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    Published on: August 5, 2014

    by Michael Sansolo

    It’s always interesting to remember that just as every giant tree began with a seed, every large chain likely began with a single store. Sometimes the memory of the journey presents interesting insights.

    The Washington Post ran a fascinating interview this past weekend with John Mackey, CEO of the nearly 400-store, $12 billion a year Whole Foods chain. In the interview, Mackey reflected back more than 35 years, to when he was 25 and just opening a small vegetarian market with his girlfriend.

    Not surprisingly, the beginning of the story is filled with missteps starting with his assumption that the food business would be easy, to a severe problem with underfunding. Even the decision to open the first store in a residential neighborhood was one of those mistakes of youth and inexperience.

    Where Mackey’s story becomes so relatable to any business today comes later in the interview on some challenges of management and growth.

    • Like so many operators, Mackey says one of the biggest challenges in growing came when the company doubled from one to two stores. Instead of being able to watch everything himself, he suddenly needed systems and a team “to organize the company, developing processes and policies, making sure our culture is being extended.”

    • Apparently the mocking nickname of “whole paycheck” is no surprise. Mackey acknowledged that early on, Whole Foods paid little or no attention to price largely because the growing chain had almost no competition. That lack of competition led to a lack of discipline on cost controls. Price became an issue of increasing importance as the natural/organic segment started to blossom and conventional stores started vigorously competing with Whole Foods on a range of products.

    • Putting a team together is one of the hardest parts of growth, again an insight every businessperson should recognize. Mackey says some of his biggest mistakes involved people, “Whether it was putting my trust in the wrong people, being slow to recognize that someone was in over his or her head (and) not putting enough premium on individuals who were aligned with the company’s philosophy.”• Mackey said he made similar mistakes in the process of acquiring companies by sometimes leaving former executives from those absorbed companies in place, even when they didn’t get the Whole Foods culture. As so many other business leaders say out repeatedly, culture eats strategy for lunch…even if it’s an organic lunch.

    • Lastly, Mackey offered interesting insights on the venture capitalists who funded his growth, but at a price. “Venture capitalists…are like hitchhikers with credit cards. They get in your car and as long as you take them where they want to go, they will help pay for the gas. But if you get lost or wander off the road you promised…they will hijack the car, throw you out and bring in a new driver.”

    An old proverb says the journey of a thousand miles begins with a single step. Mackey’s story reminds us that even the most successful of those journeys is also filled with missteps.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:
    As an addendum to this story, I thought it was interesting the other day to see in Bloomberg Businessweek that Whole Foods had lowered the price of fresh farm-raised salmon to $10.99 a pound, an approximate 20 percent reduction, which had the effect of giving salmon sales what the company called "a huge lift." The company said that it was pleased with the experiment and plans to expand on it in the fresh foods arena as the year continues. Which means, I think, that as the competitive landscape gets tougher, the journey continues for Whole Foods … and it is not hard to imagine that the coming years could see the company evolve in new and different ways even as it remains consistent about its core values and mission.

    Published on: August 5, 2014

    by Kevin Coupe

    The San Francisco Chronicle had a fascinating story the other day about 23andMe, the at-home DNA testing company that we've written about several times here on MNB. The company first drew out attention because I've always thought that DNA testing is a potential game changer for the food business … how one eats obviously can have an impact on one's long-term health, and if people have a clear picture of their genetic map, they can make intelligent and informed decisions about their diets. (Imagine food stores with their own versions of "genius bars" designed to help people integrate genetic knowledge into the shopping experience.)

    Then, 23andMe got some attention when the US Food and Drug Administration (FDA) ordered the company to stop marketing its $99 mail order kit, suggesting that the marketing had gotten ahead of the science. This may be true … but I think this is only a temporary setback for a technology that hold enormous promise.

    Now, the Chronicle writes, "the company was one of more than 50 institutions worldwide that described new genetic risks for Parkinson's disease. In particular, they determined for the first time six loci, or locations of specific genes on chromosomes, to be associated with Parkinson's. The researchers also confirmed two dozen known genetic associations with Parkinson's."

    The story notes that "23andMe contributed data from more than 4,000 customers with Parkinson's and about 62,000 without it, all of whom consented to participate in the research … More than 10,000 diagnosed patients, it says, have mailed in DNA samples and answered online questions about their illness in the name of advancing scientific research. In return, the participants can also obtain information about their ancestry and gain access to their raw genetic data."

    Gathering and processing this information, the story suggests, is an important step in trying to figure out how to treat and eventually eliminate Parkinson's.

    "Why is 23andMe so interested in Parkinson's?" the Chronicle asks. "It may be because co-founder and CEO Anne Wojcicki's husband, Google executive Sergey Brin, has a genetic variation that puts him at risk of developing the disease. (The two are separated.) In 2013, the couple gave $32 million to the Michael J. Fox Foundation for Parkinson's Research."

    It is, I think, an Eye-Opener about the potential power of DNA testing. And I find this stuff to be fascinating.
    KC's View:

    Published on: August 5, 2014

    The Boston Globe reports that a job fair held by Market Basket yesterday to offer current company employees an opportunity to change positions or move up in the organization generated little enthusiasm, with far more protestors showing up than applicants. A similar job fair is scheduled for today, but one employee said that it seemed more like a way to scare existing employees than it was a realistic way to get the retailer back on track.

    Market Basket management, saying that it believed the lack of interest was a result of intimidation, said they would provide an online option for applicants. The official statement read:

    "We have heard from many associates who are interested in applying for internal positrons, but are concerned for their safety if they attend the scheduled Job Fair. In response to their concerns, we are making available an email address to which associates can apply. Any associate interested should send a copy of their resume to jobfair2014@demoulasmarketbasket.com.

    "We understand this statement will likely generate incoming email not appropriate for this purpose, but feel associates interested in opportunity should be given an opportunity without fear of intimidation and harassment."

    Employees protesting the company's firing of former CEO Arthur T. Demoulas and other management-level employees who supported him and slated to hold yet another mass protest today.

    On Wednesday, Market Basket is scheduled to hold a job fair for outside applicants.

    (As has been reported here and elsewhere … The longtime family feud boiled over with the move by Arthur S. Demoulas, to oust CEO Arthur T. Demoulas due to a conflict over the company’s finances. The fight is characterized differently by the two sides. The Arthur S. Demoulas faction argues that Arthur T. Demoulas spends money irresponsibly and refuses to take direction from the board. The Arthur T. Demoulas side maintains that his cousin is fueled by greed, only interested in raising prices, cutting employee compensation, and threatening the formula that has built the company to a New England success story. To be fair, though, this is a battle that goes back decades, and that is beginning to resemble the Hatfields and the McCoys.)

    Yesterday, another Demoulas family member was heard from, as Jack Demoulas, who works as director of dairy and frozen foods for the company, sent an open letter to fellow employees saying that the chain had been wrong to fire Arthur T. Demoulas, but that employees were wrong to engage in a work stoppage that has "inconvenienced our customers, traumatized thousands of associates, hurt our suppliers, and made a public circus out of a private dispute."
    KC's View:
    "Public circus" is right. Current management is engaged in a high wire act, working without a net … and it seems to me that it is perilously close to allowing the whole business to fall off that wire and come crashing down to earth.

    Published on: August 5, 2014

    Mobile Marketer reports on a new report from xAd and Telmetrics suggesting that "mobile shoppers are increasingly receptive to relevant ads, with nearly 50 percent saying mobile ads are informative and helpful, up 113 percent from 22 percent last year. Additionally, 40 percent reported clicking on ads, with nearly half of these taking secondary actions such as viewing a referring Web site and searching for additional product information … The report found that relevancy is a major factor influencing ad engagement, with more than 40 percent of mobile users saying they clicked on a mobile ad because it was relevant to their interests or purchase research."
    KC's View:
    I suppose it always makes sense to do these studies, but it doesn't seem to be such a major leap to realize that relevance matters. Always.

    Published on: August 5, 2014

    The Chicago Sun Times reports this morning that Square, the mobile payments company that allows retailers to plug credit card readers into their smartphones and tablet computers, has acquired Caviar, a restaurant delivery service.

    Terms of the deal were not disclosed, though the New York Times has reported that it could be as much as $90 million.

    The Sun Times writes that "Square isn’t saying how or if it will integrate Caviar into its business model, just that the two San Francisco-based companies will operate separately for the time being … Founded in 2012, Caviar fancies itself a discerning online ordering platform, tapping only restaurants with top Yelp ratings and providing professional photographs along with each menu item."
    KC's View:

    Published on: August 5, 2014

    • Walmart's "Savings Catcher" program, after a seven market test run, reportedly has gone national.

    Essentially, Savings Catcher allows customers to go to Walmart's website and compare prices on some 80,000 grocery and household products with those of competitors. If Savings Catcher finds lower prices at a competitor, the shopper gets the difference in the form of money placed on a Walmart gift card … and Walmart ends up collecting data on the consumer and the transaction, which will allow it to create more appropriate - and, yes, relevant - promotions in the future.

    • Walmart has announced that it will hold its second annual US Manufacturing Summit in Denver, from August 14-15. The goal is to connect with local manufacturers and present potential projects with which Walmart may want to get involved.
    KC's View:

    Published on: August 5, 2014

    The New York Times has a weekly feature called "Frequent Flyer" in which it interviews executives who spend a lot of time on the road, querying them about their experiences and preferences. This week, the subject of the interview is Stew Leonard Jr., who talks about how it was on a post-college graduation trip from Katmandu, Nepal, to New Delhi that he had an encounter that led him to work in the family business - which he had no intention of doing.

    You can read the entire story here.
    KC's View:

    Published on: August 5, 2014

    Reuters reports that "Sycamore Partners, which recently bought Jones Group, Talbots and Hot Topic, is considering a bid for Sears Canada," which has fallen on hard times recently because of heightened competition from the likes of Walmart and even Target, which has had its own problems in Canada.

    Neither Sycamore Partners nor Sears Canada has commented on the report, but Sears Canada reportedly has been looking at its strategic options there.


    • Restaurant chain PF Chang has provided details about "its ongoing investigation into a security breach, saying data may have been stolen from certain credit and debit cards used at 33 P.F. Chang’s China Bistro restaurants in the U.S.," the Associated Press writes, adding that "PF Chang’s confirmed in June that data from credit and debit cards used at its restaurants was stolen, but didn’t specify the locations at that time … The company said that potentially stolen data includes the card number and may also include the cardholder’s name and/or the card’s expiration date in some instances."
    KC's View:

    Published on: August 5, 2014

    • Walgreen Co. said yesterday that it has hired Timothy McLevish, former CFO of Kraft Foods, to be its new CFO, succeeding Wade Miquelon, who will stay on to help with the transition. The Wall Street Journal notes that this move comes as Walgreen considers the acquisition of the shares of British drug chain Alliance Boots that it does not already own and move its headquarters out of the US - a controversial and increasingly popular tax-saving tactic known as "inversion."
    KC's View:

    Published on: August 5, 2014

    • James S. Brady, the former White House press secretary who was gravely wounded in an assassination attempt on President Ronald Reagan, and who used his traumatic brain injuries as an impetus to fight for national gun control laws, has passed away. He was 73.
    KC's View:

    Published on: August 5, 2014

    …will return.
    KC's View: