Prime Challenges

"Prime" Challenges

Earlier in the chapter mention was made about how NASCAR survived both the 1974 gas crisis and the "crisis" at the Daytona 500 five years later, which, by the way, proved to be more of an opportunity than a crisis when examined on a historical basis. Making that key leap from an adolescent company to one in the prime often requires getting past the moments that can turn into crises. Those companies, no matter how many years they have been in business, and even if they've reached their prime years earlier, won't get back to the top if they don't implement the right measures in tough times.

For most companies moments of crisis, many of which are defining moments in the organization's history, present themselves out of nowhere. Yet for others, moments of crisis if and when properly manufactured can help the organization.

In 1998, Hasbro manufactured its own crisis when it restricted the supply of its newly released Furby dolls during the winter holiday season. Most companies that manufacture trendy holiday gifts want to produce enough product, fearing that if there is not enough product available the company might miss its golden opportunity. Hasbro, however, made sure that scarcity was a huge factor in the company's marketing of the Furby, a decision that served the company well. Although this is certainly a risky business strategy, it worked for Hasbro.

Hasbro knew that lack of supply could drive demand, especially in the toy business. In 1982, Coleco acquired the rights to Cabbage Patch Kids from a young man named Xavier Roberts. Even when the toy was mass-produced around Christmas 1983, supply could not keep pace with demand. Every child wanted a Cabbage Patch Kid. A great many of those searching for the toy, including adults, wanted one not because of the merits of the toy itself, but for the bragging rights and the story that went along with acquiring the doll. Some parents drove for hours to find one, and others paid up to $5,000 for an original doll. Some parents even trampled children while running full speed through the aisles at their local toy store.

The Cabbage Patch Kids became the fastest selling toys of all time, generating $1.2 billion in sales from 1983 through 1985. The company benefited by the fact that it was always behind demand. However, when the fad faded and Coleco went bankrupt, another toy company Hasbro acquired Cabbage Patch Kids.

All business strategies must be guided by a capable group of leaders, particularly during periods, whether unexpected or manufactured, of crisis. Beyond successfully emerging from crises, a major step in continuing to grow a business is precisely how that company handles the stepping down of the leader who founded the organization. The passing of the corporate baton down from family member to family member isn't necessarily the toughest test. That comes when the top leadership position is given to an "outsider."