Viewpoints

It Took a Major Management Gamble to Rescue Tang


A few years ago, Tang, one of the world’s iconic products, had fallen hard to earth. The powdered drink rocketed to popularity in the 1960s as American astronauts took it into space. But over the years the excitement faded, and by 2007 U.S. sales were moribund. Tang still brought in $500 million, mainly in South America, but even there momentum had stalled. Parent company Kraft Foods (KRFT) worried that the historic drink would become a relic.

Five years later, Tang’s international sales had doubled. What accounted for the stunning turnaround? The answer violates basic business conventions: a blank check. Essentially that means giving unconstrained resources and authority to a select team that’s been handed a huge, must-succeed project.

In the case of Tang, Kraft gathered a handful of its savviest South American executives and delivered their new assignment: Double the product’s international business in five years. After the executives picked themselves up off the floor, management gave them good news: They’d be given a blank check to pull this off. Just fill in the amount needed. Eight weeks later the team returned with a plan, and Kraft wrote a check.

This approach goes against everything taught in business school. Budgets exist to impose discipline, to keep an enterprise on track. But budget restrictions can also hobble thinking. Remove the restrictions under the right circumstances, and creativity can blossom. It’s as if imaginations are suddenly set free. The impetus doesn’t come just from the size of the check. On the other side of the ledger, the staggering target forces the team to question assumptions and think in new dimensions. Simply improving on the familiar formulas won’t get there.

The blank check also breaks down another convention: the usual business hierarchy. The team with the blank check now owns the project and must turn into a band of entrepreneurs. Company leadership, trusting the team, steps aside.

Blank checks aren’t Hail Mary passes—they are bold but reasoned bets that aim for sustained growth, not a one-shot boost in revenue. They should be applied to initiatives that up the ante on what works. Progress should be monitored closely with simple metrics. If the results don’t measure up after a reasonable time, pull the plug. Move on.

The Tang plan called for doubling promotion of the most popular flavor, orange. But it also featured several innovations. The team arranged to offer Tang in one-drink-size sachets, a packaging breakthrough ideal for lunchboxes. It also relied on Tang’s green credentials—all it requires is powder and water—to capitalize on the idea of helping the planet.

The blank check request included not just money, but also the freedom to enlist people and expertise from within and outside the company. And the money was to be invested in a phased manner, based on delivery of key milestones. Blank checks have produced similarly strong results for other Kraft products, including Oreo cookies in China and Cadbury chocolate in India. (Since Kraft Foods split in 2013, Tang, Cadbury, and Oreo are part of Mondelēz International (MDLZ).)

A blank check is a metaphor for giving people out-of-scale support to accomplish out-of-scale tasks. We have seen it over and over—teams respond remarkably when unleashed on a challenge, whether it’s sending men into space or reviving an underperforming drink. That’s the lesson of Tang.

Khosla, senior fellow at Kellogg School of Management, is the former president of Kraft Foods International. He is co-author with Mohanbir Sawhney of FEWER, BIGGER, BOLDER: From Mindless Expansion to Focused Growth.
Sawhney is a professor at Kellogg School of Management, specializing in strategy and innovation. He is co-author with Sanjay Khosla, of FEWER, BIGGER, BOLDER: From Mindless Expansion to Focused Growth.

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Companies Mentioned

  • KRFT
    (Kraft Foods Group Inc)
    • $63.51 USD
    • 0.13
    • 0.2%
  • MDLZ
    (Mondelez International Inc)
    • $37.3 USD
    • 0.72
    • 1.93%
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