Psst. Here comes the muffin man

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In the New York Times today, a revealing picture of the (American) muffin business.

Bite into a Thomas’ English muffin and, it turns out, you are about to swallow one of the most closely guarded secrets in the world of baking.

The company that owns the Thomas’ brand says that only seven people know how the muffins get their trademark tracery of air pockets — marketed as nooks and crannies — and it has gone to court to keep a tight lid on the secret.

The article was written in the context of a former employee who went to work for a rival and is now being barred from doing so because of the possible leakage of Thomas’ trade secrets.

One amazing bits is how Thomas kept the recipe a secret.

According to Bimbo’s filings, the secret of the nooks and crannies was split into several pieces to make it more secure, and to protect the approximately $500 million in yearly muffin sales. They included the basic recipe, the moisture level of the muffin mixture, the equipment used and the way the product was baked. While many Bimbo employees may have known one or more pieces of the puzzle, only seven knew every step.

“Most employees possess information only directly relevant to their assigned task,” Daniel P. Babin, a Bimbo senior vice president, said in a written court declaration, “and very few employees, such as Botticella, possess all of the knowledge necessary to produce a finished product.”

This is a strategy for immortality — in this case, the economic life of a product — that comes straight from Lord Voldemort and the division of his soul into 7 horcrux. I wonder how restrictive on innovation it has been.

4 Responses to "Psst. Here comes the muffin man"
  1. It’s rampant corporate paranoia.  I wonder if these companies ever think about the signals they send?  For instnace, I certainly wouldn’t want to work for that company because I can make a pretty fair guess at what its internal culture is like.

    Sheesh, how long would it take a rival’s food technologists to work out a decent recipe for “nooks and crannies” anyway?  A week? Two? It’s not as though English muffins are new.

  2. @derrida: If that’s so, why is this company successful? If making these nooks and crannies were easy, there wouldn’t be any gain to using it as a point of differentiation in market.
     
    No, keeping the process secret is a play out of the handbook that takes the long view on innovation: rather than patenting the innovation, which would give it an assured monopoly for a fixed period but put the innovation’s details on public record thereafter, the company has decided to reap long-term rewards. The cost is higher, obviously, since they need to guard the trade secret, but in industries where a product can be expected to be around a long time this isn’t uncommon (think Coca-Cola and their famous policy of not letting the people who know the recipe fly together).
     
    The implications for innovation policy are interesting – patent protection obviously isn’t attractive enough to convince this company to use it, but would a change in law to encourage the (eventual) publication of this innovation be worth it?
    We’re “only” talking about air bubbles in muffins here, but who knows what uses such a chemical process could have…

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    Thanks for the link to this Joshua.  It’s a fascinating case!
     
    DD: There’s actually a little back and forth on the barriers to imitation in the NYT piece.  One academic thinks it would be easy, but an industry consultant disagrees, says she’s spent a long time trying, and gave up.  Given all this, it doesn’t seem too far-fetched to assume that the degree of technical difficulty associated with the production technique create a significant barrier to imitation.  This does not, of course, mean reputation plays no role.
     
    An additional fact that stood out to me as complicating the argument that the products were too difficult to imitate (and the attached assumption that the differentiation enabled by the “nooks and crannies” actually added value) was that the employee who switched firms actually accepted an offer of $50,000 LESS than he was currently earning. If the secret behind the “nooks and crannies” is so valuable surely he’d have enough bargaining power to get a better wage? Of course economic calculations may have fallen by the wayside. He was upset with his current firm and was motivated by revenge.  If the competitor was aware of this, they might have concluded that they could getaway with paying him less…either way, it’s a strange set of circumstances.

     

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