The story of Tide
This was all interesting to me but just a vague idea until I read about the story of Tide in a New York Magazine piece titled “Suds for Drugs” that highlighted the incredible market position of Tide detergent.
Shoppers have surprisingly strong feelings about laundry detergent. In a 2009 survey, Tide ranked in the top three brand names that consumers at all income levels were least likely to give up regardless of the recession, alongside Kraft and Coca-Cola. That loyalty has enabled its manufacturer, Procter & Gamble, to position the product in a way that defies economic trends. At upwards of $20 per 150-ounce bottle, Tide costs about 50 percent more than the average liquid detergent yet outsells Gain, the closest competitor by market share (and another P&G product), by more than two to one. According to research firm SymphonyIRI Group, Tide is now a $1.7 billion business representing more than 30 percent of the liquid-detergent market.
I thought that was mind blowing and was very curious how something that huge comes about. And the article talked about it a bit:
Before the advent of liquid detergent, the average American by one estimate owned fewer than ten outfits, wearing items multiple times (to keep them from getting threadbare too fast) before scrubbing them by hand using bars of soap or ground-up flakes. To come up with a less laborious way to do the laundry, executives at Procter & Gamble began tinkering with compounds called surfactants that penetrate dirt and unbond it from a garment while keeping a spot on a shirt elbow from resettling on the leg of a pant. When the company released Tide in 1946, it was greeted as revolutionary. “It took something that had been an age-old drudgery job and transformed it into something that was way easier and got better results,” says Davis Dyer, co-author of Rising Tide, which charts the origins of the brand. “It was cool, kind of like the iPod of the day.” Procter & Gamble, naturally, patented its formula, forcing competitors to develop their own surfactants. It took years for other companies to come up with effective alternatives.
I became more curious about Proctor & Gamble and the deeper story so I checked out the definitive book about P&G that’s referenced in the article, Rising Tide: Lessons From 165 Years of Brand Building at Proctor & Gamble.
The article already mentioned that P&G was tinkering with compounds, which made me recall Taleb’s ideas. But the book, in Chapter Four, “Science in the Washing Machine,” went into more detail.
At the time, P&G was a good business, “profitable, but by no means comfortable.” It was “unable to achieve anything like breakout success against Colgate or Lever Brothers.”
The chapter echoes Taleb’s ideas right from the start, pointing out that “developing Tide was not a linear process.” In fact, at the heart of it was a renegade engineer, Dick Byerly.
P&G had an inkling that the synthetic detergent market was interesting, but they weren’t able to crack the code on a compound that would work across the United States, with geographic regions that had different types of water, and would be strong enough to wash heavily soiled clothes without leaving a residue.
By 1939, after a few unsuccessful attempts, P&G had backed away from the area, but Dick Byerly, a researcher in the Product Research Department, just wouldn’t give up.
One of his supervisors described him as follows: “You’ve got to understand the man to understand what he did. He was moody at times, and obstinate as all get out. [His supervisors] had horrible times with Dick on occasion. Just tenacious as all hell.”
"We had a system at P&G that every week you wrote a weekly report," one of Byerly’s colleagues related years later. "Byerly had long since given up on putting this in his weekly report regularly since he had comments to the effect, "What in the hell is he working on that for?"
The whole story is fascinating, including details of how Byerly cautiously looped in his new boss into his research, how his boss was wary but intrigued, how they were pressured to stop diluting resources in an already-strapped research organization, how that pressure increased during World War II, how they stopped and then restarted, how they had to beg for expensive plant resources (and sometimes fly under the radar) to make the granules, and so on.
And then in the early 1940s, they had a breakthrough when Byerly reversed the typical ratio of the key components. All of a sudden, it worked. They didn’t know why (echoing Taleb’s ideas about tinkering trumping intelligence), but it worked.
Tinkering = Optionality — Farooq Javed
