Lunchables: An Oscar Meyer Case Study

The past two weeks have been all about operations. Lean manufacturing, tracking KPIs, hitting targets, kaizen and the Toyota process…the choices and possible models to illustrate and define operations are staggering. A few themes have stood out to me however, the main being the need to define a clear vision for what a company or product needs to achieve, and then the thought, design, and operational processes that make it an actuality.

We were introduced to the idea of setting “target conditions”, not end result “targets” in a lecture by Tom Johnson (author of Profit Beyond Measure, 2008). This concept  really appealed to me. The idea of setting out with a vision of service, what problem a product or offering could solve, rather than designing something that did “X”. This concept is much more creative, and offers the ability to achieve greater impact because the confines of a pre-defined outcome are no longer there.

I was reading an article in the New York Times online discussing The Extraordinary Science of Addictive Junk Food. Within this monstrous and fascinating article included many mini case studies about the addition of sugar and other addictive substances to our food to make it more appealing. The Oscar Meyer case study in particular caught my eye, because I remember as a kid, loving the very rare treat (seriously, like only twice in my life did my mom buy them for us) of the pizza lunchables.

It was interesting to read through this case and apply concepts from our coursework that allowed me to name and identify business strategy processes happening as Oscar Meyer continued to evolve this offering.

Initial Company Problem (Oscar Meyer): not selling much processed lunch meat (ie bologna)

Customer Problem: time challenge for mothers to provide kids with easy, nutritious lunch

Target condition to satisfy: Create easy to serve lunch product featuring lunchmeat

Solution: Lunchables!

As with any new product line, Oscar Meyer experience some product evolution that included customer challenges and the need to pivot. 

Problem #1: expensive to make, no profits were to be had even though it was wildly popular

Solution #1: trim production costs, including using lower nutritional “cheese food”, merge with Kraft to help source this “cheese food” at cost rather than purchasing from Kraft as a vendor

Problem #2: Profits coming in, but facing challenges of how to continue growing

Solution #2: add sugar, promote product with customers that had become bored with product

Problem #3: health concerns with products (Maxed Out line)

Solution #3: reduced sugar, salt and fat content, began producing healthier lines featuring fruit

Problem #4: this did not help the criticism since

Solution #4: market research to unpack new concept: “that kids are in control — would become a key concept in the evolving marketing campaigns for the trays. In what would prove to be their greatest achievement of all, the Lunchables team would delve into adolescent psychology to discover that it wasn’t the food in the trays that excited the kids; it was the feeling of power it brought to their lives.” As the focus swung toward kids, Saturday-morning cartoons started carrying an ad that offered a different message: “All day, you gotta do what they say,” the ads said. “But lunchtime is all yours.”

This shift in marketing was key to the success of Lunchables. Profits boomed and competitors started offering similar pre-packaged lunch options for kids. However, since this market was kid-focused, healthfulness of the product no longer appeared as a focus for the target customer.

Now what if their focus from the beginning had been a “target condition” that put a higher value on healthfulness from the beginning? What if Lunchables would have been a product designed that served both the mother’s need to provide a quick, time efficient lunch, and one that would actually be nutritious? This visioning of a different product with a slightly larger goal could have alleviated some of the growing pains the product experienced when parents began to complain. To do this however, Oscar Meyer would have had to a much larger sweep of planning that would include supply chain (like the cheese…and if nutrition and/or quality had been a priority I would venture to guess that “cheese food” would not have made the cut).

Learning from SEED

I was inspired this week. Inspired by a local nonprofit that is taking on the challenge of education by combining lessons from nature with the physical space where children learn. The project is called the SEEDcollaborative.

I am rarely struck with the desire to follow an entrepreneurial path in my career. I prefer the safety and larger impact that working for a large company provides. I feel very fortunate to work in one where I feel I have that opportunity. This quarter, we have been investigating the differences between business philosophies of a start-up vs a mature company, and in every discussion I have felt much more comfortable with the mature company. My work style resonates with distinct roles and job descriptions, and the delivery focus rather than inventing and prototyping. I also prefer the established market since it (at least in theory) helps buffer the risk of failure.

However, this week I found a start-up that caught my interest. SEED is a Seattle based non-profit that is currently a side job/hobby for three local entrepreneurs that I have crossed paths with on various other professional projects. They are designing a living building classroom that could be put on practically any site in the world. It is self-contained, non-toxic, transportable, and totally functional for all energy and water. It is the ultimate classroom.

SEED is working with one of my school districts to have students design their own SEED classroom, and eventually propose it to the school board as an option for new portables in the district. I participated in the introduction day, where students were given the overview of their task, and introduced to the idea that they could market their idea to the district. These students were learning the same basics on marketing and sales that we have reviewed. The need to demonstrate and clearly explain the value and benefits of this unique classroom, and present it backed up with real data…both qualitative and quantitative.

After this introduction I talked with one of the leaders of the SEEDcollaborative, and learned more about their business approach to rolling out their product. Past prototyping but not quite to their first real product, I was interested to hear their approach to actually rolling it out. They are working with a school district in Colorado to have students design their own SEED classroom, and then using sponsored funds to build the project. This is where their marketing comes in, and a great lesson for the students I work with in the PNW. The school district in Colorado, even with the environmental/health/net zero/design engagement benefits and an attractive ROI analysis, did not want to install the classroom. No cost to them, with all the benefits that a living classroom could bring, and the typical public school bureaucratic challenges remained. On a more positive note, yes, they eventually received a green light, and will be installing the room this summer.

This is a great lesson for my students, on how critical your marketing strategy is when presenting a new idea or product. Their target audience will be not only the school board, but the community as a whole since the community is made up of school bond voters. They will have to sell the benefits of a new approach to the traditional classroom, and this will require a flawless understanding of the value it brings.

For me, learning about SEED inspires me to take another look at how start-ups may be more interesting than I first thought. It is important to remember that where I work was once a start-up, and the passion and energy that I so highly value is what helped it to grow. If I can find an opportunity to harness that passion in a new product, service or idea, maybe a startup wouldn’t be as far of a stretch as I imagine it to be. 

Organizational Structure

As the auto and financial mortgage crisis unfolded over the past few years one main task kept surfacing: restructure the company. In the world of an average citizen, I understood this to be a straightforward task…throw out bad apples, get new management in place, and voila: new organizational structure. I could not have been more naïve. This example from the auto bailout illustrates how challenging it is to shift a corporate structure that is well established, and sometimes not even defined. I particularly appreciated the acknowledgement that the structure being revamped at GM was not even formally written down. This seems to be common in companies that either have a long legacy, or have experienced rapid, diverse growth.

On paper and in textbooks, structure can be broken down into useful archetypes such as the matrix structured organization or the market structured organization. However, even as we unpacked these examples, real work experience showed our interpretation of our own companies as hybrids of these models. Each had little nuances that made it not quite as pretty as the textbook organizational structure. Even more often, it appears that a company structure on paper is as neat as a textbook structure, but in practice, this is not their reality. Just try googling images of orgaizational strucutre, and the massive variety appears. This was a personal favorite.

As we delve into understanding what organizational structure is, and how complicated it can become, I understand more and more how existing corporate structures are influencing my work life. Acknowledging that there are larger forces at play, and that those forces are determined by the architecture in which they were implemented gives clarity around what I need to do differently in order to make change.

I work in a large organization with diverse business offerings divided by business units. We operate with a strong overarching mission highlighting integrated delivery, but the reality of the corporate structure as designed is a heavily siloed approach to projects. Resources are shared vertically, not horizontally across departments, and goals of individual divisions can sometimes hinder the ability of others to perform. Recently I have run into roadblocks where communication does not seem to penetrate the organization, and major links are impossible to connect. With a new academic understanding of how to break down the structure, I feel more prepared to seek out specific leverage points where I can intervene and make those links appear.

Understanding the structure of my organization is only the first step. Now I am becoming aware of the challenges of organizational structure of my clients as well, and it gives me a whole new appreciation for the need to redesign our approach to delivering services to them. I often work with school districts (which will remain anonymous on this blog), working to bridge the gap between facilities and operations and the actual classrooms (curriculum and teachers). This seems like a straightforward task, as the whole district is aligned around the mission of serving students. With a major focus on authentic learning around science and math, building data and interaction with their immediate environment is a natural fit. Everyone is on board with the concept, but the actualization is hindered by the district’s corporate structure.

At the district, divisions are siloed, and no individuals from curriculum have reason to directly collaborate with someone from facilities. Not because they do not see value in it, but simply because their jobs have them reporting to and collaborating with people only from their own divisions. Working across these groups is beyond their job description.  A major hole in this structure is a result of budget cuts, where the mid level managers (who previously had more cross departmental meetings and collaboration) were removed from the structure. However, instead of readjusting the roles to help fill this void, the void just exists, hindering progress since it is no one’s “job” to address.

Interestingly, I learned the most about the inside organizational structure from an adjunct member of the school district bureaucracy. This individual works for an associated foundation, and is possibly the only person to truly have a working relationship with leaders of both departments. Identifying her as a key link in bridging this gap will not only assist her in being more effective (one person trying to bridge organization gaps is rough) but will give me the opportunity to start foraging relationships that can help meet common goals of both groups. The goal here is to eventually help drive long term organizational change to create a more integrated, collaborative culture at the district, which is something that both sides have identified as a goal.

Understanding organizational structure is a fantastic tool for framing problems and diagnosing solutions. Every organization, from a fortune 500 company to a 4 person family has some sort of structure whether it is formalized on paper or simply implied. Stepping back to assess the communication and decision making channels that this structure dictates is a fantastic first step in creating smoother operations and more effective collaboration on any scale.