Gather round, children, and let me tell you a story of the same type of mindless corporate stupidity that happened in my state, about how something successful was ruined because all they could see was at the surface level…
When the mini-market chain AM/PM opened some stores in Baja California, they came up with a hybrid concept that also included a made-to-order fast food kitchen serving burgers, and a sizable seating area, they called this Dave’s Kitchen. It was a huge, huge hit.
Enter 7-11 into the scene. Getting wind of this new phenomenon and armed with corporate cash from their Mexico offices in… Monterrey I think it was… they bought every AM/PM in the state and converted them to 7-11s, surely salivating at the prospect of this large client base that was supposedly built-in with their acquisition.
So what was the first thing they did?
They shuttered Dave’s Kitchen. Poof… gone!
They got rid of the soda machine, the ice cream machine… instead of assimilating the business model of what they had bought, they got rid of everything that made these AM/PMs unique in the market, replaced it with their own bland and generic way of doing things according to the home office in Monterrey.
Within a month, the new 7-11s had lost around 3/4 of their customers. Their emergency response was to send in a squad of corporate poll takers to pester the customers still there and see… why the other ones had gone, I guess?
Asking the wrong questions (why did the customers leave in droves?) to the wrong people (the few remaining clients who didn’t leave). And thus, nothing of value was learned, because when your corporate business school suits are clumsy unthinking hammers, every situation and problem look like a goddamned nail.
Gather round children; as I tell you the story of Georgie Pie, it offered cheap local (to NZ) fast food, in this case meat and sweet pies.
Highly successful and well loved, it was a common sight across the country. Unfortunately, the corporate entities from off shore came in, diluting the fast food dollar across many more options. MacDonald’s brought the struggling Georgie Pie; mainly for its locations and to remove a competitor from the market.
Every few years; to maintain the trade mark, MacDonald’s runs a Georgie Pie promotion where you can get a pie from MacDonald’s. It is like the zombie of local “cuisine” reanimated over and over again to server its master; for the only job it is good for.
Now this truly does sound like a horrifying story.
Move over McRib, 'cause here comes Georgie “Please Let Me Die” Pie, even less often than you do!
Imagine if McDonald’s had actually defeated Jollibee in the Philippines, absorbed them, then resuscitated their menu once a year.
But that didn’t happen, I wonder how did Jollibee not only survive, but thrive? What was their crucial chessboard move there?
Perhaps they realized it would be cheaper to stop the growth of a superior product. Especially when that superior product would likely require more types of costs that would eat corporate level profit. More higher paid employees that can’t be mechanized.
Status quo is incredibly profitable, assuming nothing threatens it. That’s why big business does everything they can to increase the barrier of entry, and happily overpays to buy out successful competitors, with the leadership of the competitors having enforceable noncompetes for the model.
The fact that they polled customers afterwards points to this being a simple corporate fuckup. This kind of thing regularly happens as well where I live despite noncompetes basically not being enforceable.
Acquiring companies is easy, but it extremely rarely goes well. The incentives and skills required to buy something and give a sales pitch to a private equity firm simply do not overlap with the incentives and skills required to vertically integrate that thing without completely destroying it.
In many ways these corporate ghouls are like serial hobbyists. Buying all kinds of expensive toys and tools they don’t understand then breaking them and/or giving up.
Obviously absolute speculation on my part, but if they were truly doing what I suggested intentionally, part of the plan would need to be plausible deniability to avoid anti-monopoly issues, and also public sentiment nightmare. Killing your favorite shop out of incompetence doesn’t win good will, but you will still go there. Doing it out of malicious intent could have people in other states joining a boycott.
I’m in management, participated in the acquisition process of the company I’m at being acquired. At least at the 150mm/year revenue level there’s no one doing the shit I’m suggesting, no one is so competent. Cash on hand is bad , acquisition is an obvious way to deal with that. You’re spot on about skills though, 95% of management at every level is totally incompetent at the work required to actually do management shit. All the competent people leave as soon as they can because the work just got way harder and the money doesn’t follow.
that they polled customers afterwards points to this being a simple corporate fuckup
Yes, this is my thought as well. They bought their way into the market, somehow thinking it was the chunk of real estate and not the services provided that kept customers coming back over and over again. They didn’t even bother to see what these services were, came in like a bull in a china shop, indifferent to the point of oblivious about it, even as the accounting department back at the home office had to process out all the kitchen equipment, the self-service soda and ice cream machines, etc., from every store in Baja.
Nowadays, 7-11 is still there, puttering along, as a generic clone of Oxxo, the other large mini-market chain in Mexico, offering nothing special, except maybe along the lines of - “Hmm… Oxxo is three blocks this way, 7-11 is one block that way, I guess I’ll go to 7-11”, and Oxxos are everywhere, Jesus… like somebody gleefully abused the copy/paste function.
