business news in context, analysis with attitude

Published on: February 11, 2014

by Michael Sansolo

When Sage Kotsenburg finished his gold medal run this weekend in the Olympics his mind was probably full of a million thoughts. Not one of them was, “Wow, I just provided an amazing business lesson.”

Yet that’s exactly what Kotsenburg did and you’d be missing an opportunity if you ignore his feat, his attitude and the lesson he created. In fact, it’s one of those rare moments that creates an easy and yet wonderful discussion with your team on the power of innovation, hard work and creativity.

Kotsenburg actually won the first gold medal of the games in the inaugural men’s slopestyle snowboarding. It’s a new Olympic event, originally from the rebellious and outrageous X-games culture. The event involves snowboarding down a very steep hill, doing a series of stunts, jumps and other things that, frankly, scare the daylights out of me.

There was actually no expectation that Kotsenburg would win. The 20-year-old US athlete wasn’t considered the world’s best at the event and hadn’t won a major race for most of his career. He’s clearly quite good, but never the best.

Until the last run of the Olympics that is.

Heading into the final jump on the run, Kotsenburg said he felt great and saw a moment. He flew into the air and managed a series of more than four revolutions while adding both flair and a perfect landing. In one amazing moment, Kotsenburg went from chasing the leaders to Olympic gold.

And in that we find incredible lessons.

First, let’s give Kotsenburg his due. He didn’t win through luck. Despite the slacker appearance of the snowboarders, they are amazing athletes. They train and work incredibly hard at their craft, knowing that every practice run they take features the strong possibility of a big injury. No one gets into the finals of the Olympics - or even on the Olympic team - without a ton of practice, risk and effort.

So give him credit: it was hard work that positioned Kotsenburg for the win.

But it was creativity and innovation that got him the gold. The entire snowboarding world was stunned by Kotsenburg’s final jump because it was so completely unexpected. As the snowboarder said after his win, “You want to do stuff that’s never been done. You want to follow your own path.”

Most insightfully, he added, “There is no blueprint.”

In other words, sometimes you have to think outside the box and push yourself well beyond your comfort zone, to achieve greatness.

Luckily for me, Kotsenburg pulled off this feat just as I was preparing to address the IGA Global Rally in Las Vegas on the topic of innovation. It’s hard to imagine a better lesson could even come along.

For IGA retailers or business people from companies of any size, Kotsenburg’s gamble was exactly the kind of moment that needs to be considered. It was a triumph built on preparation through hours of training, inspiration and a willingness to take a risk, seize the moment and go where no one had gone before.

Risk taking and innovation are never easy. There’s always the potential of failure and falling. But in a world of rapidly changing conditions and ever increasing competition, playing it safe is hardly a great strategy either. Playing it safe never wins medals and many times leaves businesses playing catch up to new and unexpected competitors.

So share the Sage Kotsenburg story with your team to ignite a feeling of innovation and experimentation. There’s no telling what could come out of it.

Best of all, you don’t have to do it while careening down a mountain on a snowboard.


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: February 11, 2014

by Kevin Coupe

And now, apparently, our smart phones are about to get even smarter.

The Los Angeles Times reports that Starwood Hotels "is testing out new technology that enables guests to check in and open their rooms with a smartphone.

"If all goes well, some hotel guests won’t have to speak to any front desk workers.

"Starwood is testing the technology in the next few months at the Aloft Harlem in New York and the Aloft Cupertino west of San Jose. It plans to expand the technology to its W hotels next."

Pretty cool.

Though I do have to wonder if hotels that adopt such technologies run the risk of giving up any advantage that having really good people at the front desk might offer. The de-personalization of such experiences is not necessarily the best thing for a brand.

So, it's cool. But maybe not entirely smart.

Published on: February 11, 2014

Wired magazine has an interesting take on the decision by CVS to take all tobacco products off its selves by October 2014, which was characterized as a necessary move so that the company's offerings would be consistent with its brand equity as a health care provider.

Wired doesn't question the branding decision, but does suggest that it also is a bricks-and-mortar response that is "about staying one step ahead of Amazon’s relentless campaign to eviscerate brick-and-mortar businesses."

The argument is that as Amazon continues to grow both its offerings and its ability to offer next-day and even same-day delivery, it makes it harder for retailers like CVS to be successful selling everyday commodity products.

"The good news for CVS — and its shareholders — is that management has recognized this threat and is moving brilliantly to meet it," Wired writes. "The company’s effort to rebrand itself as a one-stop health care destination, not just a corner store, has long been under way. The decision to stop selling cigarettes takes that soft launch and turns it into a loud, clear statement of a new identity: You don’t come here to buy paper towels, you come here to be well. (And you might pick up some paper towels while you’re here.)"

Published on: February 11, 2014

Columnist Joe Cahill has a good piece in Crain's Chicago Business about the fundamental problem that seems to be facing McDonald's these days, a problem that "can't be fixed with a new milkshake flavor or faster service."

"McDonald's," Cahill writes, "flourished for decades with a lowest-common-denominator proposition for an expanding, economically (and demographically) homogenous middle class. McDonald's hit the sweet spot with food that was convenient, cheap and - if not particularly tasty - consistent in quality."

But times have changed. For one thing, "nimbler new competitors are picking off customers." Chains such as Subway, Jimmy John's, Panera and Chipotle are offering menu items that often are tastier, are promoted as being more authentic or at least less industrial.

But perhaps the bigger problem is that "the U.S. middle class is fracturing as a small group at the top captures outsize income gains and the larger low end loses purchasing power." in other words, McDonald's consumer base has less money to spend, and that can't help but impact same-store sales growth.

Cahill writes that "McDonald's responses have ranged from a foray into specialty coffees popular with higher-spending customers to an expanded Dollar Menu for penny-pinchers.

But neither addresses McDonald's real problem, which is the problem of the American economy. Stagnant incomes and stubbornly high unemployment are hurting the middle class … McDonald's long-term outlook won't improve until its core customers get a raise."

Published on: February 11, 2014

The New Yorker has a long story by George Packer that is highly critical of Amazon, suggesting that for all its advantages, the company may end up being negative for both the economy and the culture. The opening paragraph sets the tone:

"Amazon is a global superstore, like Walmart. It’s also a hardware manufacturer, like Apple, and a utility, like Con Edison, and a video distributor, like Netflix, and a book publisher, like Random House, and a production studio, like Paramount, and a literary magazine, like The Paris Review, and a grocery deliverer, like FreshDirect, and someday it might be a package service, like U.P.S. Its founder and chief executive, Jeff Bezos, also owns a major newspaper, the Washington Post. All these streams and tributaries make Amazon something radically new in the history of American business. Sam Walton wanted merely to be the world’s biggest retailer. After Apple launched the iPod, Steve Jobs didn’t sign up pop stars for recording contracts. A.T. & T. doesn’t build transmission towers and rent them to smaller phone companies, the way Amazon Web Services provides server infrastructure for startups (not to mention the C.I.A.). Amazon’s identity and goals are never clear and always fluid, which makes the company destabilizing and intimidating."

Another paragraph that caught my eye:

"The combination of ceaseless innovation and low-wage drudgery makes Amazon the epitome of a successful New Economy company. It’s hiring as fast as it can—nearly thirty thousand employees last year. But its brand of creative destruction might be killing more jobs than it makes. According to a recent study of U.S. Census data by the Institute for Local Self-Reliance, in Washington, brick-and-mortar retailers employ forty-seven people for every ten million dollars in revenue earned; Amazon employs fourteen."

You'll want to settle in for a bit when you read the piece, either with a hot cup of coffee or tea … or maybe a stiff drink. Because the Packer piece is lengthy, exhaustive and effectively presents the kinds of challenges with which any Amazon competitor needs to wrestle.

You can read it here.

Published on: February 11, 2014

• Cnet reports that "Amazon has added augmented reality technology to its main iOS app, allowing shoppers to scan for more products using their iPhone cameras.

"Amazon has long been developing this tech, released in 2011 through an app called Flow. The feature lets users snap a photo of a product instead of scanning the barcode or typing the name of the item into a search bar. It will then pull up the product from the photo, so customers can purchase it instantly.

"The original Flow was separate from the main shopping app. It let users photograph items such as books, DVDs, and packaged household items like a box of cereal or a box of tissues. Amazon is hoping this new integration into its main iOS app will encourage the purchase of even more everyday items. Customers also can manage wish lists and see products in their search histories."

Published on: February 11, 2014

Two new revelations regarding the "Dumb Starbucks" store that has opened in Los Angeles, declaring itself a parody of the national coffee chain.

For one thing, the Los Angeles Times reports that "comedian Nathan Fielder of the Comedy Central show 'Nathan for You' revealed that he's the man behind the faux cafe." The shop seemed to be part of the show's planned second season.

For another, the store apparently isn't open at the moment - it has been shut down by the LA County Department of Public Health for operating without a health permit.

Published on: February 11, 2014

• The National Grocers Association (NGA) announced its Creative Choice Awards "Best of Show" winners in the Marketing and Merchandising categories at a special reception, held during the 2014 NGA Show. 

The Best of Show in Marketing was awarded to K-VA-T Food Stores, Inc. for a marketing campaign, titled "Salute," is a 60 second video/television commercial created to honor and show respect for our armed forces. 

The Best of Show in Merchandising was awarded to B. Green & Company, Inc. of Baltimore, MD, submitted by SUPERVALU, Inc. The marketing campaign, titled "Food Depot and Eat Right, Live Well," sought to encourage low-income shoppers to buy more healthy items in-store. 
 
Over 350 entries were judged based on the criteria of creativity, clarity and effectiveness by a panel of industry experts.


• Sears announced that it "has combined mobile shopping with local store convenience to introduce In-Vehicle Pickup. The new service, powered by the Shop Your Way mobile app, enables customers to pick up their online purchases at any Sears store within five minutes of arrival, without ever leaving the car … To take advantage of the new convenience, Shop Your Way members shop online, completing their purchase via computer or tablet. At check-out, they choose In-Vehicle Pickup and input details of the vehicle they'll arrive in, then sign in to their Shop Your Way mobile app and enable location services before leaving for the store."

I do love how Sears, in its press release, describes itself as "a leading integrated retailer." I guess it all depends on how you define "leading"…


• Law360 reports that a proposed class action suit has been filed against Whole Foods, charging that "the form Whole Foods uses as part of its online application to get permission from applicants to carry out consumer reports, including criminal background checks, credit checks and other similar reports" is legally invalid.


• The New York Times reports this morning that "L’Oréal, the world’s largest maker of cosmetics, will pay about $8.2 billion to buy back 8 percent of its shares from Nestlé … in a complex transaction that marks a major step toward unwinding a long alliance between the French cosmetics maker and the Swiss food giant."

The story notes that while "Nestlé has profited handsomely on its investment, the Swiss company has in recent years been focusing on expanding its health and nutrition businesses and dropping what it considers to be noncore activities. Selling the L’Oréal stake also frees up a significant amount of capital in case Nestlé identifies acquisition targets."


• The Associated Press reports that "two retailers in Southern California have reached a $55 million deal to buy Phoenix-based Pro's Ranch Markets, which filed for Chapter 11 bankruptcy protection last May … The group is comprised of Cardenas Markets and Northgate Gonzalez Market.

"Cardenas Markets currently owns 26 stores in California and three in Nevada whole Northgate Gonzalez Markets operates 38 California locations."

Published on: February 11, 2014

Yesterday, in E-conomy Beat, we reported that Associated Grocers of New England announced that it will now offer its independent grocery retailers a state-of-the-art digital platform, including interactive digital circulars, personalized shopping lists and recipes in both a desktop and mobile format. Each retailer will have a unique web and mobile site that offer a fully connected shopping experience powered by Webstop, which we noted in a "full disclosure" note, is a longtime MNB sponsor.

The problem was that because of an editing editor (and by "editing error," I mean that I screwed up the coding), only half the story could be read. Which I have now corrected … assuming that I got the coding right this morning.

Mea culpa, mea culpa, mea maxima culpa…

Published on: February 11, 2014

Shirley Temple Black, the child movie star who lifted the nation's spirits during the Depression with movies like The Little Colonel, Poor Little Rich Girl, Heidi and Rebecca of Sunnybrook Farm, as well as songs such as "On The Good Ship Lollipop," has passed away. She was 85.

She retired from the movies at age 21, but had a long career in public service, being appointed by President Nixon to serve as Ambassador to the United Nations, by President Ford to serve as Ambassador to Ghana, and by President George H.W. Bush as ambassador to Prague.

Published on: February 11, 2014

We had a story yesterday about a study suggesting that traditional market research is less valuable in 21st century America, that it amounts to licking one's finger and holding it up to the wind in an economy that rewards people and companies that instead focus on innovation and telling people what they need and want.

One MNB user responded:

Your comments and observations regarding market research and retailing were spot on!

Two comments. A colleague was part of a team doing research on smartphones in 2007 (i.e. BlackBerry) and their finding after three weeks in the field was that people wanted more & easier to use apps. While leading the way, BlackBerry's apps were surely anything but user friendly. The implication being it is important to know the right questions to ask and how to ask them. Consumers are woefully unable to speak about that which they don't know, but they can still give you useful hints about things with which they are familiar. And lest we forget, the iPhone launched with no apps in 2007(!)

As to your remarks on retailing, heck yes retailers should be advised to follow their passion! I can guarantee you that the experiences of Whole Foods, HEB's Central Market, Starbucks, Trader Joe's and others never arose from focus groups. BUT, that doesn't mean wise researchers and consultants can't take a cue from those retailers' best in class practices to build a more relevant knowledge base of useful information. Many of us in the consulting and market research industry, for example, knew from the moment that it opened that Fresh and Easy was doomed. They we're doing almost everything wrong. And guess what? They have stated publicly that they spent millions of dollars on market research for their concept! F & E offered almost all of the things you would expect consumers to choose on a survey -- fresh, convenient, easy, prepared foods, familiar brands, etc. -- and they failed miserably. All one had to do was spend an hour in F&E and an hour in Trader Joe's to understand the severity of the problem.

The point is that market research can be really effective if the researchers and consultants spend time really understanding their industry. This means doing things that many find too time consuming like spending 3 - 4 days a month wandering around retailers, or visiting the same grocery retailer every night for one month to procure dinner ingredients. Yes, it's work. Many of us forget that once upon a time market research was far more difficult and time consuming. You had to collect data by phone or postal mail. Once received, the data had to be coded by hand, typically entered onto scantron forms or punch cards which were then fed into a mechanical computer. Well executed studies could easily take a year. Now we tell a vendor what we are looking to know via a conference call and get the results in two weeks.

From another reader:

I have done market research for many year for consulting companies..The rush to get the job done, not listening, I mean really listening to the consumer and throwing the younger staff on projects because for the more experienced, it would be a 'waste of talent'!  All this contributes to inaccurate outcomes!  It never used to be like this, but the last 10 years market research has gone right down the tubes!

I have retired from the business!

But another MNB reader disagreed:

On the other hand, I was once told that Steve Burd, retired Safeway Chairman, would not sign off on a new store or remodel investment unless & until there was a consumer market research report to accompany the capex proposal, documenting & authenticating the fit between the store concept being proposed and the local resident consumer base.  Makes sense to me.




Regarding the need for greater cyber-security, I wrote yesterday:

There seems to be no question that in order to stay ahead of the bad guys - and the bad guys seem to be both well-funded and highly motivated - government and industry have to work together and spend together.

Which prompted one inevitable response:

Don't you really think we'd all be far better-off if the government kept its nose out of this?

No. To be honest, I think that's nonsense.

Cyber-security is a lot more than making sure that credit and debit cards used at Target stay secure. There is an element of organized crime and even terrorism here that should have everyone concerned … and if you believe that government should have no role in such things, I think you are severely misguided.

Published on: February 11, 2014

Forget the Olympics. Forget about the questionable infrastructure in Sochi.

Back home, this is the week that Major League baseball pitchers and catchers report.

Yippee.

"The one constant through all the years, Ray, has been baseball. America has rolled by like an army of steamrollers. It has been erased like a blackboard, rebuilt and erased again. But baseball has marked the time. This field, this game: it's a part of our past, Ray. It reminds us of all that once was good and it could be again." - Terence Mann (James Earl Jones), in Field of Dreams