Hostess-Twinkies
and Lessons to be learned
Several
weeks ago, Hostess announced that it was winding down its operations, shut its
factories and lay off some 18,500 employees. Over time, it seems likely that
some of its iconic brands may be revived but, for now, a large number of people
are going to have a miserable Christmas season. Even in boom times, this would
be bad news.
The
easy explanation has been to blame the unions. The same was true when America's
car companies failed. But while costs, of course, do count, you have to ask the
more serious question: How responsive was this business to a changing,
competitive and technologically advanced marketplace? Why weren't labor issues
tackled? What was the management thinking? What did the unions seriously expect
to gain?
You
can't explain this business failure by anything sudden -- it is their second
bankruptcy -- and tastes in unhealthy snacks have not undergone any
revolutionary change. But the company has been sold three times since the
1980s, at each juncture racking up debt. So this is the classic story of a
company that isn't being run for its customers, isn't being run for its
employees, isn't driven by a love of product, but which is regarded purely and
simply as the vehicle for financial transaction. The people who ran it
consistently awarded them pay increases, all the time creating no future for
the business that paid them so well.
It's
become very fashionable of late to write about business failure caused by
galvanic changes in the market place, disruptive technologies, fierce
competition, volatile social change, globalization and so-called black swan
events. But, rather like its products, this is an old-fashioned story of bad
management: Well-paid managers who just didn't care about their future or that
of their 18,500 employees.
It
used to be said that Twinkies were the only food that could survive a nuclear
holocaust. What they couldn't survive was greedy, short-term leadership by
cynics who just didn't care.
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