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    Published on: February 7, 2008

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    Hi, I’m Kevin Coupe. This is MorningNewsBeat Radio, now available on iTunes and sponsored by Webstop, your first stop for retail website design services.

    I was reading the Wall Street Journal online the other day, and a headline leapt out at me. Eight words, and they encapsulated problems faces by many businesses:

    In Battle for Dominance, Will Innovation Be Casualty?

    In this case, the story was about the $44.6 billion bid by Microsoft to acquire Yahoo! The argument for the acquisition, as expressed by Microsoft in the story, is that such a deal “would lead to a more efficient marketplace by establishing a solid competitor to Google for Internet search and advertising.” Google, not surprisingly, doesn’t agree with that, and is looking for legal ways to prevent the acquisition from taking place…and the folks at Yahoo! seem intent on finding an alternative to Microsoft, though they do seem resigned to the fact that they’re going to be bought by someone.

    Now, I gotta tell you, this antitrust stuff is way over my paygrade. But I have to admit that I found a piece in the New York Times last weekend to be persuasive. It argued that Microsoft’s essential business model hasn’t really changed in decades – it is in the software business, churning out new kinds of software in addition to new versions of old favorites, like Office. And, it said, because Microsoft couldn’t innovate its way into the Internet search and advertising business, at least not enough to be competitive with Google, it made some sort of purchase inevitable and even mandatory.

    Dennis Berman, of Deal Journal, suggested that the acquisition is fraught with landmines, writing: "In a world where users -- not companies -- are continually innovating and upending the business world, creating an ever-larger bureaucracy does not seem like a guarantee of anything.”

    In the broad sense, the general agreement seems to be that because Microsoft has been intent on world domination, it has found itself unable to innovate in areas that will make it increasingly relevant to consumers. The corollary, it seems to me, is that it is difficult, if not impossible, for innovation and dominance to coexist … mostly because dominance requires an entirely different sort of care and feeding than innovation does.

    There is a pretty good argument, for example, that this is the trap that companies such as Wal-Mart and Starbucks have fallen into, and both retailers, to varying degrees and in different ways, are endeavoring to reconcile the two impulses and find ways to innovate within the dominance-driven cultures that have evolved. This kind of change isn’t easy.

    But it can be done. And I think a pretty fair example of how it can happen was seen at last Sunday’s Super Bowl.

    There you had the New England Patriots, bent on complete and utter domination of the competition…even to the point where the evidence seems to suggest that the coach, Bill Belichick, was willing to cheat to get an advantage.

    And then you had the New York Giants, a team that few gave a chance to win the game. This is a team that a year ago was this close to giving coach Tom Coughlin his walking papers because he had grown so autocratic that the players hated him. The team was pretty good, but not Super Bowl-quality…and for a while it looked like he was gone.

    But Coughlin stayed, and he changed. He became less tough, more open to suggestions, and seemed to have a better understanding that his players needed a different kind of coach than he’d been for so long. He became that coach rather than drifting off into autocratic irrelevance. And I think it is fair to suggest that one of the reasons that the Giants won last Sunday is that they were focused on innovation than dominance…and figured, at some level, that if they innovated enough, the victories would come. And they were right.

    Let’s face it. We live in a culture that has long celebrated dominance. Whether you happen to be a football team, a software company, or a retailer, dominance always is the goal. But while dominance can be achieved, every empire comes to an end, and is replaced by something else, something different.

    In 2008 and beyond, maybe we all ought to look at things from a new perspective, making innovation the foundational value for our teams, our companies, and maybe even our governments. Then, dominance may evolve from that position…but it will be a dominance that can coexist with the more important value of innovation.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: February 7, 2008

    The New York Times this morning reports that Wal-Mart is scheduled to announce later today that it plans to open “several hundred new clinics at its stores, using a standardized format and jointly branded with hospitals and medical groups.”

    According to the story, “Wal-Mart also says it plans to brand 200 of the new clinics with RediClinics, one of the Revolution Health companies of Steven Case, the AOL co-founder. Those are to be operated in partnership with various local health care providers. RediClinic, which already operates 13 clinics in Wal-Mart stores, plans to open one of the new units in Atlanta in April and another in Dallas next summer … In all, Wal-Mart plans to have 400 store clinics by 2010, including current units that will be converted to the new brand as their leases come up for renewal. The company currently has 78 in-store clinics around the country, but has had uneven performance in some cases. Wal-Mart does not operate any clinics itself but is seeking local hospitals and medical practices as partners, said Deisha Galberth, a Wal-Mart spokeswoman.”

    KC's View:
    While this clearly is a growing business and an important strategic move for Wal-Mart, it hasn’t been an initiative without problems. Late last month, CheckUps, which operates 23 in-store medical clinics in southern Wal-Mart stores, shut down those operations amid financial troubles that caused it to stop paying its employees and vendors.

    I still think that eventually, Wal-Mart will want to own at least some of these facilities. It will give the company more control and more efficiencies.

    Published on: February 7, 2008

    The Mississippi State legislature reportedly is considering a bill that would prohibit restaurants from serving obese customers. While the general feeling is that the bill has no chance of passage – or even being voted on by the full legislature – its very proposal has raised cries of discrimination by a variety of organizations.

    Mississippi has been labeled as the most obese state in the nation, and Rep. John Read, one of the bill's authors, has said that it is his attempt to draw attention to the problem.

    "It would be hard to concoct something more ridiculous," Kelly Brownell, director of Yale University's Rudd Center for Food Policy and Obesity, tells USA Today. "This brings bias against obese individuals to a new and appalling level, and at a time when significant progress is being made in the effort to stop blaming obesity on the people who have it and to address the social and political conditions that drive it.

    "Are these legislators fighting to get rid of soft drinks in schools? Are they working to stop the relentless marketing of unhealthy foods to children? Are they doing anything about the fact that poor people do not have access to healthy foods?"

    And J. Justin Wilson of the Center for Consumer Freedom, a group financed by the restaurant and food industry, released the following statement: "This is the latest example of food cops run amok. Are waiters supposed to carry scales around the restaurant and weigh every customer? Give me a break. What's next? Will waitresses soon be expected to make sure we eat all our veggies?"

    KC's View:
    Maybe the time has come to have legislation that will prevent people who propose this kind of legislation from running for office.


    This may be one of the most profoundly dumb ideas I’ve ever heard, and it is worse because it puts a black eye on almost everyone endeavoring to find culturally intelligent and acceptable ways to deal with the obesity issue. The are remedies that ought to be available to a compassionate and progressive society, like teaching kids about nutrition issues an making sure they have physical education classes while simultaneously being smarter about the foods they are served in school; these efforts of course, only are workable if they are supported by parents.

    I would like to make one other point. The person from Yale talks about “significant progress … being made in the effort to stop blaming obesity on the people who have it and to address the social and political conditions that drive it.”

    This, it seems to me, is not entirely accurate. Yes, there are social and political conditions that enable obesity, but I’m not sure that they “drive” the obesity epidemic as much as personal behavior does. There is a problem when we completely absolve people of any responsibility for whatever their conditions happen to be. Society can help make more information available to them and can create available solutions…but in the end, people have to make their own decisions, and take responsibility for their own behavior.

    Of course, there always will be reports to the contrary. HealthDay News, for example, has a report this week saying that researchers have discovered that some brains are simply wired differently, and that their makeup predisposes people to be obese. The discovery essentially suggests that new medications could be developed that would help some people deal with their obesity, much in the same way that some drugs help some people deal with issues such as Attention Deficit Disorder (ADD).

    Which is good. But just as people with ADD have the ultimate responsibility to manage their own conditions and decide whether or not to take these medicines, so it will be on the obesity front.

    Published on: February 7, 2008

    The Sacramento Bee reports that Raley’s, which already has been investing more in its private label strategy, is launching a new line of Full Circle organic and natural products, a proprietary line of products ranging from beans to laundry detergent.

    According to the Bee, “Raley's believes it can tie its brand more closely to healthy eating options, fend off old competitors and cut off emerging rivals exploiting the demand for organic goods. It also underscores how organic products have gone from a boutique business that often offered unpalatable high-priced items to a mainstream industry that mass-produces attractive goods for less … The products marry the strengths of private labeling – higher profits on exclusively branded products that cost less for a store to acquire than national brands – with the health and social appeal of organic goods.”

    KC's View:
    While Raley’s isn’t the first chain to employ this strategy, that doesn’t mean that this doesn’t make sense or won’t be successful. Proprietary, differentiated products are the best way to carve out a distinct identity…especially in a northern California marketplace that it crowded with competition, including Safeway, Wal-Mart, Save Mart, Nugget Markets, and, soon, Tesco’s Fresh & Easy Neighborhood Markets.

    Published on: February 7, 2008

    The Wall Street Journal reports that “two Chinese businesses and a U.S. company were indicted Wednesday in the tainted pet food incidents that killed dozens of animals last year and raised worries about products made in China.

    “Xuzhou Anying Biologic Technology Development Co., Suzhou Textiles, Silk, Light Industrial Products, Arts & Crafts I/E Co. and Las Vegas-based Chemnutra Inc. were charged in two separate but related indictments. The U.S. attorney's office in Kansas City said the tainted food led to the death and serious illness of pets in the U.S. last year.”

    The indictments say that the Chinese companies deliberately mislabeled wheat gluten so it would not be inspected, and that the wheat was contaminated with toxic melamine.
    KC's View:
    Hang ‘em high.

    Published on: February 7, 2008

    Remember last year, when so many people got upset when that pizza chain started accepting Mexican money? The rationale was that a number of its customers often traveled to Mexico and they would come back with extra pesos…and that the pizza restaurant was performing a service by accepting them. Some objected – vociferously – on the grounds that in America people ought to spend American money…and that anything else was damn near unpatriotic.

    Well, now USA Today reports that some stores in New York City have begun accepting euros and other foreign currency. The reason? New York City is being increasingly invaded by foreign visitors looking to take advantage of the weak US dollar, which allows them to get great deals on luxury goods; they’re even buying expensive luggage that they are using to transport other purchases back to their home countries.

    "We had decided that money is money and we'll take it and just do the exchange whenever we can with our bank," Robert Chu, owner of East Village Wines, told Reuters TV.

    And, USA Today writes, “While shops in many U.S. towns on the Canadian border have long accepted Canadian currency and some stores on the Texas-Mexico border take pesos, the acceptance of foreign money in Manhattan was unheard of until recently.”

    KC's View:
    One world, baby. One world. When I’m in Amsterdam next week, there will be numerous shops and stores that will be happy to take American money; I should be thrilled, since US money is worth so little these days.

    Money is money. Commerce is commerce. I have no problem with any of this.

    Published on: February 7, 2008

    ABC Australia reports that some so-called “green bags” may not be as good for the environment as people think.

    “Green bags are made from non-woven polypropylene,” the news service reports. “This textile is byproduct of oil refining and it is not biodegradable. You may reuse your green bag many times. But when you throw it out, it will not break down on the compost heap or in landfill. ”

    Defenders of the green bags say that they 1) last far longer than disposable plastic bags, 2) can be recycled even if they can't be composted, and 3) are better than alternatives until a better option comes along.

    KC's View:
    Listen, there are almost always downsides to most options. And it makes sense that cotton bags are more environmentally benign than polypropylene.

    This is all a work in progress, and people are trying to do the best they can, making fundamental changes in their buying behaviors. People smart enough to stop using disposable bags won’t have any problem switching to cotton bags if they believe it will be better for the environment.

    Published on: February 7, 2008

    Bloomberg reports that Wal-Mart’s Asda Group in the UK has “said it will start breeding Wagyu cattle in England and undercut the prices Harrods and Selfridges charge for the Japanese cows' fat-laden steaks.

    “The first herd, reared in Yorkshire, will be a cross of Wagyu with Holstein dairy cattle, producing meat with less marbled fat than the Japanese version, Asda said yesterday in an e-mailed statement. Asda said it eventually will raise purebred Wagyu cows, with herds all over Britain.”

    KC's View:
    I’m sure the folks at Harrods and Selfridges aren’t happy…but I will tell you this. One of the best hamburgers I’ve ever had in my life was made from Wagyu beef. It was unbelievably good, made with black pepper mayo, red onion jam, and aged, melted Gouda. (Check it out at Napa & Company in Stamford, CT…)

    Asda shoppers are in for a treat. I get hungry just thinking about it.

    Published on: February 7, 2008

    • The New York Times reports this morning that Anheuser-Busch may be in merger talks with InBev, the Belgium-based maker of Stella Artois beer. The report was originally published by the business magazine Trends; neither company is commenting on the reports.

    • Published reports say that the US Department of Agriculture (USDA) Food Safety & Inspection Service ha s shut down the Hallmark/Westland Meat Packing Co. in Chino, Calif., saying that the plant was guilty of a “clear violation of Federal Regulations and the Humane Methods of Slaughter Act.”

    It was just last month that the US Humane Society posted a video on its website that it said showed Hallmark/Westland employees being abusive to cattle about to be slaughtered and even forcing some cows to their feet so that they could pass inspection pre-slaughter.

    • Reports from Down Under say that Australian scientists have created a genetically modified banana that increases the levels of pro-vitamin A and iron in the fruit. Scientists say that this new form of banana could be growing in Australia later this year.

    • The Seattle Post Intelligencer reports that the US Department of Agriculture (USDA) has issued an announcement saying that brucellosis, “a disease that can sicken cattle and cause them to abort their calves … is nearly eradicated in all 50 states.” The malady has been “nearly” eradicated because it apparently is done from all commercial herds in the US, but “the disease could pose threats in the West, where the presence of brucellosis in free-ranging bison and elk in Yellowstone National Park and Grand Teton National Park could affect herds in surrounding states.”

    KC's View:

    Published on: February 7, 2008

    • Spartan Stores reported that its third quarter net sales reached a five-year high, increasing 15.6 percent to $826.1 million from $714.4 million in last year’s third quarter; the company said that the increase was primarily due to its acquisition of Felpausch.

    Net earnings for the quarter reached $10.6 million, or $0.49 per diluted share, compared with $5.9 million, or $0.27 per diluted share, in the same period last year.

    • Costco said that its January net sales increased 11 percent to $5.11 billion, with same-store sales that were up five percent in the US and 11 percent in its global stores.

    KC's View:

    Published on: February 7, 2008

    …will return.
    KC's View: