business news in context, analysis with attitude

I'm going to try to catch up on some of the email this morning…

I've written a lot here about the importance of being able to recognize and embrace transformational opportunities - which is what Blockbuster did not do, and Netflix did.

Which prompted one MNB reader to write:

Several years ago I was giving a talk and used the Blockbuster example, when someone raised their hand and asked, "Can you give me several examples of companies that have completely transformed themselves to stay relevant in the face of fundamental cultural shifts in technology and consumer lifestyles." Pressed as I was, standing there on my feet, I was forced to acknowledge that she had a great point that deserves further research. And I think this could be the subject of a great book (hint!).

One of the things that I think goes overlooked is that we always tend to cite management as if the failure to transform (or win) must be attributed to great (or not so great) people and their decisions. But there is another issue here, which is that just like we treat corporations as people, these organizations have a life of their own, a life that can't always be completely reconfigured. McDonald's is McDonalds. They will never be able to generate a "healthy" halo. Gosh knows they've tried, they've lost, and they've acknowledged so. Ron Johnson couldn't save J.C. Penney not because he's a bad retailer, but because it's done. Like most animals, it's nearing the end of a finite lifespan. People may disagree with me, but that is a ship that's never going to be "righted" One might point to Starbucks, but that wasn't transformation in the face of cultural change. All the guy did was to stop opening up so damned many stores and make sure the coffee tasted better. Tesco has had legendary management teams. One of 'em is a Knight! But there was never anything they could have done to fix Fresh & Easy. It was this thing that just didn't belong. Walmart is having the same problems. It's being pulled in 6 different directions to try and adapt, but at the end of the day it's this giant lumbering behemoth rapidly approaching the path to extinction. Do we really think Jack Welch could solve their problems?

And of course we come to Apple. While I do think this is an outlier to the rule, an example of success based on the vision of one person, but Jobs didn't transform Apple by adapting to fundamental technological and cultural shifts--he (more or less) invented them. That is an eye-opener.

So I think it would be a great goal for all of us to see if we can compile a list of ten examples where companies--in the face of rapid, dynamic technological and cultural change--completely rebuilt their organizations to maintain their marketplace success. I'm sure one will come to mind, but at the moment I remain as flummoxed as I was during that talk.


Regarding the death of Blockbuster, MNB reader Bob Bartels wrote:

Even Epimetheus could not help them now.

I had to look this one up. Epimetheus was the brother of Prometheus. While Prometheus had foresight, Epimetheus was the god of afterthought and the rathe rod excuses.

I love it when I learn something new.

Along the same lines, one reader chimed in:

I’ve had the opportunity to work for several CEO’s of various types. I suppose the situation of a particular company in a particular time calls for different types of leaders. I remember working for one supermarket retailer where the outcome of a meeting designed to describe the company visually was the graphic of a speeding bus with the CEO at the wheel. The picture entailed people falling out of the windows, laying on the ground behind the bus, and folks running to try and keep up. The bus was not stopping for anyone, you were either on board or you were left behind. I only worked for this company for three years but we did more cool stuff with store layouts, locations, types of stores…..on and on; it was a great experience. We were always pushing the envelope.

At another stop later on I remember sitting in an officers meeting listening to the CEO say that we were not going to be pioneers. He said to the group: “Do you know what happens to Pioneers? They get shot in the back with arrows! We will wait for others to forge that path then we will follow”. I was completely and absolutely devastated by that remark.  I had, and still have great admiration for this individual, as he turned around a company that was in a death spiral. He is as solid as they come. However; once the blocking and tackling of good management is in place how do you move a company forward in order to take advantage of those sound management practices? If you don’t have a vision of where you are going, it’s really tough to get there.
 
Both of these companies were acquired by other companies. One still has brand equity in a name that means something…one is absolutely gone, can you guess which one?





We've had some discussions here about loyalty programs, leading one MNB reader to write:

I agree with you on this topic. Any Airline, Hotel, Grocery Store, service provider, etc. that takes the time to “acknowledge” me as an individual OR reward me for using their product or service will be more likely to get my business. Like yourself, I am a long time United guy. Based on my status (loyalty) they do a pretty good job of keeping me satisfied with their service. When they do not, if I tell them I am unhappy they usually do something to “make it right,"

Those without status are not treated with the same level of service – but loyalty (consistent revenue for United or any Company) should count for something. I know that if I fly any other Non-Star Alliance carrier, I will pay for my bags, get on the plane at the end of the line, and probably end up checking my bag. I don’t get upset – as that is the way the system works.


What I don't understand is when airlines seem to do their best to erode the loyalty factor, by allowing people to buy their way to the front of the line. I understand that there is a short-term impact on revenue, but I suspect the long-term impact is negative.

My piece was about how important it is to make customers feel like they are regulars, which led one reader to write:

Your Face Time account was very timely for my wife and me.
 
We were traveling yesterday for my son’s wedding tomorrow, and the experience was an eye opener. We had a direct flight on Delta which experienced mechanical issues as soon as it pushed back from the gate.  It was a two hour delay in arriving after an aircraft change.
 
We arrived at our hotel just looking for a quick meal and some sleep.  After our luggage was brought to our room, I was riding back down with the bellhop and the elevator became stuck between floors.  It took about 40 minutes to get us out; I am glad I had my phone so I could call my wife. Considering the flight issues, there was some humor in the situation. 
 
Here is the eye opener from this “regular guy”. All Delta did for our inconvenience was thank us for our patience and cooperation; crap, even a comped beer on the flight would have been nice.  Many people missed connections.
 
What did the hotel do?  They comped our dinner for the evening and valet parking for our three day stay, as well as not charging us for our first night’s stay.  All for 40 minutes in an elevator.


It isn't hard to do the right thing.




We had the story recently about the Walmart website glitch that made all sorts of high-priced products available for very little money, which led me to be more critical of the consumers who took advantage of what was clerkly a mistake. I think Walmart is wrong to not honor the purchases, but the consumers, as far as I'm concerned, largely did something wrong on purpose.

One MNB user wrote:

If I stumbled upon this glitch, I would be quick to order dirt-cheap speakers -- but I’d also assume a too-good-to-be-true price might end in cancellation. Surely some in this situation felt similarly sober, but reports of any such consumer outrage only increase my sympathy for the company, regardless of its scale or other practices.

And I’m sure my feelings would be the same before I was in the retail industry – it’s simply the Golden Rule, “In everything, do to others what you would have them do to you.”
 
But this also could have been a priceless public relations moment for Walmart to generously honor the orders.


From another reader:

You know, in print advertising, things like this happen all the time. Even with ad reviews ad meetings etc. etc. things get out there that were never meant to happen. I remember as a young Produce  Director back in Dallas Texas, we were going to be bold and run a BOGO on celery for Thanksgiving. We forecasted and thought about it, worried about how it might impact the gross (well before excel spreadsheets) and we decided to do it. What happens in the ad?  Well, the BUY ONE GET ONE was left off, our front page ad just said FREE CELERY… for our Thanksgiving ad! We did not have to give away celery free, customers knew it was a mistake, and we said so, we ran a correction in the paper and posted corrections in our stores. It was embarrassing and I got my arse thoroughly chewed out by the President of the Company.

I don’t know if all the reaction to this Wal Mart Glitch says more about the impact of Social Media, real cultural shifts in our society over the last twenty years, or perhaps that Social Media and 24/7 coverage of anything that happens anywhere just does a good job of uncovering folks that look to take advantage of innocent mistakes. No individual or corporation is perfect, and if they were, MorningNewsBeat would be a pretty boring read.





We had a story the other day about how Amazon has created a new promotional program that will offer booksellers the opportunity to make money by selling Kindle tablets. According to the announcement, "Booksellers can receive 10% of the price of Kindle books purchased from the devices they sell. The first order is worry-free for retailers—Amazon will buy back the inventory for up to six months after the first order, no questions and no penalties." The commission deal will last for two years; after that, the bookstores won't receive any revenue from e-book sales.

I commented, in part:

The word that would best describe any independent retailer that would adopt this program? Delusional. (Or maybe moronic. Or stupid. Or any of a number of others that could easily be found in a decent thesaurus.) Essentially, Amazon - a company that I admire and have done business with since 1997 - is hoping to lure bookstores into what can only be a short-term arrangement that will funnel them a little bit of money over a couple of years, but would get readers even more used to the idea of e-books, which they would continue to buy without booksellers getting any of the action, while at the same time they lose out because hardcover and paperback book sales would decline. I would refer you to the Borders scenario, in which Borders management didn't want to do e-commerce, and decided to farm out that functionality to … wait for it … Amazon. Which Amazon was happy to do. By the time Borders realized it had made a terrible mistake (which should have been before it signed the contract), it was too late, and we all were preparing the company's obituary. I hope any retailer that decides to take Amazon on this offer has the good sense to ask to be taken out for dinner and a movie first. Because we all know how the relationship is going to end.

MNB reader Joe Davis responded:

Loved your write-up on Amazon’s dubious offer of a “helping hand” to booksellers.  The movie quotes should come pouring in, but I think your line about a dinner and a movie was perfect and gave a good laugh.  One would hope booksellers see the “rings” being offered them for what they are – short term gains ending in longer term enslavement and submission.  The One Ring sits in Seattle, and Amazon does not share power.

From another reader:

I think you nailed it regarding Amazon's offer to sell Kindles through normal bookstores. You used the words "delusional, moronic and stupid..." I would simply call it desperation. It is extremely short term thinking to imagine that it will save a brick and mortar bookstore from extinction.




On another subject, MNB reader Glenn Cantor wrote:

In your excerpt from the article entitled “Michael Pollan Doesn’t Get the Meat Business,” you included a quote from Maureen Ogle stating that one of the issues leading to misunderstanding that business is that the vast majority of Americans don’t make food.  In the case of meat, it seems apparent to me that the stronger issue is that the vast majority of Americans don’t slaughter and butcher their food.  The meat we purchase and bring into our houses from the market is nicely packaged.   It is easy to prepare.  And, it looks nothing like the original product.    That is why we don’t fully understand the meat business.

We can put a picture of a stalk of corn on our cereal or vegetables.  We don’t, however, put a picture of a steer on the front of our package of meat.





Regarding Amazon teaming up with the US Postal Service to offer Sunday deliveries, MNB reader Rich Heiland wrote:

First Larry Ellison and other Silicon Valley folks jump into help clean up the ACA web site mess. Now Amazon may have thrown a life ring to the USPS. Isolated incidents or a possible trend? I do not believe in privatization - I've worked with enough large corporations as a consultant and trainer to know just how much they really screw things up but we don't hear about it like we do with government. But, on the other hand, my mind is starting to wonder what other strategic and operational partnerships might exist out there.....without "privatization."

The problem, of course, is that there are extremists on both sides of the aisle who think that it needs to be one way or the other - either government should be involved in very little, or government should be involved with everything.

Common sense - which is in short supply in the halls of government - suggests that public/private partnerships make an awful lot of sense, and it is s shame that public policy seems to be codified so that they are the exception, not the rule.




Regarding the "Daily Table" retail concept, which will sell perfectly good food that happens to be past its sell-by date, one reader wrote:

I like this idea. I am one of the people who would be an early adopter if the store were open in my area. It is the same thing I do on a daily basis. I have no problem buying bread past its best buy date. I won’t buy fresh fruit or vegetables that look moldy in the store, but I will cull out the good from the bad in my refrigerator and won’t throw out a whole pint of fruit because one is bad. Here in the upper Midwest fresh vegetables and fruits this time of year are expensive so I am going to use all I can. Until it looks bad or smells bad, in my house it gets used.




Responding to Michael Sansolo's column about Lululemon, MNB reader Lynn Spishak wrote:

Michael was spot on about Wilson and Lululemon.  As a past customer, I am not impressed with the quality of Lulu pants.  I bought pants years ago, when it was just becoming popular.  Mine started pilling, retaining sweat scents and collecting lint.  I will also not shop there again because of their hardline return policy.  You have 2 weeks to return a product and it needs to have the tags on. To me this says they do not stand behind their product.  If they did they would have a more standard return policy like 90 days or a year.  In the future, I will buy my expensive exercise attire at Nordstrom, as they stand behind their products for one year.

But MNB reader Mike Franklin wrote:

Michael…stop fortifying an antiquated customer service myth…the customer is not always right.
 
“The customer may be right or may be wrong, but always deserves an excellent brand experience!”





Regarding the report that Tesco is considering offering e-receipts, Ken Fobes wrote:

The only surprise here, is that it takes so long for the grocery industry to wake up to the business advantages technology can enable. 
 
At the FMI 2001 Annual Convention, in an SuperTECHmart edutainment exhibit on the show floor designed for C-level executive, we demonstrated this technology and how it can be used to improve the customer experience. You may remember this SuperTECHmart event and the demonstration of how the e-receipt can be  used to automatically update the family’s “perpetual pantry” inventory.
 
Every now and then I review the video of this event and continue to be amazed at how long it takes grocery retailers to actual implement the existing technology we demonstrated 12 years ago!





I wrote recently, responding to a legislative vote by the US Senate:

“I think most Americans are in favor of not discriminating against anyone, including for reasons of sexual identity.”

Which led one MNB reader to write:

Oh if this were only true. As much as I respect you for your views, I think you missed the boat on this one. I live in San Diego, CA and homophobia is rampant here, as much as I wish it were not. I shudder to think what it would be like to live as an out lesbian, as I do, in the Midwest, deep South, or even Portland OR for that matter.

I cannot speak for the South or the Midwest … but I think I can say with some assurance that Portland, Oregon, seems to be one of the most tolerant, open cities that I've ever spent time in. (That's one of the reasons I love it.) There are pockets of intolerance everywhere, of course … but I do think that most Americans are becoming more tolerant, more open, and less discriminatory.

Maybe it's wishful thinking. I hope not.
KC's View: