Soda And Snake Oil

On May 25, 1992, Victoria Angelo listened intently to the evening news on television from her tin-roofed shack in one of Manila’s more squalid slums. For weeks before, Pepsi’s advertisements, splashed all over Philippine newspapers, radio and TV, were hardly subtle: “Today, you could be a millionaire!” The unemployed mother of five and her husband, Juanito, who pedaled people in a three-wheeled cab for about $4 a day, began drinking Pepsi with every meal and snack. Each morning, the family prayed for a specially marked bottle cap.

When it was announced that anyone holding a bottle cap marked 349 had won up to 1 million pesos, about $40,000, tax-free, Victoria Angelo examined her collection of caps and screamed, “We are a millionaire!” Unfortunately, her dream was short lived and soon became a nightmare for PepsiCo, Inc. It turned out that a mistake in either the production or the selection of the number resulted in there being about 800,000 winning caps instead of 2. Instead of $2 million in prizes that the company had budgeted for, they were now on the hook for potentially $32 billion, and they had no intention (or ability) to pay.

In their frustration, people took to demonstrating, and later rioting over the mistake. Dozens of Pepsi trucks were stoned, overturned, or burned. Pepsi executives received so may death threats that the company recalled all expatriates, leaving an official in charge who had experience in Beirut, Lebanon. And then there were the lawsuits. Tens of thousands of people filed hundreds of civil suits seeking damages from Pepsi, plus thousands of criminal complaints for fraud and deception.

When the rioting began, frightened executives decided at a pre-dawn meeting to offer $20 in pesos to anyone with a 349 cap, BEFORE they realized there were 800,000. So, they committed a second mistake which bumped the cost of the payout from $2 million to $16 million. By some estimates, it is likely the event cost Pepsi close to $200 million in costs and lost revenue.

People take it pretty seriously when they are manipulated and lied to.

“Wait,” I can hear you say, “How did Pepsi manipulate people?” Well, it’s simple really. The give-away was intended to get people to buy and drink Pepsi instead of Coke, and it worked. Pepsi’s share of soda sales during the promotion grew 40%. People bought those sodas believing they might become a millionaire because Pepsi said “Today, you could be a millionaire!” That’s manipulative.

The lie occurred through mismanagement when Pepsi told hundreds of thousands of people they had won, when they hadn’t. Or another way to look at it was they had won, but the promise of the payout was a lie.

Most of the time when people are manipulated and lied to it isn’t quite as dramatic or newsworthy.

Maybe a manager tells a team member that they need to do x, y and z if they want to be promoted, when there is no intention of ever giving a promotion. Or leadership talks vaguely about bonuses or profit sharing without specifics or financial transparency, and the expected renumeration never materializes. Maybe a team leader implies that the team’s sacrifice of time to get a project done will be taken into account and rewarded, but the result is a pizza party.

Whenever we as leaders attempt to get more out of our team members without appropriate pay and reward, we are being manipulative. This is almost always accompanied by vagueness, lack of transparency, and unspecific promises and often results in lies whether they are intentional and premeditated or not. Like the snake oil salesman of days gone by, a leader may fool some people for some amount of time. However, you can’t fool everyone, and over time, you end up not fooling anyone. At best, the result is damage, and at worst, a complete loss of trust.

Trust is the foundation for relationships, which are the basis for collaboration, creativity, and true success. For the leader who wants to build a team or an organization that will thrive and weather difficulty, transparency (personal and organizational) is the key to establishing trust. Truly including those you lead in both the vision and the rewards of success builds on that trust and creates buy-in and participation.

The current civil rights crisis in our nation underlines how repeated promises that go unmet result in disillusionment and anger. Eventually, people will quit believing that anything you say will ever come true and take matters into their own hands. While it is not necessarily “right” for someone to burn a delivery truck or threaten another person, it is a predictable outcome.

For most of us, failure to be transparent and honest will never result in a riot or a vehicle fire. However, it will certainly result in many of our team members looking out for themselves and doing only what they are required and told to do. We lose productivity, creativity, and resiliency. At the same time, we are responsible for people “putting up with” their job to get a paycheck.

Conversely, being transparent and inclusive creates an environment where people thrive and can fully participate in the culture and life of their work. This has the added advantage of increasing both the quantity and the quality of the team’s output. I have never talked to a leader who is opposed to a better functioning and producing team, but that’s not why we should be transparent and honest leaders. We should earn the trust of those we lead because they deserve trustworthy leaders, and because it is The Kimray Way.