http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html
The reason for choosing this particular video is that Malcolm Gladwell is one of my most favorite writers. A New Yorker staff writer since 1996, he visits obscure laboratories and infomercial set kitchens as often as the hangouts of freelance cool-hunters -- a sort of pop-R&D gumshoe -- and for that has become a star lecturer and bestselling author.
It took me 3 times to watch the video and unerstand the whole speech.
Mr. Gladwell tells us a story of one of great American market reseachers named Howard Moskowitz. Howard is most famous for reinventing the spaghetti sauce. He graduated from Harward University with the degree in phychophysists (which is about measuring things) and set up a small consulting shop in New York. This was back in the early seventies. One of his first clients was Pepsi. So the representatives of Pepsi came to Howard and said: "You know, there's this new thing called aspartame and we would like to make diet pepsi. We woould like you to figure out how much aspartame we should put in each can of diet pepsi in order to have the perfect drink."
More than that, Pepsi gave him particuliar borders: they were working with a band between 8 and 12%. Anything below 8% sweetness isn't sweet enough and everything above 12% sweetness is too sweet. So Pepsi would like to find out the sweet spot between 8 and 12.
At first this task seems to be very simple. We could make up a big experimental batch of Pepsi at every degree of sweetness, beginning from 8% - 8.1, 8.2, 8.3...all way up to 12% , then try it out with thousands of people, plot the results on a curve and take the most popular concentration.
Howard does the whole experiment, but when he plots the results on the curve he suddenly realizes it isn't a nice bell curve, it's a mess.
Most specialists in that kind of situation wouldn't worry too much about the results and would simply choose 10% - the middle result. However, Howad was't so easily placated. He is a man of certain degree and intellectual standards. The results weren't good enough for him and this matter bedeviled him for years. He would think it through and through, what would guess what was wrong.
One day he was sitting in a diner, when suddenly like a bolt of lightning the answer came to him. When they were analyzed the Diet Pepsi data, they were asking the wrong question. They were looking for the perfect Pepsi and they should have been looking for the perfect Pepsies. This was one of the most brilliant breakthroughs in all of food science.
Howard immediately went on the road, visited conferences around the country and shared his relevation. He would stand up and tell: You have been looking for the perfect Pepsi. You're wrong. You should have looking for the perfect Pepsies. People would look at him with a blank look and ask him what he was talking about. However, Howard was obsessed with this idea and when Campbell's Soup came to him, he expressed the same point. Campbell's Soup is where Howard made his reputation. Campbell's made Prego, which in early eighties was struggling next to Ragu, that was the dominant spaghetti sauce of the seventies and eighties. Technically speaking, Prego is a better sauce than Ragu. Despite this fact, Ragu was winning the competiotion. That's when Campbell's Soup asked Howard to fix them.
Howard did just the same he did in Pepsi case - he got to the Campbell's citchen, made 45 varieties of spaghetti sauce and varied them according to every conceivable way (by sweetness, by level of garlic, ect...). He took all raft of 45 spaghetti sauces and went on the road to New York, Chicago, ect. He brought in people by the truckload into big halls, set them down for 2 hours and gave them 10 bowls of pasta with a different sause on each one. After eating each bowl people had to rate from 0 to 100. After the end of this process, Howard had a mountain of data about how the american people feel about the spaghetti sauce.
When he analyzed the data this time he did't look for the most popular brand spaghetti sauce. Instead, he grouped different data points into clusters. Finally he realised that all the Americans divide into one of three groups:
- people who like their spaghetti sauce plain
- people who like their spaghetti sauce spicy
- people who like it extra chunky
Of those 3 facts the last one was most signigicant, because at that time (early 1980s) there weren't any extra chunky sauces in supermarkets. When Prego saw the results and realized that 1/3 of Americans crave extra chunky sauce and noone is satisfying their need, they completely reformulated their spaghetti sause that immediately and completely took over spaghetti sause business in US.
Other companies noticed Howard's succes and that's when the variety of food items started to appear on the shelves in supermarkets.
Although the name of the video is quite obvious, the story, which Malcolm Gladwell tells us is not only about spaghetti sauce. It has several interesting conclusions:
- Asking people what makes them happy not always help in achieving the success. People don't know what they want. (For years and years and years Ragu and Prego would have focus groups, they would sit people down and ask what they want in spaghetti sauce. For all those years through all those sessions noone ever said they wanted extra chunky - even 1/3 of them, deep in their hearts, actually did)
- Howard made us realize the importance of what he likes to call horizontal segmentation. Different kinds of goods serve different kinds of people.
