For half a century, until Johnson & Johnson introduced Tylenol, Bayer Aspirin drove the growth of Sterling Drug. Out of fear of cannibalizing its Bayer Aspirin leadership, Sterling Drug refused to introduce its leading European non-aspirin pain reliever (Panadol) to the United States. Instead, it tried to expand its Bayer line overseas but failed.
This failure ultimately led to its acquisition by Eastman Kodak. Sterling Drug had become immobilized, unable to change its half-century-old behavior due to cultural rigidities.
Its strong culture – its rules of thumb for decision making, its control processes, the information it used for decision making – blocked its progress and ultimately sealed its fate. It had locked itself into an ineffective approach to the market place despite clear signs that it needed to act in a new way.