Crumb Revolution: Mondelez's Strategic Shift from Oreo Breakage Problem to Multi-Million Dollar Innovation
Situation: Jean Spence, the EVP of R&D at Mondelez and Third Angle Consultant was approached by her manufacturing colleagues about the Oreo breakage problem. The cookies crumbling as they went through the manufacturing process cost the company substantial time and money. They wondered if (a) the recipe could be changed, so the cookies would not be so breakable or (b) if improvement could be made to the manufacturing machinery and process to handle the cookies more delicately.
The Catch: Changing the recipe of the world’s favorite cookie was a non-starter. Remember what happened with New Coke? Taking a mechanical engineering approach to manufacturing was an option to consider, but were they missing an opportunity to create value from an unusual suspect – in this case, cookie crumbs? Jean and her team stepped back and asked a fundamental question: “What about Oreos brings value to consumers?” To put it another way, “What motivates them to buy Oreos?” They realized it was the taste, the feel-good tradition, and the multi-purpose functionality – eat them whole; unscrew them and eat them in parts; dunk them in milk; break them up and put them in your ice cream, etc.
Innovative Actions: Jean Spence had a reputation for knowing and utilizing the talent on her team in creative ways, suited to the business and suited to the person. One of her team members learned by analogy and was great at going to meetings with people from vastly different industries and seeing what they could learn and apply at Kraft/Mondelez. In one meeting, people from the concrete industry shared how they recover chunks of concrete waste and recycle it back into the wet mixing process, so nothing goes to waste. With this analogy, the Oreo pieces business was born. Instead of trying to prevent breakage, package the broken pieces and sell them to partners in fast food chains and ice cream stores that saw potential in mixing Oreo pieces in ice cream and shakes. In fact, before this option, some ice cream shops had young employees in the back, with hammers, crushing Oreos so they could add them to shakes and ice cream. The market need was already being felt!
Growth & Value: The business took off and, today, we can even buy Oreo pieces retail to eat or mix with whatever we want at home. The pieces business generates multi-millions in revenue. Combined with the Oreo cookie, the brand is a 4 billion-dollar business for Mondelez! Clearly, the pieces are a delightful and convenient addition to the value of Oreos in the eyes of consumers.
- Ask fundamental questions that get at root problems and root opportunities. As is often the case, the well-meaning manufacturers brought the problem to Jean, along with their ideas of solutions. Jean and her team stepped back and asked questions related to value and how might a problem turn into an opportunity.
- Learn from analogy and underlying principles. The team had the wisdom to assign someone naturally good at learning from analogy to learn from other industries and make the translation. The translation came from considering the underlying principles of recycling wasted chunks of material in production processes and turning them into value.
- Think like a consumer/customer. Often it things go wrong inside our business, we only think about it from an operations or cultural point of view. When we step back and think about what our end users value (and therefore, the tie to increased business), new opportunities appear.