management.”
  • 76% of 5,900 training participants surveyed by Inscape-Wiley (Minneapolis 2013), said they would “. . .voluntarily spend their time attending training. . .” on developing innovative thinking skills.
  • The most important leadership quality for CEO’s, according to Fast Company Magazine?  Creativity.
  • Harvard Business Review publishes an article discussing creativity and its importance to business.  The year? 1988.

Clearly the ability to think creatively in business is highly prized, desired — and lacking.  Evidently for some time.

The successful business model

At the Creativity Matrix™, we know that ingenuity and the capacity to tap resourcefulness are as essential to successful business as solid structures and systems.  One without the other is a recipe for collapse.  Hostess is a prime example of a company that had their operations model perfected, institutionalized and replicable.  It worked for years.  Until it didn’t work at all.  It was the apparent refusal to adapt that sealed their fate.

Creative Thinking is Key

Creative Thinking is Key

The ability to change has always required creativity and this has never been more true than it is now.  The tricky part is that the faster and more profound the change, the more stability our businesses need as well.  However typically established companies (such as Hostess), tend to cling more fiercely to stability as change accelerates; when the opposite (letting go and doing new) is actually what is needed.

Businesses that regularly attend to both creativity and structure are the ones that win, because they have:

  • the resiliency and flexibility to change course when needed – and
  • the stability to carry out the new business strategy

Boosting your company’s CQ – 7 Questions to Ask

So.  What’s the Creativity Quotient (CQ) of your business?  Here are a few check-in points to consider:

  1.  Do you review the trends, “zeitgeist”, customer preferences, etc., that impact your business on a regular (at least once per year) basis?
  2. Does your business value, cultivate and reward original, imaginative thinking?  Among all employees?
  3. How often do you “test the waters” to make sure your operational systems are functioning in the current decade; that your employees have reasonable job satisfaction; and your bottom line can remain healthy?
  4. On a regular basis, do you ask questions such as “what if we approached this differently”? “Who are our customers and what do they really want?”
  5. Are you thinking 5, 10, 15, 20, even 25 years out and imagining what your business will look like?  What it will be doing?  What  the world will look like?  The path(s) you might need to take to get there?
  6. What’s the “fear factor” at your business?  Does your company culture embrace the new?  Or resist it and cling to established patterns?
  7. Do your proactively train your people for creativity and innovative thinking?

Postscript

As I was writing this blog, it was announced that Metropoulos & Co. and Apollo Global Management have purchased the Hostess Brands and are putting the products back on the shelves during July 2013.  The Christian Science Monitor says:  Based on the outpouring of nostalgia sparked by its demise, Hostess is expecting a blockbuster return next month for Twinkies and other TwinkiesComeBacksugary treats, such as CupCakes and Donettes. The company says the cakes will taste the same but that the boxes will now bear the tag line “The Sweetest Comeback In The History Of Ever.”

It will be interesting to watch this unfold, as it seems the core lessons of innovation and keeping up with changing times have been missed in this “comeback”.  While I am very nostalgic about Twinkies of my youth, I am not going to buy them. . .

To read Daniel Gross’ article, click here

To read the Monitor article, click here

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2 Comments

  • 1. Elmdea  |  June 27, 2013 at 1:37 pm

    Excellent and to-the-point research!! I’m an author, a therapist, and a former Fortune 500 manager, Across the board, creativity (or lack thereof) has marked the success (or failure) of everything I’ve been a part of. The arrogance of a Fortune 500 can too often blind them to the need for creativity, The “need” to be spiritual will do the same to metaphysically based businesses. Every time, the failure to embrace and welcome creativity is based on a fear of something else.
    Thank you, Anne!!

  • 2. akacoachandcompany  |  June 27, 2013 at 2:44 pm

    Thank you for reading the blog and for your comments Elmdea! So true!!


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