Company Old Gold has been around for more than a hundred years, and their brand is often referred to as the category, it’s like how this part of the world would casually say “Maggi Mee” when we refer to the category of Instant Noodles, or “Scotch Tape” when we mean Adhesive Tape. I am confident that a vast majority of consumers who bought this particular category bought their products, and it may jolly well have stuck around the house for many good years…
And that is the one weakness of Old Gold – their product is so long-lasting that fans typically use it for a long time before buying a new product. Considering Old Gold’s lineage, it came from a different era when long-lasting was the standard way of making things before intentional product obselency became an ethical norm. Not only that, but Old Gold’s products were previously the hottest topic and drove trends, but seem well past their golden age – Will millennials still adore their products like their parents?
i was highly sceptical.
But the management truly stands out – In good fashion, the management is extremely down to earth, and brutally honest with themselves and their end consumers. When he tookover as CEO, Mr Iceberg was asked why Old Gold’s sales was declining, and what were his plans to save the sinking ship.
Cold as ice and without batting an eyelid, Iceberg replied that they have simply fallen asleep behind the driver’s wheel, and consumers were right to abandon them; they got lazy and did not invest into their product innovation and marketing, nor did they expand into new markets and categories. On top of that, competitors caught up in product excellence and some even introduced disrupting series that swept the category. As the undisputed global category leader, it was entirely Old Gold’s fault for the failure of the category. If that was not bad enough, the previous management were less financially conscious and paid fat dividends while topping the company’s bank account with more debt in the age of easing money supply.
In short, when Iceberg tookover the business as CEO, the cash cow had been milked almost to its last drop of milk, and it is starving from malnutrition. It was fire-fighting mode from day one, and Iceberg quickly took the bull by its horns, identifying their core business and strengths, and worked tirelessly to reduce their distractions and weaknesses.
Iceberg instituted a new and independent R&D department to “science their way out of it”, to borrow Matt Damon’s lines. They quickly understood why some fans were feeling let down – because tastes have changed, and functionalities need to be re-constructed from the molecular level up. The order was clear, do anything and everything to get back their mojo and to be ever more relevant to their fans, or else! Thankfully, their core products were still highly profitable and resilient and that bought them a critical window to breathe.
By the first year, 75% of their senior management team left because they were too used to doing things “the convenient way” which got them where they were. i think it is the trying times that reveals a person’s character, and we prefer management who choose to do the right things rather than take the easy paths.
From when Iceberg took over until now, their debt profile decreased drastically until they are now almost net cash, while they pour more internal resources into R&D and core operations. Their R&D team introduced a way to drastically improve their last-mile delivery efficiency. This is exactly what we live for.
i remained cautious because I thought “how difficult can it be to master this product?” After all, peers have seemingly caught up with their yesteryear product offerings. Until i tested their new products and my mind was completely blown – They have truly out-invented themselves, and came up with a game-changing product to disrupt their own category; that is the reason why they can charge at least 50-80% premium to their peers and still have fans willingly shell out their savings!
We believe their strongest growth is in front of them as they focus on growing their now 30% new category as well as their Asia operations.
Put on then, as God’s chosen ones, holy and beloved, compassionate hearts, kindness, humility, meekness, and patience…
Colossians 3:12