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    Published on: December 12, 2014

    by Kevin Coupe

    Just because Benjamin Edelman is a professor at Harvard Business School doesn't mean he isn't a dope.

    Or, at least, is fully capable of behaving in a dopey manner.

    He pretty much proved that last week, when he went to war online with Sichuan Garden, a Chinese restaurant in Brookline Village, Massachusetts.

    According to a series of stories in the Boston Globe, Edelman recently purchased $53.35 worth of take-out food from the restaurant, but realized afterwards that the bill was $4 more than he expected it to be. At that point, Edelman - who is known for "militant policing" of the internet and exposing consumer fraud - embarked on an email correspondence with owner Ran Duan over the bill.

    You can read the original Globe story and most of the emails here.

    What it seems to come down to is that Duan had not updated the prices on his website, which Edelman found to be fraudulent, threatening to go to the authorities. While Duan pointed out that the online menu had the caveat, "prices subject to change," he also offered to refund the money to the professor.

    But Edelman is relentless, angry, and quite frankly, seems like he needs to switch to decaf, while Duan comes off as reasonable and a little mystified about while Edelman has turned him into a target.

    Of course, Duan ends up looking like the winner in this battle, because the emails have gone public … and yesterday, Edelman issued an apology:

    "Having reflected on my interaction . . . including what I said and how I said it, it’s clear that I was very much out of line. I aspire to act with great respect and humility in dealing with others, no matter what the situation. Clearly I failed to do so. I am sorry, and I intend to do better in the future,”

    And it tells you something about Edelman - who, when he's working as a lawyer, charges $800 an hour - that students at Harvard Business School actually are telling local papers that they don't want him to become a symbol of the place.

    And, the Globe writes, "In an effort to help shield the school, some students have launched a campaign to get people to donate to the Greater Boston Food Bank. The suggested donation is $4."

    It is an Eye-Opener - about keeping perspective, about the importance of appearances, and about having a sense of humor.
    KC's View:

    Published on: December 12, 2014

    Kroger announced yesterday that David B. Dillon, who has served as the company's chairman since 2004 and as CEO from 2003 to 2013, is retiring from the chairmanship at the end of the month after 38 years with the company.

    At the same time, Kroger announced that CEO Rodney McMullen has been named to the additional post of chairman.
    KC's View:
    Dave Dillon has helped to shepherd his company through a time of unparalleled growth, extraordinary consistency, and perhaps most important, almost none of the drama that has affected other chains a time of economic peril and enormous cultural change.

    And, from my view, he's done it while being an utter gentleman. High praise.

    No reason to think that things are going to change at Kroger. As for Dillon … well, I hope he finally gets a chance to do a little fishing.

    Published on: December 12, 2014

    The Associated Press reports that GMO labeling supporters in Oregon have conceded the defeat of a ballot initiative "after a judge ruled against them and an automatic recount appeared unlikely to sway the outcome."

    According to the story, "Measure 92 was defeated by just 812 votes out of 1.5 million, triggering an automatic recount. The second tally showed a net shift of 25 votes against the initiative. The results cover all 36 counties but have not yet been certified … A judge on Tuesday rejected the campaign's request for a temporary injunction preventing the certification of the recount results."

    Proponents of mandated GMO labeling said they have no more legal options, but pledged to continue working toward a labeling requirement for genetically modified organisms (GMOs) in food.
    KC's View:
    I think the question the anti-GMO labeling forces have to ask themselves is this - What do we need to do to assure the 50 percent of the Oregon voting population that wants labeling and didn't get it?

    That's a lot of people not to trust you.

    Published on: December 12, 2014

    The Wall Street Journal reports that new research from Kantar Media suggests that Amazon is the clear winner in the holiday e-commerce war, at least so far.

    According to the story, on Black Friday Amazon generated more than 30 percent of the online traffic of the 128 sites tracked by Kantar, and on Cyber Monday close to 35 percent of the online traffic went to Amazon.

    The closest competitor - Walmart's site, which got five percent of the online traffic on each of those two days.

    "Of course," the Journal writes, "Amazon has a built-in advantage: it’s non-holiday traffic levels are always high compared to companies like Wal-Mart, Best Buy and Macy’s, which have to also focus on driving people to stores." And it is generating this traffic without the high advertising costs that other major retailers are taking on.

    In related news, comScore is out with its analysis of the online holiday sales to date, concluding that "for the holiday season-to-date, $35.4 billion has been spent online, marking a 15-percent increase versus the corresponding days last year. Green Monday (Dec. 8) reached $1.6 billion in desktop online spending, up 15 percent versus year ago, representing the third heaviest online spending day of the holiday season-to-date after Cyber Monday and Tuesday, December 2. Cyber Week, the week beginning with Cyber Monday, posted strong growth online, raking in $9.1 billion in desktop spending for an increase of 14 percent compared to the same week last year."
    KC's View:
    We went out to do Christmas shopping last night, and every step of the way we asked ourselves if it would make more sense to get this item or that item online … and if Amazon was the best and least expensive choice. That wasn't always the case … but it was like the Ghost of Christmas Presents … hovering over us, influencing our decision making, always an option.

    That's a powerful place to be.

    Published on: December 12, 2014

    • The Dallas Morning News reports that Walmart plans to open 37 stores In Texas over the next two months, and the stores are all smaller Wal-Mart Neighborhood Markets "in two sizes: a 40,000-square-foot traditional grocery store and its newer 12,000-square-foot store, which sells an abbreviated selection of fresh produce, meats and groceries and has a pharmacy and fuel pumps."


    • The New York Times reports that a National Labor Relations Board (NLRB) judge has ruled "that Walmart managers in California had illegally disciplined employees for going on strike and unlawfully threatened to close a store if many of its employees joined a group demanding higher wages … In addition, the judge said it was unlawful for Walmart managers to tell employees that co-workers returning from a one-day strike would be looking for a new job."
    KC's View:

    Published on: December 12, 2014

    The Wall Street Journal reports that hedge fund Starboard Value has acquired about six percent of Staples' outstanding shares, raising the possibility that it could push for a merger between it and Office Depot, in which it has a 10 percent stake.

    The story notes that there is enormous pressure in the office supplies business to consolidate, as competition heightens from the likes of Walmart and Amazon; Office Depot and OfficeMax merged just last year.
    KC's View:
    The story also quite rightly suggests that any such merger would draw a lot of antitrust regulators, who could easily argue that putting Staples and Office Depot together would eliminate competition in the office supplies category.

    But it would raise an interesting question, and I would suggest that antitrust regulators would have to look at a merger of these two companies through 21st century lens. Competition is a very different thing now than it was a dozen years ago, and so-called format and category boundaries have fallen away. If merging is the only way that Staples and Office Depot can compete effectively with Walmart and Amazon, should regulators get in the way? And doesn't the very fact that competition comes from so many quarters - traditional and unorthodox - mean that the way antitrust rules are applied have to change.

    I'm getting ahead of myself here. The merger is a matter of speculation, not fact. But I do think the very idea of it raises larger questions that eventually will have to be answered.

    Published on: December 12, 2014

    The New York Times has a piece saying that "the United States economy is firing on all cylinders as the year comes to a close.

    "That’s the only conclusion that can be drawn from a blockbuster report on November retail sales released on Thursday, particularly when coupled with other recent readings on jobs, industrial activity and more."

    In other words, good news … and you can read the story here.
    KC's View:

    Published on: December 12, 2014

    • In the UK,This Is Money reports that online grocer Ocado "has launched an internal investigation to verify that its agreements with suppliers are above board in the wake of the crisis engulfing Tesco." The company says that the probe includes "a health check from an external auditor."

    Tesco has come under governmental investigation because of financial missteps that include understating expenses and overstating income in an effort to make the company's balance sheet look healthier.


    Reuters reports that RadioShack is saying that its lenders have not agreed to a plan that would have it close 1100 stores, raising the possibility that management will not be able to achieve the turnaround that they've been pursuing.

    Now, RadioShack says that it will only be able to close 600 stores over three years, 175 of which have been closed this year.

    RadioShack has 4000 stores in the US.


    • The Associated Press reports that "more than 150 cattle valued at about $350,000 have been reported missing in southeastern Idaho, and authorities suspect modern-day cattle rustling as beef prices have soared … U.S. cattle industry officials say beef prices are at record highs due to a combination of factors that include past droughts that caused cattle numbers to shrink and increased demand for beef on a global scale following the Great Recession."
    KC's View:

    Published on: December 12, 2014

    • After several quarters of dropping attendance and revenue, SeaWorld Entertainment said yesterday that CEO Jim Atchison is stepping down, becoming vice chairman of the company. He will be succeeded on an interim basis by chairman David D'Alessandro while a search is conducted.
    KC's View:
    I realize that SeaWorld is a little off my usual beat, but I was interested in this because the company's troubles have been caused not just by a recession that affected attendance, but also by the moral outrage created by a documentary called Blackfish, which purported to look at animal abuse at its parks.

    I reviewed Blackfish here, and while SeaWorld mounted a strenuous defense, I found the documentary to be utterly persuasive … I walked away from it having decided never to go to SeaWorld or any of its brethren again.

    If they're going to find a credible replacement, I'd suggest Aquaman.

    Published on: December 12, 2014

    Got the following email yesterday responding to my FaceTime about Chase:

    This could relate to both your comments today on banking (and later on) the NY Times poll regarding government regulation.

    Some of your issues in your banking story, among others, can be blamed on our current administration.   Between anti-terrorism activities, actions to prevent money laundering, and the continually increasing oversight of the financial services industries in general, we spend far more time and resources trying to keep up with government regulation than we did ten years ago.

    I attended a meeting recently conducted by one of our executives who told us that right now the fastest growing part of our firm’s hiring is not client-facing employees, but instead in the areas of oversight and compliance……we are doing all we can to find law school graduates who would rather work in this capacity than practice law, just to keep up with the continually growing regulatory demands.

    More often than not, when I question yet another new rule or requirement as being silly or unnecessary, I am told that it is required as the result of additional oversight by the government.


    On the other hand, lack of oversight brought us to the brink about six years ago.

    Which makes my point about common sense regulation.

    Another MNB user asked:

    Why doesn’t all legislation have an expiration date to be reconsidered and renegotiated at a later date?

    I'd be okay with that, except that it might open the door to an even greater flood of lobbying dollars trying to support various special interests.

    From another reader:

    Not sure how you resolved it, but we’ve found the Chase App ridiculously easy. I’ve sent my brother-in-law a $500 gift for his wedding, paid for services to freelancers, gotten money from a friend who needed me to get something for them at a store, and deposited checks up to $2,000/day. 

    All for no extra fees to my account. And all instant. I never have to go to the bank anymore. It’s the greatest.


    Which points up what Chase is try to do - get everybody to consolidate their accounts at Chase. Which we're going to do. Somewhere else.

    And your point doesn't address my biggest objection - that they wouldn't take five 20 dollar bills.

    Legal tender. Except, I guess, at Chase.
    KC's View:

    Published on: December 12, 2014

    In Thursday Night Football, the Arizona Cardinals defeated the St. Louis Rams 12-6.
    KC's View:

    Published on: December 12, 2014

    First, let me be up front about a personal bias: Tom Stoppard's "The Real Thing" is one of my favorite plays. I've now seen it three times, in three separate productions, on Broadway.

    The first, with Jeremy Irons and Glenn Close in the leads, directed by Mike Nichols, I saw in 1984. The second was in 2000, with Steven Dillane and Jennifer Ehle starring. And last weekend, I saw yet another production, starring Ewan MacGregor and Maggie Gyllenhaal.

    One of the reasons I love 'The Real Thing" so much is that it is about both words and emotion; its protagonist is a playwright who often hides behind verbal gymnastics rather than deal with his own feelings … and when he does start to connect with his emotions in a sometimes primal way, he finds that words are not enough, that they can be inadequate. Plus, the writing is gorgeous …funny, ironic and yet deeply felt.

    I love live theater, and wish I could go more often. (Broadway shows make major league baseball games look inexpensive by comparison.) I was determined to see this new iteration of the play because I was anxious to see how it fared with a different cast and director.

    Go figure, I got a business lesson.

    Because the thing is, the words were the same. But the play was not, and I have to believe that is largely because Ewan MacGregor either isn't the stage actor that Jeremy Irons is, or that he did not connect to the character in the same visceral way. He was good, but he was not as profoundly affecting as Irons was.

    It was 30 years ago that I first saw "The Real Thing," and yet I have such strong memories of that show that I could tell when MacGregor either didn't nail the jokes or didn't seem to understand the ironic twists that are woven throughout the play. Some of this is taste, of course, but for me it was just a flatter interpretation that drained the play of its romance and passion. Whenever Irons was on stage, one could feel lust and confusion and guilt and love and a palpable intelligence and even a certain amount of arrogance. With MacGregor, one could watch a pretty good actor playing a part.

    There's an enormous difference.

    Much of the blame, I suspect, can be laid at the feet of the director, a fellow named Sam Gold who does his actors no favors with his staging, which seems curiously enervated. The Mike Nichols version pretty much crackled with energy and some fascinating mixture of love and lust, seasoned by literate sophistication, but this doesn't have any of that.

    I did love Maggie Gyllenhaal, though … she manages to transcend the production's problems with a performance that is lovely and full of feeling.

    The business lesson?

    Simply put, people matter.

    A business, after all, is like a play. Especially if the business is a brand. It should have a story to tell and a guiding intelligence; it has actors, it has stage left and stage right, and it should have a director who makes sure that everything and everybody are best positioned to spin the tale in the most effective way, to bring the guiding intelligence behind the business to life.

    And if the director - or the person in charge of the business - is not up to the task, or if one of the lead actors in the play…er, business…does not connect with the role and misses his marks and steps on the jokes, well, it may not matter how good the business concept is.

    Now, to be clear, it isn't a matter of me just liking the first version I saw and being unwilling to accept any other approach to the play. In fact, I've seen three different versions of "Death of a Salesman" on Broadway over the years - with Dustin Hoffman, Brian Dennehy, and Philip Seymour Hoffman playing Willy Loman. And I really liked them all, for different reasons. And I can't tell you how many different actors I saw in '"Sleuth" and "Deathtrap" back in the seventies - I loved those plays, saw each of them multiple times, and found something to love in all sorts of different performances.

    I still love "The Real Thing," but my feelings about it remain connected to a version that I saw 30 years ago, a version that remains vividly imprinted on my memory.

    Business brands have to be careful that even as they age and evolve, their stories are being told with accuracy, passion, energy and electricity. If they're not, then closing night may come faster than desired.




    That's it for this week. Have a great weekend, and I'll see you Monday.

    Slàinte!
    KC's View: