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    Published on: August 20, 2012

    by Kevin Coupe

    The New York Times reported over the weekend about something called an e-score, described as "an online calculation that is assuming an increasingly important, and controversial, role in e-commerce," and that go way beyond what traditional credit scores have done.

    "These digital scores, known broadly as consumer valuation or buying-power scores, measure our potential value as customers. What’s your e-score? You’ll probably never know. That’s because they are largely invisible to the public. But they are highly valuable to companies that want — or in some cases, don’t want — to have you as their customer.

    "Online consumer scores are calculated by a handful of start-ups, as well as a few financial services stalwarts, that specialize in the flourishing field of predictive consumer analytics. It is a Google-esque business, one fueled by almost unimaginable amounts of data and powered by complex computer algorithms. The result is a private, digital ranking of American society unlike anything that has come before ... These scores can determine whether someone is pitched a platinum credit card or a plain one, a full-service cable plan or none at all. They can determine whether a customer is routed promptly to an attentive service agent or relegated to an overflow call center."

    The Times goes on to say that "federal regulators and consumer advocates worry that these scores could eventually put some consumers at a disadvantage, particularly those under financial stress. In effect, they say, the scores could create a new subprime class: people who are bypassed by companies online without even knowing it. Financial institutions, in particular, might avoid people with low scores, reducing those people’s access to home loans, credit cards and insurance."

    Somewhere, George Orwell is not surprised by all this. And he's probably sitting somewhere, having a pint with Patrick McGoohan, talking about how they tried to warn us, but we wouldn't listen...
    KC's View:

    Published on: August 20, 2012

    The New York Times had a story over the weekend about how lawyers who were instrumental in winning major lawsuits against Big Tobacco companies have been searching for their next big payday, and apparently have decided that Big Food manufacturers are both vulnerable and wealthy enough to be targeted.

    According to the Times, "More than a dozen lawyers who took on the tobacco companies have filed 25 cases against industry players like ConAgra Foods, PepsiCo, Heinz, General Mills and Chobani that stock pantry shelves and refrigerators across America. The suits, filed over the last four months, assert that food makers are misleading consumers and violating federal regulations by wrongly labeling products and ingredients. While there has been a barrage of litigation against the industry in recent years, the tobacco lawyers are moving particularly aggressively. They are asking a federal court in California to halt ConAgra’s sales of Pam cooking spray, Swiss Miss cocoa products and some Hunt’s canned tomatoes ... The food companies counter that the suits are without merit, another example of litigation gone wild and driven largely by the lawyers’ financial motivations."

    Those financial motivations are considerable; the lawyers, if they succeed, could be looking at billions of dollars in winnings if they are able to prove that foods are not as healthy as being claimed, or are not exactly what their labels say they are, or are causing health problems in consumers because of their ingredients.

    The story goes on to say that it is not only hungry lawyers targeting Big Food: "In recent weeks, the Center for Science in the Public Interest has sued General Mills and McNeil Nutritionals over their claims on Nature Valley and Splenda Essentials products, and warned Welch’s it would sue unless the company changed the wording on its juice and fruit snacks. The Federal Trade Commission won settlements from companies like Dannon and Pom Wonderful for claims about their products’ health benefits. And PepsiCo and Coca-Cola face lawsuits over claims that their orange juice products are '100% natural.'

    "The latest playbook - like the one that paid off in the wave of tobacco litigation - could prove potent, as the food companies’ own lawyers have warned."
    KC's View:
    To begin with, I'm not sure that anything that can rise to the level of cynical and evil manipulation demonstrated by the tobacco companies, creating a product designed to addict and kill people, all in the name of making a buck. (As I've said here before, my mom died at age 67 of lung cancer, having started smoking as a teenager and being unable to quit until she was in her early sixties, by which point the damage was done. I have no objectivity on tobacco companies or tobacco company executives, who I believe should occupy their own special circle in hell.)

    But let's put that aside those comparisons for the moment, except to concede that the lawyers in these cases are like vampires. They've gotten the taste of blood, and now that thirst cannot be slaked.

    It seems to me that it is possible - maybe even necessary - to hold two seemingly opposite ideas in this scenario.

    Yes, it is fair to say that the lawyers looking to equate Big Food with Big Tobacco are motivated entirely by money and greed, and are willing to use whatever legal means are at their disposal to get that next big payday.

    But it also could be fair to say that Big Food companies are going to have to do a better job about being transparent and accurate in their claims and labels, and that a resistance to total accuracy and transparency has left them vulnerable. (For example, I believe that "frozen blueberry waffles" should actually have blueberries in them; this seems like a reasonable bar to me.)

    There are going to be cases where the vampire-like lawyers are actually going to have a legitimate point - not every case, not every instance, but sometimes. And there are going to be cases where the Big Food companies are actually going to be wrong. (Conversely, there will be cases where the lawyers will be wrong and Big Food will be right.)

    The hard part will be separating the wheat from the chaff, and not making generalizations. And, as much as it sometimes will hurt, it will be critical to accept the notion that Big Food can do better, should do better, and needs to be better about transparency and accuracy.

    Published on: August 20, 2012

    It is being reported in numerous publications that Restoration Hardware Holdings has ousted Gary Friedman, the company's co-CEO, after the board learned that Friedman, 54, was having a romantic relationship with a 26-year-old female employee. The female in question reportedly had left the company before the relationship became public knowledge, and the romance is said to be both consensual and continuing.

    Restoration Hardware is currently preparing for an IPO, and the board is said to be concerned that the romance could become a distraction and hurts its share price. The relationship came to light when it was brought to the board's attention by the woman's ex-boyfriend.

    The Los Angeles Times writes that "the report came months after electronics giant Best Buy's then-chief executive, Brian Dunn, stepped down in April under similar circumstances. An investigation by the board discovered he had shown 'extremely poor judgment' with a 29-year-old female employee; the scandal later forced company founder Richard Schulze to resign as chairman.

    "Former Hewlett-Packard Chief Executive Mike Hurd resigned in 2010 after accusations of sexual harassment and falsifying expense reports to hide a 'close, personal relationship' with an independent contractor."
    KC's View:
    Okay, I'm going to walk out on what could be thin ice here, and I'm probably going to get myself in trouble. But here goes...

    I'm not entirely sure that the Restoration Hardware board did the right thing here. As far as we know, the woman in question is single. Friedman reportedly has been divorced for years. The relationship is consensual. There have been no charges of sexual harassment, no allegations that Friedman did anything improper, immoral or illegal. Nobody was married, nobody was cheating.

    Certainly, if a senior executive is dating someone who works for his or her company, that executive has to be careful not to be involved in decisions about that person's compensation, and cannot have that person as a direct report. And I get that such relationships can have implications through an organization; in a previous life, I used to have a woman who was married to the company CEO reporting to me, and it certainly affected how one talked and acted in her presence. Not that she ever would have reported back to her husband, but it was better to be careful and not to put her in an awkward position. It would have been better, truth be told, if she had worked somewhere else.

    But I'm just not sure this rises to the level of being a firing offense.

    Nobody should shed any tears for Gary Friedman. He remains as a consultant to the Restoration Hardware board, he is said to be getting ample funding from the company for his next venture, and as a major shareholder in the company, Friedman will no doubt do very well when the IPO takes place.

    But should he have been fired from the CEO job? Or was this just political correctness gone a bridge too far?

    Published on: August 20, 2012 has a piece - written by Cornell University student Daniel Green and Dr. Margaret Yufera-Leitch - that assesses the views held by Rep. Paul Ryan, the presumptive GOP vice presidential nominee, about various food issues.

    "Ryan, who has voted against every Affordable Care Act related bill, takes the stance that what you eat and what you weigh are both matters of personal responsibility," the report says. "In 2005, he voted for H.R. 554 'The Personal Responsibility in Food Consumption Act' also known as the cheeseburger bill, which aimed to ‘prohibit weight gain-related or obesity-related lawsuits from being brought in federal or state courts against the food industry.’ The bill was passed by the House but failed to even go up for vote in the Senate."

    In addition, the story says that Ryan is pro-Country of Origin Labeling (COOL) legislation, against the Farm Bill, against the Food Safety Modernization Act, and for School Lunch reform.

    The authors conclude that while Ryan is a highly motivated exercise enthusiast who does not eat dessert or fried foods, his political decisions seem to put fiscal health over physical health:

    "One of the most important programs available to lower income Americans is the Supplemental Nutritional Assistance Program (SNAP), commonly referred to as Food Stamps, which provides access to fresh foods for low-income families. Given that increased fruit and vegetable consumption are cornerstone habits of the Preventative Medicine conversation, why has Mr. Ryan argued to cut SNAP by $33 billion over the next ten years?

    "Paul Ryan’s choices to repeal $6.2 trillion dollars of support from the Affordable Care Act and obesity-related provisions, demonstrates a lesser degree of support for preventative care than his widely publicized exercise regime suggests.  Perhaps with unemployment still high and unsure economy, America has bigger fish to fry than fixing the food system and reversing obesity but at least for now, Paul Ryan will take his fish broiled."
    KC's View:

    Published on: August 20, 2012

    In the UK, both Tesco and Walmart-owned Asda are under attack for selling private brand bottled water that essentially is tap water.

    According to the Inbdependent, "Both supermarkets denied misleading their customers in any way, saying the bottles gave customers a clear idea of what they were buying.

    "A spokeswoman for Asda, which gets its bottled water supplied by Yorkshire Water, said it was wrong to call its product tap water. 'Our Smart Price water is treated to remove chlorine, further filtered, then bottled,' she said. 'If sparkling, carbon dioxide is added for a bit of fizz. The label on the bottle tells our customers just that'."

    At Tesco, a spokesperson said: "Our Everyday Value Still Water goes through a complex filtration process to improve the taste and remove impurities ... Tesco sells a wide range of waters to suit all tastes and budgets. All of our products are clearly labelled so customers know what they are buying."
    KC's View:
    Let's go back to the earlier story about companies being sued because of questions about content and labels...

    The question that companies need to ask themselves these days is if the creation of certain product lines are going to raise questions about their honesty and transparency. Maybe the labels say exactly what Tesco and Asda say they say. But that may not be good enough anymore, because the information machine works so fast, society is so litigious, and transparency is so valued.

    Published on: August 20, 2012

    In the UK, the Telegraph reports that plans to begin making deliveries "to nearly 5,000 corner shops and newsagents around the country," essentially using these locations as delivery depots where people can pick up orders after work or even use them as a way to return unwanted items.

    The paper notes that "the scheme is likely to prove particularly popular with employees of the many UK companies which ban staff from having personal goods delivered to their work address. However, it is also expected to ignite fresh concerns amongst traditional retailers, who already fear that the Seattle-based shopping giant is driving them off the high street."

    This is the latest move by Amazon to figure out alternatives to having products delivered to homes and offices. The company also has been testing - in London, Seattle, San Francisco and a few other US markets - the use of "Amazon lockers" that are installed in c-stores and other locations, allowing people to get a code number when they order, type it into a locker installation, and immediately get their ordered product.
    KC's View:
    It is not hard to imagine Amazon expanding this concept to the US, which will give it yet a bigger competitive advantage against Walmart, which also is trying to figure out ways to change the paradigm when it comes to online ordering and delivery services.

    And as many of us keep saying here, Amazon could totally change the game by installing Amazon lockers in US Post Offices all over the country.

    Published on: August 20, 2012

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

    • The Associated Press reports that health officials in Indiana and Kentucky are continuing their investigation into a salmonella outbreak that has killed two people and made more than 140 people sick and that seems to be traced back to cantaloupes grown in southwestern Indiana. The outbreak is said to have spread to 20 states.

    • The Sacramento Bee reports that Raley's has announced that it will close two Northern California stores "following a review by the company to identify stores where future sales would not be able to match increasing operating costs."

    The company said that continued uncertainty created by its inability to reach a contract agreement with the United Food and Commercial Workers (UFCW) helped to create the environment that made the closures necessary.

    • The New York Times reported over the weekend on how the public seems to be cooling to the daily deal phenomenon, with Groupon reporting slower than expected growth and almost 800 of the daily deal sites closing down during the last half of 2011.

    Part of the problem, the story says, is that while "small businesses were excited at first about a new way to attract customers in a post-Yellow Pages world, many soon soured on the daily deals. Customers who bought deals overwhelmed the businesses, spent the bare minimum and never returned." Add that to the problem of consumers simply getting worn out by the deluge of offers - many of them irrelevant - and you have a segment that could be on its last legs.

    I have to admit that I've grown to like Groupon and have found it useful, though I have tired by the barrage of emails. Maybe they've just gone to the well too often and too fast...

    • Lubbock-based United Supermarkets, LLC, parent company of Market Street, has announced enhancements to its Smart Rewards loyalty program, which has attracted more than 140,000 members since its June 2011 launch.  The Smart Rewards program, the company said, "will now feature more ways to earn points and many more options for redeeming them."

    The company said that “Smart Buys” are "a new component to the program. Guests can purchase specially marked products throughout the store and receive bonus points ranging from 25 to 500 points per item. Points can be used toward a wider variety of reward options, including free products along with discounts on grocery and fuel purchases. Reward options will rotate seasonally, allowing guests to be able to pick which rewards they want for their family. Redeeming points is easy and can be done through the new touch-screen kiosks located at the front of any DFW Market Street location, on the new Market Street mobile app, or online at the store’s new website,"
    KC's View:

    Published on: August 20, 2012

    • Tony Scott, the film director responsible for movies such as Top Gun and , died yesterday at age 68. Scott reportedly jumped to his death from the Vincent Thomas Bridge spanning San Pedro and Terminal Island in Los Angeles; a suicide note reportedly was found in his office.

    • William Windom, who had a long career in film and television but perhaps is best known for playing Commodore Matt Decker in an episode of the original "Star Trek" series entitled "The Doomsday Machine," has passed away of congestive heart failure. He was 88.
    KC's View:

    Published on: August 20, 2012

    Fast Company had an interesting story the other day about the importance of a company "mantra," which is defined as "a Sanskrit term, meaning 'sacred utterance' or 'sacred thought,' depending on the dictionary. Traditionally concentration aids given by Hindu gurus to devotees, mantras are words or phrases repeated to facilitate transformation. In business, a mantra is akin to a motto, albeit more fundamental to a company's internal purpose than simply a marketing slogan. It's concise, repeatable, and core to a company's existence ... Unlike mission statements, mantras are pivot-proof. They transcend current target markets and quarterly quotas."

    Or, to put it another way: "Make it short, sweet, and swallowable," says author Guy Kawasaki.

    Examples cited in the story:

    "Think different." (Apple)

    "Don't be evil." (Google)

    "Make something you love." (Huge, a digital agency)

    "Style to the people." (Stylecaster, a fashion website)

    A mantra, the story suggests, is necessary because it is "the guiding star, not the operating manual." And every company needs a guiding star.

    This has me thinking. While MNB always has been built around the phrase, "news in context, analysis with attitude," it sounds like the folks at Fast Company would define that as a mission statement. Not a mantra.

    Which makes me think it is time for a contest...

    Come up with an original mantra for MNB, and if you create the winner, you get an MNB goodie box, which includes a t-shirt with that mantra printed on it, an autographed copy of "The Big Picture: Essential Business Lessons from the Movies," and an MNB canvas shopping bag and an MNB canvas wine bag.

    We already have more than 200 entries, but the contest will remain open at least until Labor Day. One suggestion ... remember that the mantra is for MNB, which is not a retailer. (Some of the suggestions received to this point would be wonderful retail mantras, but are not really about what MNB does.)

    Let the games continue...
    KC's View:

    Published on: August 20, 2012

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