Think Again

TWO

Pattern Recognition

IN 1994, QUAKER WAS a successful and expanding food company. It had been well led by CEO William D. Smithburg since 1981. But Smithburg was about to make his biggest mistake: the acquisition of Snapple, the leading producer of iced tea and fruit juice drinks. Indeed, the acquisition proved to be disastrous. It led directly to Smithburg and Quaker’s downfall. Just three years later, Snapple was divested to the Triarc Company for some $1.4 billion less than the purchase price (or at 18¢ on the dollar). Not long after that, Smithburg retired. Quaker itself was acquired by PepsiCo in 2000.

The roots of this decision went back to Smithburg’s experience in the successful acquisition of Gatorade, a sports drink company, in 1983. ...