RUBIK CUBES, FREITAG BAGS AND
STARBUCKS
What’s the connection?
By Professor Stuart Read- February 2010
IMD
Chemin de Bellerive 23
PO Box 915,
CH-1001 Lausanne
Switzerland
Tel: +41 21 618 01 11
Fax: +41 21 618 07 07
info@imd.ch
http://www.imd.ch
RUBIK CUBES, FREITAG BAGS AND STARBUCKS I What’s the connection?
Quick test - What do Rubik Cubes, Freitag Bags and Starbucks Coffee have in common? Yes,
they are all popular consumer products and it’s even possible to create a story about how you
might carry your Rubik Cube in your Freitag Bag to the nearest Starbucks Café. Very creative.
But this story is about something less intuitive and probably more useful to an executive. It’s
about the fact that each of these success stories was born of an “absent market".
An absent market is one that fails to show up on the managers’ radar of market research,
prediction or assessment of customer demand. It is a market that only becomes present when
it is proactively created, or otherwise it might never come to be. Let’s take a closer look.
Cube creation
It’s hard to believe that the blockbuster toy that frustrated our childhoods and sold almost a
hundred million units in its first two years just celebrated its 25th birthday. But what was
behind the rise and fall of the product behind the first self-made millionaire from the
Communist Block?
The father of the cube is Erno Rubik, a sculptor, architect and teacher of interior design.
Spatial relationship problems were his business, and realizing them in three dimensions his
specialty. In class he was likely to build a physical design in order to make a point (as he did
with the cube). Rubik’s cube was not originally intended to be a blockbuster, or even a toy. It
was the presentation of a solution to a structural design problem of surfaces in three
dimensions that could be manipulated in any direction.
Without any explicit intentions, Rubik started sharing his puzzle with students and friends.
Their reaction started a chain of events that introduced Rubik to a salesman for an Austrian
computer company who took the cube to the Nuremberg Toy Fair. From there the cube
travelled to a British toy specialist with more connections and then across the Atlantic to New
York where an order for a million of the pernicious puzzles was negotiated with the Ideal Toy
Company.
But what if? What if Rubik had convinced himself that the cube was only an engineering
teaching prop? What if the cube had never made it to Nuremberg? What if Ideal had said no?
Would consumer demand for an exasperating toy have pointed some other engineer to build a
6-colored toy with only 1 correct answer and 43 quintillion wrong ones? Not likely. We were
plagued by the cube because of Rubik’s actions with his partners, not because we articulated a
latent need to a market researcher.
Re-creating bags
In Zurich, Switzerland, not far from IMD, Markus and Daniel Freitag saw a need. Unsatisfied
with the durability of available bicycle messenger bags, the pair wanted a heavy-duty, waterrepellent product. So in 1993, they set up Freitag AG. But instead of sourcing the latest hightech materials, they formed bags from old truck tarpaulins using second-hand car seat belts
as straps and waste bicycle inner tubes for edging.
IMD - www.imd.ch
RUBIK CUBES, FREITAG BAGS AND STARBUCKS
Page 2/5
RUBIK CUBES, FREITAG BAGS AND STARBUCKS I What’s the connection?
The recycled materials, intended to lower their production costs and create an industrial
strength product, generated a completely different reaction with consumers. It positioned
Freitag bags as green, re-using industrial waste, and personal, as every Freitag bag is as
original, customized and individual as the truck that hauled its skin in the first place. And
though the bags were sold to bike messengers, the real interest came from trendy, hip urban
consumers willing to pay top dollar for green personality.
By taking action, the Freitag brothers created a new product and genre for an application that
they did not envision, a new market for consumers they did not imagine with a value
proposition they did not conceive. And from that, they currently sell more than 200,000 bags
per year online, in five Freitag Shops across Germany and Switzerland and in 300 stores
around the world.
A cup of creation
But wait you say. Rubik cubes and Freitag bags are one thing, but Starbucks? The very fact
that a Starbucks occupies the corner of every city block in the known world must indicate that
the heroic founder Howard Schultz had strong insight into a market opportunity. Yet had he
actually looked at the market research when he formed the firm in 1971, he might have
thought twice. At the time, per capita coffee consumption in the United States had declined
from 3.1 cups in the 1960s to 2 cups per day. Further, the original Starbucks consisted of a
Seattle shop that sold roasted quality beans along with tea, spices and supplies. It did not sell
coffee by the cup. So neither market analysis nor a successful prototype could be credited with
helping Schultz discover the opportunity in Starbucks.
The real story of Starbucks is one based on action, learning and creation. Unable to talk the
founders into offering prepared coffee drinks, Schultz built his own coffee bar Il Giornale
(which merged with the original Starbucks in 1987). Even then, the success of Il Giornale lay
less in vision and more in action. Schultz listened carefully to patrons and employees in the
months after Il Giornale opened. Consumers did not like non-stop opera music. Those
interested in lingering in the store desired chairs. A menu printed primarily in Italian was not
helpful. The baristas’ bow ties were uncomfortable and difficult to keep looking neat after
hours working the espresso machine. Schultz responded to customer and employee feedback.
Il Giornale began providing chairs and playing more varied music. The baristas stopped
wearing ties.
Absent to vibrant
The stories of Starbucks, Rubik and Freitag are full of feedback for the growth-seeking
executive. Rubik shows us the importance of building from the things and the people we
already know and forming partnerships that add muscle to the uncertain process of market
creation.
The Freitag brothers teach us the importance of flexibility in the process of creation. It’s not
important what market you create, but rather that you create one at all.
IMD - www.imd.ch
RUBIK CUBES, FREITAG BAGS AND STARBUCKS
Page 3/5
RUBIK CUBES, FREITAG BAGS AND STARBUCKS I What’s the connection?
And Shultz shows us that information from the so-called ‘existing market’ may have limited
use or be downright misleading. This extends to information from other stakeholders
including investors and strategic partners. For example, while the founders of the original
Starbucks would not agree to convert their enterprise into an Italian style coffee bar business,
they did offer Schultz seed money and advice to found Il Giornale. Similarly, of the 242 men
and women Schultz approached for funding, 217 decided not to fund the venture, but quite a
few did purchase equity. So though market signals tell conflicting stories, it is the actions of
the entrepreneur that create the truth.
Perhaps you share Schultz’s desire to stop competing for a share of a fixed cup and start to
make new ones. If that’s the case, stop looking and start doing.
Stuart Read is a Professor of Marketing at IMD. He will teach the “Creating Markets: Exploring
Growth Opportunities” session during the Orchestrating Winning Performance program, June
20-25, 2010.
Professor Read also teaches on the Program for Executive Development and in IMD’s
Partnership Programs.
IMD - www.imd.ch
RUBIK CUBES, FREITAG BAGS AND STARBUCKS
Page 4/5
RUBIK CUBES, FREITAG BAGS AND STARBUCKS I What’s the connection?
RELATED PROGRAMS
PROGRAM FOR EXECUTIVE DEVELOPMENT - http://www.imd.ch/ped
Building global leaders
Program Directors David Robertson and Carlos Cordon
- Learn to drive performance in a fast-changing global environment
- Discover how to build a better business: gain skills, create networks and inspire others
- Reach your leadership objectives with personal coaching
- Get ready for IMD's Executive MBA degree
ORCHESTRATING WINNING PERFORMANCE - http://www.imd.ch/owp
The global business program for individuals and teams
Program Directors Bettina Buechel and Seán Meehan
- For individuals and teams who seek the latest management thinking and practical,
innovative solutions for their business
- Anticipate global business trends
- Boost your performance, broaden your perspectives and expand your global network
- Design the program that suits you
IMD - www.imd.ch
RUBIK CUBES, FREITAG BAGS AND STARBUCKS
Page 5/5