Framing: a key concept in the management of uncertainty and disruptions

The fog of war, a long 2003 interview of Robert S McNamara, shows that how one frames an issue has an influence on on how a question can be solved. As soon as they got engaged in Vietnam, the US presented the conflict as a fight between freedom and communism. This happened in the late fifties, after China had become communist and right after the Korean war, in a context in which the communist world seemed to progress inexorably. The domino theory, introduced by the Republican US president  Eisenhower in 1954, stated that once a country fell and became communist, neighboring countries also would. Hence it became crucial to defend any country facing a communist insurgency. As David Halberstam mentions in his book “The best and the brightest”, the US national context also played a role later in the Vietnam process: Harry Truman, Eisenhower’s Democratic predecessor, was accused during the cold war to have “lost” China in 1949 and to have been weak against the communists, particularly during the Mccarthyst period. A longstanding reputation of “Democratic weakness” persists to this day as a result. In the early 60s, the democrats were still traumatized by these accusations that were systematically used by their Republican adversaries. This is the initial cognitive frame with which the Vietnam question was analyzed by President Kennedy’s administration. Right from the beginning then, the administration was prisoner, without being aware of it, from a frame that was in effect imposed by their adversaries. Despite their doubts and mounting skepticism, they would remain unable, right until the very end, to get rid of it.

In the interview, McNamara tells the story of his encounter with his former enemies during his 1995 visit to Vietnam. Much to his surprise, he realizes then that Vietnamese were first and foremost nationalists before being communists. Hence, that the conflict could in fact be framed as a nationalistic fight for union and independence, something Americans could actually have been sympathetic to. He also realizes that there is nothing that the Vietnamese dislike more than the Chinese, thus showing the fallacy of the fear of a great Chinese plot in South-East Asia, and more generally of that of a grand union of communist countries against the western world. A knowledge that Richard Nixon and Henry Kissinger will use to their advantage in their opening to China to counter the Soviet Union.

Framing the conflict in terms of a moral fight of good versus evil and asserting the inevitability of the domino theory also raised the stake of the conflict considerably for the US, making it more difficult to withdraw and limiting their margin for maneuver. It’s difficult to give up when the freedom of the world is supposedly at stake, but much easier when it’s framed as a civil war in a distant country.

The concept of frame of course also applies to the corporation. It is especially important in periods of uncertainty and turbulence caused by disruptions. Disruptions bring about profound change that require corporations to review the way they perceive and analyze their environment. Any corporation use a frame that is the result of past experience and of what the corporation has learned about its successes and failures. The more the corporation has been successful, usually the stronger the frame and the more difficult to change. For instance, raised in technological excellence, telecom operators denied the significance of internet telephony on account that it was not working well. GM discounted the importance of the Japanese cars in the seventies from the height of its market share. Kodak reacted to the emergence of digital photography by inventing a… digital film (APS) simply because the company was unable to imagine a world without films, and as a result tried to ‘cram’ the new technology into the old, to use Clayton Christensen’s expression. More recently, music majors reacted to peer to peer by framing it exclusively as acts of piracy, and as a result limiting their action to the legal option, instead of taking an open view on the undermining by the Internet of their very reason to exist on the marketplace.

More generally, enabling an organization to change with its environment requires changing its frame. The question, of course, is how to define the new frame and how to adopt it. Some researchers such as Sarah Kaplan show that this can be achieved by organizing ‘framing contests’ between different possible frames within the organization. The chosen frame will be the result of this contest, the process of which creates the conditions for the frame to be properly adopted and used. See a previous post I wrote on Framing here.

Nespresso: when the simplicity of the product hides the complexity of the innovation process

One of my favorite questions when I teach Innovation is to ask participants how long it took for Nestlé to succeed with their Nespresso coffee machine. So what’s your answer? One year? Five year? Well no. The answer is 21 years. Based on a technology licensed from the Battelle Institute by Nestlé in… 1974, Nespresso only became profitable in 1995 after much ups and downs. 21 years were needed to make a success of the Nespresso innovation.

During this period, the project went through severe technical problems several times, a few failed launches, and wrong markets with wrong business models. For instance, one of the first commercialization attempts targeted restaurants. The idea was that a small espresso machine would be appealing to them. Wrong analysis. A small machine saves space but the unit cost of a cup of coffee is much higher than that of a large, heavy-duty machine. But most restaurants have enough space and care a lot about unit cost. Hence the failure. Initially launched within Nestlé, the project is hosted in a separate unit after some time as a result of the widespread skepticism – to say the least – about it within the company. Simply put, nobody believes in it. This is because the product doesn’t fit the company’s business model, which is essentially to sell light products such as coffee or snacks in packages through supermarkets. Nespresso, on the contrary, involves producing and selling a coffee machine and selling coffee cups to machine owners. In addition, the project requires an important budget at the expense of other units who face stiff competition and can’t afford to reduce their own budget for such an uncertain project. Despite the failures, the project carries on thanks the political skills of the team. Until then managed by pure Nestlé lifers, the real break for the project came when Nestlé recruited an outsider – Jean-Paul Gaillard, to lead it. Gaillard was known at that time for having successfully launched Marlboro‘s line of clothes. He had no knowledge of the coffee business but knew how to launch a radically new business unit that broke from the company’s main line of business. He also came from a different culture from the the traditional, rather conservative and low profile Nestlé culture. Nestlé is a very very well managed company that produces profits year after year like a Swiss clock, so the length of the Nespresso innovation process cannot be explained by saying that Nestlé is not well managed. Market studies were negative, nobody wanted the product, but Gaillard ignored them and finally launched the product with the high-end, consumer positioning we know today

And it worked. The Nespresso Club, another innovation, added to the premium positioning and helped with word of mouth and direct marketing. Yet another innovation for Nestlé, the opening of shops, owned by Nestlé. The overall project shows many innovations and significant risk taken by the company. It also shows the persistence of Nestlé, or rather of some Nestlé managers, in the face of persistent skepticism and negative market feedback: 21 years of failures, and each and every year the company soldiers on. 21 years, for a coffee machine! But 21 years giving way to one of the most successful and profitable products in the history of Nestlé. In the first semester of 2009, at the heart of the world recession and despite competition from Senseo and Tassimo for instance, Nespresso sales grew by 25%.