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    Published on: January 5, 2023

    Yesterday, I looked at broader business lessons from the recent Southwest Airlines meltdown.  Today, it is a different business lesson (about transparency) from a different airline screw up (United).

    BTW…one of the great social media takedowns ever took place more than a dozen years ago when musician Dave Carroll took to YouTube to complain - via a song you're never going to get out of your head -  about how United treated his guitar.  Here's a reminder of what happened back when the Internet seemed young…

    Published on: January 5, 2023

    Amazon CEO Andy Jassy said yesterday that the company is increasing the numb er of people it is laying off from 10,000 to 18,000.  The majority of the role eliminations will be from Amazon's Stores and People, Experience, and Technology (PXT) divisions.

    The Wall Street Journal points out that the layoffs "represent roughly 5% of that element of its workforce, and 1.2% of its overall tally of 1.5 million employees as of September."

    The New York Times writes that "the company more than doubled its work force during the pandemic as customers flocked to online services. It had about 1.5 million employees at the end of September.  Amazon’s growth, however, slowed to its lowest rate in two decades, and Mr. Jassy has been reeling in the company’s overexpansion. Amazon recently cautioned investors that growth could weaken to its slowest pace since 2001."

    Again, from the Journal:  "Amazon was one of the biggest beneficiaries of the Covid-19 pandemic as customers flocked to online shopping. The rush to Amazon’s various businesses, from e-commerce to groceries and cloud computing, pushed forward years of growth for the company. To keep up with demand, Amazon doubled its logistics network and added hundreds of thousands of employees."

    The Seattle Times writes that "in November, Amazon made cuts to its books and devices departments. Devices includes its voice assistant Alexa, its health device Halo and its home robot Astro, as well as Kindle, smart home products and the Echo speaker. It had also offered buyouts to some employees in its human resources division … Amazon, like many tech companies, had been hinting at its intent to cut costs and slim down before the job cuts. It froze hiring for corporate roles and ended some experimental projects, including some robots, a virtual travel experience and a video device for kids."

    In a message communicated to employees and posted on Amazon's website, Jassy wrote that the company's executive team is "deeply aware that these role eliminations are difficult for people, and we don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted. We are working to support those who are affected and are providing packages that include a separation payment, transitional health insurance benefits, and external job placement support.

    "We typically wait to communicate about these outcomes until we can speak with the people who are directly impacted. However, because one of our teammates leaked this information externally, we decided it was better to share this news earlier so you can hear the details directly from me. We intend on communicating with impacted employees (or where applicable in Europe, with employee representative bodies) starting on January 18."

    Jassy went on:

    "Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so. These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles.

    "Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year. We often talk about our leadership principle Invent and Simplify in the context of creating new products and features. There will continue to be plenty of this across all of the businesses we’re pursuing. But, we sometimes overlook the importance of the critical invention, problem-solving, and simplification that go into figuring out what matters most to customers (and the business), adjusting where we spend our resources and time, and finding a way to do more for customers at a lower cost (passing on savings to customers in the process). Both of these types of Invent and Simplify really matter."

    From the Journal, a bit of context:

    "Many tech companies have cut jobs as the economy sours. Amazon’s layoffs of more than 18,000 employees would represent the highest number of people let go by a tech company in the past few months, according to tallies released on Layoffs.fyi, a website that tracks the events as they surface in media reports and company releases."

    KC's View:

    On virtually every communication that Amazon sends to the outside world, there is a 39-word paragraph designed to communicate the company's core values:

    Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Amazon strives to be Earth’s most customer-centric company, Earth’s best employer, and Earth’s safest place to work.

    While these cuts are considerable, and probably will be reflected in a slowdown of store openings and other initiatives, ultimately the real test will be whether at a time of economic challenges, Amazon's cultural imperatives remain intact.  Is Amazon succumbing to the popular business fiction that companies can cut their way to prosperity?  Or is it simply right-sizing, as focused on effectiveness as efficiency?

    It seems to me that Amazon is facing the same issues as many maturing companies, and is reacting the same way.  In some ways, that alone is troubling … because Amazon often separated itself from the pack by turning left when everybody else was turning right.

    These events do nothing to move me off the 2023 prediction I made on The Innovation Conversation with Tom Furphy - that we're going to see Jeff Bezos return to the CEO role at Amazon.  While Jassy may be doing the necessary hard work of the moment, he may be losing the loyalty of the remaining workforce, and it could be critical for Bezos to step back in to establish fresh forward momentum and improve morale in a way that may be beyond Jassy's capabilities at this point.

    Published on: January 5, 2023

    Great piece from The Information that looks at one of the inevitable results of all the job cuts taking place in the tech sector (including the 18,000 at Amazon).

    An excerpt:

    "Denial, anger, bargaining, depression and acceptance - the five stages of grief. With more than 150,000 tech employees across the globe affected by layoffs last year alone, the cuts have hit wide and deep … As people hit the acceptance stage - helped in many cases by generous severance packages - they may find an abundance of options opens up. With even big tech losing its patina of stability, impacted employees may find themselves more open to roles at startups, where at least the volatility is expected and they can revel in the promise of the new.

    "There are any number of startups that will benefit from the vast number of experienced engineers, designers and marketers now on the job market. Even those who haven’t been laid off may decide it’s time for something new.

    "Necessity may drive some to start their own companies. There is the legendary story about the founding of Airbnb - that the founders couldn’t afford their own rent in San Francisco during the 2007 recession and started renting air mattresses in their apartment to raise cash. Their company now has a public market capitalization of more than $54 billion … For others, starting up a new business is a proactive choice. Maybe there’s an idea they’ve been mulling over but never prioritized. The flood of outstanding talent now on the market should make it possible to fill out an A-list team. Why not go for it? Even people who still have jobs may be wondering whether it’s time for a change, as one round of layoffs always makes employees wonder when the next round will come."

    KC's View:

    I've been arguing here for some time that all the layoffs taking place in the tech sector - Scott Galloway calls it the "Patagonia vest recession" - mean that there is a tremendous talent pool out there that suddenly is available and accessible.

    Aggressive businesses interested in infusing their companies with fresh and diverse talent and building a bench filled with athletes with eclectic yet applicable tools - have a couple of choices.  They can add some of these folks to their staffs, or they can create funds that help to underwrite startups that could have significant impacts on their businesses.  Not every hire will work out, and not every investment will pay off … but it seems to me that the juice will be worth the squeeze.

    Another quote from Scott Galloway:

    "Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.” 

    Published on: January 5, 2023

    The Federal Trade Commission (FTC) said this week that it has taken legal actions designed "to halt unlawful noncompete restrictions" imposed by three companies and two individuals.

    According to the FTC posting, "Each of the companies and individuals illegally imposed noncompete restrictions on workers in positions ranging from low-wage security guards to manufacturing workers to engineers that barred them from seeking or accepting work with another employer or operating a competing business after they left the companies."

    The FTC argues in its legal filing that "noncompete restrictions harm both workers and competing businesses. For workers, noncompete restrictions lead to lower wages and salaries, reduced benefits, and less favorable working conditions. For businesses, these restrictions block competitors from entering and expanding their businesses. The FTC recently issued a statement that restored the agency’s policy of vigorously enforcing Section 5’s prohibition on unfair methods of competition."

    “These cases highlight how noncompetes can block workers from securing higher wages and prevent businesses from being able to compete,” sats FTC Chair Lina M. Khan.

    KC's View:

    Interesting development, and not just because the implications could be positive for folks who find themselves subject to onerous non-compete clauses.  It also points to how the FTC is seeing the issue of competition, which likely will play out in how it deals with other antitrust issues.

    Published on: January 5, 2023

    The Wall Street Journal reports that "filings for U.S. unemployment benefits rose only modestly last week and held near prepandemic levels, suggesting the labor market remains historically tight.

    "Initial jobless claims, a proxy for layoffs, increased by 9,000 to a seasonally adjusted 225,000 last week, the Labor Department said Thursday. Average weekly claims this year through mid-December were slightly lower than the 2019 average of 218,000, when the labor market also was historically strong.

    "Claims are up from lows this spring but remain at levels that suggest many employers are still holding on to their workers."

    At the same time, the Journal writes, "Job openings held nearly steady at historically high levels in November, adding to evidence that the labor market remained strong heading into 2023 despite rising interest rates and concerns about an economic slowdown. 

    "About 10.5 million jobs were available in November, essentially unchanged from October and well above prepandemic openings levels, the Labor Department said Wednesday. The report also showed layoffs stayed low and a larger share of workers quit their jobs in November than a month earlier, a sign Americans were still confident in their employment prospects."

    KC's View:

    All of which adds up to an economy that at the very least can be characterized as complicated.  Sure, there is inflation.  Yes, there is a recessionary mindset and real concern about a recession later this year.

    But not all the indicators are negative, which makes it harder for regulators to figure out how to impact one set of trend lines without hurting other sectors.

    Published on: January 5, 2023

    From USA Today:

    "Walgreens and CVS on Wednesday said they plan to sell the abortion pill after the U.S. Federal Drug Administration relaxed its rules on where patients can buy the drug. 

    "The announcements from the pharmacy chains come one day after the FDA said any certified mail and brick-and-mortar pharmacy can dispense the abortion pill mifepristone. Patients will still need a prescription but will no longer be required to pick it up in person at a doctor's office or clinic.

    "CVS and Walgreens will need to get certified in the FDA's program before they can begin selling the drug, and the new rule won't change access for those in states where abortion is restricted."

    KC's View:

    I do think that USA Today underestimates the degree to which this is likely to become a flashpoint in many communities where abortion is a contentious issue.

    As I said here yesterday, pro-choice advocates will demand that stores have these pills available, and anti-choice forces will pressure retailers not to carry them.  The debate will rage online, in pulpits and town meetings, probably in parking lots as demonstrations take place, and retailers that just want to take their of their customers may be forced to make decisions they'd rather not make.

    To my knowledge, major food retailers with pharmacy operations have not weighed in on how they will deal with the new FDA guidance.

    FYI … some MNB readers weighed in on the story, and my characterizations, below in "Your Views."

    Published on: January 5, 2023

    •  From the Wall Street Journal:

    "Online pet retailer Chewy Inc. plans to open more automated fulfillment centers in 2023 to control costs and raise efficiency, which could help the company repurpose certain capital spending, its finance chief said.

    "The Plantation, Fla.-based company, which sells equipment, food, medication and other products for pets, in 2020 opened the first of these centers in Jessup, Pa., followed by one in Belton, Mo., in 2021 and another in Reno, Nev., in August.

    "In the coming 15 months, Chewy will open at least two more of these hubs—which rely on automated storage, retrieval and sorting systems—cutting the time employees spend finding, picking and packing products, according to Mario Marte, the chief financial officer. In some cases, Chewy has fully eliminated manual box-packing, which was previously done by workers, he said."

    Published on: January 5, 2023

    •  Schnuck Markets announced that "following a successful launch in its hometown area of St. Louis, Missouri," the company is "expanding its 'Flexforce' employment option to additional locations in Illinois, Indiana and Missouri (complete list below). Schnucks Flexforce teammates can optimize their work schedules by selecting shifts and store locations that best fit their personal schedules while creating opportunities for growth and learning at a pace determined by the teammate.

    "Flexforce teammates are able to log into a Schnucks scheduling app to view and claim open shifts and, if they choose, can also opt-in to receive notifications of open shifts."


    •  From the Wall Street Journal:

    "The Food and Drug Administration is studying whether legal cannabis is safe in food or supplements and plans to make recommendations for how to regulate the growing number of cannabis-derived products in the coming months, agency officials said.

    "'Given what we know about the safety of CBD so far, it raises concerns for FDA about whether these existing regulatory pathways for food and dietary supplements are appropriate for this substance,' said FDA Principal Deputy Commissioner Janet Woodcock, who has led the agency’s efforts looking at cannabis regulation.

    "Patrick Cournoyer, who heads the FDA office developing the agency’s cannabis strategy, said the agency wants to know whether CBD can be safely eaten every day for a long period or during pregnancy, for example. He pointed to concerns about future fertility."


    •  Axios reports that Macy's has confirmed "that it will shutter more stores in 2023 as part of its Polaris transformation strategy, which was first announced in 2020.

    "Four Macy's locations at shopping malls are slated to close, the company told Axios.  A clearance sale will begin in January and run for approximately eight to 12 weeks."

    According to the story, "Neil Saunders, managing director of GlobalData, told Axios that much of 'the heavy lifting in closures has been completed over the past couple of years and much of the dead wood has been cut out.'

    "'What we are seeing now is more an opportunistic and gentle pruning,' Saunders said of the new closings list. 'That said, I fully expect there to be more closures this year and in the years ahead as Macy’s still has a lot of sub-optimal stores that will probably perform badly as the consumer economy tightens'."

    Published on: January 5, 2023

    Responding to yesterday's piece about the Southwest Airlines meltdown and the lessons it teaches every business, one MNB reader wrote:

    Your story about Herb and Southwest reminded me of the first time I met Bob Mariano. He is the living example of a hands-on, always-in-the-store, engaged food retail executive.

    A friend of mine introduced me to him during the early days of his remarkable run-up with the Mariano’s store concept in Chicago. We met at the newly opened Randolph Street store, occupying several floors on the backside of a loop office tower. To get acquainted we walked the store together. I was struck that he knew all of the store associates by name. As we walked the aisles he explained the various pieces and parts of his concept -- the first time, he said, in his career he had an opportunity to build a store concept from a blank sheet of paper. He carefully dissected the rationale for various departments that, in its early era, were exceptional and forward-thinking for a supermarket.

    You could tell he relished being on site, observing the flow of business, tinkering with the features and upgrades in his “experiential” food store. At the end of our tour when I was getting ready to leave, he asked if I had a parking lot ticket and noticed that no one was at the validation desk, so he did it himself. This spoke volumes to me about his service-oriented point of view, reflected in the genuine hospitality and unusual customer service levels I encountered on subsequent visits without the CEO at my side. Amazing. After Bob sold the business to Kroger and moved on, his spirit and imagination went with him.

    MNB reader Troy Patterson chimed in:

    Enjoyed the snippet on Southwest.  Our organization has had the privilege of listening and reading from James Hunter on Servant Leadership  over the past 15 years.  A  few things James Hunter shared that really resonated to me as a young leader was "he who sweeps the floor should choose the broom."

    Here Jim is actually talking about being the type of leader that's willing to having conversations with our associates and really listening to what their needs are.   Would it be correct for me to just select a broom and give to the associate to accomplish their task or actually take some quality time to connect with that associate, have a conversation with that associate and find out which size and style of broom the associate thinks they need to be successful at their task?

    The other topic Jim shared that stuck with me is "having the right people on the right seat on the bus".   Just because an associate is the best and most experienced forklift operator in the organization doesn't mean they are the best associate to now be promoted to oversee all the forklift drivers in the organization.  Promoting that associate to that position may put our organization in a place where we just lost our best forklift operator off the floor and perhaps isn't the best leader to lead all the other forklift operators.

    Appears Southwest lost touch with whats really important, connecting to their associates that are on the front line and listening intentionally to what their needs are so they can better take care of their guests.

    All good points, but I would offer one thought.  If you don't promote the forklift driver because a) he wouldn't be the best manager of other drivers, and b) you don't want to lose the company's best forklift driver, you then have to figure out a way to compensate him so that it makes economic sense for him to stay in that job.  Otherwise, he'll go someplace else for more money … and you lost him anyway.


    On another subject, from MNB reader Brian Blank:

    The article on the delivery robots tests brought up issues such as uneven sidewalks and streets too wide for the bots to cross in the allotted time (reminds me of an episode of "Grace & Frankie").  There are a few more issues to consider as well, such as snow in the north (clearly the Detroit and Pittsburgh studies were done in warm weather months).  I’m also wondering how they handle crosswalks where the walk light needs to be activated by pushing a button, which are pretty common in the Hartford and New Haven areas—and some of the buttons are not mounted right at the corners, which throws off a human, let alone a robot.

    I suppose finding and learning could be programmed, but the physical act of pushing the button would seem to be a barrier that is difficult (or complex and expensive) to surmount.  I also wonder how easy it is for motorists to spot one of these delivery robots crossing in a crosswalk or traversing a parking lot.


    We reported yesterday that the US Food and Drug Administration (FDA) has authorized retail pharmacies to offer abortion pills to American consumers.  I commented:

    I would expect that this will become a flashpoint in a lot of communities, as the political and philosophical debate over whether these pills should be allowed boils over in a way that puts stores with pharmacies right in the middle, whether they like it or not.

    Pro-choice advocates will demand that stores have these pills available, and anti-choice forces will pressure retailers not to carry them.  The debate will rage online, in pulpits and town meetings, probably in parking lots as demonstrations take place, and retailers that just want to take their of their customers may be forced to make decisions they'd rather not make.

    It is not going to be pretty.

    This prompted one MNB reader to write:

    Once again, your progressive bias comes through in your comments on this story.  You label pro-abortion individuals and groups as “Pro-Choice Advocates.”  On the other hand, you give the ominous descriptor of “Anti-Choice Forces” to those that are anti-abortion.  Pro-Life Advocates is the proper descriptor for anti-abortion advocates.

    The crux of the debate is the convenience and health of women versus the life and potential of unborn children. It will never be an easy debate as there is so much at stake.  Labeling Pro-Life Advocates as “Anti-Choice Forces” is an attempt to marginalize one side of the debate. 

    If you are charging me with having an opinion/bias, I'll plead guilty.  For 21+ years around here, that been the point.  You apparently have a bias, too.

    Since this is my soapbox, I can label people any way I want.  If you have a problem with my use of "advocates" vs. "forces," I'm happy to rephrase it as "pro-choice forces" and "anti-choice advocates."  But my sense is that's not your real problem with my characterization.

    I choose these terms because I think, in fact, they are more accurate.  I know plenty of people who are pro-choice but would not consider themselves as pro-abortion - they just think that women ought to be able to make their own choices without the government interceding.  There also are a lot of people who would refer to themselves as pro-life, but really only are pro-life when it comes to the abortion issue - they're less dogmatic about the issue when it comes to things like capital punishment.

    Which is fine.  People are allowed to have their own opinions, and within reason (meaning I won't let MNB go too far down this particular rabbit hole), I'm happy to encourage agreeable disagreements in this space.  But I think that while "pro-choice" and "anti-choice" may not be a construct that appeals to everybody, it in fact is the most accurate description of the two sides and where they diverge.

    Another MNB reader wrote:

    As my father use to say; “this country is going to hell in a hand basket."

    My father used to say that, too, mostly about things he didn't agree with or didn't understand that reflected the actions, priorities and values of younger generations.  And, I must confess, I occasionally will say the same thing about the actions, priorities and values of people younger than I … though I try to at least be self-aware and mildly ironic when I do so.

    And, from another reader:

    Yup, it’s not going to be pretty. What I don’t understand though, is why there aren’t free birth control pills.

    I don't, either.


    And finally, from another MNB reader:

    Thanks for the link to the Tacombi menu…when I clicked on it, it was very familiar looking, so I did a little googling, and lo and behold, we actually ate at the location in the Battery back on Labor Day weekend.  Verdict:  I think you’ll enjoy the Westport location when it opens.  (Definitely try the corn esquitas!)

    Can't wait.