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    Published on: May 6, 2013

    by Kevin Coupe

    In the New York Times "Corner Office" column over the weekend, there was an interview with Steve Case, the founder of America Online - and one of the people who engineered the ultimately disastrous merger of AOL with Time Warner - who is now CEO of Revolution, an investment firm. While the piece spends more time looking at the merger and how it might have worked better, even more fascinating - and instructive - was Case's answer to a question about CEOs who say they "want to stay small, culturally, even as they grow."

    His response:

    "I think that when people talk about staying small, they’re saying they want to be big but still be nimble and creative and innovative and flexible. They also want to still feel like attackers, not defenders. As companies get larger — and I saw this with AOL even before we merged, but certainly after the merger with Time Warner — we did shift from being an attacker to a defender.

    "And I realized the world of business really separates into these two groups. The attackers are the entrepreneurs who are disrupting the status quo, trying to change the world, take the hill, anything is possible, and have nothing to lose in most cases. They’re driven by passion and the idea and intensity. Large organizations — and it’s true of Fortune 500s and it’s also true of governments and other large organizations — are defenders. These guys aren’t trying to pursue the art of the possible, how to maximize opportunity. They actually are trying to minimize the downside, and hedge risk. They’re trying to de-risk situations. Entrepreneurs can’t even think this way. It’s not even a concept they understand.

    "For the traditional executives running these large companies, of course they want to grow, of course they want to innovate, of course they’d rather have revenue grow faster than slower, but they mostly don’t want to lose what they’ve got. But entrepreneurs are deathly afraid that they won’t be able to change the world, and that somebody else will. Again, these generalizations are a little unfair, but corporate executives are all too often deathly afraid that the business they inherit will be less valuable when they leave than when they started."

    This strikes me as an enormously important observation - that attackers disrupt and try to change the world and confound expectations, and defenders look to protect the status quo, to minimize risk and exposure. The question is whether companies can afford, in a 21st century competitive environment, to be defenders. Because as I look around, it always seems to be the attackers who are winning...sometimes in the short-term, and almost always in the long-term.

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

    Published on: May 6, 2013

    Walmart has announced that it launching a new national ad campaign - on television and in digital venues keyed to defining and describing "the real Walmart" and using customers and employees to spread the gospel. The campaign, the company says, "demonstrates how people across America count on Walmart to save money on the products they want and need, how the company provides tremendous career opportunities for its associates and how it creates efficiencies and works directly with manufacturers to help deliver low prices."

    "We have wanted to do this for a long time because we know that people trust Walmart even more when they understand the opportunities we provide our associates, who the customers are that shop with us and how we deliver low prices," says Bill Simon, president and CEO of Walmart US. "Every month more than 60 percent of Americans shop at Walmart and we are proud to help them save money on what they want and need to build better lives for themselves and their families."

    The Wall Street Journal, in its coverage of the new campaign, notes that Walmart is launching the initiative - which seems thematically similar to political advertising - at the same time as it is "facing criticism over bribery allegations, worker protests and conditions at the foreign factories that make its goods," and that the company is looking to redefine itself as "an American success story."
    KC's View:
    There would certainly seem to be disparate views of what "the real Walmart" is, and I think to some degree this campaign could serve to illuminate that debate. I think there are elements of both arguments that are true ... it is not hard for me to conceive of a Walmart as a complex organism fed by a wide range of influences, some of them good and some of them bad. Which, quite frankly, makes the company a quintessential American story.

    Published on: May 6, 2013

    The New York Times had an interview over the weekend with Chris McCormick, CEO of LL Bean, in which he made several comments about his development as a leader that deserve some attention...

    • "I’ve been here 30 years and was promoted, on average, every other year before becoming C.E.O. That’s part of what kept me here, because if you’re not learning, you’re dying. Every time I felt I was at the peak of the learning curve, the company gave me more to do."

    • "In the late 1990s, Leon Gorman, a third-generation member of the family that started L.L. Bean, who was then C.E.O., made me head of the women’s product line. I knew marketing, not products, but I realized he was developing me to become a senior leader. The first thing I did was surround myself with women who knew the product line and had good taste in clothes."
    KC's View:
    I love the notion that every time McCormick thought he'd achieved a peak of the learning curve, the company's leaders gave him new challenges, new opportunities, and new things to do that he didn't know how to do. And, in doing so, developed a versatile leader who is shepherding the company from the catalog era into a highly digital environment without violating core company values, and who seems to understand that he needs to do for other people what was done for him.

    A good lesson to be learned by every business leader, I think.

    Published on: May 6, 2013

    The Huffington Post reports that Walter Robb, co-CEO of Whole Foods, recently told the Milken Institute's Global Conference 2013 that the company's decision to open a store in Detroit was about more than turning a profit.

    ""What we're trying to do in Detroit stretch the culture, stretch the mission a little bit." Robb said. "Culture is a living, breathing thing. It’s happening all the time ... I see thousands of communities across the United States don't have fresh healthy food ... In Detroit, within the 138 square miles, the life expectancy is 12 years less than outside the city limits. That just happened to be, the story is too long for today, why we started there. We have a particular set of skills. We're going there to participate in the community."

    And, he added: "We've tried to put the community first in this effort. I know that we're learning as much as we're giving. Not only are we going after the affordability and the accessibility ... we're going after these hard issues. Because we're going after elitism, we're going after racism."

    Robb concluded: "This experiment of doing this, trying this, has been a wonderful stretch for us, and also tremendous learning experiment. I think the culture sees it's okay to take risks, it's okay to take a step forward and remain open to what you can learn."
    KC's View:
    There is a little bit of off-putting grandiosity about Robb's pronouncements ... but it may be that this is only in the reading of the text, and when he delivered them it was with some degree of humility.

    And maybe real and sustainable change can only take place when people have grand aspirations.

    Published on: May 6, 2013

    Phil Rosenthal of the Chicago Tribune had a column over the weekend in which he excoriated local retailer Walgreen for simultaneously marketing itself as being a leader in health and wellness services and existing "at the corner of happy and healthy" while simultaneously selling tobacco products that were "long ago deemed a major health hazard." (CVS and Rite Aid are equally at fault, he says.)

    "It's strictly business," Rosenthal writes about a tobacco selling habit that is difficult to break. "The calculation is that while tar and nicotine might stain their brands' claims to be partners in healthy living to the degree that anyone thinks about it, the failure to give regular customers what they want poses a greater threat."

    Michael Polzin, a Walgreen Co. vice president, agrees that this is a financial decision at odds with the company's philosophical brand positioning: "We're well aware of the health issues related to (tobacco) products. But we also need to stay competitive in the marketplace and offer the products and services our customers want and expect us to carry, even when we wish they were making healthier choices ... "Our main competitors - whether they're other chain drugstores, grocery stores with pharmacies, mass discounters with pharmacies to convenience stores - they all sell tobacco products. And when you consider that 20 percent of all Americans use tobacco products and expect to find those items in our stores, we'd be at a tremendous competitive disadvantage if we didn't offer them."

    "The American Medical Association, American Heart Association and American Pharmacists Association are among the many groups to have come out strongly against pharmacy sales of tobacco products," Rosenthal notes, but, "until the smoke clears, it may be hard to see drugstores as more concerned with their customers' health than their own."
    KC's View:
    I tend to agree with Rosenthal's argument - that the major drug store chains, by emphasizing their health care credentials and working to claim a bigger role in the nation's health care infrastructure, now must deal with the fact that when it comes to selling certain products, they appear to be hypocritical. (Except in places like San Francisco and Boston, where they're legally prevented from selling tobacco.)

    This debate is not likely to go away; the way things work these days, it seems to me that it will become more pronounced, that the "we'll be at a competitive disadvantage" will be less effective, and that the drug chains should not take it likely. Perhaps, moving forward, they need to rethink their business model so that they can be more consistent ... maybe rethinking how the store is laid out so that the inconsistencies seem less egregious.

    Published on: May 6, 2013

    CNet reports that Apple is about to celebrate 50 billion downloads from its App Store, which was launched in 2008.

    "The person who downloads the 50 billionth app gets $10,000 in App Store credit," the story says. "The company is also doling out $500 gift cards to the 50 people who buy an app immediately afterwards."
    KC's View:
    Here's the line from the story that is a real kicker:

    "Apple's last big contest for the App Store was for the 25 billion benchmark last March."

    So it took from 2008 to March 2012 to get to 25 billion downloads, and then about 14 months to double that to 50 billion downloads?

    Yikes.

    I actually found this acceleration to be so extraordinary that I double checked it. Forbes describes it this way:

    "The crazy growth continues. The 10 billionth app download occurred in January 2011 and it took nearly 14 months for the App Store to reach 25 billion. From a rate of just over a billion a month during that span, most of 2012 saw close to 50 percent higher as 35 billion was reached in October of last year.

    "Since then, though, things have gone into overdrive. Downloads are now happening at close to 2 1/2 billion per month. While some of that is a function of the 85 million iPhones and 43 million iPads sold in the past two quarters, it also suggests the average Apple device user is downloading more than ever. That helps explains why Apple users keep reporting in surveys the next device they are likely to buy is another one from Apple: They are locked in through their loyalty to a lot of apps."

    Bingo.

    Despite all the questions about Apple that seem to be raised these days, that's the key to the kingdom ... finding ways to create a system that keeps people locked in by constantly expanding it while at the same time keeping borders around it.

    Published on: May 6, 2013

    The contest is over, and a winner has been named.

    As reported a couple of weeks ago on MNB, Connecticut-based Stew Leonard's ran a caption contest when someone snapped a picture of comedian Jerry Seinfeld leaving one of its stores with a shopping cart full of groceries. (See picture at right.)

    And so, the retailer offered a $200 gift certificate to whoever came up with the winning caption. Which I thought was a very smart - and opportunistic, in the best sense of that word - thing to do.

    Well, yesterday I got an email from Stew Leonard's announcing that there had been more than 6,000 entries ... and the winning one, from Lori Mancini of Brewster, New York, was as follows:

    "15 years later and I'm still feeding Kramer!"
    KC's View:
    The winner may have gotten a gift certificate, but Stew Leonard's got more than its fair share of publicity.

    Published on: May 6, 2013

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

    USA Today reports that "Soft drink giant PepsiCo says it is pulling a highly controversial commercial for Mountain Dew -- depicting five African-American men and a goat in a police line-up -- that has managed to offend African-Americans, women and bloggers coast-to-coast.

    "African-American rapper Tyler, the Creator, developed the 60-second spot in which a battered white woman on crutches is urged by an officer to identify a suspect out of a lineup of black men. A talking goat named Felicia is included in the lineup. The goat makes threatening remarks to the woman, including, 'Keep ya mouth shut'."

    The story notes that "dumb ads seem to be contagious ... The action comes days after Hyundai pulled an ad parodying suicide, and few weeks after McDonald's yanked a regional subway poster that parodied depressed women. It comes several weeks after Ford killed an ad in India that depicted sexy women tied up in the back of a Ford Figo."

    There have been enough of these offensive ads out there, and enough companies saying that "they were never supposed to see the light of day and omigosh how did this happen," that pretty much every business leader ought to be asking the following question of his or her marketing department: "Do we have any ads in the pipeline that maybe we ought to be thinking twice about?"

    But that said, I would hate to see real creativity be shut down because a few people crossed the line. After all the line keeps moving; who would've thought that Kmart would score a viral hit with its "shipped my pants" commercial?

    KC's View:

    Published on: May 6, 2013

    • Michael Solomon, president/CEO of Ready Pac Foods since 2008, has announced his retirement today announced his retirement from Ready Pac. He will be succeeded by Phillip Theodore, who recently joined the company as COO and now will add the president and CEO titles to his business card.
    KC's View:

    Published on: May 6, 2013

    Last week, we posted an email from an MNB user who wanted to comment about JC Penney's troubles, saying that one of the points I was missing that the "Christian community" has backed away from companies like JC Penney that "outwardly support gay initiatives" - in JCPO's case, it was a Mother's Day commercial featuring a two mom family, and a Father's Day commercial featuring two dads. "Trust me," this person wrote, "my family and I are not alone in our boycotts."

    My response was as follows:

    I'm sure you're not. Must be tough not drinking coffee from Starbucks, not ordering products from Amazon, not watching any network or visiting any theme park owned by Disney, not eating Oreos, not buying Microsoft or Apple products, not wearing Levi's, and not shopping at Nordstrom or Target. It also must be tough knowing that support for gay rights is increasing, and that in many ways, the war is over, though battles remain to be fought. But hey ... I've always believed that consumers and investors should support companies that reflect their world view, and not patronize those that do not.

    This response, in turn, prompted several emails.

    From one reader:

    If you gain and retain readers as you contend, I am amazed, because I have been a reader for under a year and have been turned off by your column more than once. Your ribbing of a reader that shared their view is unwelcome and unnecessary. If you want a robust conversation then you must be willing to accept other’s viewpoints with grace and humility, both of which you sorely lack.

    Those whose opinions differ from yours on hot-button political issues are chided and made fun of, with a more-than-unnecessary sarcasm. So what, the reader chooses to stand his moral ground and not shop at retailers that back gay marriage. That is his right and he is entitled to state it. You, Kevin, are not the only one that gets to be politically incorrect. It amazes me that you would suggest someone take the easy way out (i.e. shopping at Amazon) and forego their principles, considering you so often promote shopping “Made in America” and “Non-GMO,” both of which are not easy.

    I am a vegetarian and my shopping choices are limited. I choose not to buy meat, meat-based products, leather, etc. This drastically limits the products I can buy and where I can buy them from, but it’s an issue that is dear to me and I will stand by it, regardless of the inconvenience. I applaud the reader for sharing his opinion, however unpopular by your standards.

    Your thinly veiled  political leanings are frankly becoming blatantly obvious and overbearing.


    And from another:

    I must say, your response to a reader expressing why they didn't shop at JCP smacked a bit of: 'I'm right, and I'm sorry for you because you're obviously wrong' (despite your half-hearted disclaimer at the end).

    There are lots of people with lots of world views, and they are absolutely entitled to them (as long as they're legal), regardless of what you think, what major corporations think, and what popular media thinks.  It seems a little hypocritical to demonstrate intolerance towards someone's viewpoint for what you see as their being intolerant.  At least that's how your comments sounded to me.


    And, from MNB user Daniel Hariton McQuade:

    I support your comments, "I've always believed that consumers and investors should support companies that reflect their world view, and not patronize those that do not." , both socially and economically.

    Our family has created an investment " life" portfolio. We invest in companies that we use their products, services and we support their go to market strategy, mission statement and social responsibility. We see the world as being much bigger than we are versus the narrow vision of the MNB user that wrote those comments.

    Selected from tech companies, retailers, CPG's and service providers our investments are part of our life on a daily basis. It's great to go to one of the companies outlets and interact not only as a customer but as an investor that believes in the people, the product and the culture of that company and we let the team members know that when we interact.

    Usually we ask how they are doing and what they think about how the company is doing. Kind of our own "insider trading" activity. It's great feedback!

    So far, so good! A long term vision for our "life portfolio" and it has been doing well.


    Some in the MNB community may not believe it, but I've spent a lot of time this weekend thinking about these emails and the issue that they address.

    And I've concluded that I was flippant and sarcastic to a degree that is inappropriate. I'm by nature a wisenheimer, and I think humor and even sarcasm can be applied to most issues, but I'd like to think that when I do so, it is with some degree of thoughtfulness. By that standard, I think I failed on Friday. My mouth and fingers got ahead of my brain, as sometimes (often?) happens.

    Now ... You are more than welcome to try to categorize my politics and cultural leanings, though I suspect that they may be more complicated than you think. I try to always keep in mind the line from the great writer Pete Hamill - that ideology is just a substitute for thought. But what the hell - my opinions are out there for everyone to see, my name and picture are on every edition on MNB, and if I'm going to be arrogant enough to comment on the news and share my opinions, I better be humble enough to accept criticism and post it here. (You say that my opinions are "thinly veiled." I'd argue that for the most part, when relevant, they are neither veiled nor anonymous.)

    The point I was trying to make, though I did so clumsily, was that I'm not sure I agree with the observation that JCP's troubles were even a little bit related to the pro-gay ads. I'd actually forgotten all about them, though I'd written about them at the time on MNB, and I'd seen virtually nothing in the news or on the web to suggest that there were cultural issues affecting the retailer's consumer traffic, sales and profits. Maybe I'm just reading the wrong websites. But I'd seen nothing.

    By listing all the other companies that seem to have gone out of their way to express not just tolerance, but some level of solidarity with the gay community, I was trying to show how mainstream such attitudes have become ... and if there is a cultural backlash against companies taking such positions, these particular businesses would seem to be unaware of it. Or at least, I'm unaware of it. I'm sure there have been some protests and even some attempts at boycotts, but they certainly haven't gotten any large-scale traction.

    Let's talk about the word "tolerance" for a moment, because that's what I've spent a lot of time thinking about...

    You're right. To some degree I was intolerant of other people's opinions. But this is not an easy one, because in my view, the thing I was being intolerant of was, in fact, intolerance. (This is a conundrum. How tolerant must one be of an point of view that one sees as reflecting intolerance?) And this is not some abstract political issue for me - I have members of my family, whom I love very much, who are members of the LGBT community, and I take very personally intolerance toward them or discrimination against them. Hence, my smart mouth. (BTW...I treasure the email that I got about a year ago that started, "I really don't care that you are gay...")

    Now, I recognize that this issue gets more complicated for some people because of religious teachings that they believe are intractable in this area. But y'know ... opinion and emotion in the "Christian community" hardly seems monolithic. There are a lot of people who consider themselves Christians, who I would consider to be exceptional Christians in word and deed, who have been able to reconcile their religious beliefs with their conviction that a Christian's moral imperative must be to support love, justice and tolerance for all people, even members of the LGBT community.

    I remain convinced, as I wrote last week, that in many ways, the war is over on many of these issues, though battles remain to be fought on various fronts. I think there will be people and institutions on the right side of history and the wrong side of history. I believe firmly that for many people, these issues will remain extremely complicated and not easily resolved. And I respect the fact that they can and often will exercise their opinions through the support of and rejection of certain companies.

    And I think that while these issues may seem cultural in nature, they also concern businesses. Because we should keep in mind that it was in a discussion of JC Penney that this conversation started. And so I can promise that we're going to keep discussing even the thorny issues, and that I'm going to try to be provocative and thoughtful and irreverent and entertaining. And I can even promise you that from time to time, I'll probably cross the line and be flippant and sarcastic to a degree that is inappropriate. But I'll try to learn from all of it.




    And now, on to other matters...




    Regarding the decision by HEB to begin carrying Whataburger ketchup and mustard, one MNB user wrote:

    Good for H-E-B!  They are a clever and intuitive company…this reminds me of their exclusive distribution of Salt Lick BBQ Sauce.  Although it may seem small, reasons like this are why H-E-B is loved by their customer base.

    Whataburger ketchup is indeed superior to all ketchups.  I know, spoken like a true Texan.  So much so that when you dine in, you can’t just pick up an excessive amount of packets or pump potentially wasted excesses of the fine condiments into a cup or on a tray.  No, their team members bring condiments and napkins table to table, preventing waste and adding exceptional customer service that one normally doesn’t get at a fast food joint!


    I have been reassured by several Texas friends that this is all true - that Whataburger condiments are indeed something special.

    I bow to your greater insight.




    Responding to our recent Eye-Opener about the responsibility retailers have to make sure that the products they are selling are not being manufactured in facilities outside the country that are putting their workers in unsafe conditions, one MNB user wrote:

    Recently, Amy Hall, Director of Social Consciousness for Eileen Fisher, appeared on WNYC on the Brian Lehrer show. Obviously, Eileen Fisher is an apparel brand that is serious about supporting a sustainable model of manufacturing.  Amy was quite eloquent about the lengths to which the company will go to make its overpriced schmattas eco-friendly – such as looking for a substance other than chlorine to make the washable wool washable.

    They got into a discussion about the tragedy in Bangladesh, and how much responsibility the manufacturer ought to bear to ensure the safety of off-shore workers, even when those workers aren’t directly employed by the US firm.  Brian Lehrer made the sensible suggestion that one way to avoid such tragedies would be to bring the manufacturing home to the USA. 

    Well, that would be hard, said the Director of Social Consciousness – “because we don’t have the talent here“ in the US!!!  Why, it would take years to get Americans up to snuff!  Brian Lehrer, apparently not believing his ears, asked what she meant by ‘talent’.  Designers?  Nope.  Folks who sit at a sewing machine and run up seams.  Matter of fact, the best ‘talent’ for keeping a seam straight is found in China.
     
    It would be funny if it weren’t so horrible.


    Not a very good argument to make these days, I think.




    MNB user Jim McConnell had some thoughts about how Whole Foods treats its employees:

    I also work at Whole Foods Market in a regional support office.  I agree with the letter writer.  Even though we have a special week once per year, this is the culture all year long.  Team Member happiness is a part on our principles and core values.  Whole Foods Market is a great place to work; and the best job I have had in my long career in the food industry.




    I recently criticized Newsweek for managing to achieve almost total irrelevance, despite its switch to an all-digital format. Which prompted MNB user Rich Heiland to write:

    A couple of years ago I subscribed to Newsweek because I got an offer to do so for a buck. I read it years and years ago and so thought I would give it a try. When they announced the were going digital only, I went along with it rather than ask for the 29 cents back on the remainder of my subscription. But, digital as I am these days, I have yet to follow one single email to the digital site.

    I think one thing Newsweek did not understand is that most of us have a digital "lineup" of places we go each day. In my case, Newsweek can't crack that line-up.


    Just going digital doesn't make you relevant. There's gotta be some meat with the sizzle.




    Last Friday, I had a piece about how forensic anthropologists have discovered that at least some of the early settlers at Jamestown resorted to cannibalism in order to survive the harsh winter of 1609.

    About which I commented:

    As grossed out as I am, I have to admit that I find myself wondering what they served with the meal.

    Fava beans and nice chianti, perhaps?


    MNB user Larry Vander Meulen responded:

    Not a light subject.  I would not be so quick to judge.  If you were faced with their situation, death by starvation or cannibalism, what would you do?

    Until you are in that situation, don’t judge.  I am sure it was a very tough decision for them.


    C'mon, Larry. I wasn't judging. I was making a joke. And a movie reference to The Silence of the Lambs.

    In fact, experience suggests that if I hadn't made that Hannibal Lechter reference, I would've gotten a dozen emails asking me how I'd missed such an obvious opening.

    MNB user Chuck Lungstrom responded:

    I instantly visualized Anthony Hopkins slithering tongue with your reference ... but I was still grossed out by the whole image from the story as well as the movie.
    KC's View:

    Published on: May 6, 2013

    Orb, which went into the Kentucky Derby at 5-1 odds, won the race on Saturday afternoon in soggy conditions. A $2 to-win bet on Orb would have paid out $12.80.
    KC's View: