David Novak Became a CEO Even With This Crystal Clear Mistake

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I love the theme of learning from mistakes. That's why I started my latest podcast, “My Favorite Mistake.” Yesterday, I just released Episode 150. Who knew that so many people would be willing to talk about their mistakes and how they've learned from them?

I jumped when I saw this headline in the Wall Street Journal the other day (the link should allow you to read for free even if you're not a subscriber):

CEO David Novak Learned Leadership by Making Mistakes

I've invited David Novak to be a guest on My Favorite Mistake and I'm hoping that it works out.

He's promoting a new book that's out today, Take Charge of You: How Self-Coaching Can Transform Your Life and Career.

In the WSJ article, Novak shares a story from the time when he was Pepsi's head of marketing.

His “epic fail” was the launch of the ill-fated “Crystal Pepsi” back in 1993.

The fail wasn't this somewhat pretentious commercial that featured a popular Van Halen song:


The fail was the product itself, as Novak explains:

“I thought I was the genius of all time.”

The WSJ added:

After noticing that colas were losing market share to clear drinks, he dreamed up a colorless Pepsi and pushed it into stores in time for a big Super Bowl campaign.

Pepsi-Cola distributors quibbled that the soda didn't taste enough like Pepsi, but Mr. Novak brushed them aside. “

I was a heat-seeking missile,” he recalls.

Crystal Pepsi turned out to be a dud and was off the market by 1994. Time magazine listed it as one of the “10 Worst Product Fails of All Time.”

“Today he uses the case of Crystal Pepsi as a cautionary tale about hubris.”

Novak added:

“I was too in love with my own idea, and I moved too fast on it.”

“He suspects that if he had taken time to listen to feedback from doubters, the soda would still be on the market today.”

I apologize for citing Wikipedia, but it says there that initial consumer testing was positive in test markets. Maybe that goes to show that limited consumer testing isn't always representative of the broader market? Would Novak have listened to consistently negative feedback from test markets? He admits there were “doubters,” but is that always true even when a product is ultimately successful?

I appreciate that Novak is willing to talk about mistakes and failures. I appreciate that he takes ownership of those failures instead of blaming others.

It's also a great story to show that, even with that mistake, he was still able to become the CEO of YUM! Brands.

“People know how you've gotten your success, but they don't know how you failed along the way,” he says.

I hope I'll be able to talk with him about this in an episode of “My Favorite Mistake.” Stay tuned.

You can also read this article:

How Crystal Pepsi Became the Soda World's Greatest Fail

Novak is quoted there as saying:

“It was probably the best idea I've ever had — and the most poorly executed.”

One of the food scientists is quoted in saying that Pepsi corporate wouldn't tell him the formula for original Pepsi, if you can believe it. And there was a major risk that clear soda would “go bad” in clear bottles from light exposure (think of why 7-Up and Sprite were traditionally sold in green bottles.

“Imagine trying to protect the flavor of something without actually knowing what's in it,” he says. “It was difficult and very frustrating.”

Test markets loved the product… but being willing to try it once didn't mean you'd want to buy it over and over again. It was “rushed to market” by Novak in just nine months, when it took three years to launch “Slice” soda.

“As… predicted, ultraviolet rays caused the soda to spoil.”

Here's a final quote from Novak:

 “I let my passion for the product override real issues,” he admits. “I still have a bottle of Crystal Pepsi in my office to remind me to take risks, be creative — and listen to people.”

Even with the failure of Crystal Pepsi, it did lead to a great Saturday Night Live parody ad for “Crystal Gravy.”

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