NAB senior leaders discuss the economy and why there’s good news ahead for business.
Their big break: transformative moments for some of history’s best-known products.
American Express started life as an express mail business, transporting letters, freight and gold from the east of the USA to the west. When the company’s president, JC Fargo, travelled to Europe, he was frustrated by how difficult it was to cash letters of credit, and on his return instructed company executive Marcellus Flemming Berry to create a better alternative. The result was the world’s first traveller’s cheque, launched in 1891. Within 10 years American Express was selling more than $6 million in cheques annually as it developed a network of European banks that accepted and cashed the products. This helped change the company from a mail business into an international financial services organisation.
Listerine was invented in the nineteenth century as a powerful surgical antiseptic and was later sold as a floor cleaner. Then, in 1920, the company’s owner, Jordan Wheat Lambert, and his son Gerard came up with the idea of marketing Listerine as a solution for bad breath. They even invented the word halitosis by taking the Latin word for breath, ‘halitus’, and adding ‘osis’ to give the problem a more medical sound. Their new advertising campaign featured lovelorn young men and women who longed to be married but were unimpressed by their partner’s breath. In just seven years, the company’s revenues rose from $115,000 to more than $8 million.
After World War I, the popular English spread Marmite was hard to find in Australia. Fred Walker, businessman and entrepreneur, asked chemist and food technologist Cyril Callister to develop a home-grown version. Sales were disappointing, however, until a British scientist discovered that pigeons with polyneuritis (beriberi) could be cured with Vegemite. Walker began marketing Vegemite as not only a source of Vitamin B but an allround wonder food. By the late 1930s, the health message had been taken up by baby health centres around Australia, promoting Vegemite to parents as something nutritious that children couldn’t wipe off bread. As another war approached and food was in short supply, mothers took the message to heart and Vegemite became an Australian children’s staple food.
Driving home one night, Percy Shaw stopped to investigate a bright reflection in his headlights. The light had been reflected by the eyes of a cat – and Shaw realised his car was on the wrong side of a mountainous road. If he hadn’t stopped, he would have plummeted off a ledge.
Shaw set about developing reflecting road studs that created a similar effect to guide motorists after dark and, in 1934, patented his ‘Catseye’. The concept attracted little interest until the outbreak of World War II and the onset of the universal blackout. Devised to prevent German bombers from targeting populated areas, it plunged streets into darkness, with vehicles’ headlights masked to show only a crack of light. The Ministry of Transport finally saw the value of Shaw’s reflecting studs and decided to back their production. Orders started pouring in, including one for 40,000 studs per week.
Kleenex tissues were originally marketed as a way to remove cold cream or makeup – a clean, convenient alternative to the ‘cold cream towel’ many women kept in their bathrooms. Then Kimberly-Clark’s head researcher suffered a bout of hay fever and started using the tissues in place of his handkerchief. This inspired the company to run simultaneous advertisements, one showing Kleenex being used to remove cold cream, the other as a handkerchief. In the first year of the new strategy, sales of the tissues doubled.
In 1932, George G. Blaisdell created the Zippo, a lighter that could be operated outdoors with one hand. It sold well but, when America entered World War II in 1941, Blaisdell decided to stop selling the Zippo to the public in order to supply the US military. This proved a good business move, resulting in full production for the plant and establishing Zippo as a viable firm. The fact that millions of American military personnel carried the lighter into battle also helped establish Zippo as an American icon throughout the world.
Wallpaper used to get very dirty when homes were heated by coal. In 1933, Noah McVicker invented a doughy substance to rub off the marks – but sales dwindled when coal was replaced by cleaner oil and gas furnaces. In 1954, his daughter-in-law Kay Zuffal read that wallpaper cleaner could be used to make cheap Christmas decorations and, as she ran a nursery school, decided to give it a try. The children had so much fun playing with the dough that Zuffal persuaded McVicker’s son Joe to remove detergent from the recipe and add different colours. By 1956 it had become Play-Doh and, according to owner Hasbro, more than 300 million kilograms have been sold.
In 1956, less than 10 per cent of American women coloured their hair, according to Advertising Age – and, as many of these were models or actresses, it carried something of a stigma. Shirley Polykoff, the only female copywriter at advertising agency Foote, Cone and Belding, was asked to come up with a campaign to convince women that, when they used the new Miss Clairol product, no one would guess they were colouring their hair. Polykoff came up with the headline ‘Does she… or doesn’t she?’ and the tagline ‘Hair colour so natural only her hairdresser knows for sure’.
Clairol’s sales increased by 413 per cent in the next six years, by which time more than 50 per cent of American women were using hair colour, according to A Dictionary of Marketing, prompting some states to drop the requirement for women to state their hair colour on their driver’s licence. By 1959, Clairol was considered the leading company in the US hair-colouring industry. The campaign ran for 15 years and is still considered one of the most successful
Chester Carlson, an independent physicist and patent attorney, produced the first xerographic image in 1938 – then spent the next nine years trying to find someone to take up his invention. The likes of Remington Rand, General Electric, Kodak and IBM all turned him down. Joseph C Wilson, who ran a small photo-paper manufacturer, happened to see an article about the invention, recognised its potential and agreed to help Carlson develop it commercially. It took 20 years of experimentation before the Xerox 914 plain paper copier was ready for sale but, once released in 1959, it generated almost $60 million in revenue in the first year. By 1965, this had risen to an astonishing $500 million per annum.
In 1945, Harold “Matt” Matson and Ruth and Elliot Handler were making picture frames in a garage workshop in California. They began to craft doll’s house furniture from the leftover scraps of material and, encouraged by its popularity, shifted their focus to producing toys. When Ruth noticed how much her daughter loved playing with cut-out paper dolls, she was inspired to create a three-dimensional version that could be dressed in different outfits – and she gave the new doll her daughter’s nickname, Barbie. The first Barbie went on sale in 1959 and, by the following year, Mattel had become a publicly-owned company. In 1965 sales topped $100 million, and Barbie went on to become the most popular doll ever produced, consistently attracting worldwide annual gross sales of more than $1 billion.
When Gunpei Yokoi started working at Nintendo, the company’s stock was falling. It had begun by selling handmade Hanafuda cards in 1889 and gone on to great success with Disney character cards but, by the early 1960s, the market was close to saturation. Yokoi, an electronics graduate, was experimenting with machine parts in his spare time and happened to be playing with one of his inventions, an electronic extendable arm, when the company’s president Hiroshi Yamauchi toured the factory. It was the moment that set Nintendo on the path to becoming one of the most successful video games companies ever. On a hunch, Yamauchi decided to market the arm as a toy called the Ultra Hand and, that Christmas, it sold more than 1.2 million units. Gunpei was promoted and, in his new role of product developer, came up with the Game & Watch. This was one of the world’s first portable video games and the forerunner of almost every handheld gaming device Nintendo has since sold.
In the late 1970s, Caroma employee Bruce Thompson received $130,000 in government funding to find a way of reducing the amount of water wasted by flushing toilets. He developed a cistern with two buttons and two flush volumes and redesigned the toilet bowl to ensure it would work effectively with less water. It saved 32,000 litres of water a year per household and led every state except New South Wales to pass laws making dual-volume toilets compulsory in new buildings. Today, the Caroma dual-flush toilet is shipped to more than 30 countries worldwide.
George Lewin was an ABC journalist when he decided to try woodwork as a hobby. Frustrated by his inability to cut expensive wood in straight lines, he developed a workbench that held the wood securely and enabled him to use handheld power tools with precision. Realising there was nothing similar on the market, he patented the idea and tried to sell it to corporate Australia – only to be told it would never fly. When he appeared on ABC TV’s The Inventors the following year he hadn’t made a single sale, even on consignment, but the next day he received more than 1,000 orders. Between the TV appearance in 1976 and 2001, more than 400,000 Triton workbenches were sold worldwide. Today, Australian Geographic estimates that 10 per cent of Australian households with a garage have a Triton Workcentre.
Harley-Davidson was one of only two American motorcycle manufacturers to survive the Great Depression but, by the 1980s, competition from Japanese giants such as Honda, Suzuki and Yamaha had taken the company to the edge of bankruptcy. In 1981, 13 senior executives decided to take the company in a new direction. With a rallying cry of ‘The Eagle Soars Alone’, they began building on the appeal of their older designs rather than competing with the speed, agility and affordability of lightweight Japanese models.
Marketing reworked designs as authentically American, Harley-Davidson set about building a community of enthusiasts and collectors. The company made the machines easy to customize and re-tool, focused on their retained value, and redesigned dealerships as places where enthusiasts could meet. The Harley Owners Group, created in 1983, rapidly became the largest factory-sponsored motorcycle club in the world. Despite its niche market, Harley-Davidson is now one of America’s best-known brands and the largest manufacturer of heavyweight motorcycles in the world.
James Dyson had an unusual ambition: to create the ultimate vacuum cleaner. He started work on the project in 1979 and spent five years doing little but making and testing prototypes. When he felt he had achieved his goal, he offered his design to manufacturers. Frustrated by their lack of interest, he put his house on the line and borrowed enough money to build the product himself. Again, there was little interest – sales were limited to a few mail-order catalogues and small stores. Then, in 1995, former British foreign secretary Lord Howe went to look around his factory and asked if he was experiencing any problems. When Dyson told him he couldn’t get his product into large electrical store Comet, Howe said: “Well, my wife’s on the board!” The next day, Dyson got a call from Comet’s purchasing director and, within a year, the Dyson was the best-selling vacuum cleaner in Britain.
This article was first published in Business View magazine (Issue 24).
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.