business news in context, analysis with attitude

Yesterday we had a piece about how how ESG (environmental, social and governance) and DEI (diversity, equity and inclusion) have lost their luster with many companies.

One MNB reader responded:

First of all, I appreciate your nuanced position on ESG and DEI, which is in keeping with your ability to see all sides of any issue, avoiding knee-jerk reactions and narrow views. I admire your approach, and seek to emulate it.

So, I couldn't help but comment on this quote from the Bloomberg article you referenced: "Depending on your view, DEI is either a cure for America’s structural racism or proof that the fight against it has gone too far."

As usual, the truth is in the moderate and often overlooked middle between those extremes. Defined and executed well, DEI is simply being intentional about being open to hiring all kinds of people, and giving each of them a voice and an opportunity to contribute to and develop in your company. That's good for society, but more importantly in this context, it's good for business.


One MNB reader, however, does not:

You’re missing the point.

While you ask good questions, nobody or company should be forced into DEI or ESG nor shamed for not abiding by them.

Furthermore more, what makes you think the shareholders care whether or not about governance on these issues?

I choose to not invest in any company that is involved in DEI or ESG.

Looks like I’m not alone.

I wasn't aware anyone was being "forced" into DEI or ESG.  Of course, I suppose it depends on how you define "forced."  There certainly aren't any laws that I know of forcing companies to integrate these things into their operating plans.  Now, if you mean "forced" by trends, publicity, activism and general sentiment - well, okay, maybe so.  But isn't it a business leader's job to resist these forces if they're not good for business, and then make the case for why the company is taking these positions?

And let me ask you a question:  what makes you think the shareholders don't care about governance on these issues?

I'd take a less absolutist position on this - and, if I'm being honest, a position that I believe is more reasonable.  I think some shareholders (like you) don't care, and therefore should feel to invest in businesses and funds that do not have ESG or DEI in their business plans.  And I think some shareholders (like me) do care, and therefore should feel free to invest in businesses and funds that do have ESG or DEI in their business plans.

I'm not sure what the problem is with that - except that some people have made it a problem. 

And from another MNB reader:

Any time you weaponize something, the results are not normally good, especially in the case of DEI where the effect can be the exact thing you were trying to correct.

Solutions are in overall hiring practices,  where you are led by management that wants the best person for the job nothing else.  Competition thru education and training is the only way to get you there, so let’s focus on using those dollars in ways that achieve real results.

From another MNB reader:

In my view DEI is not a bad conceptually. It is the execution that is poor. Corporations and Government were so eager to check the box for DEI that they neglected to structure the programs to actually result in DEI. Of course a program is going to polarize if one group (i.e. White Males) are labeled as a whole “privileged” or worse, an entire race (i.e. Whites) labeled privileged. Where is the Equity there? It is valuable to understand other individuals and the struggles they may face but to ostracize entire groups within an organization is detrimental to the purpose of DEI. Been listening a lot lately to the Dwight Yoakam song “Let’s Work Together” and think it should be piped into every organization, public and private, to remind everyone to “Make someone happy, make someone smile. Let’s all work together, make life worthwhile…Together we stand, divided we fall!”

I really liked this email from MNB reader Karl Graff:

I work in economic assistance for a midwestern state. There are 2 things I always hear as arguments against the continued funding of these and other assistance programs.

One is that there is “so much fraud!” I can tell you that SNAP and WIC have had historically the lowest amount of fraud across all government funded assistance programs. Anyone can look up this information as the USDA is very transparent about how these funds are used and accounted for. EBT skimming has created problems in recent years and that is being dealt with. I’d wager that the poor and hungry are not setting up these skimming operations.

The other is that “the illegals are getting so much aid!” I can tell you that for most government funded assistance programs you must be a US citizen. There are exceptions made for certain immigrant statuses, like those seeking political asylum or escaping violence, etc. If undocumented parents apply for aid, their citizen children can receive assistance, but the parents are not included as participants in the allotments and any income the parents have is used to determine the amount of benefits those children will receive. The more income, the less benefit- sliding scale.

On top of this- every SNAP dollar spent returns about $1.50 in the local economy through increased consumer spending, job creation/preservation- which results in more money moving through local economies.

Many poorer people are ashamed of needing help and if they are undocumented, or asylum seekers, they are doubly careful about reporting accurate information as they could be deported if they are found to falsify information or commit any criminal acts- including certain traffic violations.

Are there exceptions- do people slip through? Yes. But they are exceptions- one offs.

Times are tough and if we are not even willing to make sure that human beings have at least some food, a safe place to sleep, basic hygiene, basic education, and accessible basic health care then who are we?

Hardly anyone ever questions military expense- but help the poor and suddenly “we cannot afford it.”

Guns or butter?

Thanks for the great job you do- I love MNB!

On a related subject, from another reader:

KC – Love your work and appreciate your opinions.  Regarding your comment on the WIC program cuts, I respectfully ask you to consider FROZEN foods in addition to fresh when thinking about the WIC program.  Frozen fruit is often the forgotten orphan of fresh berries, however what most don’t know is that our frozen fruit is fresher than that fresh fruit purchased off shelf.  Our frozen fruit is peaked at the peak of ripeness and flash frozen with hours of harvest locking in the flavor and nutrients of each berry.  The fresh berries on the retail display could have been harvested weeks or even months prior to hitting the store floor (in case of imported fruit).   

I checked (because, to be honest, I wasn't sure), and found that WIC covers "any variety of frozen fruits without added sugars, fats, oils, or salt (i.e., sodium)."

But I'm sure you all knew that.

MNB fave Glen Terbeek had a thought about silos:

KC,  I agree we need to break down the “old mass marketing” silos but need to replace them with the "local market" silos defined by the shoppers, competition and other factors of each local store, real and virtual.  Remember "The shoppers only cares about their store".  These "local shopper silos" will then drive all of the "support systems" needed to improve the effectiveness of the local silo serving its local shoppers. Mass is over, it is all about maximizing the market value, long term  loyalty of each shopper in each local silo.

Silos can be good, are required, but only if they define true market needs defined locally.    Headquarters will be gone, support centers will develop to help the local silos achieve their goals.

Long term, the practices and economics of the way the industry ,retailers and suppliers, works will need to change accordingly.  

It is "back to the future”!  Where the local retail shopping experience, real and virtual, is like the old corner store.  The local store silo drives the business by winning the loyalty of its shoppers.

Mass is so over!

We took note the other day of a story in The Atlantic about how "plant-based" has become a description that has lost all meaning:  "The 'plant-based' label lives on in virtually every food product imaginable: instant ramen, boxed mac and cheese, Kraft singles, KitKat bars, even queso. You can now buy plant-based peanut butter. You can also wash your hair with plant-based shampoo and puff on a plant-based vape."

MNB reader Lisa Malmarowski responded:

To be fair, Kraft does offer plant-based singles now - they are vegan and non-dairy. So, not the same as labeling other things. That said, plant-based it much better accepted than vegan. People who don’t want to consume animal products look for these labels, people who are curious are more likely to choose plant-based labeling over vegan because the connotations of vegan is that it’s not going to taste good. 

The same thing happened with labeling everything ‘fat-free’ like candies. 

C’est la Vie. This will all be yesterday’s news when a new “feature” is suddenly popular. 

Another MNB reader wrote:

Regarding the overuse of 'plant based' is directly tied to your reporting earlier about New Haven style pizza.  Some will look to exploit the term as a rush for profit, while watering down the product quality.  The food industry already did this with 'All Natural'.  There is no government standard of identity for this phrase like there is for a USDA Organic approved label, kosher label, etc.  Now the same is happening to plant-based.  And in 6 month there will be another watered down buzz word the marketers will introduce to us that may or may not actually mean anything. 

And from another reader:

Loved your analysis Kevin!  Spot on.  As a follower of a plant based diet I find it exploitative when a manufacturer puts “plant based” or “vegan” on their packaging when it is obviously plant based.  Plus I am smart enough to know that just because it says “plant based” doesn’t mean it’s healthy…another issue with the abuse of using the label.

And another:

Hope you’re doing well. Without naming names or products, this story reminds me of a meeting I was in a few years ago. We were reviewing our new innovation line up with upper management at our account and one of the categories was “Plant Based Snacks."

When our business manager finished the presentation one of the VPs of the company turned to us and with a straight face said “Aren’t these nuts?”

I wanted to burst out laughing.

Nuts is right.

And from still another:

I think I have been missing out, where is the animal based peanut butter kept? This annoys me and is a pet peeve. If something is inherently gluten free or plant based or whatever it should be against regulations to label it gluten free, plant based or whatever. It just confuses consumers and adds to distrust of the food industry. We really, really need to educate consumers on label reading. 

On the subject of fraudulent returns, one MNB reader wrote:

Ordering multiple sizes and then returning most everything is the way I have to shop now. Have you went to a store and tried to find a selection or sizes? I tried, I really tried, but then had to resort to shopping online. Here’s a thought - online retailers need to do MUCH better at outlining the  sizing correctly. As a woman, clothing sizing is ridiculous, but it’s gotten worse. It’s not customers defrauding online retailers, it’s the retailers that don’t make it easy to find things that fit, that are presented so you can tell how they actually look on average people (and don’t get me started on showing clothes with the models contorted in ways no actual human is going to wear that garment - Gap Brands - I’m looking at you). Oh, and stop telling me my ‘ideal size’, when every garment in that size arrives differently sized. 

But don’t fear, some online retailers are clamping down on returns and charging $10 or more in restocking fees or forcing store credits instead of refund. I just don’t order from them because… see my previous comments. Honestly, even Postmark doesn’t charge you until you, the buyer, accepts the item, plus I can ask questions of the seller who can provide accurate measurements. 

Sorry/not sorry - online retail practices are to blame - not the customers.

We took note the other day of a Wall Street Journal report that "a battle is brewing over the latest term for many packaged food products that manufacturers fear could infiltrate U.S. food policy and scare off consumers … Food-industry groups and makers of goods from ice cream to pasta sauce are stepping up lobbying, pushing back as the U.S. government probes the health effects of heavily processed food. It is a new front in a struggle that could reshape America’s approach to nutrition and threaten profits for companies behind foods throughout much of the supermarket."

I commented:

I hope we're not at the point that a surfeit of lobbying dollars will be effective at diminishing reasonable and legitimate scientific findings - in this case, managing to force the government to soft-pedal science-based findings.

I hope it, but who am I kidding?  Of course we're at that place.

One MNB reader wrote:

One of the fundamental issues we face as a society is the ability of a typical consumer to evaluate the reported “scientific facts” we are presented by government, industry and the media. 

The phrase “trust the science” is referenced in many contexts from climate change to vaccines/pharmaceuticals to nutrition. 

Seems like an entirely rational and appropriate thing to do. However, to think that there is no bias in scientific investigation is naive.

Lobbyists certainly have a great impact on many issues. But to assume that scientific research isn’t influenced by “a priori assumptions”, competition for research grants and personal agendas is naive.

Putting chronic skeptics and conspiracy theorists aside, one of the most concerning trends we have seen over the last decade or so has been erosion in the credibility of federal agencies like the FDA, CDC , NIH and other previously highly regarded regulatory bodies.

This trend has been exacerbated by the spread of social media and the fact that a major segment of the population…particularly younger people…relies upon social media as their primary  source of news and information.

More federal regulation of processed foods to promote better health and nutrition may well be appropriate…but hopefully that won’t happen in the absence of vigorous debate and an objective as possible review of all available data.

And from another reader:

I agree with you, enough money can and will be thrown at this to negate what is right for Americans dietary needs.  In addition, the money/lobbying will not be regulated, especially when the fox is guarding the hen house.  

I believe our system of government is one of the best in the world, however, power and greed still takes precedence over the needs of the people and doing the right thing.  

I actually agree with Winston Churchill:

"Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time."

Which dovetails nicely with another Churchill utterance:

"You can always count on Americans to do the right thing - after they've tried everything else."

Got the following email from MNB reader Mark Johnson:

First of all, your Innovation Conversation with Tom Furphy is my favorite piece each week – not sure if that’s because I enjoy hearing from someone other than you for a change (Haha!) or something else – I suspect it’s just two brilliant minds instead of just one.  Anyhow huge kudos to both you and Tom for keeping it fresh and teaching me something with each week’s convo.

During the Amazon Fresh pickup closure discussion on 1/10, Tom mentioned the processes that mange Amazon’s core strategies such as “leadership principles, innovation process/business planning process, 6-pager, how they budget and set plans in motion.”  Not sure if he’s able or willing to go deeper, but I think it would be fun and informative to have the both of you tease that topic out.  Perhaps it’s a subject for a future Innovation Conversation.

I'll put it on the list.