Corporate Sabotage part 1



By Marhalt.

Competition is good – the whole idea of competition is that corporations will compete with one another, and in the process develop new, better, cheaper products. Often, it does – and the company with the better product goes on to reap rich rewards, until the next battle. And, at each iteration, we the customers benefit! It’s a good system. Occasionally, though, this doesn’t work as expected – because some companies have figured out that destroying the competition is a lot easier than coming up with some better product.

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Corporate sabotage can take many forms. One of the most famous form is the kamikaze sabotage – where a company consciously destroys a product to kill off its competitor’s.

Do you remember this?

Crystal pepsi Corporate Sabotage part 1

This is was Crystal Pepsi. If you’ve never seen it before, not to worry. It was a real but short-lived product – introduced by Pepsi in 1992, it was the first of the “clear Colas”: basically, a caffeine-free clear soda that was marketed as a new, fresher, healthier soda. It launched to Van Halen’s “Right now” song, it was healthy (ok, healthier) and clean-looking and different, and it should have been a huge hit.

And initially, it was. Sales spiked, and then, after a few months, started to level off and drop quickly. Eventually the product was pulled from the shelves, and sodas remained black forever thereafter.

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So what happened? Some blamed Crystal Pepsi’s taste, but initial taste tests and consumer reaction was pretty strong. So why did consumers eventually turn against the drink?

This could be the answer:

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This was Coca Cola’s response to Crystal Pepsi: Tab Clear.

You should notice a few intriguing things about this Tab Clear: first, it was only ever available in opaque cans, which is odd for a clear drink. Secondly, it focuses heavily on the “diet” component, with a package that is almost reminiscent of a medical drink or a cough syrup. And even the name, Tab Clear, was vaguely… off: Tab was a much weaker brand than Pepsi – why not fight flagship brand against flagship brand? So why did Coke introduce its competitor to Crystal Pepsi in such a bizarre way?

The then-CMO of Coke, Sergio Zyman, eventually talked  about this, several years after the fact. Coke had realized that they needed an answer to Crystal Pepsi, but rather than try to introduce a better cola, Coke had an idea – change the perception of Crystal Pepsi. Whatever drink Coke introduced, they knew that it would be immediately compared to and associated with Crystal Pepsi. Both products would be placed next to each others on the shelves, for example, and the two drinks would continue the Great Cola Wars that had already been raging for decades. But rather than introduce a ‘Crystal Coke’, Coke introduced a medicinal, diet drink, and basically recast the entire category. Instead of giving clear colas a cool new vibe, Tab Clear made them a diet, medicinal drink. In a few months, Tab Clear was dead – but so was Pepsi Clear. Coke had essentially introduced a kamikaze – a brand doomed to fail – and had made sure that its demise also took its competitors. By ‘ruining’ clear sodas, Coke lost Tab Clear, but also killed Pepsi Clear, a much larger threat to Coca Cola overall.

kamikaze Corporate Sabotage part 1

This is a good example of corporate kamikaze sabotage, but there are other forms of corporate sabotage as well. One of the more funny one is often called brown-washing.

Basically, brown-washing is trying to paint your opponent in a terrible light, usually without a shred of substance. It has a long history. Thomas Edison, for example, once found himself in competition with Nikola Tesla, probably one of the few men who was more brilliant than he was. Both men had schemes to transport electricity from utility to homes – Edison backed a scheme called DC (direct current), and Tesla backed AC (alternative current). For a variety of technical reasons, AC is actually far superior when you’re trying to move electricity around, which is why every utility on the globe uses it today. But back in Edison’s day, the debate was not settled, but Edison knew that, if the decision was made completely objectively, he would lose. So what to do?

Edison decided to electrocute an elephant.

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No, seriously. Edison found an elephant that had attacked his keeper, and that was scheduled to be put down as a precaution. Instead of shooting it, which was the procedure to kill elephants back then, he campaigned to have the elephant electrocuted instead… using Tesla’s AC!

Edison was hoping to prove how dangerous Tesla’s AC was by showing that it can kill an elephant. Of course, this was nonsense – enough electricity can shock anything, whether DC or AC (DC is actually more dangerous in some circumstances). But Edison wanted to paint his rival’s invention in a negative light, and, for a while, he succeeded – no one knew the spec differences between AC and DC, but they knew that AC “was the one that killed the elephant”. Edison was a master showman, and brown-washing came naturally to him.

There are many examples of brown-washing. For example, you may have heard about the famous reading of War of the Worlds on radio?

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The story that most people heard is that when “War of the Worlds” was first read on the radio, thousands mistook it for a real news report of extra-terrestrial invasion. People escaped the cities, families hid in basements, reservists showed up for duty, several people killed themselves, and general mayhem ensued. It’s a well-known story that is variously used to illustrate the power of good narrative, the gullibility of the 1930′s crowds, or H.G. Well’s skills.

But the fact is that the story is, itself, largely made up.

When researchers went back to look at the extent of the actual panic, they found very, very little. No suicides. No crazy crowds trying to escape the cities. Mostly, it seems, the broadcast was met with concern by some listeners who mistook the aliens for German troops.So where did the story of panic striking the nation actually come from??

The newspapers largely made it up. You see, back in 1938, radio was starting to become a force to be reckoned with. Newspapers were getting very nervous at this new source of information that was taking readers away from them. Fearful of their future, newspapers started to attack radio on the grounds of being “too quick”. How can you trust a source, they said, which didn’t really take the time to investigate, to research, to print? So when the War of the Worlds broadcast happened, newspapers (especially those owned by Hearst, the Fox of the day) decided to pounce on it. Some newspapers used the opportunity to decry how stupid radio listeners were in general. Other noted with pride that listeners who were scared called the newspapers offices to ask whether the news they were hearing on radio was true (with the clear implication that only newspapers were trusted news source). The entire story became an attempt of the newspapers industry to brown-wash the emerging competitor, radio, and make it seem like a dangerous, untrustworthy alternative to newspapers.

Craiglist. Corporate Sabotage part 1

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There is a fair bit of corporate sabotage going on even today. It’s a form of manipulation that is time-honored and fairly effective: Microsoft used it extensively when it was a dominant player to destroy upstarts before they could become threatening, and more are using it every day as they discover that it is a LOT easier than competition. And, unlike individuals, corporations rarely go to jail or pay hefty fines for sabotage activities…

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