From Humiliation to $20M in Sales

by Victor Cheng

Times change, and with it we must change too.

The following story is about a very unusual product called the Microplane Grater.

If you spend a lot of time in the kitchen (or Williams Sonoma), you know exactly what I am talking about.

It is a little device that shreds block of parmesan cheese effortlessly. It is just amazing — serious.

I first discovered this in our kitchen and nearly shredded my skin off. The thing is sharp, sharp, sharp!

And it grates, it shreds… (okay, now I sound like an infomercial).

But here is my point, its customers are fanatical and swear it is the best grater in the world — and in my opinion, it really is.

But what is the story behind this company’s market dominance?

It has an absurdly relevant story for us all.  It is THE essence of strategic planning — know what you’re good at doing at your core, but be flexible in how that manifests itself in terms of customers and specific products.

Be loyal to your core competitive advantage; be willing to change all else as the market changes. (And now more than ever, many markets have changed.)

The company was originally a manufacturer of woodworking tools. The Microplane Grater was originally designed to grate wood – yes, the stuff that comes from trees (which explains why it is so sharp).

As the legend goes, some housewife many years ago broke her grater before a dinner party. Desperate to grate something before her guests showed up in a few minutes, she raided her husband’s toolbox and found the Microplane Grater.

“Hmm… it looks like it could grate some cheese or lemon zest… let’s give it a try.” She falls in love with it, tells all her friends, they all descend upon the local hardware store looking for this thing.

The hardware store manager can’t figure out what is going on. All he knows is he sold out of the darn thing, re-ordered it, sold out in a day, re-ordered again… sold out yet again.

Some of the customers frustrated that they couldn’t get the product in stock at the hardware store decide to try the local kitchen store.  In response to the question, “Do you guys carry the Microplane Grater?  If you do, I’d like tobuy six of them…”, the store manager says, “Ummm…. Hmm… I’m sure we can get it for you.”

The store manager didn’t quite get it, but was smart enough to just give the customers what they wanted.

And so suddenly kitchen gadget stores like Williams Sonoma started ordering the Microplane Zester by the truckload.

When the folks at Microplane noticed this one item flying off the shelves and discovered who was buying it, at first they were insulted.  Microplane tools are tough. The fact that they were being used to grate cheese was just humiliating.

But (and this is very important), they decided to fulfill the order anyway.

Today, Microplane is the leader in high-end graters.  The kitchen gadget category represents 60% of sales.  Through this process, they came to appreciate what their true competitive advantage is.

The advantage is not the ability to make graters that grate wood (that’s a specific way their underlying competitive advantage happened to be expressed in the marketplace at a particular point in time).

Instead, they came to realize their core competitive advantage is to make “really sharp stuff.”

So they started looking to other markets where the need for sharpness was important. Through this process, they came to discover that orthopedic surgeons that need to grate bones for fitting hip replacements properly had the need for sharp tools capable of pulverizing bone.

There are two underlying lessons from this story:

1) Always take the order!

2) Don’t get overly wedded to the specific customer segment you serve and the specific products you produce — those can come and go with the times. Instead, appreciate your company’s competitive advantage, and seek to find those who value it.

For the full story, see the following New York Times article, which is good read:

http://www.nytimes.com/2011/01/12/dining/12united.html

Comments

Leave a Comment

Previous post:

Next post: