Tiny Softsoap’s Unconventional Strategy to Win Against the Industry Giants

William Sheppard was granted a patent for liquid soap in 1865. He discovered that regular soap mixed with liberal quantities of hartshorn resulted in a soap derivative that had the consistency of thick honey or molasses. The new product was soon found in many public facilities but never found mass acceptance in the home. This all changed in the 1970s when the Minnetonka corporation offered a modern version of the soap called Crème Soap on Tap in decorative ceramic containers through specialty boutique shops.

The product gained almost immediate market acceptance, and in the 1980s, Minnetonka created a mass-market version of the product in a unique pump bottle dispenser which they named Softsoap. The product flew off the shelves, and although they were happy, Minnetonka management was also very nervous.

Giant players such as Procter & Gamble, Lever Brothers, Dial, and Colgate-Palmolive dominated the hand soap market and wouldn’t take kindly to a new upstart threatening to steal their market share. Minnetonka had a history of innovation and successfully launched toothpaste brands and the perfumes Obsession and Eternity. But in the 1970s, the company had launched a line of fruit shampoos that quickly threatened the market prospects of established players like P&G’s Clairol division which swiftly countered with their line of fruit shampoos. Clairol quickly knocked Minnetonka’s shampoos off the retail shelves, and Minnetonka management did not want a repeat performance of that defeat.

The complication was that nothing of the soap or its production was patentable. The problem of protecting this new product’s life on the shelf seemed to be insurmountable until management realized one simple thing. A vital aspect of the Softsoap experience was dispensing the soap itself through the bottle’s pump. The patent for the pump was closely held, and there were only two manufacturers for the device. In a bold and audacious move, Minnetonka bought up nearly 100,000,000 units of future production of the dispensing pumps, basically betting the entire company on the hopes that Softsoap would be a stellar success.

Without access to the pumps, competitors could not launch a rival product for nearly two years, thus giving Softsoap the lead time it needed to establish itself. The Softsoap brand was so successful that Colgate-Palmolive bought the division in 1987 for $61 million.

Insight and Application

Minnetonka’s key strategic move was to clear the landscape of all competitors. By locking up key resources, Minnetonka was able to do just that. Apple also executed a similar move when introducing their first-generation iPod, locking up the supply of the new micro hard drives that were essential to the product. Once again, competitors had to sit on the sidelines and wait for new hard drive supply before they could enter the market, thus giving Apple a multi-year head start.

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This is a story in the new book I’m writing, Leadership Parables, which will feature leadership lessons in highly memorable short story form. But I need your help. If you remember an anecdote that influenced the way you think about business and leadership, tell me about it. If your suggestion is selected, you will receive a copy of the book and credit as a contributor. If you would like to know when the book is released, please add your name here. And, if you have an idea to share, please contact me at kurian@strategypeak.com.

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