CONSTANTLY RECASTING ASSUMPTIONS
Few things are more prosaic than the cast-iron skillet. What you see is what you get.
Relatively speaking, it’s also simple to produce: Melt iron, pour the molten mixture into sand molds, remove, cool and rinse. You’re done. That’s one reason China produces lots of cast-iron skillets for the U.S. market.
But the connoisseur of traditional cast-iron cookware will probably choose the one brand that is still made in the United States: Lodge.
More than three in four U.S. board members and executives worry that management tends to use outdated assumptions in setting strategy.
Netflix, which started as a DVD-by-mail service before entering into streaming digital, has rejected assumptions about who provides content and now produces its own. In fact, it was recently voted as having the “best” original content of any premium TV and Internet-video subscription service, topping perennial leader HBO.
March of Dimes, originally founded to eradicate polio, engaged in a five-year internal debate in the 1950s about what to tackle next as polio was on its way to being wiped out. It eventually changed its mission to fighting birth defects and infant mortality—only to change its focus again in recent years to improving the health of babies.
After the 9/11 attacks, the Federal Bureau of Investigation changed its “primary function” from “law enforcement” to “national security.”
A hat-tip to: KPMG; Morgan Stanley; Forbes; and MSNBC, respectively.
Based in South Pittsburg, Tenn., Lodge Manufacturing has managed to survive as every other U.S. competitor has gone out of business, keeping nearly 300 people, or close to a tenth of South Pittsburg, employed. One reason is that Lodge’s leaders have been willing to constantly set aside their assumptions. Another is that they’ve been willing to defy the assumptions of others.
Lodge Manufacturing was founded in 1896, a time when most kitchens could be counted on to have cast-iron cookware. Southern cooking in particular relied (and to a considerable extent still relies) upon it. Cast iron is what gets cornbread crisp and what offers a steady heat for deep-frying chicken. It also provides some extra iron in the diet.
“A lot of people don’t realize how desperately poor the South once was,” says Mark Kelly, PR and advertising manager at Lodge. “People lived on pinto beans, cornbread and very little meat. The dietary supplement that people received in cast iron kept the South alive.”
While the company had one problem that never quite goes away for producers of cast iron—the cookware, if taken care of, lasts forever and therefore needs no replacing—business was fairly straightforward. Southerners needed pots and skillets, and Lodge provided them.
Over time, however, things changed. In the 1960s and ’70s, stainless steel and Teflon-coated aluminum began to eat into sales. Both were thin, light and dishwasher-safe. Cast-iron cookware gradually but persistently fell out of favor, shrinking to a small fraction of the market.
By the 1980s, there were only three makers of iron cookware left in America: Wagner Ware, Birmingham Stove & Range and Lodge. The prevailing assumptions were clear and logical: Cast iron was a niche product. What’s more, if it had any kind of future, the production base would surely be overseas, where labor costs were cheaper.
The Lodge family, including then-CEO Bob Kellermann, a great-grandson of company founder Joseph Lodge, could see the new realities as well as anyone. But they rejected the assumptions that typically went with them.
In fact, they laid out a Theory of the Business uniquely their own: that cast-iron cookware had special properties for which the competition had not found a substitute; that making those properties better known to people would increase the company’s sales; and that steady improvements in technology and quality would make Lodge so superior to its rivals that customers would pay a premium for it.
While others tried to squeeze the last bit of profit out of their old U.S. production lines, Lodge put in new, state-of-the-art equipment. “Our family is always a believer in reinvestment,” says Kellermann, who recently became CEO emeritus.
For instance, in 1992—when offshoring was the norm, and China was already showing strength—Lodge replaced its coal-fired cupola furnaces with a superior melting system that used electro-magnetic induction.
It also capitalized on unexpected successes. In the 1980s, celebrity chef Paul Prudhomme of Louisiana prominently used cast iron. That boosted Lodge’s sales, and it led the company to collaborate with Prudhomme on a line of custom skillets. Lodge benefited, as well, when chef Emeril Lagasse made a point of showcasing cast-iron cookware for various dishes that he was introducing on his TV show in the 1990s.
Lodge also responded to consumers’ ever-shifting buying habits.
In many Southern homes, people were long familiar with a pre-cooking process known as “seasoning”—coating cast-iron pans with oil and baking them in the oven in order to keep food from sticking and the bottom from rusting. But market analyses showed that many younger consumers, especially those who didn’t live in the South, weren’t comfortable with seasoning.