When Failure Becomes Opportunity

The annals of history are rife with business blunders. Such costly mistakes can be seen across industries and sectors. For example, in 2000, Blockbuster had the opportunity to purchase Netflix for $50M, but management decided that it was too niche and that it was more prudent to stick with brick-and-mortar stores. Kodak literally invented the first digital camera in 1975, but buried the concept to protect its film business. Yahoo turned down the chance to buy Google for $1M in 1998 and didn’t acquire Facebook in 2006 after initially agreeing. Sears, once the largest and most powerful retailer in the US, failed to modernize and underinvested in digital development, paving the way for Amazon, Walmart, and Target to eclipse it. 

Perhaps no blunder is more famous than the one made by Coca-Cola in 1985. At the height of the so-called “cola wars,” it was not uncommon to see blind taste tests in supermarkets, malls, and other public places across America. The Pepsi Challenge was a highly successful marketing campaign that Pepsi utilized to attempt to capture a portion of Coke’s market share. Most of the people who partook in the blind taste tests preferred the sweeter taste of Pepisi to the citrusy, spicy flavor of Coke. Pepsi launched a nationwide advertising campaign, the message of which was that when a consumer can’t tell what’s in the cup, that consumer picks Pepsi. Coca-Cola felt threatened by these taste tests, which led them to launch the disastrous New Coke in 1985. 

Before its launch, New Coke underwent extensive market testing. However, the tests didn’t accurately reflect real drinking habits, and most importantly, did not account for the emotional reaction to losing old Coke. The Coca-Cola Company not only focused on the wrong data; it assumed that data alone would override customer sentiment. When New Coke launched and the original formula was pulled from shelves, consumers revolted. What Coca-Cola failed to factor in was the sentiment that the original conjured. Americana. Memories made with families and friends. Community identity. And of course, it’s iconic, feel-good commercial from 1970, “I’d Like to Teach the World to Sing.” 

Coca-Cola’s biggest miss was in assuming that there was an issue with taste. Changing the formula made it clear that brand identity was more important. Coca-Cola drinkers don’t just buy a beverage. They purchase a brand that evokes memories, emotions, and identity. They didn’t want a better taste. They wanted the same Coke they’d always had. You can improve a product only if customers want improvements, and die-hard Coke drinkers did not. The backlash was swift and vociferous. Angry customers called the company to complain. Some hoarded caches of the original Coke. New Coke was mercilessly mocked by comedians, reporters, and late-night TV hosts. Just 79 days after the launch of New Coke, Coca-Cola Classic was reintroduced to the market, bringing joy to its loyal customers. New Coke would eventually quietly disappear from the shelves. 

The Coca-Cola Company rebounded and regained its position as the winner of the Cola wars. Although the New Coke debacle cost the company between $50M and $100M, it quickly recouped those losses and took the key lessons it learned to heart. Coke confused a market share problem with a taste problem. What Coke really had was a brand positioning problem. Some of the major errors Coke made include:

Conflating data for insight. Researchers didn’t assess the emotional response to losing the original formula. They relied solely on the taste tests. 

Ignoring emotional/cultural attachment: Products with deemed emotional ties cannot be changed without factoring in intense backlash.

Underestimating brand equity: Coke assumed flavor defined the brand. Public reaction demonstrated the brand’s iconic status.

Eliminating choice: When New Coke debuted, the original was discontinued, without any customer preparation. 

What can you take away from this? 

In your career, turning failure into success is less about avoiding mistakes and more about how you respond. Treat failure as feedback, not a dead end. Act quickly to correct the course. Heed lessons, document mistakes, and avoid mishaps in the future. Leverage your failure for innovation. Take calculated risks and celebrate learning. 

The Bottom Line

New Coke was a marketing blunder that ended profitably. Sales increased with the return of the classic formula, and the free publicity the company received more than offset the financial loss. You probably don’t have any Kodak flashcubes or Blockbuster membership cards, but I’m sure you see Coca-Cola everywhere. Take a lesson from them and transform your challenges into drivers of growth. Failure is a springboard for innovation. Think of it not as a stop sign, but as a compass that guides you on your journey. Resilience and adaptability are more important than perfection.