4.11 End-of-Topic Case: Frozen Despair

Charlene was tired. She had not expected to return from her honeymoon to be sent immediately to Europe and then out again to help a domestic client resolve a crisis. Fortunately, the problem seemed routine and shouldn’t require more than a few days on the road. The client company, Frozen Delight, had experienced several new product disappointments: new products that customers didn’t embrace or that weren’t profitable.

With the tight freezer space allotted in groceries, and average grocery profit margins of 1-2%, Frozen Delight could not continue to disappoint and expect the grocery chains to stock its products. Further, Frozen Delight risked its slotting fees, which are the fixed charges that manufacturers often pay grocery chains for each store that provides shelf space for an additional product. When a new product does not meet sales expectations, the grocer can replace it with a different product—without refunding the slotting fees.

Moo-Moo Mango—Just Not Right

When Charlene met her client, Mr. Dan Fritz, President and Founder of Frozen Delight, on a hot afternoon in Phoenix, he was anything but delighted. He paced the room, agitated. “Charlene, I am infuriated with our marketing department. They promised me that this latest product would be a success. But customers aren’t buying it. They don’t seem to like, ‘moo-moo chocolate mango.’ I don’t know how they could let me down this way. We paid for consumer focus groups, we paid for test markets…it seemed perfect." Mr. Fritz paused.

Then, he said, "Here, try some.” Mr. Fritz turned to the freezer behind his large desk, and got out a pint of the moo-moo mango and a spoon, handing them to Charlene. It was all she could do not to groan. She had just eaten lunch and was not a fan of premium, high-fat ice cream. Oh well, all part of the job. She would work out a bit longer tomorrow. She opened the lid, and dug in. Ugh! It wasn’t the silky-smooth, high-fat taste she expected. There was some graininess to the chocolate; it just wasn’t quite right.

Dan’s eyes met hers. “See? See what I mean? Your reaction should have been, 'Mmmmm,' or maybe a sigh. Not a look of dismay and disappointment. Anyway, the marketing folks blame finance for making the new product group cut the cost and the quality of the ingredients. Marketing wanted a product that the consumers were dying to buy. The finance folks say that there is no point in selling unprofitable products, like our fabulously popular Mesquite Mélange. We lose a few cents on every pint that we sell!" Again, Mr Fritz paused, his agitiation amplifying.

Clearly frustrated by the finger pointing, Mr. Fritz continued intently, "They’re both right. But we have to find some middle ground and work together so that we can produce products that customers will flock to the freezer case to buy—AND we can make money on. That’s where you come in, Charlene. We need help looking at our new product development process.”

Why Can't They Just Get Along?

Charlene smiled. Getting people to work together was her forte. The circumstances reminded her of her husband Doug’s situation in trying to get people at Olympus CPG to actively engage in supply chain collaboration. Charlene fowned, but just a little, as she thought about how many opportunities companies missed because their people couldn't work well together. Then again, if managers ever learned to work together, she'd need to find a new job. Leaning forward, Charlene asked, “When do I get to talk to all of the players involved?”

“I’ve got meetings set up starting in just a few minutes with marketing, then finance, and you’ll finish with the new product team. And here,” Dan extended his hand toward the ice cream Charlene was holding. “Let me take that stuff away. I didn't mean to torture your tastebuds. I just wanted you to experience it.”

Charlene needed to gather her thoughts quickly. She wanted to ask the right questions to make effective use of her interviews with each of these groups. She not only needed to gain critical insight into the problem but, more importantly, she also wanted her questions to start a dialogue and a process that would endure long after she had returned home. She knew that she would see a lot of finger pointing. But, she also knew she that there would be no clear bad guy in this situation. The underlying issues would be familiar: poor communication, conflicting goals and measures, low or lost trust, not getting the right people involved at the right time, and so on.

Case Questions

1. If you were in Charlene’s situation, what questions would you ask marketing, finance, and new product development?

2. What do you think the organization structure, reporting relationships, and reward systems at Frozen Delight look like? Are these issues relevant to what is happening here? Why or why not?

3. What are some of the mechanisms within the organization that can be used to help these functions, and others within the company, work more closely towards common goals?

4. When Charlene aspires to starting an enduring dialogue through careful questioning, what role is she taking on? Why would that be a primary goal of her consulting visit?