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    Published on: January 14, 2010

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    Hi, I’m Kevin Coupe and this is MNB Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.

    Okay, everybody else seems to have weighed in on the Jay Leno - Conan O’Brien - NBC late night controversy. So now it’s my turn...especially because I think the whole mess teaches us a lot about strategic vs. tactical thinking.

    To be clear, I really don’t care much when any of these programs get aired. Given a choice, I think that “The Daily Show” with Jon Stewart and “The Colbert Report” are a lot funnier and smarter than Leno or O’Brien. I also think Letterman is funnier, though in my book, he still isn’t as funny as Stewart and Colbert. The other guy I find to be generally hysterical, but who I never watch because he’s simply on too late, is Craig Ferguson. And let’s face it - none of them are Johnny Carson. And if you’re too young to know who Johnny Carson was, or you never saw him, all I can say is - keep it to yourself. And go rent some DVDs.

    However, that doesn’t mean I don’t have an opinion about this whole mess. Not surprising, I guess, since I generally have opinion about everything. So here goes...

    As I understand it, this is how the situation played out. Four years ago, faced with the possibility that Conan O’Brien, who occupied the 12:35-1:35 am time slot on NBC, might leave the network when his contract ran out, NBC decided to avoid any succession controversies by promising him that he would inherit the “Tonight Show” from Jay Leno in mid 2009. The feeling was that by that point Leno would be almost 60, and it would be time to bring in fresh blood and attract the younger audience that O’Brien had.

    As it grew closer to the deadline, however, the suits at NBC got nervous. After all, Leno’s “Tonight Show” was in first place, and they began to worry that once Conan replaced him, Leno might start a competing show at another network. So they hatched another plan - they decided to ‘remake the face of television’ and give Leno a show weeknights at 10 pm. The network that had for so many years used that hour for prestige dramas such as “Hill Street Blues,” “St. Elsewhere,” “Miami Vice” and “ER” decided that this would keep Leno at at the network and save money, since it could produce a week of Leno shows at 10 pm for less than it cost to make a single one-hour drama. These new efficiencies, they told us, would create new paradigms for network television.

    What it did, however, was establish new paradigms for public humiliation and ratings disasters.

    Leno’s ratings at 10 pm were abysmal. That created problems for the local newscasts that followed him, which saw their ratings sink. And Conan’s show lost many of the viewers who watched the Leno ‘Tonight Show,” in part because he appeals to a different demographic, and in part because fewer people watched NBC because once Leno came on at 10, it was like dominoes falling.

    NBC had promised to give this experiment a year to see if it worked out. Under pressure from local affiliates, they only gave it seven months. This week, they announced that they would return Leno to the 11:30 pm time slot for a half-hour show, and would push Conan’s one-hour “Tonight Show” back to 12 midnight. As of this writing, Conan is resisting the plan, saying that the network is ruining a franchise that is more than five decades old and arguing that by changing the rules of the game, they essentially are breaching his contract.

    The betting seems to be that Conan will reach a settlement with NBC and eventually do a late night show on Fox, which doesn’t have one. Leno will re-take the “Tonight Show.” And nobody really knows what will happen to the ratings, which have been dominated by CBS and Letterman...who seems to be luxuriating in the whole disaster because it was he who got out maneuvered by Leno for the “Tonight Show” years ago when Carson decided to retire.

    Now, let’s be clear. Nobody should feel sorry for any of these guys. This is rich people fighting with richer people. But there are some good lessons to be learned here...

    It can be argued that in the original construct, NBC actually was thinking strategically. Create an orderly transition, position the “Tonight Show” for a younger generation, and give the whole scenario plenty of time to play out.

    But what NBC lacked was the courage of its convictions, which created tactical mistakes. Once the decision was made they should have stuck with it. But they didn’t really believe in the strategy, which is why they were desperate to keep Leno. And then, ignoring the entreaties of affiliates that did not want Leno at 10, they decided to make a move that ultimately was about efficiency, not effectiveness. They said they were remaking the face of television, but that was for the headlines. They really wanted to save money, and they did not calculate the consequences, the impact on other parts of their business. Which is why, with the exception of Sunday Night Football, NBC does not have a single hit show.

    In an excellent column in yesterday’s Washington Post, Steven Pearlstein put it best: NBC, he wrote, demonstrated a “mind-set that puts short-term profit over long-term value creation,” a mindset that is “ emblematic of just about everything that is wrong with American business these days.”

    And the wonderful David Carr, in his New York Times column, wrote: “The message to the younger talent is one thing — wait for a turn that may never come or may be taken back at any second — but the message to younger audiences is even clearer: a legacy industry will default to legacy assets and ride them down to the bitter end.”

    These are excellent lessons, whatever business you happen to be in.

    Long-term value creation always is harder than short-term efficiencies, but to quote Tom Hanks in “A League of Their Own,” it is the hard that makes it worthwhile. In the end, if you don’t engage in value creation, your business is going to collapse from a lack of foundation.

    And while legacy assets certainly have their place, one has to know when to abandon them, or relegate them to a less important role. You have to be willing to create the future by embracing change, as opposed to yearning for the good old days when things were different.

    And finally, you have to have the courage of your convictions. Having laid out a strategy, you have to believe in it and give it time to work. There were too many moving parts, collateral problems and business issues to know whether Conan’s show was going to be successful. Ultimately, the NBC executives simply did not believe in their strategy, did not believe in their vision. So they blinked, waffled and caved...and ended up creating a bigger mess than they started with.

    You start to think that maybe Art Fern is running NBC.

    For MNBeat Radio, I’m Kevin Coupe.
    KC's View:

    Published on: January 14, 2010

    Delhaize Group said that its fourth quarter sales were down 10 percent to $6.95 billion, largely because of declining food prices and an economic recession in the US that affected its stores here; US same-store sales were off 2.8 percent for the quarter.

    Responding to the economic issues, the company said that it will integrate its US support services as a way of being more efficient, and will close 15 unprofitable Food Lion stores and one Bloom store.

    “In 2010, we will start the implementation of our New Game Plan with special focus on increased price investments and other sales building initiatives, accelerated store openings and remodels, and more cost reductions,” CEO Pierre-Olivier Beckers said in a statement. “In this context, we are implementing a completely new U.S. operational structure with the creation of one integrated organization with common shared services. These changes will allow increased flexibility, better service to our local banners and major cost savings.”

    He added, ““All of these initiatives should position Delhaize Group to emerge from these difficult economic times not only as the highly profitable food retailer it is already today, but also as a much faster growing food retailer."
    KC's View:
    One of Delhaize’s advantages, it seems to me, is that the folks there understand that they cannot sacrifice effectiveness for efficiency.

    Published on: January 14, 2010

    Several retailers have gotten out front on relief efforts to responds to the 7.0 magnitude earthquake that struck Haiti on Tuesday, causing untold human and infrastructure damage.

    • Walmart announced that a $500,000 monetary donation to Red Cross emergency relief efforts in Haiti. The company is also sending pre-packaged food kits valued at $100,000 to Haiti at the request of the Red Cross. And, the company is providing a place on its website through which customers and associates can make donations to nonprofits that are also supporting relief efforts in Haiti.

    Business Week reports that “Publix Super Markets said Wednesday it will accept donations from customers and employees in Florida to help victims of the earthquake that struck Haiti Tuesday. The company also said Publix Super Markets Charities will give $100,000 to the relief efforts. The money will be sent to the American Red Cross for the Haiti Relief & Development Fund.”

    • The Seattle Post-Intelligencer reports that Amazon.com has placed a box on its home page that gives its shoppers the ability to donate money to Haiti relief efforts through charity Mercy Corps.
    KC's View:
    Bravo.

    Published on: January 14, 2010

    The Wall Street Journal this morning reports that new figures from the National Center for Health Statistics suggest that “34% of American adults age 20 and older were obese in 2007-08 while 68% were considered overweight or obese. In children ages 2 through 19, 17% were considered obese while 32% were considered overweight. Broadly, the figures are similar to rates seen in 1999-2000.”

    However, analysts say that there is some small good news - that the rates of increase seem to be slowing a bit.

    "I see this as relatively good news," William Dietz, the director of the division of nutrition, physical activity and obesity at the US Centers for Disease Control and Prevention (CDC), tells the Journal. "It suggests we've halted the progression of the epidemic."
    KC's View:
    Halting the progression is one thing. Reversing the trend is something else again. Too much optimism would seem to be misplaced.

    Published on: January 14, 2010

    Marketing Daily reports that Laura J. Sen, the president/CEO of BJ’s Wholesale Club, told attendees at the Cowen and Company 8th Annual Consumer Conference that she has “zero worries” that when the economy recovers, value-driven formats like hers will lose some degree of their consumer appeal.

    Sen told the conference that she believes that BJ’s positioning - focusing more on families than small business (which is somewhat different from the approach taken by competitors Costco and Sam’s Club), using smaller locations and being more liberal in the acceptance of coupons and credit cards - will serve it well when the economy gets better.

    Besides, she said, “ "Consumers are still being very careful ... once you're paying $2.29 for chicken, you're not going to go back to paying $2.99."
    KC's View:
    It is smart of BJ’s to be focusing on the things that make it different from Costco and Sam’s. When fighting with bigger, more powerful competitors, it always makes sense to exploit differences rather than play by their rules...

    Published on: January 14, 2010

    Tesco-owned Fresh & Easy Neighborhood Markets has opened three new stores in Fresno, including what it says is the first new grocery store in the downtown area.

    “Fresh & Easy is excited to be a part of the revitalization of downtown Fresno because everyone deserves access to fresh, wholesome food at affordable prices,” said Tim Mason, Fresh & Easy’s CEO, at the opening of the downtown location. “We are thrilled at the wonderful reception we have received from our new neighbors in this wonderful community.”

    The company emphasized that it has created 125 jobs in the Fresno area with its recent efforts there.
    KC's View:

    Published on: January 14, 2010

    When Whole Foods opens a new store in Darien, Connecticut, in May 2010, the parking lot will include premium parking spaces for hybrid cars and a pair of free charging stations for electric-powered cars - initiatives not often seen in this part of New England, though much more familiar in places like California and the Pacific Northwest. It is part of a broader approach to environmental awareness that typifies Whole Foods’ approach.

    "This will be the first one in the (Northeast) region," said Christopher Auricchio, a company spokesman.
    KC's View:
    I know a little bit about this location because it is quite literally around the corner from my house and a couple of blocks from my office - I won’t be needing the electric car charger because 1) I don’t have an electric vehicle, and 2) I can easily walk to the store.

    The interesting thing about this new Whole Foods is that this store, along with a new Fairway store being built in nearby Stamford, is going to raise the level of competition in this area. We have Stew Leonard’s, and we have some good independents such as a Palmer’s store and a Grade A ShopRite. But we also have a poor Shaw’s store and a pitiful Stop & Shop.

    Not sure how many electric cars there are here, but putting in free chargers sends a very clear message. It is a brand-building exercise that highlights what the company perceives as its differential advantages.

    Published on: January 14, 2010

    The Financial Times reports this morning that Hershey may in fact be planning to offer a bid that would compete with the $16.5 billion hostile acquisition effort being pursued by Kraft. While Cadbury has not solicited the Hershey bid, it has said that it would be more open to an offer from that company than it is to Kraft’s bid, which it has said is inadequate.

    The paper also notes that Italian chocolate manufacturer Ferrero has decided not to pursue Cadbury.
    KC's View:

    Published on: January 14, 2010

    Walgreen Co. said yesterday that it is acquiring the company-owned Snyder’s Drug Stores in Minnesota. Terms of the deal were not disclosed.

    Twenty-five locations are affected by the sale. According to the announcement, “Walgreens will acquire and continue to operate certain locations and anticipates staffing most of these store positions with Snyder’s employees. At other locations, Walgreens will purchase the prescription files and transfer them to nearby Walgreens pharmacies.”
    KC's View:

    Published on: January 14, 2010

    Donald Goerke, a longtime Campbell Soup executive, died over the weekend at the age of 83. His contribution to the industry: he helped to create both the SpaghettiOs and Chunky Soup brands.
    KC's View:

    Published on: January 14, 2010

    ....will return.
    KC's View:

    Published on: January 14, 2010

    Thanks to the Stamford Advocate for doing a nice piece about the new book, “The Big Picture: Essential Business Lessons from the Movies,” by Michael Sansolo and Kevin Coupe.

    To check it out, click here > .
    KC's View: