business news in context, analysis with attitude

Published on: April 3, 2012

by Michael Sansolo

To my mind, competition and the drive for advantage is never a bad thing. It’s probably the single most potent force driving most companies forward. It makes us better and stronger and provides vision for the future.

Yet sometimes there are competitive issues that are best left unmentioned; times when saying nothing speaks far louder than an amplified announcement.

Last Thursday I boarded a plane from Washington to San Francisco, and I would be willing to bet that there was a common thought among many of us in the cabin. Just a day before, the news was filled with the story of a Jet Blue pilot losing it - he became delusional and began yelling about Al Qaeda and other things that are especially troubling at 35,000 feet. Thanks to a quick thinking co-pilot, some able passengers and an extra pilot on board, the Jet Blue flight landed uneventfully and the pilot was carried off.

Ambling down the jet way, I couldn’t help but think about the incident. I have no fear of flying, but I am aware that I am in a heavy metal tube soaring miles above the earth, jammed in with all manner of humanity. Intellectually I understand how the entire thing works, and I prefer to stop thinking about it right there.

Sadly, someone on the United Airlines crew thought differently. As we prepared to push away from the gate we heard the final boarding announcement with a twist. Whoever was speaking reminded us that United “unlike our blue tailed competitor” spends a little extra on screening pilots. That little bit more, he said, may make our tickets cost an extra $10, but it’s worth it.

That’s one pretty obvious dig at low-fare Jet Blue. And considering that I often talk about the need to emphasize value rather than price and the importance of adding personality to the every day job, you might think I liked this little jab. But I didn’t and, by the way, neither did all the passengers around me.

First, the joke was at the expense of mental illness. Had the Jet Blue pilot suffered a heart attack or stroke I doubt that anyone would have mocked it. So on humane reasons alone, I don’t understand why a mental breakdown deserves any less sympathy. (Someone at United needs some sensitivity training.)

More to the point though, I don’t think value comes from mocking an incident when it gnaws at basic customer insecurities. For me, that creates a case where no one wins. The jab at Jet Blue wasn’t funny, reassuring or winning for passengers getting on a nearly six-hour flight.

Back in my newspaper days, I remember the rule that whenever there was an airplane crash our paper would lose all its airline ads the next day. No one airline wanted a reminder of the scariest part of air travel in front of passengers. Anxiety isn’t limited to one airline so it is the last place to find or build competitive advantage.

Like it or not, every industry has a spot like that, where the issues of price, service, convenience and more get overwhelmed by basic human emotions. Most of the readers of MNB are in the food industry and live with this daily. Whatever else happens in this industry, food safety looms over us all the time. The billions of meals provided safely week after week are easily overwhelmed by every food safety outbreak. Even when the problem is caused by human error it’s hard to use that to build competitive advantage because consumer fears of contamination easily spread from one company to another.

Sure, you can talk about your enhanced procedures and spell out how you care constantly. Talk about how you never have or never again will use “Pink Slime.” Just remember that both are a long way from pointing a finger at the unlucky operator who just ended up on the nightly news. There’s a time to talk and a time to be silent.

And that’s why I share the United story. Because there are a lot of public address systems - and now social media pages - out there and a lot of people who might find an opportunity to make an announcement that makes everyone losers. Make this a teachable moment because that’s cheaper than apologies and lost sales.

Besides, employees who understand how to do and say the right thing are a huge competitive advantage that speaks for itself almost constantly.


Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: April 3, 2012

by Kevin Coupe

An idea that’s time has come...?

There reportedly is a new company out in Silicon Valley that has come up with a new idea that could change the face of e-commerce through the delivery of what Stephen Colbert called “intercontinental ballistic munchies.”

The company and idea is called “Tacocopter,” and the idea is to allow people to order tacos via their smartphones, and then have unmanned drones deliver them to the customer by identifying their location through the use of the GPS system in their devices. You pay online, so all the Tacocopter has to do is drop the tacos off and fly off to make its next delivery.

Which sounds, once one stops laughing, actually like a really cool idea.

Except for one problem. According to various reports, US law makes such a system illegal; it is against the law to fly unmanned aerial vehicles for commercial purposes within US borders.

As opposed to, say, using them to drop bombs on foreign countries.

Which made me think. I wonder if we’d be any further along in the war against terrorists if we were dropping tacos - and maybe even burgers and fries - on these towns and villages instead of bombs.

(Think about it. Instead of destroying things and killing people, we just send them hot, salty fast food that they get totally addicted to. Either they drop their guns and decide to try to buy a McDonald’s franchise, or they keep eating and give themselves a heart attack. Either way, we win.)

I’m just thinking...

Published on: April 3, 2012

The Los Angeles Times reports that AFA Foods Inc., a ground beef processor jointly owned by Earvin “Magic” Johnson and private equity group Yucaipa Cos., has filed for bankruptcy protection, citing negative publicity over the use of Lean Finely Textured Beef, more commonly known as Pink Slime, produced in its plants.

According to the story, AFA said it was “faced with an immediate and unanticipated liquidity crisis" and, the Times writes, “was unable to pay vendors last week without a loan, which banks refused to provide.”

Pink slime was only part of the problem, the story says; AFA was said to be “straining with too much capacity and heightened competition,” and was “struggling to post a profit.”

As the Times reports, the US Department of Agriculture (USDA) has approved the use of Lean Finely Textured Beef for decades, though it was a federal regulator who came up with the term “Pink Slime” when writing a memo decrying its use. More recently, the Times writes, “Celebrity chef Jamie Oliver has been virulent in his attacks on the trimmings, denouncing them as unappetizing and unhealthy. The negative publicity quickly reached a crescendo, resulting in ground beef containing the trimmings to be pulled from school cafeterias, supermarkets and even some fast-food restaurants.”

For example, Reuters reports that “Wendy's Co says it never has used so-called ‘pink slime’ in its hamburgers and ran ads in eight major daily newspapers around the United States on Friday to let diners know that.” Wendy’s is just the latest in a series of companies to go public with its position.

"This controversy has dramatically reduced the demand for all ground beef products," says Ron Allen, the company’s interim CEO. "Almost all retail grocery stores have succumbed to public pressure to reduce or eliminate the sale of products including BLBT, as well as public requests to prominently label products containing BLBT."

Published on: April 3, 2012

The Houston Chronicle has a brief interview with Randall Onstead Jr., who as CEO is running the newly merged Winn-Dixie and Bi-Lo chains. Some excerpts:

How the industry has changed since he was CEO of the old Randalls chain... “Customers have changed. They're demanding better value, and supermarkets have had to respond. It's always been competitive, but it's even more so now ... it's a matter of giving customers what they want, whether it's value, the right product or location. It sounds simple, but it's the key to this business.”

His first steps... “I'm excited. I recently spent a week on the road going to 10 town-hall meetings talking to district and regional managers. It's been a while since I stood in front of managers and talked about our goals for the company. It reminded me of how much I love the business.”

Published on: April 3, 2012

The Wall Street Journal reports that Burger King is introducing a new, better-for-you menu in the United States, with additions that include salads, snack wraps and smoothies, all designed to expand its appeal and deal with the fact that it recently slipped behind Wendy’s in the burger chain wars.

"We found that consumers wanted a broader range of menu options," Steve Wiborg, Burger King's North America president, said in a prepared statement.

Published on: April 3, 2012

The Boston Globe reports that Dunkin’ Donuts is reformulating its bagel recipe , switching to one that “ will result in ‘artisan bagels’ that feature ‘a soft and chewy texture with bolder flavors’.”

According to the story, “The new artisan bagels are available in such ‘classic bagel selections’ as sesame, poppy seed, and cinnamon raisin, along with two new seasonal varieties --- sun dried tomato and pumpernickel. Dunkin’ Donuts said it has also introduced new reduced-fat artichoke spinach cream cheese bagel.”

In addition, Dunkin’ Donuts announced it is switching from Pepsi products to Coca-Cola beverages at its US restaurants.

Published on: April 3, 2012

Fast Casual reports that Chipotle, normally held up as a relative paragon of virtue and integrity within the fast food community, “ is facing scrutiny over its unwillingness to work with the Coalition for Immokalee Workers (CIW), an organization dedicated to improving the working conditions of tomato harvesters in Florida.”

The problem is that Chipotle has not signed an agreement that would have tomato harvesters pay a penny more per bushel, which CIW says would go a long way toward improving working conditions for people in the fields. But Chipotle says that its relationships with independent growers do as much to support worker wages as any signed agreement with the CIW.

CIW says that Chipotle’s stance is misleading, and that it should take the formal step of signing the agreement.

Published on: April 3, 2012

• The Chicago Tribune reports that “Express Scripts Inc.on Monday completed its acquisition of rival Medco Health Solutions Inc. in a $29.1 billion deal that could have major implications for Walgreen Co. The deal was announced after the Federal Trade Commission lent its formal approval after 8-month antitrust investigation of whether the merger would hurt competition in the pharmacy benefits management sector. PBMs administer prescription drug insurance coverage for employers and insurers.”

According to the Tribune, “For Walgreen, the nation's largest drugstore chain, the deal takes on added significance because of its ongoing spat with St. Louis-based Express Scripts over pricing. The two companies parted ways on Jan. 1 after they were unable to come to terms on a new contract that would cover more than $5 billion in business. As a result, Walgreen lost roughly 85 percent of the prescriptions it filled for Express Scripts customers through the quarter ended Feb. 29, contributing to a 7.6 percent slide in Walgreen's earnings.”


• The Wall Street Journal reports that Starbucks “plans to triple the size of its work force and network of shops in China over the next three years” - it currently has 500 stores and some 10,000 employees there.

Published on: April 3, 2012

• Target Corp. said yesterday that Jeffrey J. Jones II has been named as the company's executive vice president and chief marketing officer.

Most recently, Jones was partner and president of McKinney, a Durham, NC based advertising agency. Previous to that, he was an executive at Gap, Coca-Cola and Leo Burnett Worldwide, among other places.

Published on: April 3, 2012

...will return.

Published on: April 3, 2012

• In the NCAA Men’s Basketball Finals, Kentucky defeated Kansas 67-59 to win a championship that was the first earned by a team coached by John Calipari, and was notable because the team was made up almost entirely of freshmen and sophomores.

• The 2012 Major League Baseball Season begins tomorrow night.