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    Published on: March 24, 2015

    by Michael Sansolo

    He may be my favorite author, but F. Scott Fitzgerald was incorrect when he famously wrote that there are no second acts in American life. I’d argue that second acts not only exist, but that the stories of company resurrections might be among the most instructive models of business evolution we find these days.

    The April issue of Fast Company focuses on great business revivals in the past 20 years, principally Apple, which in 20 short years went from irrelevance to the most valuable company anywhere. Some of these other short stories provide lessons in rebuilding businesses that need be considered and discussed at length.

    Consider the varied paths some of these companies employed to launch their comebacks. For example, take two very different companies - Converse sneakers and Pabst Blue Ribbon beer - that roared back to profitability by focusing on emerging consumers.

    You won’t see a single player wearing Converse’s iconic Chuck Taylors in March Madness, but you’d see tons of them if the cameras showed the fans footwear. Converse, which lost the athletic shoe category years ago and now is a division of Nike, successfully focused on the brand’s allure as a fashion statement.

    Likewise PBR noticed its popularity growing in trendy Portland, Oregon, and pivoted its marketing to Millennials, especially hipsters. PBR won’t ever get a spot in my fridge, but it’s the top choice among my daughter’s generation.

    The examples abound of companies repositioning, refocusing and rebounding to success even if the markets around them were changing. Take CBS, which wins broadcast television ratings regularly thanks to a refocus on traditional formats like "The Big Bang Theory" or reality shows like "Survivor." Then there is Marvel, which saw the market for comic books dropping and jumped into movies. In the process it has launched a run of gigantic franchises.

    How about Old Spice, which seemed like an old brand when I was in college (a long time ago). Today it’s a hip brand with edgy ads and growing sales. Or General Motors, which paid off its government loans by paring down its offerings, improving operations and returning to profitability.

    Of course, there is Apple, which learned how to combine revolutionary and incremental advances to change the way we listen to music, talk on phones, take notes and everything else. And there is Fast Company, a magazine that uses edgy, unusual angles on stories to stay important while other magazines disappear constantly.

    The lesson of all these stories is simple: the future isn’t ever written in stone, especially when smart leadership realistically evaluates how to best evolve for the changing environment.

    Dr. Tom Haggai of IGA frequently reminds audiences that his daily prayer is “not to die until I’m dead.” It’s advice many companies could use along side the challenge from The Shawshank Redemption that we “get busy living or get busy dying.”

    No matter what difficulties you and your company face - and we all face them - examples like those in Fast Company remind us there are ways to find a way back to health.

    Second acts are always possible. But they have to be earned.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: March 24, 2015

    by Kevin Coupe

    The New York Times this morning reports that Hillerich & Bradsby is selling its Louisville Slugger brand to Wilson, which is owned by Finland-based Amer Sports Corporation. The deal means that the baseball bat manufacturer that has supplied lumber to the likes of Babe Ruth and Jackie Robinson no longer will be American-owned.

    The deal is worth $70 million.

    The Times story notes that, "created by John A. Hillerich in his family’s woodworking shop in Kentucky, Louisville Slugger bats eventually became one of the most recognizable symbols of the sport. A majority of professional players use them, and the company has sold more than 100 million since the late 1800s."

    "”The decision to sell the Louisville Slugger brand was a difficult and serious one to make,” John A. Hillerich IV said in a prepared statement. “The Hillerich family, and those closest to the brand, firmly believes that a new business model is necessary to realize the enormous potential of this brand in the future.”

    If there is a good news in this story, it is that Louisville Sluggers will still be made in America: "The company will still manufacture bats, made from hardwood trees in Pennsylvania and New York, in its factory in downtown Louisville."

    However...this is not just a story about how yet another American company lost its edge and had to sell out to a foreign company in order to survive.

    In fact ... back in 2013, USA Today had a story about how the Louisville Slugger was losing market share: "The Marucci Bat Company, created out of a backyard shed by LSU athletic trainer Jack Marucci in 2002, has emerged as Slugger's biggest rival in an increasingly crowded field of manufacturers," the paper reported, noting that Marucci claimed to be the number one major league bat supplier, though the claim was hard to verify owing to fluctuating tastes.

    The story also reported that there was increased competition in the field: "There are 32 companies licensed to make bats for major league and minor league players. That's up from 10 in 1993, according to Major League Baseball."

    And what makes the difference? Often, players say, it is bat maker's responsiveness - quickly supplying lumber that is highly specific to the batter's needs and tastes.

    In other words, it is just like most other customer-facing businesses. The product has to be absolutely right, it has to be available immediately, and it has to be personalized/customized to the greatest extent possible.

    Live up to those demands, and the company has the ability to hit a home run. Disappoint the customer, and the company is more likely to strike out.

    It's an Eye Opener.
    KC's View:

    Published on: March 24, 2015

    The Washington Post reports that "a sharp rise in reports of fraudulent Apple Pay transactions is raising questions about the security of the first mobile payment system to find a measure of popular success. One payments analyst, Cherian Abraham, estimated that as many as 6 percent of Apple Pay purchases are completed with stolen credit cards, or 60 times the rate of the old-fashioned plastic swipe."

    The story suggests that "the problem is that Apple Pay may be too simple to set up, security analysts said. Fraudsters have been loading stolen cards onto iPhones to buy things at stores. As it turns out, it might have been better if Apple Pay required users to do more to prove their identities when they sign up for the service, these experts said."

    Here's how the problem is framed by the Post:

    "The essential problem with Apple Pay is the setup, security analysts said. Users need only to open the app on their smartphones and enter a credit card number, the expiration date, and the three- or four-digit verification code. That information is instantly sent to Apple, which rates consumers as safe or risky, based on what it knows about their buying habits at its stores or on iTunes. The bank or company that issued the card is also notified and has ultimate say on whether to reject a user.

    "In most cases, the decisions by Apple and the card issuers occur within a few seconds.

    "Compared with traditional credit cards, Apple Pay does not do enough to weed out bad consumers from good ones, security analysts said. That has made it easy for the unscrupulous to trick banks and other financial firms into approving stolen cards, they said.

    "Criminals can buy credit card numbers and their verification codes by the bundle - and cheaply - online, said cybersecurity blogger Brian Krebs. They then plug those numbers into unlocked Apple devices that are hard to trace."
    KC's View:
    There seems to be no question that as new mobile payments systems are developed, the bad guys are very quickly going to be developing ways to abuse them.

    The interesting thing is that, at least as I read these stories, the problem isn't that my data is more at risk when I use Apple Pay ... it is that data stolen in other ways can be easily plugged into the Apple Pay system. That doesn't mean the problem is less serious ... but it requires a different and broader sort of fix, I think.

    Published on: March 24, 2015

    The Chicago Tribune reports this morning that "sales of low calorie soft drinks in the United States have tumbled by almost 20 percent over the past five years, according to data from market research firm Euromonitor. This year, diet soda sales are on pace to drop another 5 percent. By 2019, they are projected to have fallen off by roughly a third since their peak in 2009.

    "Some of the biggest brands are also some of the biggest losers in America. Diet Coke, which is the third best-selling soda in the United States, has seen its sales fall off by 15 percent in the past two years, and almost a third since 2005. Sales of Diet Pepsi, the second largest low calorie brand, meanwhile, have plummeted by roughly 35 percent."

    The slowdown is said to not just be affecting US consumption, but global drinking habits as well.

    The story suggests that the diet soda slowdown reflects a broader decrease in soda consumption, as well as a growing mistrust of artificial sweeteners.
    KC's View:
    It was just a week or so ago that we took note of a Wall Street Journal piece about Coke CEO Muhtar Kent, who has a specific approach to declining soda sales:

    "Mr. Kent’s risky strategy: Sell more soda. The 62-year-old CEO says he has a number of plans - such as increased marketing spending and an overhaul of the company’s U.S. distribution network - that will help Coke return to high-single-digit earnings growth in 2016."

    One has to wonder whether this is a trend that can be reversed, or if soft drink companies are better off not just being soft drink companies. This is highly anecdotal, of course, but almost everybody I know is cutting back on soda consumption.

    Published on: March 24, 2015

    Whole Foods has announced "expanded hours and three additional community market locations" for its My Street Grocery, described as "a mobile grocer" operating out of a refurbished trolley car "that travels to neighborhoods throughout the Portland metro area and is focused on improving fresh food access and building community by introducing choices, resources and relationships that celebrate the joy of food."

    The announcement says that "once the spring schedule is in full swing, My Street Grocery will operate community markets five days a week, Tuesday through Saturday. The trolley is stocked with produce, pantry staples, as well as dairy, meats and frozen fruits and vegetables. Whenever possible, the mobile grocery store sources from the hundreds of local producers Whole Foods Market partners with in the Pacific Northwest."

    The My Street Grocery represents a partnership between Whole Foods Market and local healthcare providers, social service agencies, faith-based organizations, schools and neighbors.
    KC's View:
    I love initiatives like this one ... not least because it just seems so Portland. But also because it reflects something very important ... a willingness to expand the universe by going to the customer, and also by going to customers who might not ordinarily go to you.

    Published on: March 24, 2015

    Michael Sansolo's column this morning took note of how the current issue of Fast Company looks at companies that have resurrected themselves, finding ways to re-connect with consumers after periods of misfires and misjudgments.

    But I'd also like to refer you to a specific story about a company that was hot, went cold, then got hot again and now is in a cold period, seeking yet another revival: Gap.

    "The brand enjoyed a 15-year reign over classically cool, affordable American style, but it has spent the past decade-plus struggling with an identity crisis while new retailers have colonized much of its domain," Fast Company writes. "The iconic brand slept through the fast-fashion revolution fueled by the likes of European labels H&M and Zara; got lost amid competitors such as Uniqlo and Target, who offered basics and denim at higher and lower price points; overexpanded; and became too ubiquitous for today’s niche-minded fashion crowd."

    How do you solve such a set of problems? That's the question facing the company's new CEO, Art Peck, who says that Gap has "been doing business the same way for 40 years, and there are very few 40-year-old business models that are successful forever ... Periods of disruption are periods of disproportionate opportunity. More money is made during disruptive times - but is also lost - than is made during times of stability."

    Fascinating story ... and you can read it here.
    KC's View:

    Published on: March 24, 2015

    The Wall Street Journal this morning reports that Amazon is engaging in a kind of "charm offensive," meeting with investors and being more transparent about some of its expenses as it looks to offset concerns that it spends too much money and generates too little profit.

    "Why this seemingly unprecedented level of hand-holding? One possible answer: Slowing top-line growth and its effect on Amazon’s valuation. The stock fell 22% last year—making it one of the worst performers among large-cap technology companies—at a time when Amazon is expanding rapidly and relying on its shares to lure talented employees."

    The Journal concludes that "the charm offensive seems to be working. Amazon’s share price has rallied more than 20% since the beginning of 2015, regaining last year’s lost ground."
    KC's View:

    Published on: March 24, 2015

    • The Philadelphia Inquirer reports that Walmart "has asked the U.S. Supreme Court to overturn a a December decision by the Pennsylvania Supreme Court to approve a $151 million class-action award to employees in the state for unpaid wages and damages."

    The original case concerned more than 180,000 employees who accused the company of not paying them for work performed "off the clock." Walmart is appealing the decision by saying that the class action award was reached by a formula that applied a few allegations to the broader group; the retailer wants the Supreme Court to apply the same rationale that had it decertify a class action gender discrimination suit.

    MassLive reports that five years after Walmart made a big deal out of the installation of 12 wind turbines atop a Worcester, Massachusetts, supercenter, those turbines have been removed.

    "We're going through the data to figure out what we learned, and we're applying those lessons in a variety of renewable energy projects," says Kara Greco, Walmart director of sustainability communications. However, no specific reasons have been given for the removal of the turbines.
    KC's View:

    Published on: March 24, 2015

    • In Wisconsin, the Journal-Sentinel reports that Meijer executives say "they intend to expand in cities across Wisconsin in much the same way the company has grown across similar size cities in its home state of Michigan ... With a distribution center already up and running in Pleasant Prairie, Meijer says it is investing $750 million in Wisconsin and that it eventually will create 7,000 jobs in the state."

    Meijer currently has stores in Michigan, Indiana, Ohio, Illinois and Kentucky, and employs 60,000 people, the story notes.

    Forbes reports this morning that Sen. Cory Booker (D-New Jersey) plans "to introduce legislation to establish temporary rules to govern the commercial use of drones that could greatly expand the ability of companies to fly unmanned vehicles." The bill, according to the story, would "allow for the piloting of small unmanned aerial vehicles (UAVs) for purposes such as the surveying of construction sites or the mapping of crops. If passed, the legislation will dramatically change the government’s stance toward the commercial use of drones, which is currently banned by the Federal Aviation Administration, with only a few exceptions."

    The FAA has been slowly doling out permissions for unmanned drone testing; the issue has been placed front and center because of efforts by Amazon, FedEx and UPS to test the use of drones to deliver packages in select markets.
    KC's View:

    Published on: March 24, 2015

    Yesterday, MNB took note of a Reuters report that the International Agency for Research on Cancer (IARC), which is an arm of the World Health organization (WHO), said Friday that "glyphosate, the active ingredient in the Monsanto Co herbicide Roundup, was 'classified as probably carcinogenic to humans'. It also said there was 'limited evidence' that glyphosate was carcinogenic in humans for non-Hodgkin lymphoma."

    I commented:

    This may be nothing. Or, it could be Monsanto's worst nightmare. It'll be interesting to see what happens when WHO's scientific apparatus goes up against Monsanto's PR machine.

    One MNB user thought I was unfair in my characterization:

    I guess you don’t claim to be “fair and balanced” so fair enough that yours is an opinion piece and not “hard news”. But your pitting “WHO science against the Monsanto PR machine…” rather than pitting them against the science of the USDA, FDA, and EPA does seem to signal a distinct “opinion”?

    That's why I call it my "view." It is an opinion ... though I'll also cheerfully concede that it was a bit of cheap shot.

    But to be clear, I'm perfectly willing to take cheap shots.

    And not everybody disagrees with me.

    MNB reader Mike Franklin wrote:

    Let’s not forget, all those regulatory agencies around the globe have reached their conclusions based on research funded by Monsanto. It is interesting that an agency yet to be tainted by Monsanto has reached such a diverse conclusion. My Father managed over 10,000 acres of farmland in Eastern Oregon, growing peas, during the 60’s & 70s…and died of cancer in the early 80’s at the age of 52. He spent his years walking through pea fields after they had been sprayed with parathion, malathion…I would hope that the management of Monsanto meet up with the management of  cigarette companies in the after life.

    And another MNB user chimed in:

    Monsanto's PR machine is the last thing we have to worry's their lobbyist on Capital Hill that will kill us. Why is money more important than health in this country and the rest of the globe (Europe specifically) doesn't allow these modifications,  poisons, etc. onto their crops, or in their animals? Because our thirst for stockholder satisfaction drives our pocket in the short-term, which in-turn assures that big pharmaceuticals and big food keep us sick so they can continue to sell us drugs. Chris Rock said it best at the Apollo..."They'll NEVER find a cure for cancer, NEVER; because the money isn't in the cure, the money is in the drugs!" Oh, cigarettes are bad for me??? High-fructose corn syrup is bad for me??? Processed foods are bad for me??? Roundup is bad for me??? All are still on the market and we know they are causing obesity, diabetes and cancer. A winery in Oregon that makes some organic wines had an ad campaign for their organic wines with the tagline, "From 10,000 BC until 1945 all agriculture was organic;" think about our illnesses since. I hope we wake-up as a nation in my lifetime.

    I hope you live long. (And prosper.)

    KC's View: