business news in context, analysis with attitude

Published on: January 29, 2015

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here, and this is FaceTime with the Content Guy ... coming to you this week from South Florida, where I've been lucky enough to miss the snow that has buffeted New England. (We are having a stiff, cool breeze though...which accounts for the fact that my cameras work is a little shaky. My apologies.)

I've been thinking a lot about leadership and management this week, mostly because of the time I've been spending with the Network of Executive Women (NEW) here. NEW is engaged, as I reported earlier this week, not just in a movement to grow the number of women in executive leadership positions, but also to remake the workplace. I think this is an important distinction - at a time when companies are demanding more of their people, and smart employees know that it is in their best interests to bring more to the table in terms of commitment, talent and innovative ideas, it behooves organizations to create a workplace that is demanding but also nurturing.

It makes sense for the workplace to not just feed the bank account, but also to feed the mind, the heart, the soul and the spirit. This will be absolutely necessary, I think, to attract the next generation of employees ... and, go figure, it ends up that women and millennials have pretty much the same priorities. They want a workplace that is more than just a place to go to work. Women leaders, the research also suggests, are better positioned to provide this, and therefore better able to create sustainable and profitable work experiences. And better work experiences tend to result in better consumer experiences, which, when you think about it, is the bottom line.

Spending some time in the car this week, I found myself thinking about women bosses I've had in my life - especially two women who, when I really thought about it, helped to make me the writer I am today.

The year was 1973, I had just finished my freshman year of college, and for reasons too complicated to explain here, I was miserable. A family friend, Father Richard Armstrong,was at the time running an organization called The Christophers, which had spiritual roots but was non-denominational and ecumenical in its approach: the slogan there was, 'Better to light one candle than to curse the darkness." Father Armstrong offered me a job on the weekly public affairs show, "Christopher Closeup," that was produced by the organization. I could be the show's first production assistant, he said. I could learn about television and writing. But I could only do it for a year ... after that, I had to go back to school.

That's where I met Jeanne Davis Glynn and Cecilia Harriendorf, who were the executive producer and producer of the show. Now, I knew how to write a little bit, but they schooled me and trained me to be fast and smart and focused. We worked on IBM Selectric typewriters, so it was in my best interests to organize my thoughts quickly and get things right in the first draft. It was like working without a net, except, of course, there was a net ... I never felt anything but supported and encouraged. They not only made me do my best, but they made me want to.

I haven't thought about Jeanne and Ceil in a long time, but now that I do, I realize that most of what they taught me I use every day here on MNB, and have used for my entire career. When I left The Christophers and went back to college - transferring to Loyola Marymount University - I was the envy of my friends there because I could knock out a term paper with my first draft, and I got the best grades of my life because teachers actually liked reading my papers. It is the gift that keeps on giving.

That's more than four decades ago. I did a little checking before doing this piece, and found that Dick Armstrong and Jeanne Glynn have passed away. But Ceil - well, it ends up that she worked for 30 years at "Christopher Closeup," and then retired ...and became a nun. She seems to be living a life of service with an enormous spiritual component. How cool is that?

I may have to look her up...

Thanks to the Network of Executive Women, I thought a lot about Jeanne and Ceil this week. Every man - every person - should be so lucky to have people like that in their lives and careers.

They were right at The Christophers. It really is better to light one candle than to curse the darkness. I'm glad NEW lighted this particular candle for me.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: January 29, 2015

by Kevin Coupe

The Wall Street Journal reports that "Vidiots, a Santa Monica storefront that grew over the past 30 years into a mainstay for cinephiles in search of everything from mainstream to out-of-print titles, will close on April 15, the owners announced Monday.

"It’s a fade-to-black that owners Patty Polinger and Cathy Tauber had fought against for more than a decade, as major chains like Blockbuster and new streaming services like Netflix Inc threatened to make them obsolete. The two childhood friends opened the store in 1985, and soon rode the wave of independent cinema by building out an inventory to include hard-to-find titles like documentaries and foreign films."

The story goes on to say that "in 2010, the store expanded into an event space in an attempt to offset revenue being lost to online and video-on-demand services. Last year, Vidiots became a non-profit, adding trivia nights and spoken-word performances to make it a kind of movie-centric community center. But a recent drop in rentals – about 24% in the last five months – made the business unsustainable."

I have to say that I feel awful about this ... I wish there were a way these kinds of businesses could stay in business. If I lived in Santa Monica, given my interests, I'd like to think that I'd be a customer.

But the sad truth is that I might not be. Other than the local library and the Redbox kiosk at the local supermarket, I'm not even sure there is video store within 20 miles of my home. Not that many years ago, there probably were a half dozen. I haven't stopped watching movies at home, but the ability to make instant decisions and stream these movies has changed everything.

Relevance is all. Sadly, in the end, maybe these kinds of businesses simply cannot be relevant enough to survive.

The Eye-Opener is this .... How many other businesses out there are approaching the relevance precipice and don't even know it?

Published on: January 29, 2015

There is a long piece in the Wall Street Journal that definitely is worth taking a look at, exploring what it calls "a take of two economies" that has affected virtually every category - food, cars, clothing, electronics. While there has been a recovery of sorts, it has almost entirely been at the upper end of the economic scales ... which creates pressures on marketers to start to make hard - and sometimes not-so-hard - choices about who they want to serve and what they want to sell.

You can read the entire piece here.

Published on: January 29, 2015

The Chicago Tribune reports that McDonald's announced yesterday that its CEO, Don Thompson, is retiring, and will be replaced by Steve Easterbrook, a longtime company executive who most recently served as global chief brand officer.

In addition, the company said, it had named CFO Pete Bensen to the new role of chief administrative officer, and named Kevin Ozan, previously corporate controller, as its new CFO.

Meanwhile, Crain's Chicago Business reports that " the company began a massive restructuring at its corporate headquarters in Oak Brook, resulting in more than 100 layoffs, with potentially more to come.

"The layoffs, which sources said affected workers across all departments, are effective immediately. Dozens of other employees were informed that they would have to reapply for new positions within the company as it shifts resources in amid the restructuring. Those workers have a week to decide, sources told Crain's. Those who lost their jobs or who opt not to reapply will be provided with severance packages and other assistance, the company said."

Published on: January 29, 2015

The New Yorker has an interesting website posting suggesting that while Netflix may have more data about who watches what and wants to watch what than almost any other comparable content providing service, it isn't always data that drives the decision making.

In fact, the company's chief content officer, Ted Sarandos, concedes that programming choices are roughly 70 percent data-driven and 30 percent judgement-driven ... but that the 30 percent actually is "on top" and is the priority.

"Perhaps what we are seeing here is better explained by the rise of a different kind of talent," The New Yorker

Published on: January 29, 2015

Nielsen's recent Global Health & Wellness study, revealed an alarming trend - that "less than two-thirds (63%) of global respondents trust health claims on food packages, and the percentage is lower in North America (56%)."

The conclusion: "The industry must be more transparent about the contents and source of foods, providing stronger scientific support for health claims."

However ... "80% of North Americans are still willing to pay a premium for foods with healthy claims or attributes ... Health claims on labels do increase sales globally, but only when the product is perceived as a healthy product to begin with ... Global sales of products with 'natural' and 'organic' claims have grown 24% and 28%, respectively, over the past two years. Also consistent with the interest in more pure/natural products, global sales of artificially sweetened 'diet/light' products declined -12%, while products naturally sweetened with Stevia grew 186%."

Published on: January 29, 2015

• The Wall Street Journal reports that Amazon "n Wednesday announced an email and electronic calendar service called WorkMail that is aimed at grabbing a slice of the corporate-email market largely controlled by Microsoft Corp. and to a lesser extent Google Inc.

"The new email service is the latest chapter in Amazon’s transformation from e-commerce powerhouse into major seller of corporate technology, until this point largely acting behind the scenes as computing muscle for Netflix videos and Unilever websites. Amazon’s move also spotlights how technology giants including Facebook Inc., Google and Microsoft increasingly view the workplace as a central battleground in the wars for users and dollars."

The story notes that "Email services could bring Amazon $1 billion in revenue annually, said Colin Sebastian, a Baird Equity Research analyst, based on his estimate of sales for Google’s business software."

Amazon describes the entry like this:

"Amazon WorkMail delivers the simplicity and on-demand access of a managed cloud service that works with popular email clients and also has the security controls enterprises need. Amazon WorkMail eliminates the need for customers to purchase and license email servers and handle the ongoing patching, back-up, and upgrades involved in maintaining these systems. It is fully compatible with Microsoft Outlook, and customers can quickly integrate Amazon WorkMail with their existing corporate directory, choose encryption keys, select the location where they want their data to reside, and pay only for the mailboxes they create."

Published on: January 29, 2015

...with brief, occasional, italicized and sometimes gratuitous commentary…

• In Wisconsin, the Journal-Sentinel reports that Meijer is going to begin hiring employees for its first two stores in the state, in Grafton and Kenosha, which will open in June. Two more stores, in Oak Creek and Wauwatosa, are scheduled to open in August.

According to the story, "Meijer has plans for additional stores in the greater Milwaukee area and throughout the state, and has said it plans to open two to three new Wisconsin stores each year for the next four years."


• The Wall Street Journal reports that "California plans to launch a statewide campaign warning citizens about the health risks of electronic cigarettes.

"The campaign, which will include television and radio advertising, follows a report released on Wednesday by California health officials declaring electronic cigarettes a public health risk. The report urged lawmakers to regulate them like traditional cigarettes."

The story goes on to say that "e-cigarette advocates criticized the California report, saying it repeated false claims that would confuse people and discourage smokers from switching to e-cigarettes, which are widely accepted as less harmful than traditional cigarettes."

I don't trust the people and companies making this stuff any further than I could throw my car. I am totally persuaded that this is just another way of selling stuff that will addict and eventually hurt people, especially young people. You can see it in the advertising, which strikes me as directly targeted at young people. It may take a little longer to addict them, but the long-term result probably won't be that different. Time to build an extension on that special circle of hell reserved for tobacco marketers...


• Fox News reports that a group of New Jersey consumers "is suing Whole Foods and East Coast grocer Wegmans over their  liberal use of the terms 'store baked' and 'made in house,' charging that both chains claim to be baking certain products in-house when, in fact, they are just reheating products that originally have been baked elsewhere.

The companies both say that they haven't deceived or tried to deceive anyone.

Published on: January 29, 2015

• Internet Retailer reports that "when Wal-Mart Chile CEO Gian Carlo Nucci retires in June, the world’s largest retailer plans to add Wal-Mart Chile to Wal-Mart Argentina president and CEO Horacio Barbeito’s portfolio." However, "even though Wal-Mart is aligning its Chile and Argentina presences under a single leader, the retailer plans to keep the two operations separate businesses."

According to the story, "Agustín Beccar Varela, director of marketing, corporate strategy and e-commerce for Wal-Mart Argentina will oversee the retailer’s day-to-day operations. He will report to Barbeito."

Published on: January 29, 2015

On the subject of SkyMall going out of business, one MNB user wrote:

Let’s face it – Skymall was milking the business. When their catalogues show pictures that haven’t been updated in years, they weren’t serious about the business.
 
One photo I always look to see (if it’s updated) is for an inflatable pillow that one can set on their tray table. The photo is of a Continental Airlines interior with a color scheme which Continental used years ago.  Their pricing model reminds me of Radio Shack.    
 
One never used “innovation” in the same sentence as Skymall.  Rest in peace…




An MNB user wrote in the other day about being asked one question in a survey after dealing with a Delta customer service representative - would he hire that person for his own company?

Which led MNB reader Mike Franklin to chime in:

What Gary Loehr experienced in his “One Question” survey was a (Net Promoter Score) NPS question…Many companies, tracking their NPS over time, feel this is the best way to determine equity growth…or brand strength growth. However, an equal number of companies feel it is ineffective. I personally feel very confident with the results from the question, because of the same conclusions Gary had with his experience.




On another subject, an MNB user wrote:

Kevin, it really wasn’t a surprise that Target failed in Canada. As you rightly point out, their location strategy wasn’t ideal. Tesco learned this (in US); Wal-Mart has learned this any number of times as they stubbed their toes when flag planting in new countries (Germany, S Korea and others).

Target has always played its value & differentiation strategies in the US; this wasn’t replicated in Canada. So, as a new retailer, they didn’t own either a value or differentiation platform.

There are countries where the Target Brand would do well although I’m sure that’s the farthest thing from their mind at present.




On the subject of GMO labeling, one MNB user wrote:

The issue isn’t going away obviously, and I have always agreed that transparency is the best approach.

To me, the perfect analogue is actually the place where this all started – farms and gardens.

I have been a gardener for many years, raising vegetables as well as ornamental  plants like flowers and shrubs. And around this time of year, as we await a major snowstorm, I start receiving the seed and plant catalogues.

Hybrids, new plants, crossbreeding, modified – most of the things available are marketed. Some suppliers tell compelling little stories about some horticulturist toiling for year to make a new flower or a new plant. Traditional breeding right there along with GMO plants. And look – if you don’t want these features, you can buy “heirloom” tomatoes, flowers, corn, vegetables of all kinds.

This is the unfortunate part of the food industry response to GMO concerns.  If it’s a virtue – then by heavens MARKET it.  And then you can turn around and market the original recipe for more money because now it is “special”. Cane sugar soda anyone? Organic and natural products?  They often command a premium.
 
Get with the program, people. Stop hiding behind legislation and regulation and come out of the laboratory closet and celebrate it! Market it! Sell it! Let it compete on its merits.

Agreed.




Got the following email from MNB reader Doug Madenberg:

Enjoying your reporting on the FMI Midwinter Conference.  It’s amazing how e-commerce is changing the retail value proposition.  Regarding the recommendation to “treat the store as a living website”… not long ago we were advising companies to treat their website as a virtual store.




Finally, one MNB user responded to yesterday's piece about how the Food Safety Modernization Act (FSMA) essentially is Sarbanes-Oxley for food safety ... making CEOs ultimately responsible if companies do not live up to its requirements:

I’d be in favor of the Sarbanes-Oxley for the food safety system, in favor of the Sarbanes-Oxley for the banking system, and I’d be in favor of the Sarbanes-Oxley for business.  Why not a Sarbanes-Oxley for government systems too?  You know, holding them personally responsible for voting or signing bills they did not read.  Imagine a CEO signing an annual report that he/she did not read.   Imagine a CEO getting a report stating that a major division would be bankrupt in 8 years and taking no action to correct it. Why not have trial attorneys hold everyone to the same rules?  Heck, it’s just an idea.

I think it is a pretty safe bet that the US Congress, regardless of which party happens to be in charge, will never do anything even remotely like what you describe.