The creator of Crystal Pepsi says it’s probably the greatest idea he’s ever had — and its failure taught him an important lesson
Retired Yum Brands chairman and CEO — and Crystal Pepsi inventor — David Novak.
The creator of Crystal Pepsi, the clear cola that had a brief stint in the early 1990s and is about to be relaunched for a nostalgic limited run this summer, told Business Insider recently it was “the best idea I may have ever had in my career.”
Its inventor, former Yum Brands (KFC, Taco Bell, Pizza Hut) CEO David Novak, had an illustrious career, leaving behind a legacy of 41,000 restaurants across 125 countries and a market capitalization of about $33 billion when he retired as chairman in May. He still thinks, however, that he could have made Crystal Pepsi a hit if he just had been a more experienced leader at the time.
At least, he said, the failed product taught him a lesson: When you’re a leader, it is your duty to not only take into account your employees’ input, but to explain your final decision, regardless of how it aligns with what your team wants.
PepsiCo
Novak became COO of PepsiCo in 1992 after a successful run of marketing jobs. So when he saw the rise of the buzzwords “pure” and “clear” for products ranging from soap to gasoline, he saw an opportunity for Pepsi’s flagship product. Thus he pitched Crystal Pepsi, a colorless cola that would appear more refreshing and “good” for you — because even though the non-diet version was still loaded with high fructose corn syrup, it didn’t have caffeine.
Pepsi ran a limited run of the soda in a limited market, and it performed well. Novak was stoked, and that’s why he didn’t want to hear any nitpicking from the team manufacturing the beverage.
“The bottlers told me, ‘David, it’s a great idea, and we think we can make it great, but it needs to taste more like Pepsi,’” Novak said. “And I didn’t want to hear it. I was rolling the thing out nationally and I didn’t listen to them.”
Crystal Pepsi launched across the United States the next year with a Super Bowl ad featuring flowers, coins flying over the globe, a cyclist against a field of clouds, and the Van Halen anthem “Right Now” that was ridiculous enough even at the time to warrant a “Saturday Night Live” parody. But it did grab attention, and customers initially flocked to the product.
The data service Beverage Digest told the Wall Street Journal that Crystal Pepsi peaked with 0.5% of the American soda market but could not carry momentum past an initial burst of interest, and never met Pepsi’s goal of capturing 2% of the market and turning it into a billion-dollar brand. Pepsi stopped producing it by the end of the year, and it was extinct by the end of ’94.
There are several factors that contributed to Crystal Pepsi’s failure — the end of a marketing fad, the century-old association of cola flavor with a dark brown drink — but Novak continues to be most concerned with analysis that said the flavor, however close, wasn’t 100% right. And whether or not the flavor was indeed the main reason the soda flopped, it’s the factor that mattered most to Novak and what caused him to rethink his management style.
“I learned there that you have to recognize that when people are bringing up issues, they might be right!” Novak said. The next step is making the effort to find evidence that either proves or disproves these issues and make your decision accordingly. Then, the final and most important step is explaining why the decision was made.
“If you show them that you’ve listened and addressed their concerns, then you’ve given them the input opportunity they need to get committed … [and] then they’re going to be more committed to the solution,” he said.
The key takeaway concerns the importance of recognition, which is why Novak’s latest book “O Great One” is dedicated to teaching leaders how to recognize their employees and why that’s so important to a company’s success. So even if Crystal Pepsi was destined to fail, Novak is confident that he mishandled its launch.
But he made up for it.
From ’94 on, including his highly successful tenure as CEO of Yum from 2002 to 2015, he made employee recognition his No. 1 priority, and ended up with an office covered in framed photographs of him with employees he gave awards to for exceptional performance.
And, for what it’s worth, Crystal Pepsi has been embraced by a generation nostalgic for the ’90s. It’s coming back for a limited time, starting this month in Canada and in August in the US.
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