Saturday, November 17, 2012

R.I.P. Twinkie

The NYTimes had an article the other day reporting the planned liquidation of Hostess under Chapter 7 bankruptcy. Management decided to throw in the towel blaming a a failure to negotiate a contract with one of its workers' unions.

Unfortunately the article did not cover Hostess' history of mismanagement including private equity backed mergers and debt loading (this Forbes article has more detail); so the article's comment stream collected many posts bashing the union.

I know nothing about Hostess or its history, but ignorance has never stopped me from offering an opinion - I'd never say anything otherwise. Here's a copy of the comment I posted to the article:

It looks like Hostess failed, because it failed to develop compelling products. Twinkies and Wonder were once trail-blazing brands. A popular snack can demand large markups, but today people don't want to eat twinkies at any price. Management deserves blame for failing to adapt to a changing market.

Many older companies (Sony, H.P., ...) suffer similar problems in their markets. The company has outlived its visionary founders, and is left to stock holders and M.B.A.s who see the company as a collection of assets to manage for optimal profit rather than a vehicle for realizing the founders' dreams.

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