Building on strengths does not always follow a standardized approach. Even when defying conventional wisdom, companies can succeed by building on their strengths. A good example is Tootsie Roll, as described in the article “Tootsie’s Secret Empire” in the August 22, 2012 Wall Street Journal.
Tootsie Roll is a relatively small company in the candy industry. The industry has been consolidating, with smaller players being acquired by huge corporations. According to conventional wisdom, smaller candy companies could no longer compete and be profitable unless acquired by the big guys. But, Tootsie Roll defied conventional wisdom. Tootsie Roll was successful while holding out as a smaller company that did a few acquisitions of its own. And, as the Wall Street Journal explained, Tootsie Roll limited its acquisitions to those with a really good fit.
It is beyond the scope of this blog to determine how long Tootsie Roll’s success will continue, especially since the Wall Street Journal article tells us that Tootsie Roll’s profits have fallen somewhat. But, I can say what the business success and failure patterns I have been researching for over 25 years imply about Tootsie Roll’s relatively successful performance. As I’ve said numerous times, the patterns indicate that businesses succeed by building on their strengths. By limiting its acquisitions to those that fit really well with its strengths, Tootsie Roll is following the patterns of business success.
Furthermore, Tootsie Roll’s success comes without the backing of a large corporate parent, defying conventional wisdom that smaller candy companies can only survive by selling out to the largest corporations. Conventional wisdom encourages vast size. But, although size may offer valuable economies of scale in some cases, the size of a business is not necessarily associated with success. Plenty of huge corporations have experienced dismal failure. Building on strengths, making the right strategic moves, with good fit is far more important than size. And, Tootsie Roll’s success is an excellent example of that.
Additionally, the age of Tootsie Roll’s top executives also defies conventional wisdom. Its top executives are age 92 and age 80. Although I have not researched the role of executive age, my research does find immense benefits in experience. And, executives in their 80’s and 90’s do have extensive experience. That experience can help the company evolve successfully and avoid the ill-fitting missteps that many others make. As long as the company continues to evolve, rather than fall into stagnation, wisdom from the experience of elderly executives, like those running Tootsie Roll, can be a valuable strength.
So, what can we learn from the Tootsie Roll example? First of all, it is important to pay attention to success patterns and apply them in a way that fits your company well. And, it is crucial to look at your company’s unique characteristics, rather than blindly following conventional wisdom. Not every company could thrive by keeping its executives until they are 90 years old. But, some companies certainly can, as Tootsie Roll demonstrates. Thus, it is important to carefully evaluate what does and what does not fit well for your company.
So, pay attention to the patterns and apply them in ways that fit your company’s unique situation–even if you are defying conventional wisdom. Doing so can pave the way to business success.
