business news in context, analysis with attitude

Published on: May 15, 2012

by Michael Sansolo

Twenty years ago next week, Johnny Carson signed off "The Tonight Show" for the final time. For a portion of the MNB audience that’s your cue to say, “Wow, has it been that long?” For the other portion of the audience - possibly the majority - it’s time to say, “Who”?

That’s how the world keeps changing. Carson was the undisputed king of late night television (in the US, that is.) He is still considered so iconic that he remains the standard by which Letterman, Leno, Stewart, and the rest are judged and frequently found lacking. Yet an incredibly large portion of the American population - including nearly everyone under the age of 35 - has no personal recollection of ever seeing him perform on live television.

Carson is in the news this week, thanks to an excellent PBS documentary about him on the "American Masters" series that aired last night in most markets. Also in the news - Mark Zuckerberg, who turns 28 this week while at the same time the business he founded, Facebook,is scheduled to go through an initial public offering (IPO) that will raise billions of dollars for the company. (Hopefully no part of the MNB audience will ask “who”?)
The convergence of these unrelated events prompts some serious questions about business and the creativity it takes to stay on top.

Carson ruled in an era where America’s late night choices were limited. Sure, Carson had some competition, but he never really was challenged because he was always more topical and funnier. Plus, he was essentially an institution in a way that few things are today. I’m young enough to remember when it seemed special that I was finally old enough to get to watch Carson and mature enough to understand what he was saying. The competition never had a chance.

Today, America can select between thousands of channels at bedtime, with offerings ranging from pawn to porn. And that’s just on television. The range of choices is available on line in even greater numbers.

The parallels can be found in how America shops. The choices are broader and more varied than ever and the notion of an institution is nostalgic. No doubt there was a time when shopping choices were passed generation to generation just as there were once families devoted to Fords or Chevys. Today competition comes from everywhere and the choice of where to shop can change product by product or simply by day of the week.

Beyond that, reputations and institutions are made and destroyed instantly and that is where Zuckerberg’s world comes in. In a Facebook world, everything and everyone is important - it is up to the individual user to assign priorities and set the agenda. In Carson's world, the entire country would talk about what he said was important - he set the agenda. (It was suggested on the PBS documentary that Carson and Walter Cronkite were perhaps the most influential Americans of their generation. If they said it was important, it was. When Cronkite criticized the nation's Vietnam policies, and when Carson started taking comedic potshots at Richard Nixon, it signaled the end for both.)

But let’s look beyond social media and its implications as we consider the power of creativity. While social media existed before Facebook, the web community was, and is, new in so many ways. If you read about the birth of Facebook you see that the inspiration wasn’t to improve MySpace, but rather to create a new way to link to friends around the Harvard University campus, where Zuckerberg was studying. In other words, Zuckerberg was free to create because he wasn’t encumbered by the past.

Last week I wrote about the importance of basics because I think they do matter. Carson may have had an institutional advantage, but his real edge was that no one combined comedy, entertainment and current events better. (His "Tonight Show" was something very new, vastly different from the versions done before him by Steve Allen and Jack Paar.) Carson's age was never a limit; in fact, he was as hip as any comedian, even in his 60s when he stopped performing. (Remember, Sam Walton was in his mid-40s when he opened the first Wal-Mart.) For Zuckerberg, inexperience was an advantage. Not knowing limits, he just kept breaking rules as he went.

So yes, keep working those basics because you must. Then take a second to think about Johnny Carson and Mark Zuckerberg and ask yourself what are you doing to maintain excellence or smash the status quo.

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: May 15, 2012

by Kevin Coupe

As noted here on MNB, "Wegmans: The Musical," a student-created show about sibling rivalry between two brothers who work at competing supermarkets, played to an enthusiastic and standing-room-only audience last Thursday night for its one-time only performance at Algonquin Regional High School in Northborough, Massachusetts.

Well, an MNB user passed along a link to an online video that features part of the show...and you can see it here. Or click on the pic at right.

What is interesting - and Eye-Opening - to me is not just the affection that the actors and the audience seem to feel for the chain, but also the knowing laughter that seems to accompany every joke - people "get it" because they are extremely familiar with it.

That level of intimacy is a powerful weapon in any competitive battle. And when the folks at Wegmans hear the songs and jokes and the laughter, they must think to themselves, "They're playing our song."

Published on: May 15, 2012

The New York Timeshas a story about how a bunch of IBM engineers came up with a new computer program designed " to make shedding pounds as geekily fun as playing Xbox, but with an added incentive: the opportunity to win cash.

"The idea for this program, which recently won patent approval, was simple: participants would be rewarded for eating well and discouraged from eating poorly. So a salad for lunch could mean winning 50 cents. Pecan pie? Forget it.

"The invention is an example of how gamification — applying game techniques and psychology to influence behavior in the real world — is affecting the health arena. Eventually, IBM hopes to license the system to companies or insurers as they seek to improve employees’ well-being."

Published on: May 15, 2012

The Des Moines Register reports that Tom Vilsack, the US Secretary of Agriculture, told the Greater Des Moines Partnership yesterday that "US beef consumption has remained strong despite attacks questioning the safety of lean trimmings in hamburger."

“We haven’t really seen that much of a drop, maybe a small one-tenth of one percent kind of drop, not significant,” Vilsack said.

Vilsack said that consumers and school districts can make their own decision about the use of the trimmings, which have become popularly known as "pink slime." He said that the trimmings are safe, lower in fat and make meat cheaper.

“Eventually, people are going to be looking at a variety of factors as they make decisions in tough economic times. School districts may be faced with tight budgets, and if they’re faced with tight budgets, they have to make tough decisions in terms of this,” Vilsack said.

Published on: May 15, 2012

The Wall Street Journal has a story that points to a cultural change that is likely to affect how marketers pitch their products and services, noting that even men who do not make particularly good husbands "are proving themselves to be rock-solid fathers. Even a casual observer of American family life knows that dads now drive kids to more doctors' appointments, preside over more homework assignments and chaperone more playdates.

"Research confirms the rise of co-parenting. A recent U.S. Census Bureau report found that 32% of fathers with working wives routinely care for their children under age 15, up from 26% in 2002. Popular culture has noted the trend, too. Involved regular-guy dads are now commonplace in commercials. In one AT&T ad, a dad diapers his baby while talking sports on his phone with a buddy.

"Whether it is because today's men were raised amid the women's movement of the 1970s, or because they themselves experienced the costs of that era's absent fathers, there is little question that the age of dads as full partners in parenting has arrived."

However, the Journal writes, "As men try to be better dads, they are running into the familiar difficulty of balancing kids, career and marriage - a problem that women have been trying to manage since the 1970s. With men as with women, it is marriage itself that often gets short shrift." In addition, the story says, "The connection of marriage to parenthood also seems to be changing. Marriage rates are at historic lows, and a new report from the National Center for Family and Marriage Research shows a small but definite rise in the decoupling of fatherhood and marriage."

You can read the entire story here.

Published on: May 15, 2012

• In the UK, the Daily Mail reports, some 5,000 Tesco executives and store managers have been informed by CEO Phillip Clarke that "their annual performance-based rewards would be dramatically reduced following a dire year." Clarke said that compared to last year, when they received 100 percent of their potential bonuses, this year they will get less than 17 percent.

The story says that the managers are "outraged," though not surprised at the bonus award, said to be the lowest at Tesco in two decades.

Published on: May 15, 2012

IGA yesterday announced that it has joined forces with Wounded Warrior Project (WWP) in its second annual IGA Exclusive Brand national cause marketing initiative. During this national campaign—running in participating IGA stores from Memorial Day Weekend (May 28) through Labor Day weekend (Sept. 3)— a number of WWP co-branded IGA Exclusive Brand products will be available for purchase in participating IGA stores. By fall of this year, IGA plans to donate up to $200,000 to WWP.

According to WWP, "Nearly 47,000 of our nation's servicemen and women have been physically wounded during the current military conflicts, with hundreds of thousands more estimated to be recovering from post-traumatic stress disorder, major depression and brain injuries. WWP assists injured service members and their families through a holistic approach to their recovery, providing programs and services to aid their physical rehabilitation and improving their mental health and well-being."

Published on: May 15, 2012

• In the UK, Retail Week reports that online retailer Ocado is introducing a line of private brand products, which "includes 450 of its 600 own label products, the majority of which are food, under ten categories including meat, poultry, fresh produce, eggs, bakery, household and flowers. The retailer will increase the range further this year."

Published on: May 15, 2012

• Aldi said yesterday that it "is preparing to enter the Houston market with 30 new stores over the next three years. With this expanded Texas footprint, ALDI is expected to bring 400 jobs and an investment of over $100 million of capital expenditures to the local community. ALDI currently has more than 1,200 stores in 32 states, including 37 stores in Texas, most of which are located in the Dallas/Fort Worth metro area."

• Two years after stating its intentions to open a store in the Detroit metro area, Whole Foods yesterday broke ground for the 21,000 square foot store, its sixth in Michigan. The unit is slated to open in early 2013.

• Reuters reports that "French retailer Casino Guichard Perrachon took a key step on Monday in its plan to take control of Grupo Pão de Açúcar, stripping its estranged partner in the company of the right to name most of the board members at Brazil's largest retailer."

Published on: May 15, 2012

• Not a good week in the executive suite, as the New York Times reports that Richard M. Schulze, the founder and chairman of Best Buy, has resigned from the company after an internal audit discovered that he knew - but did not reveal to the board - that the company's CEO, Brian Dunn, "violated company policy by engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment."

Dunn resigned under pressure last month.

The move at Best Buy comes as Yahoo's CEO, Scott Thompson, was forced out of his job at the company - without severance - after an outcry over a falsified resume that misstated his academic record.

Published on: May 15, 2012

Fascinating email from MNB reader Amanda Malusky Krauss:

I’ve found the commentary you’ve received in response to the Walmart bribery investigation to be interesting.  I am a forensic accountant, and therefore my job is to perform investigations of this type.  I also have experience in the grocery industry, hence why I follow MNB – working at Dorothy Lane Market during high school and college, and then auditing a large grocery chain when I started out in the accounting industry. 

Yes, bribes are a way of doing business in certain other countries.  Because of this, companies have to figure out whether they want to do business in those countries, and if they can do so without violating the Foreign Corrupt Practices Act.  A company considering doing business in another country, and certainly a company of Walmart’s size, would have fully vetted the nature of getting business done in the country before entering it, and decided whether it could operate in that country without violating the FCPA. 

The FCPA relates to bribery of foreign officials, and therefore does not cover the U.S. activity some of your readers questioned as being the same as bribery.   But there are numerous federal and state statutes that do cover such U.S. activity, and associated investigations and prosecutions. 

Regarding what constitutes a bribe, the FCPA is pretty clear in defining this point.  I agree that the cover-up is what makes this worse, and U.S. authorities won’t look favorably on the fact that Walmart covered up instead of self-reporting.  Also, not only does it appear that Walmart violated the FCPA’s anti-bribery provisions, but they disguised the payments in the accounting records and therefore likely violated the FCPA’s record-keeping provisions as well.

Like I keep saying, they got Al Capone for tax fraud.




Got the following email regarding yesterday's mention of a Fortune piece about Coke CEO Muhtar Kent:

As a former Coke employee, I read the Fortune article and concluded this is another in a long line of “Coke-favorable” articles that Fortune has written over many years. With the stock price continuing to grow and a possible stock split on the horizon, it is easy to have a “Coke and a smile” when reading Fortune articles.

I am very impressed that Muhtar is professing the need for cash management. Turning off the lights on the 25th floor is important, but I’m hopeful that same attitude is applied to a number of other symbolic areas, like who uses the company aircraft, Director remuneration for services rendered and other cash-burning areas recently identified in the 10-K filing.

What mystifies most who leave Coca-Cola for more entrepreneurial roles elsewhere is the cost of process that snuffs out employees who have innovative ideas. Or, worse, looking first to shift costs to the bottlers, many of whom suffer the cash impact first with erratic fuel pricing and imposed taxation levies (outside the US). The most innovative business unit in Coca-Cola has been The (now former) Minute Maid business unit, who have managed to grow non-sparkling business over the last 30 years by operating leaner and with less bureaucracy than Atlanta. It’s amazing what Minute Maid colleagues got done by not being under the process-centered, risk averse approach taken in Atlanta. For example, Minute Maid innovated Orange Juice flavors, packaging (as far back as 1988) – were first in Coca-Cola to sell retailers like Toys R US and Target - and led retailers in the area of efficient shipping and billing practices. All of which contributed immediate cash to The Minute Maid business.

On the “respect for cash” point: understanding cash is a huge issue that goes well beyond Coca-Cola and the corporate world. There is very little of this taught in our schools. Our kids have such a limited understanding of cash. ATM cards & easy credit availability, combined with parents who can’t say “no” – have created a culture where kids just simply don’t understand cash 101.  We all have friends / colleagues / relatives that can’t manage their cash because they were never trained to do it.  I have talked to my son’s school principal about adding courses on cash management. He agrees with the need but they haven’t made it a priority. My son thinks I’m a bully because he’s getting his “training”, which I mention only because it’s an issue when he can’t get confirmation through the school as to the messages I’m trying to leave with him.

I’d love to see Coca-Cola drive an initiative to teach cash management to our youth. As reported a few days back, Joe Tripodi has linked Olympics to youth via EPS (or as you put it Social Shared Value). To me, Coca-Cola linking the “respect for cash” initiative to one focused on youth development might not lead to a bunch of kids holding hands on a hilltop. However, it would lead to our kids understanding the importance of managing cash and might also stimulate parents to focus upon this as well.




On another subject, an MNB user wrote:

I am not at all surprised by the NCL complaint about the NuVal system, but I think the only real issue here and the one the complaint sort of touches upon but does not come out clearly and state is all about education.  I was fortunate enough, in a previous position, to be part of a group reviewing the NuVal system for use in our stores.   Through that education we were given a true understanding of the simplified value/purpose of the system for the consumer: to compare like items to each other, providing an easy to use comparison tool to select the item with the best balance of nutrition.  The system, as I understand it, was never meant to compare Donuts to canned peas but rather to compare canned peas to other canned peas as well as to frozen and fresh peas.  This IS valuable to the consumers but it is not very well explained to them….the how to use it.  I believe there is probably a relatively easy to implement solution to this but I will leave it to NuVal to figure that out.

I think we are fooling ourselves if we actually think the FDA will, in a timely manner, develop a system that will be acceptable to all and be overly influenced by one Lobbyist group or another.  I have reviewed many systems and find this one to be well done, certainly there is always room for improvement.  In that light I am also impressed by the fact that the NuVal system is updated periodically to revise their algorithm to incorporate new learnings on Nutrition, again something a privately held company can do quickly and seamlessly.  If the FDA had to update their systems or recommendations it would take numerous committees and congressional hearings and numerous years, by which time the “new” learning would be outdated and proven false…..in fact I am still not sure if Caffeine is good for me or bad for me.

Another MNB user wrote:

I am not going to guess for what reason NCL is complaining, but this goes straight to the heart of the issue of transparency, and how I, for one, argue that *sometimes* it’s best that things remain confidential in order to save the people from themselves. If you make that algorithm public, then it will inevitably become corrupted by industry, special interests groups, and the public at large. It would probably also lead to the spawning off of a variety of alternative algorithms/scores that would only serve to confuse people even more.




Finally, I wrote yesterday - after taking note of the fact that 7-Eleven is introducing a low-cal Slurpee - that I've never had one, and wondered if I'm in a minority.

One MNB user wrote:

Probably not the only person to never have a Slurpee, but close. You may have had a Slurpee by a different name. Have you had an Icee, a frozen coke, a DQ Freeze? They go by many names. Never been one of my favorites, but then I don’t do Kool-Aid either. Having a Lite version probably won’t entice me to start drinking them, although having a diet coke version might.

And MNB user Paul Schlossberg wrote:

I too have never had one. But if you ever had a frozen margarita, you're probably in a related sub-group of the club - alcohol-based. It's been around since at least the 1930's.

Oh, I've had margaritas. Lots of them. Often while nibbling on sponge cake. Or smelling the shrimp as they come to a boil...

Cue the steel drums...