business news in context, analysis with attitude

Published on: September 29, 2014

by Kevin Coupe

I'm a writer, damn it. Not a miracle worker.

Which is probably what it would take to get the US Commerce Department Inspector General to see things my way. But let me give it a shot…

The Washington Post reports that "in May 2013, a supervisor at the National Oceanic and Atmospheric Administration’s Geostationary Operational Environmental Satellite-R Series — which monitors, among other things, space weather — organized a 'team building' activity in the middle of the day to go grab lunch together and then all see the 2 p.m. showing of Star Trek Into Darkness.

"Many who attended assumed that since it was a work-organized event, they could charge the time as work hours. But the Commerce Department’s inspector general said in a report released this week that oh no, going to the movies is not work.
'The OIG concluded that, unlike training events, which are designed to develop professional skills and therefore may be counted as work hours, watching a Star Trek movie offered no professional development opportunities,' according to the report. 'Therefore, even if such an event resulted in greater unity or cohesion, the hours spent at the event should not have been billed to the government'."

May I offer a different opinion…?

As has been well-chronicled on MNB, to the point of shameless self-promotion that likely will continue as long as I can beat this particular drum, I am the co-author, with Michael Sansolo, of a little book called "The Big Picture: Essential Business Lessons from the Movies." (Available on Amazon by clicking here, in case you were wondering.)

In fact, our entire premise is that you can learn important business lessons - about branding and marketing, about leadership and teamwork - from the movies.

Forget about how the hours were counted for payroll purposes. (I wonder which cost more - the trip to the movies or the inspector general's investigation? But I digress…)

Almost all of the Star Trek movies are great examples of how movies can provide critical lessons. Think about the different management styles exemplified by Kirk and Spock. Think about how almost all the movies hinge on some discussion of the importance of the many vs. the importance of the one. Think about how Star Trek Into Darkness specifically looked at the question of whether one should do certain things just because one can do certain things. It also was about how rules are important - in this case, the Prime Directive - but that sometimes one has to break the rules. One of the things you see in pretty much all the Star Trek movies and TV series is an exploration of the importance of team-building, of management styles that range from cowboy (Kirk) to diplomat (Picard) to soldier (Sisko) … though, to the show's credit, it often was able to show variations and subtleties within these characterizations.

Now, to be fair, it doesn't sound like the folks at National Oceanic and Atmospheric Administration’s Geostationary Operational Environmental Satellite-R Series got together afterwards to discuss the movie and its lessons - but that doesn't mean that going was a bad idea. In fact, it made a lot of sense, even if it was accomplished in a ham-fisted way.

I once was told that a major retail CEO once ordered his entire management team to go see The Social Network, saying that it was important that they understand how people were changing the way they communicated and related to each other …because if they did not, they would not be able to understand and relate to that customer.

That makes sense. At least to me.

So go to the movies. Or rent one and watch it at home. Find the lesson. Talk about it.

It isn't the final frontier of management. But it is a fun one.

Published on: September 29, 2014

The Market Basket saga, which captured the consumer and business media's attention for much of the summer, continues to generate headlines and analysis as we get closer to the point where Arthur T. Demoulas is able to close on the purchase of the 50.5 percent of the company owned by his cousins.

For those who may have missed the story, Market Basket's operations were thrown into disarray earlier this year when the company's board of directors, led by Arthur S. Demoulas, fired CEO Arthur T. Demoulas, saying that he was uncooperative, would not provide financial information to the board, and was engineering inside deals with companies in which his side of the family had a financial stake. Arthur T. Demoulas's position was that his cousins were trying to take money out of the company rather than investing in it, and would pursue a path that would hurt both customers and employees and eventually wreck the chain.

Now, the Wall Street Journal reports, Forbes is about to come out with a story that "dismantles the standard version of the story peddled by Boston's local media for much of the summer. The local press portrayed a spontaneous worker uprising at the family-owned chain, in which employees defeated rapacious cousins who wanted to replace a beloved CEO and increase profits at worker expense. 'It's a great saga,' says Forbes. 'Too bad it's not true.'

"Far from being spontaneous, the uproar after the ouster of Arthur 'Artie T.' Demoulas was 'orchestrated from the top,' reports Forbes, claiming even that employees who contributed $500 apiece to fund the campaign were 'reimbursed via a bonus.'

"As for the allegedly greedy cousins behind the firing, they were less interested in milking profits from the business (or even running it) than in curbing what they regarded as questionable dealings by the CEO."

At the same time, the Boston Globe reports that the Massachusetts Institute of Technology (MIT) hosted the first of what no doubt will be many seminars about the Market Basket situation. An excerpt:

"Three of the panels featured MIT and Harvard professors discussing everything from leadership development to political science to marketing. MIT‘s Deborah Ancona, who focuses on leadership, broke down Market Basket’s leadership lessons in every which way, focusing on terms that populate business academia (and business in general, to be sure) like 'alignment' and 'distributed leadership' to say the movement succeeded because middle management and store managers were all on the same page.

"In another panel, Ancona’s colleague Andrew Lo, who teaches finance, considered the effect low interest rates had on Arthur T. Demoulas’s ability to finance his pending deal to buy Market Basket, which will reportedly include more than $1 billion in debt.

"Zeynep Ton, a professor with a focus on company operations, compared Market Basket’s way of doing business to companies like Costco and Trader Joe’s, which are also known for treating their retail employees well. Market Basket’s business model, known for its strong employee benefits and low prices, was thought by workers and customers to be at threat under the direction of Arthur S. Demoulas, leading to the summer’s revolt."

And, in another panel, the evening "broke from the business school mold, featuring four of Market Basket’s store directors. They explored some of the dynamics at play during the summer, such as the difficulties part-time workers faced when their hours were cut to zero in early August, the support the managers received from customers, the awkwardness of encouraging those customers to boycott, and their resolve to put the company back together once Arthur T. Demoulas was back in charge."

Published on: September 29, 2014

It was just a week ago that Tesco announced that its first half profit projections had been overstated by the equivalent of more than $400 million (US) because of what the company acknowledged was "early booking of revenue and delayed recognition of costs." While it did not say fraud was involved, four company executives - including Chris Bush, who has been running Tesco's UK business - have been suspended, though not disciplined, pending an investigation.

In the UK, This Is Money reports that Tesco CEO Dave Lewis "has ordered staff not to shred or delete documents as lawyers and accountants probing the huge profit shortfall at the supermarket giant conduct dozens of interviews.

"The investigation into the accounting scandal is likely to reach back into historic accounts and fears are mounting that the group could be forced to restate its results from last year … Lewis’s ‘no shredding’ order will be seen as a sign that he is determined to get to the bottom of the problem.  It also indicates that the group fears the errors – whether or not deliberate – may extend deep into the company."

The story quotes Cantor Fitzgerald analyst Mike Dennis as saying that "a discrepancy of this size suggests this is not just the behaviour of a few individuals, but behaviour instilled by the senior management team … The key question they will have to answer is whether this practice goes back into last year or even before previous chief executive Phil Clarke took over."

Reuters reports that the whistleblower who first altered Tesco's management to the financial irregularities in fact first tried to do so months ago, while Philip Clarke was CEO of the company. However, his warnings were ignored, and he had to wait until the company had a new CEO before he could get traction with his concerns.

Published on: September 29, 2014

The Associated Press reports that the US Department of Agriculture (USDA) is saying that "unregulated genetically modified wheat has popped up in a second location in the United States, this time in Montana," though it is said to be "on a smaller scale than a similar finding in Oregon last year that prompted several Asian countries to temporarily ban U.S. wheat imports."

Genetically modified wheat has never been approved for US farming.

According to the story, "The herbicide-resistant wheat was found on one to three acres in Montana, while the genetically engineered plants found in Oregon were spread over more than 100 acres. And the plants were found at a university research center in Huntley, Montana, where genetically modified wheat was legally tested by seed giant Monsanto 11 years ago. The plants in Oregon were found in a field that had never conducted such tests, prompting questions about how they got there."

An investigation is proceeding. There had been an investigation into the Oregon case, but there never were any findings about how the GM what got there, except to say that it likely was an isolated incident. Monsanto had suggested that anti-GMO forces may have planted the Oregon wheat as a way of sabotaging its prospects, but that never has been proven.

Published on: September 29, 2014

In New Orleans, the Times Picayune reports that Whole Foods co-CEO Walter Robb told an audience of business executives that the company "plans to add another 40 or so stores to its list of nearly 400 next year, part of the company's aggressive growth strategy." The announcement came after a two-day period in which Whole Foods opened five stores in the US and Canada.

"In an appearance organized by the World Trade Center of New Orleans," the paper writes, "Robb said expansion is only one angle to the company's future. It's also about updating 200 of the company's existing stores, crafting a clear message to consumers and responding to increased competition over prices on fresh foods, he said."

That includes attempting to use Whole Foods as an engine to drive economic development, even though the company is more often associated with people with personal economies that are, in fact, already highly developed.

"In his speech," the story says, "Robb pointed to Whole Foods' latest opening in New Orleans as the anchor store in the $20 million ReFresh Project development, a renovation of the 60,000-square-foot former Schweggman's building at Broad and Bienville streets. The project was developed by Broad Community Connections, a local nonprofit focused on revitalizing the area, and L+M Development Partners, a New York-based firm that specializes in low-income and market-rate housing.

"Other tenants include Liberty's Kitchen, a restaurant and youth culinary program, which partners with the grocery. 'I really think it can be a model for around the rest of the country in terms of how communities can revitalize,' Robb said."

Published on: September 29, 2014

The New York Times reports this morning that the US Department of Agriculture (USDA) plans to announce today that it will "spend $52 million to support local and regional food systems like farmers’ markets and food hubs and to spur research on organic farming … The $52 million will be the first outlay to local and organic enterprises of the farm bill signed into law by President Obama in February, which tripled the amount of money aimed at that sector to $291 million. The organic business, which has long complained that the Agriculture Department does not support it financially, will get $125 million over the next five years for research and $50 million for conservation programs … The department will also be putting $30 million a year into marketing programs for farmers markets and promotion of locally grown foods, and has an additional $70 million available as a block grant to support more research on so-called specialty crops, or fruits and vegetables."

The story notes that while "the local food movement has been one of the fastest growing segments of the business, as consumers seek to know more about where, how and by whom their food is grown," distribution systems are designed "to accommodate the needs of large-scale commercial farms and growers. Grocery stores and restaurants largely rely on big distribution centers and are only beginning to figure out how to incorporate small batches of produce into their overall merchandise mixes."

And, while "farmers’ markets are proliferating around the country, increasing 76 percent to 8,268 since 2008 … they have trouble marketing themselves. And few consumers are aware of a website the department created to help them find a farmers market in their area."

Published on: September 29, 2014

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

• Reuters reports that Family Dollar Stores, still hoping to fend off what has turned into a hostile $9.1 billion takeover move by Dollar General, has said that it has been informed "by certain state attorney generals" - unnamed by the company - that they plan to investigate the bid because of antitrust concerns.

While Dollar General has said that it is willing to divest as many as 1,500 stores and will pay a $500 million break-up fee if federal regulators oppose the acquisition, Family Dollar continues to prefer an $8.5 billion offer from Dollar Tree.

Not to be overly persnickety about this, but I'd like to point out to Reuters that the plural is "attorneys general," not "attorney generals." Not that this makes the story inaccurate, but that is just the sort of thing that sticks out to me.

Published on: September 29, 2014

• Advertising Age reports that Dana Anderson, the senior-VP marketing strategy and communications at Mondelez International, has been promoted to the role of senior vice president/chief marketing officer.

Published on: September 29, 2014

…will return.

Published on: September 29, 2014

In Week Four of the National Football League…

Carolina 10
Baltimore 38

Green Bay 38
Chicago 17

Buffalo 17
Houston 23

Tennessee 17
Indianapolis 41

Detroit 24
NY Jets 17

Miami 38
Oakland 14

Tampa Bay 27
Pittsburgh 24

Jacksonville 14
San Diego 33

Atlanta 28
Minnesota 41

Philadelphia 21
San Francisco 26

New Orleans 17
Dallas 38



In the biennial Ryder Cup championship. the US lost to Europe 16 1/2 to 11 1/2, its eighth defeat in the last 10 meetings.

Published on: September 29, 2014

Published on: September 29, 2014

Many retailers face this question to solve their technology needs.  When you’re analyzing your technology needs in Fresh Departments, Invatron can help you make the right decision for your business.  If you want to align your ordering and production with your sales, if you want to maximize revenue, if you want to reduce discarded inventory, Invatron’s Periscope can help.  Learn more at www.invatron.com.