TWINKIE

All the news about Hostess these past few days reminded me of a close friend who purchased a dog for his daughter when she had just turned 4 years old. He told me as he drove home with the puppy that he was thinking of naming the tiny white Bichon Frise Fluffy or maybe Snowy. His wife preferred the names Casper or Snowflake. But when he walked in with the puppy under his arm, his daughter immediately ran to him jumping up and down shouting, “Can I hold Twinkie?” According to him, no other name stood a chance after that.

So when I read that the last ditch mediation session ordered by U. S. Bankruptcy Judge Robert Drain for Hostess and its Bakers’ Union had failed, that liquidation for Hostess might be imminent, and Twinkies might be history I had a brief, reflective moment about Hostess Brands the company, Twinkie, my friend’s daughter’s dog, and what it all might mean.

Well, to start with it was going to mean a high likelihood that 18,000+ Hostess jobs were going to be lost. Unfortunately, even though Hostess had $2 billion in revenues, it was suffocated with $1 billion in debt.  Hostess was also saddled with anachronistic pensions, manufacturing facilities that were significantly outdated, and a highly distrustful workforce. I remember reading this summer that Hostess had announced that without an agreement from both its major unions, The Teamsters and Bakers’ Union, it would be forced to cease operations. I wondered at the time if they were posturing or whether it was a real threat. The Teamsters did agree to meaningful wage cuts (nearly $200 million) but the bakers decided to fight. Thus, the showdown developed. It also likely means that most of the cash that’s been pumped into Hostess over the past couple of years from the outside (like $130 million) is “down the drain” (no pun intended on the Bankruptcy judge).

What are the major lessons we can learn from Hostess shutdown? Well, first and foremost, bluffing has its risks. The Bakers’ Union undoubtedly thought that Hostess wouldn’t take the drastic steps of bankruptcy and subsequent liquidation as Hostess management had backed down from the bankruptcy threat late in the summer. At the same time, Hostess management probably felt that since The Teamsters had agreed to a restructured deal, the Bakers’ Union would be close behind. Both were wrong. Second, my best guess is that the Twinkie brand will somehow survive. After all, they produced like 500 million of them last year (how many of you would have guessed that number??). Twinkies will probably look exactly the same even though someone besides Hostess is making them.

So where does that leave my friend’s daughter’s dog? Well, Twinkie passed away a few years ago but I am told he was a great family pet. Of course, this wouldn’t have been nearly as good a story if my friend’s daughter had run up and shouted, “Can I hold Ding-Dong?”

PROCESS INNOVATION

Malcolm Gladwell calls that threshold moment where an innovation boils over to mainstream The Tipping Point and he wrote a national bestselling book on the topic several years ago. Process innovation is the implementation of a new or significantly improved production or delivery method. Examples of famous process innovations are factory to consumer delivery of custom-built computers by Dell and the use of barcodes, scanners and the Internet to allow customers to track parcels in real time as they are being transported.

There are some fascinating things being introduced into the MBA admissions process that might potentially fit in the process innovation category. For example, Duke’s Fuqua School of Business has a required “25 Random Things” list that is supposed to be a numbered, top 25 inventory of an applicant’s passions, personality, quirks, hopes and fears. Admissions uses this additional “tool” to differentiate among applicants.

Wharton, because its MBA program involves multiple team interactions throughout the two years of coursework, has just recently introduced a “team interaction” exercise as part of the admissions process. The most promising Wharton applicants are invited to participate in a discussion with 5-6 other applicants who then work as a team to brainstorm a solution to a real-world business scenario. This interaction is viewed and assessed by trained facilitators from Wharton’s admissions office and becomes a part of the applicant’s admissions file – another process innovation tool to differentiate applicants.

The University of Chicago’s Booth School of Business, UCLA’s Anderson School of Management, and NYU’s Stern School of Business accept PowerPoints, multimedia, and art in an attempt to differentiate potential applicants.

What’s process innovation at UHD? To apply to our MBA program, all you need are three years of work experience after completion of your undergraduate degree, your GMAT score, and two professional references.

We think it doesn’t get any easier than that……