Improve Your Chances of Winning: Cut Down On Turnovers and Unforced Errors

What I’ve learned: The surest path to winning is not to lose.

Over 70 years, since 1950, the NFL team that committed the fewest unforced turnovers won the game 78% of the time. In tennis, the player who commits the fewest unforced errors wins 73% of the time.

Business is all about risk and mistakes are inevitable. Mistakes are how we learn. However, costly turnovers and unforced errors can significantly reduce an organization’s odds of success.

At P&G, all too often the failure of a new brand or product, a new business strategy or venture, or of a merger and/or acquisition was the result of an unforced error. Sometimes we made the same strategic mistake over and over before key learnings sank in enough for us to actually adjust our approach. 

P&G cannibalized and eventually killed category leading brands by introducing revolutionary new product innovations on new brands.

In the 1960s, the company chose to introduce a revolutionary new fluoride toothpaste that helped reduce cavities on the small, virtually unknown Crest brand instead of their category leader at the time, Gleem.  Crest rose quickly to category leadership behind “Look Ma, No Cavities” advertising and the unique fluoride product— ahead of not only Gleem but their rival, Colgate. Gleem didn’t even offer a fluoride toothpaste until the 1970s — at least was a long ten years after Crest and Colgate.  The brand, already in serious decline, never recovered and Gleem was eventually discontinued.

In the 1970s, P&G once again ran the same play - this time with a new Dawn dishwashing liquid and a better performing product to clean away grease. In just a couple years, Dawn surpassed P&G’s Ivory Liquid and rival Colgate’s Palmolive to take category leadership. Again, Ivory Liquid was “denied” the new consumer preferred product until it was too late. Like last time, a former category leader went into a long term decline and was eventually discontinued.

Believe it or not, P&G made the same unforced error a third time.

In the 1970s P&G launched a new brand called Luvs, which featured a revolutionary hourglass-shaped disposable baby diaper. In an effort to minimize cannibalization, Luvs was priced at a premium compared to Pampers. Alas, the two tier pricing model didn’t work. Moms that were previously loyal to Pampers tried the new product… and ended up preferring it to Pampers.  Pampers lost their dominant 75% market share to Luvs— eventually splitting the company’s share points in half and opening the door to the distant #3 three brand… Huggies.

Huggies introduced a similarly shaped diaper product that was priced below Luvs and equal to Pampers - effectively capturing chunks of market share from both P&G brands. In a few short years, Huggies over took both brands for category leadership.

It would take P&G another three decades to figure out how to strategically manage two baby diaper brands and how to rebuild a lineup of innovative and better performing diaper products to enable Pampers to regain category leadership.

The prevailing thinking in the 60s, 70s and 80s at P&G was that a new product offering a new benefit should be introduced on a new brand to maximize brand sales and market share. So, rather than improving their existing brands, they spun a new one up.

Luckily, This thinking would evolve.

In later years, new brands would be introduced strategically - only when a new product addressed a new need or created a new category for consumers and retail customers. Align, Febreze, Swiffer and Venus were examples of new brands that created new product categories.

Improved products — even innovative products that delivered new forms, significantly better performance, and new product experiences — were introduced on established leading brands and category leaders like Tide or Downy, Olay or Pantene, Gillette or Vicks, Pampers or Dawn. These category leading mega brands and their product innovation strategies significantly reduced unforced errors and cannibalization, and resulted in P&G strengthening its business leadership of several categories — both in market share and financial performance. 

White Space and Walled Cities

Another strategic unforced error lead to costly turnovers: the inability to recognize or accept the reality that one competitor’s “white space” might be another competitor’s “walled city.” This mistake was time and time again by P&G and a range of other leading companies.

One would think that the difference between the two situations could not be more different or more obvious. But, the failure to see things as they are (and not as we would like them to be) can cause business leaders to become overconfident while minimizing or even ignoring opposition.

When entering developing and frontier countries, P&G often turned a blind eye to the reality of competitors’ established positions, and to the obvious strategic advantages they had in defending their home territory.

P&G repeatedly made the decision to attack “walled cities” — believing that their brand, product or people were superior and would prevail. Some even believed P&G brands and products had a right to win in countries where it did not yet play. These untouched countries were described as “P&G white space.” They represented a new market full of consumers who would flock to better brand and product offerings.

Cold, hard reality proved time and again that direct attacks on a competitor’s walled city almost always fail, while unceremoniously costing the company billions of dollars in write offs and worse — chronically underperforming brands that get in the way of a more strategic allocation of scarce company resources.

Here’s an example: P&G introduced Crest and Oral B into Brazil and Mexico. At the time, Colgate had 80 to 90% market share in those countries. They had been selling their products there for decades — allowing them to build their walls through consumer and retailer loyalty. Another example: P&G introduced Ariel and Tide laundry detergents into Unilever strongholds in India and South Africa.  The outcome was inevitably the same: failure to establish a viable business, tremendous profit and cash losses, an unfortunate misallocation of precious human and financial resources.  

Mergers and Acquisitions

Perhaps the most precarious moves companies make involve mergers and acquisitions. The failure rate is high. Depending on the study, the success rate may only be 10 to 20%, even if their bar of success is as low as simply returning the cost of capital.

A lot of things have to go right for an acquisition or merger to deliver expected results. The strategic hypothesis has to become an operational reality. Both the cost and the revenue synergies have to be delivered. Plus, the two different company cultures must, at a minimum, be compatible and able to connect and collaborate. And— perhaps most challenging— the business leaders and managers who stay on must play well together in the new sandbox.

At P&G, the success rate wasn’t much better than average. There were a lot of failures (Ben Hill Griffin, Clairol, Fisher Nuts, Hawaiian Punch, Max Factor and Wella, just to name a few). On the other hand, there were a few acquisitions — Charmin Paper Company, Gillette (Fusion, Mach3, Venus, Oral B) and Richardson Vicks (Olay, Pantene and Vicks) — that turned out to be wildly successful. 

Over time, P&G developed important divestiture capabilities — not only deciding which businesses to abandon, but also disposing of brands and businesses in a way that generated consistent financial returns.  This core capability enabled the company to create (or at least salvage) significant value from M&A turnovers and unforced errors.