Many of us have eaten an Oreo biscuit before.
Whether you dunk the iconic charcoal black and white cookie in milk, eat it as it is whole, or pull apart the two pieces of biscuits to eat separately from the cream, the Oreo cookie is a huge fan favourite among millions worldwide.
But the humble Oreo cookie is more than just a tasty snack.
To me, it is a symbol of innovation. Let me explain.
How Oreo captured the Chinese market
Oreo is today 106 years old and still makes US$1.5 billion a year, give or take a crumb.
Up until the 1990s, its manufacturer Kraft Foods largely produced and sold it to Americans.
But in 1996, Kraft decided it would Oreo-rise China. Never in their wildest dreams did Kraft expect that the Oreo would end up being China-rised.
When it first launch, so absorbed were the Oreo makers in the cookie’s dominance in the US that they saw no need to change anything about it.
For almost 10 years, Kraft sold the same flavour of the Oreo cookie in China and in the same huge packaging as it did in the US.
But the cookies weren’t selling. And things got so bad that Kraft were on the verge of pulling Oreo out of China.
Instead, it decided to innovate.
For the first time in the cookie’s history, its manufacturers had to ask themselves fundamental questions about Oreo that they had always taken for granted. Why did it have to be round? Why must it always be black and white?
Kraft reformulated the original Oreo to suit Chinese consumers.
For example, they made the cream less sweet and the biscuit less bitter; they experimented with different flavours for the cream to be more suited to Asian tastebuds such as green tea; they even turned the cookie into a wafer; and they started selling in smaller packets to entice more Chinese to give it a try.
From just US$20 million of sales in China in 2005, Kraft sold US$400 million worth of Oreo biscuits in 2012.
So successful were the resulting product changes that Kraft started selling some of the new range of products in other markets too.
Today, Oreo is sold in over 100 countries and its second biggest market is China.
What the Oreo lesson taught me
The Oreo story was shared with our organisation’s middle and senior management recently during a two-day leadership forum on innovation conducted by INSEAD Professor Nathan Furr.
Professor Furr is a leading expert and thought leader in innovation and strategy who has spent time interacting with the likes of Tesla’s Elon Musk and Intuit’s Steve Cook. Some of his MBA students include the founders of popular social media app Instagram.
We decided to make the theme of this year’s leadership forum innovation as I feel that this would be an increasingly important culture to cultivate within our organisation.
Bank of Singapore is eight years old today. We have done exceptionally well in this short period of time. We have, over a much shorter time frame, achieved equivalent scale in our business compared with others which have been around longer than us.
The Oreo example taught me one thing: That a company which does not learn to innovate will one day fall apart. It does not matter how big or how established it is. If it does not change with the times or circumstances, it may soon be part of history.
A recent study by strategy consulting firm Innosight found that corporate longevity was shrinking rapidly. The average lifespan of a company on the S&P 500 – the 500 biggest companies in the United States – was 33 years in 1964. By 1990, it was down to 24 and the report estimates that this would further drop to just 12 years by 2027.
The 4th Industrial Revolution is leading all of us into an era of digitisation. There has never been a time of greater opportunity to grow, and at the same time, greater potential threat to get left behind.
So we as an organisation must learn to be innovative. This journey is not an option that we can afford to pass up on.
Who do we innovate for?
It is important to bear in mind that the most innovative companies are always client focused.
They innovate not because it is cool or the in thing to do. They innovate to delight their clients to keep them coming back for more. The client experience is always at the foremost of their strategic planning.
Our innovative ideas must first identify clearly what the problem is to the client and then find ways to solve them.
We do not need to be the next Google, Facebook or Apple. Often, the best innovative companies solve a common-day problem that no one ever thought could be fixed.
We as an organisation are in the infant stages of our innovative journey and it will involve a lot of changes within our company.
The type of people we hire, the type of training we give them and the environment we create to breed innovation are all essential to make this journey fruitful.
Change is never comfortable. We will experience discomfort, we will have to try things we never thought we would be doing, and we will need to engage with a lot more people to gain different insights.
But we must start changing.
And the Oreo biscuit can be our daily reminder of the need to adopt an innovative mindset.
Disclaimer applicable to recommendation
*This is the first of a three-part weekly series on innovation. In the next two articles, Bahren will discuss the lessons learned during the leadership forum on innovation and how the company can change to become more innovative.
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