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    Published on: October 20, 2009

    by Michael Sansolo

    Aside from being a fabulously enjoyable Broadway show, Wicked actually teaches an incredible business lesson that virtually all of us need to learn. The show, based on the Gregory Maguire book of the same name, poses a very challenging question: what if everything we knew about a specific event was simply wrong.

    In the case of Wicked, the premise is simple. We all know the story of The Wizard of Oz. However, consider for a second that it was told incorrectly to protect a cruel and corrupt government and that the Wicked Witch was actually the hero. The genius of Maguire’s story is that he tells his tale without violating anything we know in the beloved movie. And by doing so he makes us think.

    Perspective is stunningly important, but far too often we all hesitate to challenge the views we personally hold. We do it in politics (Bush bashers out there, consider your complaints about how Obama is treated…and vice versa), we do it with history and we do it in business. You’re on your own to consider opposing views in history or politics, but in business we have to start tackling some of this together.

    The trigger for this discussion came during last week’s FMI Future Connect, which once again I must inform you I played a big role in planning and running. One of the most interesting discussions I heard there took place thanks to Peg Neuhauser, author of books on tribal warfare inside companies that I plan to start reading immediately. Neuhauser put the group through an interesting exercise in which audience members were asked what words or phrases colleagues use that make their skin crawl. The examples came quickly, including: “you people,” “my boss said it’s our call,” and the dreaded “that’s not how we do it.”

    The answers flowed a little slower when Neuhauser asked the group to think of the phrases they personally use that probably have the same impact on others. But the point was made: tribal warfare and silo building isn’t something only the other guys do.

    But there was one stunning moment that was not answered as well. Neuhauser asked the group to name the department that causes them the most problems or seems to have the most impenetrable silos. Incredibly, the same department kept coming up: IT or information technology. The message was clear: in a room of 1,000 people representing companies of all types and sizes, IT is THE problem.

    Except that’s largely wrong, a point the small group of IT people in the room wisely avoided making that day given the overwhelming numbers against them.

    Certainly, there are problems caused by IT. There are times an IT staffer answers questions in a less than helpful way. And it’s hard to imagine there is any department outside a hospital emergency room that has more confusing jargon than IT. But like the Wicked Witch, IT is getting a bum deal.

    I’ve had the good fortune of working with many IT professionals over the years and they all share interesting stories about how operations, merchandising, marketing or management messes things up and then blames IT. The litany of problems is huge ranging from people who simply have no clue how to operate a computer to those who want various technological tools without any plan on how to use that tool to help the company operate better. And when questions are asked, IT is blamed for intransigence.

    This is just an example, but an important one all the same. Trying to see problems or issues through another’s eyes can make us all stronger. The Neuhauser discussion reminds us that we all need an attitude adjustment time and again to make us consider whether the silo builder is the person staring back in the mirror or if the Wicked Witch really isn’t very wicked at all. Sometimes perspective needs a good shaking.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .
    KC's View:

    Published on: October 20, 2009

    USA Today reports that Target plans to offer its shoppers a five cent discount for every usable shopping bag they bring into its stores. The move comes just days after CVS said that it will give customers in its Extra Care program a $1 coupon for every four times they use a reusable shopping bag.

    According to the story, “the two programs could keep billions of plastic bags out of the environment and nudge other big retailers to take similar steps, says Allen Herskowitz, senior scientist at the Natural Resources Defense Council.”
    KC's View:
    Nudge, nudge. this is the best way to get ahead of legislation and regulation. It is true that this will force other retailers to make the same sort of move.

    And expect Walmart to take up the cause at some point in the near future. it just seems likely, especially since the company has been so progressive in environmental areas.

    Published on: October 20, 2009

    New legislation that would require country of origin labeling (COOL) on dairy products that include milk, cheese, yogurt, ice cream and butter has been introduced in the US Congress by Sen. Al Franken (D-Minnesota), Sen. Russ Feingold (D-Wisconsin) and Sen. Sherrod Brown (D-Ohio).

    This legislation will help American dairy farmers stand out in a crowded marketplace," said Sen. Franken. "They need every tool at their disposal to weather the current dairy crisis. And this isn't just about helping our farmers. When Minnesota families fill their shopping carts, they have the right to know what country their milk and cheese came from."
    KC's View:
    With some justification, his legislation will be decried as more about marketing than safety...and Franken’s comment does little to dispel that notion. I don’t particularly have a problem with that...especially at a time when consumer confidence in the food safety system has been eroded and COOL might be reassuring.

    Published on: October 20, 2009

    Target Corp. said yesterday that it is joining the battle over book prices in which Walmart and Amazon are engaging, cutting its price on so-called “highly anticipated books” to $8.99.

    Last week, Walmart.com lowered the price on 10 soon-to-be-published books expected to be best-sellers - by authors such as Stephen King and Dean Koontz, and politicos such as Sarah Palin - to $10.
    Amazon.com matched the price within hours. And then Walmart.com lowered its prices on the books to $9.

    Amazon matched the $9 price, prompting Walmart to go down to $8.99.
    KC's View:
    It is ironic that just a few years ago there were a number of folks who worried about America’s growing illiteracy, and now the big price battle is being fought over books.

    Published on: October 20, 2009

    Marketing Daily reports on a new Mintel study suggesting that “ethnic food sales will reach a record $2.2 billion this year, and advance by another 20% between 2010 and 2014.”

    According to the study, Mexican/Hispanic foods have become so popular, with more than a 60 percent share of the ethnic food market, that many people don;t even consider them to be ethnic anymore. The real growth drivers in this category are said to be Indian and Asian foods, “which showed 11% and 35% growth, respectively, between 2006 and 2008,” according to the story.
    KC's View:
    Not sure if it is a testament to the recession or the popularity of the Food Network, but one surprise in the story is the note that “two-thirds of respondents prefer to cook ethnic meals from scratch.” That certainly sounds like a shift worth paying attention to.

    Published on: October 20, 2009

    Business Week has a good piece about the power of consumer reviews on Amazon.com, and how the e-tailer has turned this one-risky innovation into a “new reality for the way consumers shop in the Digital Age: The Internet has become the world's greatest research tool, and consumers hardly buy anything anymore without first getting the skinny online. Some 70% of Americans say they consult product reviews or consumer ratings before making a purchase, according to an October 2008 survey by Penn, Schoen & Berland Associates, a research and consulting firm. Amazon has played a central role in the change in consumer behavior by being the first successful Web retailer to embrace consumers' views. ‘What we try to spend our time on is harnessing customer passion,’ says Russell Dicker, Amazon.com's senior manager of community.”

    The numbers are staggering: 15 years after Amazon began posting unvarnished consumer reviews, “more than 5 million consumers have posted tens of millions of reviews on Amazon.com, says the Seattle company.”
    KC's View:
    Part of being viable online is being willing to create an environment for this kind of consumer interaction, and accept the notion that people aren’t always going to say nice things. You can deny the fact that this kind of consumer engagement exists, or you can embrace it. Seems to me that this really isn't a choice, since it amounts to choosing irrelevance or relevance.

    Published on: October 20, 2009

    USA Today reports on planned new US Food and Drug Administration (FDA) regulations that will require that oysters harvested during warm weather months be “post-harvest processed” to kill the deadly bacteria vibrio vulnificus, which is more evident in osyeres harvested between May and October. As a result, oysters will become harder...though not impossible...to find during the summer.
    KC's View:

    Published on: October 20, 2009

    • Bob Hermanns, the former president/CEO of Associated Grocers of Seattle, as well as a former senior executive at Weis Markets, Lucky and American Stores, as well as Shopeaze.com, will become the director of the Food Industry Management Program at the University of Southern California (USC).

    Hermanns notes that he “was a student in the Food Industry Program and graduated from the USC with an MBA.  This unique program has a history of 51 years at USC and enjoys the enthusiastic support of the retailer and supplier community.  I am looking forward to sharing my career experiences with future leaders in the food industry.”

    The Food Marketing Institute (FMI) announced yesterday that Craig Herkert, the new president/CEO of Supervalu, has been elected to the FMI board of directors.
    KC's View:

    Published on: October 20, 2009

    Ahold said this morning that it had a total third quarter sales increase of 4.3 percent to the equivalent of $9 billion (US). US sales for the company were reported to be up 5.2 percent, while in Europe they were up 3.1 percent.
    KC's View:

    Published on: October 20, 2009

    Lewis Golub, Price Chopper’s former chief executive officer and chairman of the board of directors, died Sunday at age 78, after a long battle with amyotrophic lateral sclerosis, or Lou Gehrig's disease.

    He was eulogized by his cousin, the company’s president/CEO Neil Golub: ““Lewis Golub was more than just a great businessman. He was a truly loving and caring person who believed deeply in family and community service. His values are a big part of our corporate culture today.”
    KC's View:

    Published on: October 20, 2009

    MNB had a piece yesterday noting that Whole Foods CEO John Mackey gave a speech talking about his notion that capitalism needs a brand makeover, with companies and executives doing a better and more responsible job to represent the positive facets of capitalism.

    One MNB user wrote:

    So who are the good guys and who are the bad guys?

    We cannot continue to ship jobs to foreign countries, reduce insurance benefits, lower salaries, increase the pay and benefits of executives, pay off lobbyist and politicians and expect to have a thriving consumer driven economy when we have continued to drive the consumer into the ground for the benefit of the rich.

    Walmart changed the capitalist equation by trying to be a cheap as possible in every way shape and form. They have put thousands of businesses under, pay low wages, low benefits, and buy from the cheapest source possible. Knock off name brands the took decades the evolve.

    We are not thinking right to pay executives millions and workers peanuts. “60 Minutes” last evening had a great story about a bred company in CA where everybody gets the same pay. Hows that for a new philosophy? Or another company owned by the employees and run as a democracy!


    I’m not sure that paying everybody in a company exactly the same is the best definition of capitalism, nor that companies should be run as democratic entities. But certainly there is a major disconnect in a lot of companies between management and labor, and it may be untenable.

    MNB user Jerry M. Lawson wrote:

    John Mackey just continues to make good sense. It is becoming more and more obvious why they are succeeding as a company. I hope he continues to share his thoughts with everyone.

    Another MNB user wrote:

    If folks are skewed negatively on the topic of capitalism, it is perhaps because the bad dudes and their greedy actions have touched us all of our lives and operations and commerce SO very  impactfully and on such a scale that the restrained good citizens of capitalism seem more the exception rather than the rule.  The behavior of the unfettered illustrates the need for controls, regulation, fettering.  They are protections for safety and order much like the rules of the road protect and order us all and keep commerce humming.

    And still another MNB user chimed in:

    The problem with Capitalism is that it is really Crony Capitalism as practiced today. Via lobbying (legalized bribery) corporations are given enormous tax breaks and they make government agencies create regulations that allow them to break or go around the rules. When workers want fair wages its called socialism. When the upper management pays themselves huge salaries --even when they are running the company into the ground-- its supposed to be acceptable because its "capitalism". John Mackey is correct that profits are the by product of focusing on service. This is a basic human trait that is missed in many of today's corporate cultures. I wish there were more leaders like him in business. Wall Street would rather embrace a cactus than John Mackey's ethics because they do not believe they would be so wildly wealthy without their current practices! They caused this severe economic downturn with credit default swaps, etc. and we the people bailed them out last year for their greed. Notice the disconnect between what the voters ask of their elected officials and what the corporations request. Why do the corporations get what they want? They have the money to give the politicians either through lobbying or campaign contributions to influence policy. Given this, what reasons do we have to like capitalism as it is currently branded? Let John Mackey's successful formula be applied to other corporations and then some day we will be able to take the can of Capitalism off the shelf and find a healthy alternative inside!

    And, from another MNB user:

    I really think people may be confusing corporatism and capitalism. Capitalism is good. Corporatism when not serving the people is bad.  Companies are currently  given more rights than people. For example, if a person kills someone…then they are subjected to a death penalty or life in prison…if a company kills someone, with knowingly tainted products, they just pay a fine or file bankruptcy.




    Regarding the new battle over book prices between Walmart and Amazon, MNB fave Glen Terbeek wrote:

    As is happening with books and other categories, the internet will push (is pushing) prices on nationally branded products to the lowest common denominator.  This should be considered a real threat by all supermarket operators.  It will be harder and harder for traditional retailers to compete successfully on these well respected items alone.   In fact if they don't differentiate in other ways, they will probably go the way of Crown Books.

    This lowest common denominator pricing by retailers will put so much cost pressure on the manufacturers that they will start to use their current trade dollar expenditures to go around their current retailers to reach their targeted end consumers directly.  They will do this using a "consolidating shopper's agent" that connects the shopper with the products they want.  The agents will charge the manufacturers a "connection fee" just like Fed Ex or UPS do; the agents won't  make money by buying and reselling nationally branded items, or getting more trade money from the manufacturers.  

    After all, this only makes sense.  First, the manufacturer will then take all of the risk/rewards of marketing an item, including its price and availability; while the agent will connect their customers to any item the manufacturer creates demand for.  And second, the manufacturers will be able to divert trade marketing dollars to consumer marketing dollars.  These joint marketing dollars will become much more efficient and effective for the manufacturer as a result.  After all, the finished manufactured cost of most nationally branded products is approximately 20% of the retail price; in other words, 80% of the retail price currently goes to marketing, logistics,  administration, and profits for both the retailer and the manufacturer.  There is quite a bit of redundancy and mass vs. focussed marketing waste in the current model.   This  hugh amount of money will be rationalized by the manufacturers,  shoppers and their agents in the future, as lowest denominator pricing created by the internet continues to develop.





    Regarding Amazon Fresh, which was described on MNB yesterday, one MNB user wrote:

    I immediately went to their website. This is amazing! If they had it in my area, I’d try it in a heartbeat. I love the blog area – the writer is honest and doesn’t use retailer-lingo – explains things simply & in a way you would want them to be explained if you were a customer, like ‘We’re charging a $5 fee for orders under $30 because realistically we lose money on shipping those orders. It doesn’t cover all the cost, but it helps…’ I so appreciate the honesty and transparency. If they follow it up with high quality products as their “foodies” advertise hand-selecting… wow.

    They have personalized the shopping experience like I have never seen done by a retailer before – like a blog mixed in with the product selection. Example -- there were some mushrooms available with this in the description beside it: “I recently had a simple but delicious preparation where a variety of mushrooms were sliced, coated lightly with olive oil roasted on a cedar plank until just tender and topped with a seasoned salt - just delicious.” Makes me want to try some… great way to get impulse orders of not just that product but the supplies you don’t have (though in the Northwest those are kind of staples for Salmon) by adding that personal touch and simple preparation recommendation.

    Looks like they need to expand their personnel – it doesn’t look like the blog area is able to be maintained quite regularly yet. I’m excited to watch this develop, though.


    Music to their ears, I’m sure.




    One other note.

    I got a half dozen emails yesterday from people who have shopped in or have relatives who live near the Marketplace store in Wisconsin where a bear walked in and went straight to the beer cooler.

    Apparently it is quite a store. And nobody seemed surprised by the idea that a bear was walking the aisles.
    KC's View:

    Published on: October 20, 2009

    In the American League Champion Series, the Los Angeles Angels defeated the New York Yankees 5-4 in 11 innings; the Yankees now have a 2-1 lead in the best-of-seven series.

    In the National League Championship Series, the Philadelphia Phillies beat the Los Angeles Dodgers 5-4, and now has a 3-1 series lead, needing just one more win to go to the World Series.

    Meanwhile, in Monday Night Football action, the Denver Broncos defeated the San Diego Chargers 34-23.
    KC's View: