Why Did McPizza Fail?

Why do some products succeed and others fail? The answers may hold lessons for which future projects should be pursued and, if pursued, how to pursue them. Successes are sometimes researched; failures much less often. The passages quoted below are from an unusually deep dive into the story of McDonalds’s failed McPizza.

(p. 1) Maybe you are too young to remember. Perhaps you forgot. Or there’s a chance you’ve blocked it. But the home of the Big Mac began selling pizza in the mid-1980s, hoping to grab market share from national pie chains. McDonald’s gave up a few years later. Nobody seemed to lament the passing of McPizza, and nobody was urging its return. Which, to Mr. Thompson in the fall of 2016, made the topic all the more appealing.

. . .

(p. 8) One trick to keeping this enterprise alive and entertaining is Mr. Thompson’s refusal to accept answers to the show’s titular question, which he had learned by Episode 5. McPizza failed for reasons that should have seemed evident before it was rolled out: It’s way, way off brand, and it didn’t bake fast enough to keep pace with the rest of the menu.

. . .

Early on, Mr. Thompson learned that a McDonald’s in Pomeroy, Ohio, was the last franchise in the country still serving the pizza, and he raised money through Indiegogo to fly there and try it. (He described it as “at least as good as Little Caesars.”)

He wondered how the place kept selling an item that others in the chain didn’t offer. Once again, definitive answers were elusive because the franchise owner would not speak to him.  . . .

Several months after Mr. Thompson’s visit, the Pomeroy McDonald’s stopped selling McPizza. The podcast depicted this as retaliation against the show, a shameless effort to curtail old-fashioned muckraking. This makes sense only in the mind of “Brian Thompson,” whose baseline assumption is that McDonald’s ought to again sell pizza because people love it and because the company is in business to make money. Hence, any rationale for the product’s demise is under suspicion.

To Mr. Thompson’s delight, he keeps unearthing new rationales for the product’s cancellation. At one point, he heard about a McDonald’s in Adak, Alaska, a largely deserted island in the middle of the Bering Sea. For years, Adak was a Cold War outpost for Army and Navy barracks, but it was decommissioned in the early 1990s, and the McDonald’s there was abandoned. Last year, Mr. Thompson raised money online to travel the 3,100 miles there, hoping that the husk of a restaurant would contain his Holy Grail: a McDonald’s pizza oven.

He flew to Anchorage, then took a once-a-week, three-hour flight to Adak. After landing, he went straight to the McDonald’s and was disappointed to see it had been boarded up — there was no way inside. The trip seemed a grand bust. But as Mr. Thompson prepared to leave the island, his Airbnb host suggested he call a guy named Larry, who, it turned out, had once found a pizza oven in a derelict bowling alley. Evidently, it had been hauled out of the defunct McDonald’s. Larry determined it had been manufactured for McDonald’s by Garland Commercial Industries, a company in Freeland, Pa.

To “Brian Thompson,” this was a breakthrough on a par with the formulation of the laws of thermodynamics. He called Garland, and a representative put him in touch with a service tech in Cleveland who had once repaired McDonald’s ovens. Unlike the corporate P.R. department, this guy was chatty.

“They were only in McDonald’s for roughly two to three years because of the difficulty to program them,” the tech said on Episode 143. “I don’t even think there’s program manuals for it.”

And thus, to Mr. Thompson’s delight, three years into the show, he’d added another reason that McDonald’s killed pizza — the ovens were a fiasco.

For the full story, see:

David Segal. “Answering a Fast-Food Question, if You Care.” The New York Times, SundayBusiness Section (Sunday, November 1, 2020): 1 & 8.

(Note: ellipses added.)

(Note: the online version of the story has the date Oct. 28, 2020, and has the title “A Podcast Answers a Fast-Food Question That Nobody Is Asking.”)

Starkweather Went Over Head of Boss to Champion Laser Printers at Xerox

(p. A10) While working for Xerox Corp. in the late 1960s, Gary Starkweather proposed to build a laser printer, able to reproduce any image created on a computer. His boss told him it was a terrible idea.

Mr. Starkweather’s persistence—and finesse in maneuvering around that boss—led to the introduction in 1977 of the Xerox 9700. It became one of the company’s top-selling products, generating more than $1 billion of annual revenue.

. . .

After the boss nixed his idea in 1969, Mr. Starkweather recalled in an oral history produced by the Computer History Museum, “I couldn’t get this thing out of my head. I thought, ‘He’s wrong. This is so good that it’s got to work.’ ”

Mr. Starkweather reached higher in the organization, sold his vision and obtained a transfer to Xerox’s Palo Alto Research Center, where he began working on prototypes.

. . .

To avoid blurry prints, Mr. Starkweather had to find ways to direct laser pulses precisely. He devised a cluster of revolving mirrors and a lens to guide the light. One of his breakthrough ideas came while he was mowing the lawn; he turned off the mower and drove to the lab to test it out.

. . .

An only child, Gary spent much of his youth taking apart and reassembling whatever mechanical and electrical equipment he could scavenge. “We had a basement, and as long as I didn’t blow up the house I was allowed to do whatever I wanted down there,” he said.

. . .

The resistance he met from some Xerox executives reflected a lack of imagination, preventing them from seeing the possibilities of solving technical problems and bringing down costs, Mr. Starkweather said.

For the full obituary, see:

James R. Hagerty. “Inventor Dreamed Up Better Way to Print.” The Wall Street Journal (Saturday, January 18, 2020): A10.

(Note: ellipses added.)

(Note: the online version of the obituary has the date January 14, 2020, and has the title “Gary Starkweather Invented a Laser Printer at Xerox.”)

Apple Will Make Its Own Mac Processor Chips

In similar stories told in books by Grove and by Christensen and Raynor, technology firms work better when large, if components require careful design to work well together. When components become standardized and interchangeable, technology firms work better when smaller, buying components from specialized component suppliers. Deciding what is best at any moment requires uncertain judgement, and can change over time. In the passages quoted below, it appears that Apple thinks better performance can be achieved by integrating a key component back within the firm.

(p. B4) Apple Inc. built its gadget empire by outsourcing production to a vast ecosystem of chip makers and other component specialists. Under Chief Executive Tim Cook, it is taking a lot of that business back.

The company, which released its first iPhone processor in 2010, said Monday [June 22, 2020] it plans to ship Macs later this year with custom chips, a move that ends a 15-year technology partnership with Intel Corp. Apple said the custom-designed chips are more efficient and offer higher-performance graphics.

. . .

The strategy springs from Apple’s philosophy—fostered by its late co-founder Steve Jobs—that owning core technologies provides a competitive edge. Customized chips and sensors can help its iPhone, iPads and Macs leapfrog rivals in battery performance and features. It also can protect Apple from Chinese rivals that buy universally available parts.

. . .

The initiative—called insourcing by some suppliers and analysts—can give Apple a two-year jump on competitors in device performance because Apple can plan how multiple chips work together to limit power consumption and free up space inside iPhones and iPads for other components, analysts said.

It also reduces potential leaks of its product plans.

For the full story, see:

Tripp Mickle. “By Making Its Chips, Apple Gains Control.” The Wall Street Journal (Wednesday, June 24, 2020): B4.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story was updated June 24, 2020, and has the title “Apple Is the Newest Chip Giant in Town.”)

The Grove book mentioned above is:

Grove, Andrew S. Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company. New York: Bantam Books, 1999.

The Christensen and Raynor book mentioned above is:

Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

“Run With the Herd or Be Crushed by It”

The author of the passages quoted below writes poetry and novels in Havana.

(p. 7) Throughout my life, I’ve seen how powerless parents are in matters regarding their own children. Parents have no say over how their children should be raised, whether they will be conscripted or sent away to school in rural areas, and what dangers could befall them being so far from home and such a young age. They have no say over their children’s manners, religious teachings and political ideologies. There are only two choices: Run with the herd or be crushed by it.

As a teenager in the 1980s, I was taught in a “scientific communism” class that family was the heart of society. But from what I could see, that was no longer the case; organizations with mass followings like the Young Communist League had taken its place.

. . .

I was born and raised in a system that exerts control under the guise of paternalism — a system that caresses you as it beats you, that teaches you but also inhibits you, enlightens you and censures you. We are hostages to a government that behaves like an abusive, old-fashioned and sexist father, from whom we must seek consent and forgiveness.

For the full commentary, see:

Wendy Guerra. “Cuban Women Need a Revolution.” The New York Times, SundayReview Section (Sunday, October 13, 2019): 7.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Oct. 12, 2019, and has the title “‘Cuban Women Await Their #MeToo Moment.” The first paragraph quoted above is from the online version and differs in several respects from the equivalent paragraph in the print version.)

Jim Collins Book “Had a Huge Influence” on Reed Hastings’s Creation of Netflix

(p. 6) The Netflix founder and co-chief executive, whose new book is ‘No Rules Rules,’ reads with his mind more than his heart: ‘I generally turn more to television and film for emotional nourishment.’

. . .

What’s your favorite book no one else has heard of?

Probably “Beyond Entrepreneurship,” by Jim Collins and William C. Lazier. It’s not nearly as well known as Collins’s “Good to Great” or “Built to Last” in the pantheon of influential business books. But it came out in the early 1990s, right around the time I was starting my first company, Pure Software. It had a huge influence on how I thought about that business and, later, what I aspired to create at Netflix. Collins and other business authors whose books I benefited from are a big reason I decided to write a book of my own, to try to pay it forward to other entrepreneurs in the same way those other authors have. Years from now, it would be great if someone who found “No Rules Rules” useful today writes their own book improving on it..

. . .

What do you plan to read next?

“Shoe Dog,” the memoir by Phil Knight, who created Nike — and yes, we’re also adapting it for Netflix.

For the full interview, see:

“By the Book; Reed Hastings.” The New York Times Book Review (Sunday, September 27, 2020): 6.

(Note: the online version of the interview has the date Sept. 24, 2020, and has the title “By the Book; Reed Hastings, the Founder of Netflix, Keeps His Library in His Pocket.” The first sentence quoted above, and the questions, are by the New York Times interviewer, who is not identified in either the print or the online versions. The rest is by Reed Hastings. The first sentence quoted above is in the print, but not the online, version.)

Reed Hastings’s book mentioned above is:

Hastings, Reed, and Erin Meyer. No Rules Rules: Netflix and the Culture of Reinvention. New York: Penguin Press, 2020.

Jim Collins’s co-authored book mentioned above is:

Collins, James C., and William C. Lazier. Beyond Entrepreneurship: Turning Your Business into an Enduring Great Company. Paramus, NJ: Prentice Hall, 1992.

Phil Knight’s memoir mentioned above is:

Knight, Phil. Shoe Dog: A Memoir by the Creator of Nike. New York: Scribner, 2016.

Robots That Can Grip Donuts Cannot Grip Asparagus

Distinguished MIT labor economist David Autor, who I reference in my book Openness to Creative Destruction: Sustaining Innovative Dynamism, was a co-chair of the MIT Work of the Future Task Force that wrote the report discussed in the article quoted below.

(p. B3) L. Rafael Reif, the president of Massachusetts Institute of Technology, delivered an intellectual call to arms to the university’s faculty in November 2017: Help generate insights into how advancing technology has changed and will change the work force, and what policies would create opportunity for more Americans in the digital economy.

That issue, he wrote, is the “defining challenge of our time.”

Three years later, the task force assembled to address it is publishing its wide-ranging conclusions. The 92-page report, “The Work of the Future: Building Better Jobs in an Age of Intelligent Machines,” was released on Tuesday [November 17, 2020].

. . .

Technology has always replaced some jobs, created new ones and changed others. The question is whether things will be different this time as robots and artificial intelligence quickly take over for humans on factory floors and in offices.

The M.I.T. researchers concluded that the change would be more evolutionary than revolutionary. In fact, they wrote, “we anticipate that in the next two decades, industrialized countries will have more job openings than workers to fill them.”

That judgment is informed by field research in several industries and sectors including insurance, health care, driverless vehicles, logistics and warehouses, advanced manufacturing, and small and medium-size manufacturers.

. . .

Despite advances, robots simply don’t have the flexibility and dexterity of human workers. Today’s robots learn from data and repetition. They can be remarkably adept at a certain task, but only that one. The report cited a fine-tuned gripping robot that could pluck a glazed doughnut and carefully place it in a box, with its shiny glaze undisturbed.

“But that gripper only works on doughnuts,” the report said. “It can’t pick up a clump of asparagus or a car tire.”

The cost and operational expertise required will also slow the widespread adoption of robots.

For the full story, see:

Steve Lohr. “Don’t Fear the Robots, Says Jobs Study Group.” The New York Times (Wednesday, November 18, 2020): B3.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date Nov. 17, 2020, and has the title “Don’t Fear the Robots, and Other Lessons From a Study of the Digital Economy.”)

The MIT report discussed above is:

MIT Work of the Future Task Force. “The Work of the Future: Building Better Jobs in an Age of Intelligent Machines.” Cambridge, MA: Massachusetts Institute of Technology, 2020.

My book mentioned above is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Expense of Clinical Trials Reduce the Incentive to Re-Purpose Old, Cheap, Off-Patent Vaccines

(p. A5) “Retrospective studies are great and they provide some hints, but there are caveats,” said Dr. Shyam Kottilil, a professor of medicine with the Institute of Human Virology at the University of Maryland School of Medicine. “It’s very difficult to establish causality.”

Interest in the cross-protective effects of vaccines has led to efforts to repurpose old vaccines that may have potential to provide at least transient protection against the coronavirus until a specific vaccine against SARS-CoV-2 is developed and proven safe and effective, he said.

“But nobody knows whether this approach will work unless we test them,” Dr. Kottilil said. “To endorse this, you need to do really good randomized clinical trials.” There is little incentive for private companies to invest in expensive trials because the old vaccines are cheap and off-patent, he added.

For the full story, see:

Roni Caryn Rabin. “Are Past Vaccinations a Shield? It’s Doubtful.” The New York Times (Thursday, July 30, 2020): A5.

(Note: the online version of the story has the date July 29, 2020, and has the title “Old Vaccines May Stop the Coronavirus, Study Hints. Scientists Are Skeptical.”)

Dolly Parton Sings and Donates with “Effective Sympathy”

The above is an “embed” from a YouTube video posted by singer (and English Professor) Ryan Cordell. The lyrics were written by Gretchen McCulloch and the tune is from Dolly Parton’s “Jolene.” The YouTube URL is: https://www.youtube.com/watch?v=cCwNQtnI64I

In my book Openness to Creative Destruction: Sustaining Innovative Dynamism, I write about “effective sympathy” which I describe as “actions taken by sympathetic observers that actually save or improve the lives of those who are suffering” (p. 110). I admire Dolly Parton for donating copies of The Little Engine That Could to poor children. I also admire Dolly Parton for donating a million dollars to help start research on the Moderna vaccine for Covid-19. Dolly Parton knows how to practice effective sympathy.

(p. 12) She wrote “I Will Always Love You” and “Jolene” on the same day and built a theme park around herself. She has given memorable onscreen performances as a wisecracking hairstylist and harassed secretary. She even helped bring about the creation of “Buffy the Vampire Slayer.”

Now, Dolly Parton’s fans are crediting her with saving the world from the coronavirus. It’s an exaggerated, tongue-in-cheek claim, to be sure. But for legions of admirers, Ms. Parton’s donation this spring to Vanderbilt University Medical Center, which worked with the drugmaker Moderna to develop a coronavirus vaccine, was another example of how her generosity and philanthropy have made her one of the world’s most beloved artists.

. . .

“Her money helped us develop the test that we used to first show that the Moderna vaccine was giving people a good immune response that might protect them,” Dr. Denison said on Tuesday.

Ms. Parton told the BBC on Tuesday [November 17, 2020] that she was excited to hear her contribution provided a “little seed money that will hopefully grow into something great and help to heal this world.”

. . .

On Monday [November 16, 2020], after Moderna announced that early trials of the vaccine showed a 94.5 percent effectiveness rate, fans reacted rapturously.

. . .

Ryan Cordell, an associate professor of English at Northeastern University in Boston, filmed himself singing a song about the vaccine to the tune of “Jolene.”

For the full story, see:

Maria Cramer. “Dolly: A Star of Country, a Songwriter, a Virus Hero.” The New York Times, First Section (Sunday, November 22, 2020): 12.

(Note: ellipses, and bracketed dates, added.)

(Note: the online version of the story has the date Nov. 17, 2020, and has the title “Dolly Parton: Singer, Songwriter, Pandemic Savior?” The online version says that the title of the New York print version was “Dolly: Country Music Legend, Songwriter, Pandemic Hero” and its page number was 8. The title of my National print version was “Dolly: A Star of Country, a Songwriter, a Virus Hero” and its page number was 12.)

My book mentioned above is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

The use of The Little Engine That Could to encourage entrepreneurial perseverance is analyzed in:

Yandle, Bruce. “I Think I Can! Does the Little Engine That Could Matter?” Journal of Private Enterprise 26, no. 2 (Spring 2011): 127-42.

Beating the Market Depends “on Your Ability to Be a Reader of People”

(p. B1) The person who helped inspire the passive-investing boom, the late economist Paul Samuelson, became wealthy from his active investments.

The greatest active investor of our time, Warren Buffett, advocates investing passively.

. . .

(p. B6) Prof. Samuelson’s decisions show why investors shouldn’t become so doctrinaire about index funds that they completely cut themselves off from any chance, however rare, of doing better.

In 1970, the same year he became the first American to win the Nobel Prize in economics, Prof. Samuelson began buying stock in Mr. Buffett’s Berkshire Hathaway Inc., at a cost that eventually averaged about $44 per share. (Berkshire’s A shares traded this week at approximately $290,000 apiece.)

. . .

In an interview this week, Mr. Buffett says Prof. Samuelson believed the same thing he does: that markets are “generally very efficient but not perfectly efficient.”

Mr. Buffett adds, “I do think if you know something about finance and about people, you may be able to identify someone out there who can overperform. But for every one you identify who can, there’ll be 1,000 others who don’t turn out to be able to.”

Continues Mr. Buffett: “You’re betting enormously on your ability to be a reader of people, even more than your ability—or theirs—to select securities. They’re all promising overperformance and spending a lot of money on selling it very persuasively. Overwhelmingly this is a world of salespeople.”

For the full commentary, see:

Jason Zweig. “THE INTELLIGENT INVESTOR; From a Skeptic, a Lesson on Beating the Market.” The Wall Street Journal (Saturday, December 22, 2018): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the commentary has the date December 21, 2018, and has the title “THE INTELLIGENT INVESTOR; What You Can Learn From One of Warren Buffett’s Smartest Investors.”)

Founder Re-Acquires StubHub

In my book Openness to Creative Destruction: Sustaining Innovative Dynamism, I praise project entrepreneurs for having as their main goal, not wealth or fame, but making a ding in the universe (to use Steve Jobs’s phrase). I also suggest that they are more likely to succeed, in part because they are more likely to stick with the venture they founded. But there may be exceptions to my narrative. Eric Baker sounds like a project entrepreneur who left his start-up because of conflicts with his co-founder, and who now is back in charge.

(p. B4) Eric Baker long envisioned bringing together the two ticketing companies he started.

This week eBay Inc. agreed to sell its StubHub unit, a business Mr. Baker launched nearly two decades ago, to Geneva-based Viagogo Entertainment Inc., the ticketing firm with a large European presence he has been running since 2006.

The $4.05 billion all-cash deal would create a global ticketing juggernaut in the booming business of live events. It would also put StubHub back in the hands of the person who early on saw the opportunity in the legitimate resale of tickets.

. . .

“You had to pay through the nose or find people on the street corner to purchase from,” says Mr. Baker. He felt there had to be a better, more efficient way to find tickets and imagined that could happen online.

He headed to Stanford Graduate School of Business that fall and, together with classmate Jeff Fluhr, started StubHub—then called Liquid Seats—in 2000.

. . .

Mr. Baker and Mr. Fluhr—who was chief executive and had majority ownership of the company—had their differences, and in 2004 Mr. Baker left at the board’s direction, said people familiar with the decision.

. . .

When eBay bought StubHub in 2007, Mr. Baker says he opposed the deal. “It’s rare you have the opportunity to have a business like that,” he says. “To me, you try to hold on to something that’s working.”

For the full story, see:

Anne Steele. “StubHub Acquisition Puts Co-Founder Back in Charge.” The Wall Street Journal (Monday, December 2, 2019): B4.

(Note: ellipses added.)

(Note: the online version of the story has the date November 29, 2019, and has the title “The Tale Behind StubHub’s Sale: How Eric Baker Bought Back the Ticket Seller.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Oligopolists Compete Intensely

(p. B3) The race is on between the world’s largest videogame console makers, this time during a period of heightened demand for at-home entertainment through the coronavirus pandemic.

Sony Corp. SNE 1.45% on Wednesday said two versions of the PlayStation 5 would go on sale in November, one for roughly $400 and another for $500. Both consoles will be sold in a small number of countries including the U.S. and Japan starting Nov. 12 and the rest of the world a week later.

Last week, Microsoft Corp. said it would release two new consoles as well, the Xbox Series X for $499 and the Series S for $299, on Nov. 10.

For the full story, see:

Sarah E. Needleman. “Videogame Rivalry Heats Up.” The Wall Street Journal (Thursday, September 17, 2020): B3.

(Note: bracketed year added.)

(Note: the online version of the story was updated Sep. 16, 2020, and has the title “Sony to Launch Two PlayStation 5 Models This Fall.”)