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    Published on: June 12, 2012

    by Michael Sansolo

    I don’t know if corporations are people, but in so many ways organizations behave like living organisms, changing and evolving with the times, the challenges, competition. Sometimes that change isn’t all for the good; but sometimes you have to deal with reality.

    Allow me to explain. After watching Kevin’s FaceTime commentary about lessons he learned from changing barbers, I realized that MNB is uniquely able to find metaphors for business success everywhere. In my case, that goes all the way to the operating room and a lesson in business improvement thanks to a minor injury.

    I developed a bone spur in my shoulder that caused me a world of pain for nearly a year. I tried all the usual treatments including ignoring it for as long as possible. But as the year went along I changed my actions to work around the problem. No longer could I lift anything with my left arm. Putting on clothes and seat belts took absurd amounts of time and effort, and going through tollbooths or parking garages where I had to reach for a ticket became an adventure.

    It was a stupid strategy, but I achieved a new normal that allowed me to cope. Only it was a really diminished normal.

    All that is changing. I had surgery about 10 days ago, and now I have a wound, a sling, lots of aches and pains, and a wonderful physical therapist who seems hell bent on making me cry. Yet thanks to all of this I know that someday the old normal will return and I’ll be able to put on a jacket without pain medication.

    So what’s the business lesson in all of this?

    Let’s think about organizations and how they evolve. All of us have worked on a team where one person or another essentially caused all of us to change behaviors. It could be blamed on incompetence, surliness, micro managing, etc. We all change behaviors to simply work around the problem person to avoid the battle of fixing them. Sometimes we adjust so much that we continue to exhibit the behavior long after the offending party has moved on.

    What’s more, it isn’t limited to people. Think of the supply chain used by your company and ask yourself how many parts of it have become standardized to work around problems or to cope with legacy systems. Once again, it usually means a lesser level of performance becomes the norm, loaded with inefficiency and activities that really don’t make sense but are accepted under the guise of “that’s how we’ve always done it.”

    Just as with my shoulder, a new normal evolves. Just as in my case it means coping with a less than perfect world.

    Now the sad truth is that with my shoulder - or in an organization - correcting the problem is no easy task. Fixing the new normal is unquestionably every bit as painful and inconvenient as the surgery that repaired my shoulder. In most cases it costs a ton more time, money and therapy to repair. I can’t imagine there are any pain pills that would possibly lessen any of that.

    But here’s the thing: I have no guarantee that going through all the pain will actually leave me fully healed. I still have a secondary injury that might require future medical attention and either way I have a 56-year-old shoulder that’s not getting younger. But I still have to try and I’m hoping that my therapy will enable me to avoid future injuries too.

    The same prognosis would exist for any team or any company seeking to root out those mis-evolved new normal states that provide no benefit or reason for being. The treatment will be misery and the recovery just awful except for the prospect of widespread improvement.

    Remember, ignoring the problem didn’t work for me. I doubt it’s doing any better for you too.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: June 12, 2012

    by Kevin Coupe

    This morning's Eye-Opener comes compliments of an MNB reader who took notice of yesterday's Sports Desk entry taking note of the controversial split decision on Saturday night when Timothy Bradley defeated Manny Pacquiao in a WBO world welterweight title fight in Las Vegas.

    This reader sent me a blog posting from the Paddy Power online betting service in Ireland, which apparently felt - like a lot of people- that Pacquiao got robbed.

    And so, Paddy Power instituted something called a "Justice Payout," saying that "if you had placed a bet on Manny to win in a pre-fight outright or on points, that money is now back in your account. We Hear You!"

    In other words, Paddy Power was willing to give back all the money that people lost betting on Pacquiao as well as paying off the people who bet on Bradley.

    I'd be willing to bet that there are not a lot of bookies that would make such a move. But clearly the folks at Paddy Power thought that it would be good for business in the long-term, not to mention good for its credibility, to make such a money-losing move. I cannot pretend to know whether this makes sense, but it certainly seems to me to be a great example of making long-range decisions that are good for business and not worrying (too much!) about the short-term.

    That's an Eye-Opener.
    KC's View:

    Published on: June 12, 2012

    Bloomberg reports that Walmart is being sued by a coalition of New York pension funds, charging that it was mismanagement that failed to prevent systemic and systematic bribery by the company's Mexico devision.

    Included in the list of defendants are 27 current and former Wal-Mart board members and executives as defendants, including CEO Michael Duke. The plaintiffs include the New York City Employees’ Retirement System, Police Pension Fund, Fire Department Pension Fund and Board of Education Retirement System, all of which are Walmart investors.

    According to Bloomberg, the suits contends "that company officials were duty bound to control alleged 'widespread corruption' and a subsequent cover-up at Wal-Mart de Mexico." The suit "seeks unspecified restitution from officials in behalf of the company and reforms 'to improve its corporate governance and internal procedures'."

    The scandal was uncovered by the New York Times, and Walmart has said that it is cooperating with a series of investigations into the bribery allegations, though critics say that it only began talking to the US Department of Justice once it found out the Times was working on the story.

    “We take our responsibility to our shareholders very seriously,” Walmart spokesman David Tovar told Bloomberg in an e-mailed statement. “We will review the lawsuit closely and are thoroughly investigating the issues that have been raised."
    KC's View:
    I know that some folks think that this is much ado about nothing, or business as usual, and that the long term impact on Walmart will be negligible.

    I'm not buying it. If it can be proven that Walmart's top execs - the ones still there, and the ones who have gone off to run other companies - knew about the bribery and tried to cover it up, the implications for the company and its leadership could be enormous.

    Published on: June 12, 2012

    The New York Times this morning in a front page story reports on the obesity problems that continue to plague the borough of the Bronx, where more than two-thirds of adults are overweight.

    The problem has led to a number of initiatives, the Times writes: "A hospital offers Zumba and cooking classes. Farmers markets dole out $2 coupons for cantaloupe and broccoli. An adopt-a-bodega program nudges store owners to stock low-fat milk. And one apartment building even slowed down its elevator, and lined its stairwells with artwork, to entice occupants into some daily exercise ... But, if anything, this battery of efforts points to how intractable the obesity problem has become in New York’s poorest borough."

    And this intractability is one of the things that led NY Mayor Michael Bloomberg to call for new regulations that would ban the sale of jumbo sugared soft drinks by restaurants (though not by c-stores, as it happens).

    Bloomberg maintains that the proposal - which is expected to be implemented by the NYC Health Department - is not designed to limit people's rights, but rather to deal with an increasingly troublesome issue. “We are absolutely committed to doing everything in our power to help you get on track and stay on track to maintain a healthy lifestyle,” he says. “Because this isn’t your crisis alone — it is a crisis for our city and our entire country.”
    KC's View:
    This continues to be a tough one for me, just as it is for a lot of people. (Jon Stewart continues to make comedic hay out of it on "The Daily Show." Last night, he engaged London Mayor Boris Johnson in a discussion that led to Johnson offering sanctuary in London to people who want to buy jumbo sodas.)

    I recognize the seriousness of the problem, but I don't think that the notion of restricted freedoms should be minimized. And the thing is, it could take generations before we start to see any improvement.

    Published on: June 12, 2012

    ...with brief, occasional, italicized and sometimes gratuitous commentary...

    • Weis Markets today announced it will close on its purchase of three former Genuardi’s stores, located in Conshohocken, Doylestown and East Norristown, on Monday June 11th and that it will reopen these stores on Saturday, June 16 at 6am. In advance of these openings, each store’s pharmacy will re-open on Monday June 11th at 12 noon to minimize prescription service disruption.

    To staff these stores, Weis Markets has hired 218 former Genuardi employees and has added 150 positions, which will allow each store to double the number of cashiers it employs and increase front-end service.

    Always nice to see companies hiring employees. As opposed to, say, firing employees even while saying they are engaging in "customer-facing initiatives."

    • The Chicago Sun Times reports that bankrupt Hostess Brands - maker of Twinkies and Ho-Hos - has informed all of its 1,380 employees in Illinois that the company could go out of business.

    However, the story says, a spokesperson for the company said that the move was simply fulfilling a legal requirement, and that if the company is able to get its fiscal house in order, including getting wage concessions from unionized employees, it should be able to emerge from bankruptcy “as a growing company with a strong future.”

    • The Boston Globe reports that the future of Green Mountain Coffee Roasters' K-Cup single serving business may not be okay.

    According to the story, "K-Cups, which produce one cup of coffee at a time in Green Mountain’s Keurig brewers, are the most profitable segment of the company’s business, accounting for about three-quarters of its net sales. But when the K-Cup patents expire this fall, a stream of grocery and retail stores are expected to produce lower-priced, store-brand coffee pods that can be used in Keurig machines and cut into Green Mountain’s earnings."

    That's what happened yesterday, when Kroger announced that it would begin selling a private brand K-Cup coffee later this year, a declaration that sent Green Mountain's stock price down almost eight percent.

    • Maurer’s Foods has entered into an agreement of intent to open a full-service grocery store in the proposed 720 Northwestern development in West Lafayette, Indiana, which will be designed to be, according to the company, "a food destination for Purdue students, University faculty, staff and local residents. The market will offer a fresh food and grocery alternative with affordable prices." This concept will be replicated at the new location and will operate under the name of Fresh City Market.
    KC's View:

    Published on: June 12, 2012

    • The Grocery Manufacturers Association (GMA) announced the appointments of Melinda Hayman, Ph.D., as GMA Director of Microbiology and William Koshute, M.S., as a GMA Scientist in Chemistry.

    Hayman is a food microbiologist with over 10 years of experience specializing in Food Safety, including government and industry appointments.  Most recently, she served as Director of Technical Services at Food Safety Net Services (FSNS), where she managed Laboratory Quality Systems, Training, Method Validation, and Special Projects.

    Koshute most recently served as a pharmaceutical Research Scientist for Sanofi-Aventis in analytical support for new drug applications, and is said to have "extensive experience in the areas of method development and validation, protein purification, immunodiagnostics and food biotechnology."
    KC's View:

    Published on: June 12, 2012

    Got the following email about the staffing cutbacks announced by Supervalu for its Albertsons stores on the west coast.

    I shook my head again when I read the recent Albertson’s article and the majority of Supervalu articles in general. The direction they are taking seems as well planned as the one being taken by the USPS. I keep reading about reinvestment in the customer in one form or another.

    It would be interesting to say the least Kevin, if you were to get feedback anonymously from a group of those company representatives that do business with some of the Supervalu banners. Some of these reps actually call on other reps in their offices as they “buy” for the banners buyer. They certainly are coming up monthly with new ways to get funding from those brands foolish or desperate  enough to keep giving. Their Store Support Center are the profit centers instead of the stores, and a select group of stores, but as fees and margins rise, we do not see it being reinvested back to Mrs. Consumer. So their period margin numbers may briefly improve, but where are the store profits and where is the long term strategy? How is the customer count Vs. YAG? What is the basket size Vs. YAG? The answers are obvious.

    They are also losing their key players as they find more competitive retailers to jump over to. Is it any wonder why they continue to lose market share? Do you think the investors actually know this stuff?

    Supervalu is going to have to spin something off soon. If you were a retailer looking for additional locations today, would you jump at it or sit, wait and watch the as price continues to go down? Who is in place in key positions for the long haul in SuperValu that could actually turn them around? Perhaps when Jim Sinegal finishes his project this year, they can convince him to join their board!

    Also got an email about the errant "proud to be a Brit" posting that Starbucks put on its Irish site:

    I hail from the UK (more specifically, England) and recently moved to the US.  Starbucks is not alone in its confusion over my home nation's nomenclature (and which territories are included), although you would have thought a quick glance at Wikipedia would have helped them out !  For those of you who are interested, the full terminology for the UK is the United Kingdom of Great Britain and Northern Ireland.  Great Britain, therefore, consists of the countries of England, Scotland and Wales.  Add Northern Ireland to the mix and you have the full UK.  As you point out, the Republic of Ireland is a separate nation with a separate currency (the euro).

    I should add that the first visit of a British monarch to the Republic of Ireland only happened  in May 2011, a full century since a previous visit by King George V.

    And, I got the following email from MNB user Mike Jackson:

    I found your discussion of the move at Disney regarding “healthy advertising” and the action in New York to limit the size of sugary beverages to be interesting.

    As a Florida resident living right next door to Disneyworld, I would suggest that Disney think about their priorities.

    I applaud any efforts to curb obesity, but have to wonder why Disney still allows smoking on their property.

    Obesity can lead to health problems; smoking does cause cancer and death.

    KC's View:

    Published on: June 12, 2012

    • The Los Angeles Kings yesterday defeated the New Jersey Devils 6-1 to win the sixth and deciding game of the Stanley Cup Finals, earning the Kings its first championship in its 45 years of existence.
    KC's View: