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    Published on: January 31, 2013

    This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy, coming to you this morning from Phoenix, Arizona.

    I want to come back to a subject that I've discussed several times here on MNB, but that I think is worth paying attention to, because it focuses on the potential disruption of an industry. I want to suggest that you read an article in the February issue of GQ ... and not because it has pictures of a scantily clad Beyonce, not to mention a feature on the 100 sexiest women of the 21st century. (Isn't it a little early to be making that list? Though checking it twice isn't the worst job in the world...)

    The story looks at Netflix and its evolving business model, examining how the company from distributing content to producing its own differentiated content.

    The point of the story is that businesses like to create "managed dissatisfaction." Reed Hastings, the founder/CEO of Netflix, likes to say that companies create managed dissatisfaction because it serves their bottom lines - people have to wait for a TV show to come on each week, wait for movies to make it to the theaters, wait while ads play out, because that's how they make their money and how they've been making their money for decades.

    But what Netflix has discovered is that a lot of people like "binge viewing" - they'll wait until a TV series season has come out on DVD or is available to be streamed, and then consume in a night or series of nights. And so, when Netflix makes its differentiated content available - series like "House of Cards," which comes out tomorrow - it will make whole seasons available at the same time. You can watch one episode, or you can watch a bunch of them in a row. It is a challenge to how people consume product, and Netflix believes it is a good bet.

    There are some folks who are not convinced, largely because they think Netflix can make more money by stretching out distribution over weeks and months. But it seems to me that it is hard to go wrong giving the customer what he or she wants ... and in this case, Netflix isn't speculating. The trend had been proved out.

    This is an important lesson for any business.

    You know the old song, "You can't always get what you want..."

    Well, these days, you can. Customers are demanding it. And businesses have to accept that as the balance of power has shifted, they have to give customers what they want, not just what they think they need.

    That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: January 31, 2013

    by Kevin Coupe

    Marketplace, on National Public Radio, had an interesting story the other day about how the Cathedral of the Holy Cross in Boston has been coping with a problem that I never really considered - in a world where cash is used less and less, what happens when you pass the collection basket at Sunday Mass?

    Well, according to the story, that's where the digital collection kiosk comes in.

    That's right. The Cathedral of the Holy Cross has a digital collection kiosk, a touch-screen unit "mounted on a shelf, under a big stained-glass window. Now tourists and parishioners ... can use it to make donations with a credit or debit card, any day of the week."

    In fact, this church is just one of 900 around the country using the technology. Marketplace reports that the manufacturer says that "the kiosks usually pay for themselves in a few months. They start at $1,500, plus a set-up cost and a $40 monthly licensing fee ... Some models print receipts for people to put in the collection basket so they don’t feel guilty when it passes by. Those with smartphones can use mobile apps to donate right from the pew." Sales ... er, donations ... reportedly have as much as tripled in places that have installed them.

    Of course, one thing the story does not address is whether people making the e-donations in Boston are able to use the touch-screens to say where they'd like their money to go - to upkeep of the cathedral, or supporting the free clinic or the food pantry or school programs for low-income kids.

    Which some parishioners might want, since reports are that the Boston Archdiocese has paid out close to a hundred million dollars to settle charges brought against it because of the sexual abuse of minors by its priests and the cover up of these cases by local Catholic officials.

    I'm just saying...

    It's an Eye-Opener, isn't it?
    KC's View:

    Published on: January 31, 2013

    The Wall Street Journal has a piece about what appears to be a growing business segment in the US, with the epicenter in the San Francisco bay area - prepared foods companies that make fresh, healthy meals for schools and school districts.

    One such company - Kid Chow, which was launched by a husband and wife team in 2003, "started by serving these lunches to one private school in San Francisco. Today, the company has 85 employees and serves 52 schools, takes in annual revenue of about $5 million and is profitable ... Now Kid Chow is expanding to serve about 1,000 to 1,500 meals that are part of a federal after-school meal program, as well. Overall, about 30% of its revenue comes from government programs, up from none three years ago."

    Kid Chow, the story says, "is just one of the small prepared-food businesses that are expanding as school districts nationwide try to make student meals healthier. The movement is propelled partly by the Healthy, Hunger-Free Kids Act of 2010, which requires a certain amount of fruits and vegetables in school lunches, among other federal programs ... Earlier this month, Revolution Foods Inc., an Oakland-based company that serves about 200,000 healthy meals daily across 12 states, began supplying San Francisco public schools with fresh, locally prepared lunches under its new $9 million contract with the San Francisco Unified School District. Previously, an Illinois company shipped frozen meals to San Francisco." (Kid Chow didn't bid for the business because it doesn't have the capacity to handle those numbers.)
    KC's View:
    Sounds both like a big business opportunity and a ray of hope that if school districts really want to make a commitment, they can move away from the slop that generally is served in school cafeterias and educate kids' palates as well as their brains.

    Published on: January 31, 2013

    The various problems being suffered by the Boeing 787 Dreamliner have been the stuff of headlines lately, with incalculable air time and column inches being devoted to the travails of an airplane that was supposed to represent an enormous technological advance, but rather has found itself grounded because of safety concerns. And this after a gestation period that took years longer and billions of dollars more than it was supposed to.

    In the words of James Surowiecki, in the February 4 issue of The New Yorker, "It’s become an object lesson in how not to build an airplane."

    And, perhaps, in how not to run a company.

    Surowiecki's analysis is very much worth reading, here. It offers a fascinating look at how a culture more focused on bean-counting managed to subvert one that was actually good at building planes ... how outsourcing one's product can lead to outsourcing one's reputation (not a good thing) ... and how consumer expectations shape what is acceptable and, more importantly, what is not.

    Great piece. And one with plenty of cautionary notes for people in pretty any much any business.
    KC's View:

    Published on: January 31, 2013

    MarketWatch reports that Amazon.com plans to open three new distribution centers in Texas - in the cities of Coppell, Haslet and Schertz.

    The announcement comes as Amazon has reported fourth quarter and annual sales and profit figures. The company had Q4 net income of $97 million, down 45 percent from $177 million during the same period a year ago. Q4 revenue increased 22% to $21.27 billion from $17.43 million last year. For the year, Amazon posted a loss of $39 million compared with net income of $631 million in 2011. Revenue topped $61 billion, up 27% from revenue of $48 billion in 2011.

    However, the stock market responded to the numbers by sending the stock price up by 10 percent - an indication that some, at least, see value in Amazon.s persistent investments (like in distribution centers) that it believes will have a long-term payoff.
    KC's View:
    The more fulfillment centers Amazon opens, the easier it will be to move to same-day and next-day delivery. And the easier it is to provide same-day and next-day delivery, the more likely it is that Amazon will extend its Amazon Fresh offering to new places.

    Not saying it is going to happen in Texas anytime soon. Just saying that it is easier.

    Published on: January 31, 2013

    • The British Broadcasting Service (BBC) this morning that Tesco is responding to charges that there was horse meat in some of the frozen beef burgers it has been selling by mandating DNA testing of all its meat products.

    This is an addition to its recent decision to stop using the suppliers that provided the horse meat-contaminated beef burgers.
    KC's View:

    Published on: January 31, 2013

    Research in Motion, the company that makes the BlackBerry smart phone, did two things yesterday.

    It changed its company name to BlackBerry.

    And it introduced a new line of BlackBerry smartphones that it hopes will help reverse a corporate and technological decline that - because of poor attempts at innovation that left it looking irrelevant in the smartphone market - seemed to be headed toward creative and corporate oblivion.

    Technology columnist David Pogue, writing in the , says this morning that the company "kept saying that it had a miraculous new BlackBerry in the wings with a new operating system called BlackBerry 10. But it was delayed and delayed and delayed. Nobody believed anything the company said anymore. Besides — even if there were some great phone, what prayer did BlackBerry have of catching up to the iPhone and Android phones now? Even Microsoft, with its slick, quick Windows Phone, hasn’t managed that trick.

    "Well, BlackBerry’s Hail Mary pass, its bet-the-farm phone, is finally here. It’s the BlackBerry Z10, and guess what? It’s lovely, fast and efficient, bristling with fresh, useful ideas.

    "And here’s the shocker — it’s complete. The iPhone, Android and Windows Phone all entered life missing important features. Not this one; BlackBerry couldn’t risk building a lifeboat with leaks. So it’s all here: a well-stocked app store, a music and movie store, Mac and Windows software for loading files, speech recognition, turn-by-turn navigation, parental controls, copy and paste, Find My Phone (with remote-control lock and erase) and on and on."

    Now, not everybody is as enthralled. Wall Street Journal tech columnist Walt Mossberg says that the new versions "represent a radical reinvention of the BlackBerry. The hardware is decent and the user interface is logical and generally easy to use. I believe it has a chance of getting RIM back into the game, if the company can attract a lot more apps."

    But the point seems to be this - BlackBerry addicts may be able to get themselves a new fix.
    KC's View:
    Never owned a BlackBerry and never have used one. I never owned any sort of PDA, though I'm now totally into my iPhone.

    But that said, I'm glad that the folks at BlackBerry seem to have a win on their hands. All tech companies are better when the competition is strong and the next guy's innovations push everyone to new heights.

    Published on: January 31, 2013

    Computerworld reports that Apple Inc. has announced a next-generation iPad that will double the maximum storage space of its current model to 128GB. According to the story, "The Wi-Fi-only 128GB iPad will cost $799, while the cellular-enabled model will run $929. Those prices are $100 more than the corresponding 64GB iPad SKUs.

    "Apple pitched the increased storage as a business play, citing the iPad's success in the Fortune 500, and running testimonials from several corporations who use the tablet."
    KC's View:
    Here's the interesting passage from the Computerworld story...

    The 128GB of solid-state storage is the same amount that comes standard with Apple's top-end 11-in. MacBook Air, and the entry-level 13-in. MacBook Air and 13-in. MacBook Pro with Retina laptops. It's double that of the least-expensive 11-in. MacBook Air.

    In other words, for a lot of people tablet computers will replace or eventually supplant their laptops. And that at least suggests that marketers need to be thinking about how to maximize their online shopping experiences for these devices.

    It won't be for everyone. I, for one, still find my first generation iPad to be better at content consumption than content creation. (Besides, I've just gotten used to packing up the bag with the usual devices - MacBook Pro, iPad, iPod Classic, and iPhone. They all serve different purposes, and besides, one could break down and I don't need that kind of stress...)

    That said, Mrs. Content Guy has begun using her new iPad Mini - along with its bluetooth keyboard - as a way of keeping efficient notes about the third graders in her class. So she finds it to be just fine for content creation.

    Published on: January 31, 2013

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

    USA Today reports that a new study from researchers at the University of Murcia in Spain, Tufts University in Boston and Harvard Medical School "suggests that dieters who eat lunch early lose more weight than those who eat a late lunch ... researchers don't know why weight loss was greater in the early eaters, but one hypothesis is that glucose (sugar) is processed differently depending on the time of day. Another theory is that the timing of meals can impact the circadian system (the body's clock) which may disrupt the proper function of the liver and fat cells."

    I thought that I had to exercise my whole body to lose weight. Turns out all I have to do is exercise my circadian system. Go figure.

    • Safeway and ExxonMobil announced that they have "teamed up to provide Safeway shoppers a new way to save at the pump. Safeway shoppers and ExxonMobil customers can now earn Reward Points for most products purchased at Safeway stores in the Mid-Atlantic region and redeem their Reward Points at participating Exxon or Mobil locations. This new loyalty program will help maximize the value and savings provided to Safeway and ExxonMobil customers through the combination of convenience and rewards."

    • The Financial Times reports that Nestlé and the Swiss security company Securitas AG will have to pay financial compensation to an anti-globalization NGO called Attac for having infiltrated the group by having people on their payroll attend meetings and gather intelligence.

    The timing, FT writes, is not good, because it puts at risk productive relationships it has been trying to foster with such organizations: "The world’s biggest food company has been at pains to repair relations with NGOs since the milk formula debacle, which led to new health regulations on its marketing. The rise of social media and rapid dissemination of any wrongdoings – and a new generation of more socially conscious consumers – has further encouraged the maker of KitKats and its peers to address issues ranging from child labour on cocoa farms to saving water. Such initiatives are often carried out in partnership with NGOs."

    Busted! Don't you hate when that happens...?

    • The Wisconsin State Journal reports that "three accusations of short-weighting Oscar Mayer meat products in the past two years have resulted in a lawsuit settlement that requires Kraft Foods Group to pay a civil fine of $13,911.50 and install an estimated $10 million of weight quality control equipment over the next five years. Kraft/Oscar Mayer has not admitted any deliberate wrongdoing, but did concede that it was "an unplanned and unwanted variance" at odds with its company policies and procedures.

    Could have been worse. They could've had the folks at Securitas AG on the payroll...
    KC's View:

    Published on: January 31, 2013

    Yesterday, I espoused what essentially is my life/religious/cultural philosophy - whatever gets you through the night.

    And I attributed the line to the Beatles.

    Which was a "I'm writing at 3 am in Phoenix" sort of mistake, and I got a ton of email correcting me.

    "Whatever Gets You Through The Night" was, of course, a solo song by John Lennon ... released as a single in 1974, and featuring harmonies by Elton John.

    Mea culpa, mea culpa, mea maxima culpa...
    KC's View:

    Published on: January 31, 2013

    I'm on the road, so just a couple of quick ones this morning...

    Regarding the Supervalu bonus/golden parachute fiasco, one MNB user wrote:

    As you talk about Wayne Sales golden parachute, what no one has done yet and if they do it would be startling…….follow this retail entity backwards to the American Stores days.    If I recall, Vic Lund walked away with tens of millions when he sold the original ASC to Albertsons.        When Albertson’s sold to Supervalu and Cerberus,  Larry Johnston parachuted out also, with tens of millions, and of course now Craig Herkert and Wayne Sales have also siphoned off millions off of the failing enterprise.    It is really eye opening to look at it in this historical sequence.

    And as I said yesterday, it is not just shareholders and employees who should be looking at all this askance. Supervalu's independent retail customers should be looking at the whole mishegas and be asking if any of these transactions has made Supervalu more responsive to their needs, and if the money spent on high-priced talent could have been better put to work lowering the cost of goods or improving services.



    And on the subject of guns, which has been taking up a lot of space here this week, one MNB user wrote:

    Ignorance.  I don't say that to be demeaning.  I says this for a lack of a better word.  Just to clear a couple of things up with you and some of your readers that commented on this subject and I just cannot believe the level of ignorance on this topic.

    One of your readers claimed to be a conceal carry holder and a strong supporter of the second amendment (which I have a hard time believing) but then commented on the need for anyone to own an automatic weapon which by the way are outlawed and have been for a long time.

    This is the main problem; most people do not even understand what they are in favor of outlawing! How about educating yourselves before becoming such experts.  You thought that going by by the way of Wyatt Earp is going to solve anything when it really didn't work then and it surely doesn't work in present day Chicago.  All you do is turn good people into sheep for the wolves to prey in.  Quit basing your opinions on the movies... Everybody.

    I do not fault the reaction by Kroger on them because they are only reacting to how their customers reacted and oh by the way the customers either overreacted of they were just making a political statement themselves.   "How dare you" and so on.  They knew perfectly well that this guy was not posing any aggressive intentions.  It can't be the weapon itself that they were so afraid of right.  I don't see people running for their lives when an armed police officer walks though the door.  Don't get me wrong, I do not support what this guy was did but it does highlight the sheer ignorance or at least the distinct political lines that have been drawn.  I'd like to ask that last officer who thinks people love their guns and rights more than their kids if he had his legally possessed firearm with him while on duty or off duty?  Was it because he loved his job, rights or firearm more than his kids?  I'm guessing that being able to go home that night to be with his kids was a priority and that's why he carries his firearm.  Same here....


    I get and respect your point. I'd like to think we can have a meaningful and sophisticated discussion about the culture of violence in the country and come to a reasoned and reasonable understanding about how the availability of guns, the lack of enforcement of existing laws, the problems with the mental health systems, and the heavy doses of violence on movie, TV and computer screens affects us all ... and how we can affect change in each of these four categories. The only people for whom I have little respect are the people who say any of these four subject should be off the table.

    I would disagree with you on one point. When that guy walked into the Kroger store armed with a semi-automatic rifle, the customer who scattered and called the police were not making a political statement - and it is both foolish and self-serving to think so. They were scared. I would be, too. So they called the cops.

    I'm just glad a firefight didn't break out between some well-meaning and armed private citizen and the guy with the rifle, which could have ended up in the deaths of a lot of people. (By the way, that's going to happen. Just wait. And then the discussion will change yet again.)

    Another MNB user wrote:

    For someone who said they didn't want to start an ongoing dialog regarding guns and gun control, you sure are posting a lot of your own comments and other's emails.  Please don't tell us you don't want to do something if you're going to continue to do it.

    Fair point.

    Except I believe I said I didn't want to have the discussion a back when the Sandy hook massacre took place. I thought I needed to bring up the subject because it was in the news, and that's what I do. Besides, I was a little shaken by the incident because a) it isn't that far from where I live, and b) my wife is an elementary school teacher. But it didn't seem at the time like a subject that we need to hash out here on MNB.

    The discussion this week was launched because some idiot with a semi-automatic rifle, a political agenda and questionable judgement walked into a retail store, resulting in the cops being called and the man being banned from the store. It could have been a lot worse.

    Seems like a reasonable subject for MNB discussion to me.
    KC's View: