From Pepsi via Apple to digital healthcare

Published date03 January 2023
Publication titleGlobes (Rishon LeZion, Israel)
"They always showed me as if I was 60 years old, when I was actually 40 years old," he recalls. "And in all these movies, I wear a suit, although I never wore a suit to the Apple offices. Sometimes they have me drinking expensive wines, even though I don't drink at all. When I mentioned these to Aaron Sorkin [who wrote "Steve Jobs"], he told me, "I'm not a documentary filmmaker. I have to tell a story."

The story about Sculley that the film world insists upon telling is a story of the corporate business man, the responsible adult who came from buttoned-up PepsiCo to lively young Apple, and banished its brilliant inventor, Steve Jobs. From that moment on, the story goes, the company began to deteriorate until Jobs the genius returned to save it. Sculley has a different version but to understand it, we must go back a bit.

"The Pepsi Challenge drove Coca-Cola crazy "

At the age of 30, after graduating from design and architecture studies and a degree in business administration, Sculley arrived at PepsiCo. At the time, its market share was one-tenth that of Coca-Cola. "In 1970, I was appointed vice president of marketing for PepsiCo, a small company that had to compete with Coca-Cola, then the strongest brand in the world. I conducted the company's first market research: we went to 550 consumers' homes once a week, and brought them a few bottles of whatever beverage they wanted from our selection. What was amazing was that no matter how much they ordered, when we got there, all the bottles were empty. For nine weeks, they drank whatever we provided. So, we realized that in order to sell more cola, we simply needed our consumer to have more cola at home."

Then he had the idea that to some extent determined Pepsi's success. "I said: you can't compete with Coca-Cola on their playing field. But their bottles are very small."

At the time, Coke was only sold in glass bottles. Sculley instructed Pepsi to produce one-and-a-half-liter plastic bottles. (If you've been looking for who's to blame - here's your man.) "It's not easy. The bottle has to be safe to use while containing CO2 under pressure, so that there is no aftertaste in the beverage, and also be convenient for production in the existing factories." The solution developed by manufacturer DuPont, was a small bottle that could be produced with the existing machinery, and then inflated to the desired size.

When the change was implemented, Coca-Cola didn't really understand what was going on, Sculley says. "Three and a half years after we launched the plastic bottle, we received an award for the largest increase in market share ever [measured for the first time by volume and not in number of bottles sold], and Coca-Cola said, What are you talking about? We don't see it."

The defining moment was the Pepsi Challenge campaign. "It drove Coca-Cola crazy," Sculley takes pleasure in recounting. As part of the challenge, Pepsi actually conducted and recorded blind taste tests, revealing to the world that the public could not actually tell the difference between the two companies' beverages. "We started in Texas, where Coca-Cola unquestionably ruled and most of the public had never tasted Pepsi in their lives. The video camera launched in 1975, and it became much easier and more convenient to create a testimonial ad. Up until then, all advertisements said 'Look how big I am'. We were the first to focus on consumers".

The verdict Steve Jobs wouldn't accept

Pepsi's success was apparent to Jobs. Already in the early 80s, Jobs wanted to be Apple CEO, after the departure of its first CEO Michael Scott. "Steve founded Apple and was the largest shareholder, but the board of directors thought he wasn't ready yet. To appease him, they said: You pick the CEO. When he didn't like any of the candidates, they suggested he choose someone from a completely different industry."

So began Jobs' courtship of Sculley, which lasted five months. "We formed a bond. We would meet every weekend; I would fly to California or he would meet me on the East Coast. There was one day, in late March 1983 when I took him to the Metropolitan Museum of Art in New York City, where I knew, for a change, he wouldn't be an expert. He took me to Tower Records, to introduce me to new music that he liked. Then we got to his...

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