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    Published on: December 11, 2015

    by Kevin Coupe

    Go figure. The ethical lapses that led Volkswagen to cheat on emissions tests given to its cars go back a decade and were both systematic and systemic.

    Hans-Dieter Pötsch, the chairman of Volkswagen’s supervisory board, said yesterday that the initial results of an internal inquiry has revealed that "the cheating took place in a climate of lax ethical standards," saying that "there was a tolerance for breaking the rules." The inquiry "proves not to have been a one-time error, but rather a chain of errors that were allowed to happen."

    According to the New York Times this morning, "Although the company is not ready to identify culprits, the preliminary findings confirmed widespread suspicion that the scandal occurred because the company’s ambitions in the United States collided with air quality rules that were, and still are, more stringent than Europe’s." And in this case, as so often happens, ambition trumped ethics.

    The chemistry is, to be honest, a little beyond my pay grade ... and if you are interested, you can read more about it here.

    To me, the most interesting part of this issue has to do with how companies like Volkswagen create a culture in which short-term advantages are seen as far more important than the long-term brand equity and trust that allow companies to thrive. It is business malpractice ... and yet there are companies that tolerate it, because it helps this quarter's numbers and bolsters this year's performance bonuses.

    Now, as the Times writes, Volkswagen continues to look as if it is taking public relations advice from veterans of the Nixon White House: "Volkswagen on Thursday continued to maintain the company’s account that the cheating was the work of a relatively small number of people. It said that nine people had been suspended as a result of the scandal, one more than had previously been disclosed. But the company said it could not disclose any names until the evidence was 'watertight'."

    I'm not buying that position ... just as I'm not buying any product made by Volkswagen or its corporate brethren, Audi and Porsche. (Though, I must admit that if I had the money to buy a Porsche 911 Carrera Cabriolet, my moral superiority and ethical condescension might fade away...)

    Matthias Müller, the chief executive of Volkswagen, said yesterday something that lots of executives should say: "We don’t need yes men, but managers and engineers who make good arguments."

    That's true. Of course, senior management actually have to listen to them and act on their good arguments. Because that's the definition of leadership, and it would be an Eye-Opener.
    KC's View:

    Published on: December 11, 2015

    Walmart yesterday said that Stephen Quinn, its longtime chief marketing officer, plans to retire in January, and that it is hiring Michael Francis, a three-decade veteran of Target Corp., to be a marketing consultant charged with initiating "a broad revamp of Wal-Mart’s marketing department," including the identification and hiring of Quinn's successor.

    The Wall Street Journal reports that "the shake-up adds to a growing list of executive changes the world’s largest retailer has made in recent months as CEO Doug McMillon works to spur a turnaround and focus the company’s investments on long-term goals like boosting e-commerce sales and making stores more efficient, as well as appeal to higher-income shoppers. In October, Wal-Mart said longtime CFO Charles Holley would retire at year’s end and Steve Bratspies would become chief merchant."

    The retiring Quinn is 56; Francis is 53.

    The Journal story points out that after 27 tears at Target, Francis went to JC Penney to serve as president, joining Ron Johnson, with whom he'd worked at Target. After that went south, Francis ended up at DreamWorks Animation SKG as chief global brand officer for three years. "But the marketing executive is best known for helping to craft Target’s image over a nearly 27-year career at the retailer. He helped forge some of Target’s well-known designer partnerships, like a line of home goods by architect Michael Graves and limited runs of luxury items from fashion houses such as Missoni."

    Meanwhile, as Walmart looks to retool its marketing strategies, Advertising Age reports that "in what seems to be a direct response to Amazon's sophisticated dynamic pricing, Walmart has been following the e-commerce giant's price fluctuation patterns, suggesting that rather than always sticking to the lowest price, Walmart must follow Amazon's pricing lead to compete."

    The story goes on to say that "the availability of daily price data gathered by third party data firms crawling e-commerce sites, along with tools to automatically alter prices based on data analysis, is altering the retail landscape. This new reality is changing the rules for Walmart, which followed Amazon's pattern of price alterations relatively closely throughout November as measured by 360pi, not just on big days for sales."

    Walmart is not commenting on the story, but experts tell Ad Age that it seems to be generally within five percent of Amazon on prices across the board.
    KC's View:
    You gotta give McMillon credit ... he's totally owning the changes he's making at Walmart, and if things go badly, there will be no question about there the blame will be placed. Conversely, if things go well, they'll build a monument to him in Bentonville.

    It seems to me that at a time when discounting seems to be taking on considerable momentum in the US, it says something about its own pricing that Walmart does not seem content with its 'always low prices' message. The Bentonville Behemoth seems to realize that this is not enough, and it is making all these changes to protect its various flanks ... against Aldi over here, against Amazon over there, and then against Kroger over in that other place.

    I guess the question I would ask is as Walmart plays defense, is it doing enough to play offense. If it positions itself as an alternative to Aldi or Amazon or kroger or Lidl or whoever, is it making clear enough statements about what it is ... not just what it is not. Because it seems to me that if Walmart is positioning itself to attract a customer base that is different from its tradition consumer, it has to establish its image in positive and differentiated terms ... while remaining attractive to its longtime shoppers.

    Given that challenge, maybe I'd retire at age 56, too.

    Published on: December 11, 2015

    In a story about how Albertsons has reacquired 30 of the stores that it sold to Haggen back when it bought Safeway, a result of Haggen's inability to manage a rapid expansion that resulted in a near total competitive meltdown, the Seattle Times takes a look at how the Federal Trade Commission (FTC) may deal with future mergers, acquisitions and dispositions.

    The Times writes that the Albertsons-Haggen situation, experts say, "underscores not only how the FTC made a disastrous bet, but also how it’s become more difficult to encourage diversity among traditional supermarkets. In recent years the industry has consolidated into gigantic chains as a response to competition from the likes of Costco Wholesale, Wal-Mart and even Amazon Prime.

    "Diana Moss, president of the American Antitrust Institute, a Washington D.C.-based nonprofit, says that it was regulators’ leniency to mergers over the past two decades that led to this problem. 'The fewer competitors, the harder it is to find a viable buyer of the assets that can fully restore the competition lost by the merger,' Moss said."

    And Daniel McInnis, a lawyer specializing in antitrust cases, tells the Times that "the well-publicized debacle will probably result in higher standards being imposed on future supermarket mergers ... It’s hard to predict what further requirements the agency might impose, but one possibility is having an independent trustee find a buyer for the stores that supermarket chains are required to divest when they merge, McInnis said. (Right now, the merging companies find a buyer and the FTC approves it.)"
    KC's View:
    I guess the workability of this last concept very much depends on who that independent trustee is; it wouldn't be surprising to see the FTC choose one who does not really reflect modern competitive realities, which won;t help anybody.

    I do think that regulators have a role in making sure that consumers are protected when mergers and acquisitions occur, but I also think that people a lot smarter than I am have to assess competitive realities within the context of a robust e-commerce climate that redefines markets. I'm not saying that the regulators have to go all laissez-faire on us, but I do think they at least have to understand the world as it exists.

    Published on: December 11, 2015

    The New York Times reports this morning that PepsiCo has sought and received approval for the application of the seal of approval from the Non-GMO Project for its Tropicana Pure Premium orange juice, as well as its Naked Juice, Smartfood, and Stacy’s snacks lines.

    "The decision to add the seal to Tropicana is notable because its parent, PepsiCo, has been one of the biggest opponents of state efforts to impose labeling requirements on such foods," the Times writes, quoting Björn Bernemann, vice president and general manager for the Tropicana brand in North America, as saying, “Consumers today have a desire for transparency from brands, and that desire is only going to increase."

    The story notes that "PepsiCo has not had to make any changes in the products to meet the verification because the only thing in Tropicana is orange juice — and as yet, there are no genetically engineered orange trees." It also points out that PepsiCo continues to support - and has spent more than $11 million lobbying for - federal legislation that would prevent states from establishing their own GMO labeling requirements.
    KC's View:
    In the end, the placing of "contains no GMOs" labels on products like Tropicana could have far more impact on how consumers think about this issue than placing "may contain GMOs" labels on tons of other products. I think that pro-labeling and anti-GMO forces at this point have to focus on what they can do ... which to educate consumers, market their position aggressively, and evangelize whenever and wherever possible.

    Since at this point the argument for labeling products containing GMOs seems to have lost, if I were them I'd do my level best to make the manufacturers that opposed it yearn for the good old days when that was the focus of the debate.

    Published on: December 11, 2015

    The Rochester Democrat and Chronicle has a story about how "the National Museum of American History opened Wegmans Wonderplace on Wednesday as the first National Mall exhibit tailored for children 6 and younger who want to touch, hold and climb their way to learning."

    Wegmans is "underwriting the $1.5 million cost of the exhibit, with a 20-year commitment ... The exhibit includes a tugboat, a climbing tower, a small replica of the kitchen used by the late chef Julia Child and a kid-sized farm stand."

    The story notes that "the National Mall exhibit is a marquee philanthropic commitment. The Smithsonian museums, which are free to the public and open 364 days a year, depend heavily on philanthropy to supplement the money they get from Congress. During tourist season, the exhibit is expected to draw families from throughout the nation as well as from abroad."

    Meanwhile, the paper also reports that Wegmans "has released a gold anniversary logo to celebrate its 100th year in business, which occurs in 2016." The company has grown from a single store in Rochester, New York, to an 88 store chain with units in New York, Pennsylvania, New Jersey, Virginia, Maryland and Massachusetts, with at least a dozen new stores in the pipeline.

    KC's View:

    Published on: December 11, 2015

    The always reliable New Yorker has its assessment of Chipotle's problems and possible solutions, noting that "the real problem for Chipotle is that the very things that made it so successful are now going to make it hard for the company to bounce back quickly ... Even Chipotle’s slogan—'food with integrity'—sounds painfully ironic when people are getting food poisoning at its restaurants."

    Take a look here.
    KC's View:

    Published on: December 11, 2015

    GeekWire reports that "Amazon has quietly changed the name of its 'Amazon Mom' program to 'Amazon Family' in the U.S., following a longstanding campaign by dad bloggers to get rid of a name that was increasingly out of touch with parental roles in the 21st Century."

    An Amazon spokesperson tells GeekWire that the new name "better reflects the program’s focus on parents and caretakers who are Prime members."


    The Chicago Business Journal reports that Amazon is "majorly expanding its Prime Now service in Chicago to include one-hour deliveries from a high-end grocer and other food outlets. The Seattle-based online retailer said ... its Chicago area customers are now able to purchase groceries, prepared meals and baked goods from Plum Market, Sprinkles Cupcakes and My Fit Foods via the Amazon Prime app and get the items delivered to their doorstep within one hour for a per-order fee of $7.99 or within two hours for free."
    KC's View:

    Published on: December 11, 2015

    MarketWatch reports that Whole Foods has named Tien Ho as its new global vice president of culinary and hospitality, a newly created role. The story notes that "Ho was previously at Morgans Hotel Group, owners of 10 hotel brands including the Delano and Royalton, where he was responsible for all aspects of the culinary department such as partnerships with celebrity chefs and recruitment. He was named Best New Chef by New York magazine in 2011 while at Ma Peche, a New York restaurant."


    • The Mrs. Green's natural foods chain in the New York metropolitan area has announced the hiring of John Boyle - the former director of merchandising at New Seasons Market in Portland, Oregon, as well as a former Haggen senior executive - to be its new chief merchandising officer.
    KC's View:

    Published on: December 11, 2015

    Got the following email from an MNB reader yesterday:

    I have never, ever sent an email to a blogger. But something has been bugging me, and I wanted to mention it to you since you read your emails and really listen to your readers.

    It was triggered by this comment in your post today:  “The first one was from a reader who said that while she likes MNB, she feels that I spend too much time focusing on big companies and not enough on smaller companies. Now, I'm not sure that this is true ... I like to think that I really spend most of my time focusing on the big innovations that grab my attention, but I take seriously even the criticisms I disagree with.”

    Have you noticed how often you say “I’m not sure this is true”? I’ve been following your blog about two years now, and it’s more often than I think you would imagine. I am sure that I am especially sensitive to your response, because I am dealing with the exact issue with my 16 year old daughter.  Instead of saying what you say, she says “That’s not true” when someone in our family or one of her friends has a complaint or we try to give her constructive criticism. If you think about it though, the exact wording doesn’t matter , because it’s the same attitude. She is incredibly defensive, and can’t seem to realize that if someone has a complaint, they are sharing their “reality” with her. Here is the parallel:  In the above instance, if the comment above is the reader’s reality, then it is “true” to her.

    Instead of “I’m not sure this is true” what you say above comes across as “she was wrong because …”

    There have been a number of other instances where you have shared criticisms or concerns from readers, and you often say “you are right”  or “thanks for sharing this, I am rethinking my position” … but  more often you say “I’m not sure this is true” when in my mind you are really saying “you are wrong because …”

    Anyway, I may be totally off base, but if you want to look back through your archives, see if you can substitute the two phrases and see my point of view. If you agree, then think about the message it is sending to your readers – that your first inclination is to be defensive and only when you agree with the reader completely will you say the reader is right or has possibly changed your thinking. It’s a tough nuance for my 16 year old to understand, but I can tell you that my husband and I are constantly trying to help her grasp the fact that her peers are tired of her philosophy of “I’m right and I don’t care what you say.” Because the bottom is: that is how the attitude comes across. (In her defense, she’s an awesome person with a great heart, but she just can’t read people well and we’re trying to help her since that leads to some tough social situations. As I said, it’s top of mind for me so I may be reading too much into your comments.)

    On a separate note, I really value your insights and I learn a ton from reading MNB regularly. I enjoy the mixture of serious information, humor, and some social commentary.

    Finally, I know you sometimes post your readers’ comments. I can’t imagine that you would post this, but if you do, please post mine as anonymous. My company is very sensitive to what we share via email and online, and while I really don’t think this would upset anyone, I’d really love to keep my job 🙂


    I have to be honest here. I am so tempted to simply respond by saying that I'm not sure that what you say is true...

    But I won't.

    I'm not sure it is a good thing or bad thing that I, a 61-year-old man, have just been accused of having the emotional/intellectual sophistication of a 16-year-old girl. But since you clearly feel a great deal of affection for your daughter, I'll take it in the spirit in which it has been offered.

    I am also not entirely sure how to respond to this. I think it goes without saying that when I express an opinion, I think I'm right. (Most people do.) When people disagree with me, I think they're wrong. But, where I like to think MNB is different (and, quite frankly, has made me more tolerant and open-minded) is that civil discourse is the rule, and I try to see all sides ... and give people who disagree with me plenty of time and space to express their opinions. Sometimes they sway me, often they do not ... but I try to create an environment for legitimate discussion.

    I don't think I'm overly defensive, but maybe that's just me being defensive.

    Perhaps I need to say that "I disagree," rather than suggesting that my truth is the only truth. I'll try to be conscious of the difference, because the last thing I want to be accused of is epistemic closure.




    Regarding Amazon Prime Now, MNB reader Joe Davis wrote:

    I have to admit that I am surprised how often we use Prime Now in our household, after originally viewing it as more of a novelty or service statement.  It has killed the “can you swing by the store and grab X on your way home” trip.  Here in traffic-insane Atlanta, that trip on the way home can add an extra 20-40 minutes depending on the store location and traffic situation.  So instead, we fire off an order to Amazon and let them figure out the 1-hour logistics instead of us.  Totally worth it.
     
    I’ll add a sprinkle more of flavor to this.  I just attended Kantar’s Year End Forum the other day where they were talking about online behavioral impact, and their Chief Research Officer ordered a Fire TV Stick ($29) from the main stage to raffle off later in the day – arrived at the hotel conference center a little over an hour later in a neat little bag.  Point made.


    In so many ways.
    KC's View:

    Published on: December 11, 2015

    In Thursday Night Football, the Arizona Cardinals defeated the Minnesota Vikings 23-20.
    KC's View:

    Published on: December 11, 2015

    I am happy to be able to recommend three movies to you this week, all of which share a common attribute. While they take place during different time periods, have entirely different tones and concern vastly different subjects, they share a sense of outrage and disappointment about institutions that have let down the very people they were supposed to serve. These movies, I think, should make any reasonable person angry at how events transpired ... and should be must viewing this holiday season.

    Let's start with Spotlight, the extraordinary movie about the extensive and landmark investigation conducted by the Boston Globe into the sexual abuse of children by priests in the Boston archdiocese, and the decades-long policy of covering up and, ultimately, enabling these events that was practiced by church officials.

    Almost everybody knows some small piece of this story - either as it unfolded in Boston or in other locations - but Spotlight is a painstakingly detailed look at not just the individual crimes (and sins), but also at the ways in which the church exercised its considerable power in Boston. This may be the most important movie I've seen this year, and it is every bit as good as All The President's Men in the way it portrays the investigative journalists pursuing the story; these reporters are not perfect, and they're not saints, but they are filled with both compassion for their victims and revulsion at the actions of the predators and their enablers. But they're also competitive ... they want the story right, but they also want the story first, because that's how success is measured.

    The acting is, across the board, first rate: Michael Keaton, Mark Ruffalo, Rachel McAdams, Stanley Tucci and Liev Schreiber are just some of the actors who turn what could've been stereotypes into flesh-and-blood people. (I'm told by people who know that both the journalistic environment and the journalists themselves are captured with neat total-accuracy.) The direction by Tom McCarthy creates a Boston in which the truths often can be found in the shadows, and the script by McCarthy and Josh Singer is filled with nuance.

    Now, I must confess something. In watching Spotlight unfold, I felt - perhaps more than with any movie I've ever seen - that I knew every single person onscreen. I grew up going to Catholic schools, in a family where priests and nuns were pretty much deified, and yet, like some characters in the film, I did not know what was going on. (I've since learned that there was plenty, and I actually feel a little guilty about not knowing it. Also, while I think it is fair to say that I was the victim of some emotional and physical abuse, none of it was sexual.) But I knew all those people, and I shared many of their experiences with the Catholic Church and its hierarchy.

    And, while I did not work as a newspaper reporter for very many years, I felt like I knew those people as well. I've been in those newsrooms, I've made those kinds of phone calls, and I've knocked on those kinds of doors ... albeit never in pursuit of a story so dramatic and important.

    What worries me, and worried me even as I was watching this amazingly compelling movie is that it is possible that not nearly enough has changed.

    The second movie I'd like to recommend to you in The Big Short, which is a comic and unconventional retelling of the events that led up to the economic crisis and near financial collapse of 2007 and 2008, based on the book by Michael Lewis. Directed and co-written for the screen by Adam McKay (best known for movies like Anchorman and Talladega Nights, The Big Short realizes that it is getting into some pretty deep weeds by doing a film in which credit default swaps are the least complicated financial instrument being described.

    This is where I think the movie really is brilliant. When it comes to some arcane financial concept, the movie breaks the fourth wall and explains it to you. Like the moment when the movie concedes that "it's pretty confusing, right? Does it make you feel bored? Or stupid? Well, it's supposed to. Wall Street loves to use confusing terms to make you think only they can do what they do. Or even better, for you just to leave them the (bleep) alone. So here's Margot Robbie in a bubble bath to explain." And then they cut to the utterly gorgeous Robbie, who explains sub-prime mortgages while sipping champagne in a tub. Chef Anthony Bourdain performs the same function at one point, explaining collateralized debt obligations while making fish stew. Suddenly, all is clear ... and the movie manages to be outrageous, unexpected, entertaining, accessible and educational all at the same time. It is, to my way of thinking, far superior to The Wolf of Wall Street, which seemed to traffic more in shock value than any sort of real enlightenment.

    The Big Short is less like Ocean's 11 than the trailers and commercials might lead you to expect, but this actually is a good thing .... because the events that it describes are very real, and the extent of the greed and willful criminality that almost brought the nation's economy crashing down cannot be exaggerated. The actors are excellent - Christian Bale, Steve Carrell, Ryan Gosling and Brad Pitt all play financial experts who see economic weaknesses that nobody else does, and try to figure how to exploit them. That's not to say they are heroes ... because there are no real heroes in this story.

    And what will - or should - really scare you is how little seems to have changed.

    Finally, there is a Trumbo, a much smaller movie than the other two, about screenwriter Dalton Trumbo, who was blacklisted during the late 1940s when he refused to testify before the US Congress about his past associations in the Communist party. This is an admiring yet rounded portrait, largely because of the first-rate work by Bryan Cranston in the title role; while he has at every moment the ethical and moral high ground (largely because the Congress and popular sentiment were surrendering to fear-mongering ... hard to believe, I know), his Trumbo is not without faults as he ignores his family as he fights against the blacklist.

    Again, the creative work here is excellent - by Diane Lane, Louis C.K., John Goodman and especially Helen Mirren in supporting roles, and in Jay Roach's direction and John McNamara's screenplay.

    (By the way ... whenever I see movies about the blacklist I feel compelled to recommend The Front, one of the rare movies in which Woody Allen starred that he did not write or direct. He plays a "front" for blacklisted screenwriters, submitting work under his name so that they can still play their craft ... and the remarkable thing about it is how many of the people involved in the movie - from co-stars Zero Mostel and Herschel Bernardi to director Martin Ritt and screenwriter Walter Bernstein - were actually victims of the blacklist. The Front was made in 1976, but it remains both topical and timely.)

    Trumbo is a movie very much about what happens we we lose touch with what are supposed to be our nation's ethical underpinnings, and how difficult it is for even good people to say and do the right thing when the winds of change seem to be blowing in the wrong direction.

    And I find myself wondering ... more than six decades later, how much really has changed.

    All three movies - Spotlight, The Big Short, and Trumbo - remind us of an uncomfortable fact ... that the institutions in which we often place our trust and faith can and often will let us down. Whether it is the Catholic Church, the nation's financial system, or the US Congress, we are reminded in these movies that institutions often serve only to reinforce their own power and prestige, not to serve the people who make them possible. In watching these movies, all within the space of the week, I found myself uplifted by their various artistic achievements, but also a little disgusted by their core messages.

    But sometimes that's okay, as long as we emerge from the experience reminded of our responsibilities as people and citizens, and of how important it is not to be intimidated or made fearful by those who seek to dominate the narrative.

    Sometimes, we have to say what Woody Allen's character says at the end of The Front ... I'd repeat it here, but it really is better if you Google it.




    On Monday I'm going to do something I've never done before ... Mrs. Content Guy and I are going to be in the audience for a taping of "The Jerry Springer Show."

    And to answer the first question I almost always get when this show comes up, yes, they're still making 'The Jerry Springer Show." In fact, it is celebrating 25 years on television this season, which is remarkable by any measurement.

    The second question you are likely to ask is, "Why?"

    It is simple, really, My son, Brian, who is pursuing a career in television, is a production assistant on the show, which is taped just a few miles from our home in Connecticut. And we want to see what he does for a living, so he arranged tickets ... it ought to be memorable.

    By the way, Brian tells me that if any MNB readers who either live in or are visiting the New York metropolitan area would like to attend a taping of 'The Jerry Springer Show," he's happy to arrange tickets. (And maybe even a special Jerry gift.)

    Just call him at 203-564-1284, or email him at brian.coupe@nbcuni.com ... and make sure you mention that you are an MNB reader.




    I wrote last week about making a lamb and artichoke stew ... and promptly got several emails asking me for the recipe. To be honest, I've adapted it from an old frugal Gourmet cookbook...but here it is.

    INGREDIENTS:

    1 tablespoon butter
    2 lbs boneless lamb, trimmed and cubed
    3 yellow onions, chopped
    Emeril's Essence
    2 cloves garlic, chopped
    salt and pepper, to taste
    6 ounces tomato paste
    1 cup dry white wine
    2-3 (14 ounce) cans artichoke hearts, drained and quartered (NOT marinated)

    DIRECTIONS:

    In very large frying pan, melt butter.
    Add lamb and sauté until lightly browned.
    Add Essence, to taste. (I like lots.)
    Remove lamb and sauté onions, and garlic in pan drippings until tender.
    Put lamb, onions, garlic into a large pot.
    Add salt, pepper, tomato paste, and wine, simmering, covered, until lamb is tender (about 1 1/2 hours).
    Add artichokes and simmer another 1 1/2 hours.

    Serve with rice pilaf. Enjoy.




    I have a wonderful chianti to recommend this week - the 2013 Giacomo Mori, which was absolutely delicious with a lasagne I made. Yum.




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

    Slàinte!
    KC's View: