Category Archives: What’s Going On

Those Pesky Joneses

You might have missed something in the financial news yesterday that reminds us of a really important business point. The good folks at Verizon wrote down the value of Oath, which is what they renamed their acquisitions of AOL and Yahoo. I’ll let the good folks at Bloomberg relay the facts:

Verizon Communications Inc. is conceding defeat on its crusade to turn a patchwork of dot-com-era businesses into a thriving online operation.

The wireless carrier slashed the value of its AOL and Yahoo acquisitions by $4.6 billion, an acknowledgment that tough competition for digital advertising is leading to shortfalls in revenue and profit. The move will erase almost half the value of the division it had been calling Oath, which houses AOL, Yahoo and other businesses like the Huffington Post.

For you non-financial types out there, writing down an asset is the accounting term used to describe a reduction in the book value of an asset due to economic or fundamental changes in the asset. In other words, something isn’t worth what you paid for it any longer. Oops. These were acquisitions that Verizon made to transition into taking on Facebook and Google as a content providing, eyeball-generating ad brand. This latest stumble comes on the heels of several others that Verizon has made over the last several years (a JV with Redbox, their failed news site, their awful app store and of course, V-Cast). When you basically spend $4.8 Billion and flush $4.6 Billion of it down the write-down toilet as they did the other day, you might need to rethink your strategic direction.

When you think about it, what Verizon did is not all that uncommon in business. They forget what their core competencies were and chased the latest shiny object. Big mistake. Where would we be now if all that capital had been invested in 5G networking or in WiMax? Video and advertising is something in which hundreds of companies are engaged. Yes, it’s highly profitable but it’s also dominated by two behemoths and subject to the ebbs and flows of consumer interest (whatever happened to MySpace anyway?). Why would you try to keep up with those Joneses?

It seems as if FiOS, their high-speed broadband service has been abandoned. They’re no longer expanding despite the fact that demand for very high-speed internet is everywhere. 5G is years away and technically challenging. Does anyone remember the dream of WiMax? Those are areas in which they are the Joneses and people have to keep up with them. None of us in business can forget what made our ventures successful because we think the grass is greener in some other business’ yard. Don’t chase the Jones’ success. Create your own.

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Filed under Helpful Hints, Huh?, What's Going On

Thank You For Your Service

Yesterday was Veteran’s Day. I don’t typically post on Sundays but I did want to honor all of those who served by putting out something, even if a day late. This is my post from 2009 (yes, I’ve been at this for quite a while) and I like it as much now as I did then. Thank you for your service if you served and please remember to thank a vet, even if it’s a day late.

Today is Veteran’s Day, a holiday which was created to commemorate the end of “The War To End All Wars.” While that part didn’t work out so well, it’s a worthy celebration of our men and women who have served and are serving in the Armed Forces. My Dad is one of those vets. He fought – as Archie Bunker used to say – in The Big One – WW2. And while he’s taught me a lot over the years, he and his fellow vets teach us another really valuable business lesson to go along with all the others.

Veterans Day 2007 poster from the United State...
My father got out of high school and went into the service like most of the young men (and many young women) of his generation.  They put their country ahead of themselves realizing that the answer to “what’s in it for me” lay in the preservation of the principles on which this country was founded and which made everything else in their lives possible.

The really inelegant analogy I want to make has to do with how we approach business.  While the stakes in business aren’t nearly what they were and are for the vets, there are still people making that same decision today both in and out of business.  That decision is to put something else – your customers in the case of business, your country in the case of vets – ahead of yourself.  I’ve written a lot about everything from lousy customer service to marketing messages that shout “me me me” and not “you you you.”  That’s so 1999, isn’t it?

Converse, don’t spew.  Listen, don’t talk.  If I can’t get you to engage in a conversation and put others first because it’s smart, how about to salute the vets?

Any takers?

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Filed under What's Going On, Thinking Aloud

Woebuck

Sad news about Sears today. An American institution, they filed for bankruptcy in order to restructure the company. They will close 142 unprofitable stores near the end of the year. Liquidation sales at these stores are expected to begin shortly. This is in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed by next month.

The press release says that “The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right-sizing its operating model, and return to profitability.” I guess the question I’d ask is what the heck has taken so long? When I was a kid, the Sears catalog was a 500-page wish book. Everything from clothing to tools to appliances and damn near anything else was in the catalog or the store. At one point you could even buy a prefabricated house kit. They sold great appliances (built by Whirlpool) and even better tools (also built by others). They did very smart things like label grades of product “good” “better” and “best” using brand names.  They were Amazon long before Amazon was a gleam in Jeff Bezos’ eye.

So what happened? Well, technology did but that’s only part of the story. This is a perfect example of what can happen when any of us fail to recognize the fundamental changes happening in business – all business. Obviously, online commerce happened but Sears was in decline in the early 1990’s as Walmart took over the title of largest US retailer. Then the little wave became a tsunami, as consumers fundamentally changed their behavior, becoming more price sensitive, doing more research and shopping online, and the shift away from the mall sped up.

You might not remember this, but Sears was an investor in Prodigy, one of the original online services. They jumped out of the digital service in 1996, however. One can only wonder what might have been had they stuck with it and learned from it. Even though walled-garden services died as the internet grew, there was a lot to learn. Remember that Amazon didn’t begin to sell beyond books until around 2000. Why did they bail? To get back to what they knew best – retail (they also sold off their interest in brokerages and real estate companies they owned).

This is an excellent summary from Investopedia:

It would be easy to read this story as a triumph of e-commerce, or to reflect on the irony that Sears was a first-mover when it came to online shopping, with its proto-internet joint venture Prodigy. But even recently, Sears has been ahead of the curve in that area. According to Bloomberg, Lampert “showered” the online division with resources while the rest meleed over a shrinking pie.

Nor did competition with Amazon alone precipitate Sears’ decline. When sales and profits began to fade, in the mid-2000s, other big box retailers—particularly Walmart—were thriving. In 2011, the year Sears lost over $3.1 billion, Walmart made $17.1 billion.

Perhaps the might-have-been next Warren Buffett should have listened to the original, who told University of Kansas students in 2005, “Eddie is a very smart guy, but putting Kmart and Sears together is a tough hand. Turning around a retailer that has been slipping for a long time would be very difficult. Can you think of an example of a retailer that was successfully turned around?”

This is a story of a series of failures. It’s also a cautionary tale to any of us who live and work in these changing times. Brick and mortar stores still make up the vast majority of retail sales in this country yet the country’s largest retailers failed. Greed? Ignorance? Stupidity? What are your thoughts?

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It’s Not Fair

This Foodie Friday sees the opening of the North Carolina State Fair. Until I moved here, I had no idea that state fairs were such a big deal. I mean, I knew that we had them up north, but they always seemed to take place in some remote part of the state and I don’t recall ever having attended one.

Image courtesy NC St. Fair/Facebook

That changed when I headed south. This fair is a big deal and it’s right here in the middle of the state. Last year, over a million people attended and the day I went, it was jammed. While some of the folks there are interested in the giant vegetables on display or the prize hogs being shown, many more are there for the food, and that’s our topic today.

The NC fair seems to be a coming out party for many foods that I can only classify as lab experiments. Many of the foods for sale are normal things such as Cuban Sandwiches that have been “enhanced” by deep frying. Deep-fried Key Lime Pie? You bet! Others are the sorts of things one might dream up in college while in altered states of consciousness. Unicorn Bacon, which is Bacon-on-a-Stick dipped in glaze and rolled in Fruity Pebbles cereal. Then there’s Jalapeno Cheetos Bacon: Bacon-on-a-Stick dipped in jalapeno nacho cheese and rolled in Cheetos. You catch my drift.

Here’s my issue. We have an obesity problem in this country along with an epidemic of diabetes. I don’t think people would have a heck of a lot of fun eating salads as they stroll the midway, but there’s also no limit on how much of the nutritionally horrible stuff one can consume. Before you jump on me, let me point out there the fair does limit how much beer or wine you can buy. In fact, they only started selling beer and wine last year, and you can buy 6oz of wine OR 16oz of beer or cider. Period. One time only, and it’s sold in only one place. In part, it’s to maintain a family-friendly atmosphere but it’s also because the powers that be think alcohol isn’t good for you. Is limiting unhealthy food consumption that different?

There’s a lot of education at the fair. There are demonstrations and exhibits of just about everything represented there. There isn’t, however, any education about healthy eating nor about what a burger held between two Krispy Kreme donuts does to your system when it’s consumed after Candied Bacon S’mores and a Shrimp and Cheddar Cheese Grits Eggroll (that sounds pretty good, by the way). Throw in a sugary soda or two and it’s pretty easy to see why there’s an obesity issue. I know people don’t eat this way all the time and every so often, it’s fun to treat yourself. The problem is that many folks really do eat this way much of the time.

None of us in business can afford to kill our customers. In this case, educating the customers about what they’re putting in their bodies might help keep a few of them around a little longer so they can indulge for many years to come. Do I think the vendors are being malicious or deceptive about what they’re selling? Not a bit. I just wish they, like all of us in business, thought about what impact their products have on their customers and the environment before they pushed them on the public. The rides at the fair have signs explaining that some people shouldn’t ride and that the ride is a health risk to others with back conditions, high blood pressure, etc. Maybe the food stalls need something similar?

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Teshuva 2018

It’s Yom Kippur, the holiest day of the Jewish year.  This was a post from several years ago.  As I read it over, looking for inspiration for something to write on the subject of change and business based on the holiday, I realized that I had expressed my thinking pretty well in the earlier post.  Those of you who celebrate the holiday are probably not reading this until sundown (I scheduled this yesterday in keeping with the spirit of not working on the day). Whether you do or don’t celebrate, I hope you’ll take a moment to reflect.

Yesterday was Yom Kippur, the holiest day of the Jewish year. For those of you unfamiliar with the holiday, it concludes the 10 day period at the start of the Jewish calendarRosh Hashanah – head of the year – during which all Jews are supposed to reflect upon the past year and examine how they’re going to change their lives going forward. One also seeks forgiveness from those against whom he has transgressed – both those of this earth and higher powers. There is a lot of other imagery connected with the period – inscription in the Book of Life being a big one – but I think there’s something each of us can take as a business lesson in a non-denominational way.

We all get off track.  Sometimes it’s in little ways like eating badly or drinking too much.  Sometimes it’s in big ways like alienating our families or hurting friends who love us.  The concept in Judaism of repentance is called Teshuva which means “return”.  I love the notion of coming back to one’s self as well as to the basic human tenets that are common to all religions and peoples.

We can take a period of reflection and “return” in our business lives as well.  The most obvious way is for us as individuals. Who have we alienated this year?  What client have we taken for granted?  But it a bigger opportunity.  How has the business diverged from the mission?  Why have we stopped getting better and are just marching in place?  What can we be doing to grow our people but are ignoring?

We ask those kinds of questions from time to time, but I guess I’m suggesting that it become a more formal process.  Set aside a period every year for “return” thinking.  A period of repentance?  Maybe, in some cases.  But in all cases a chance to change.  A chance to regret past bad actions and to vow not to repeat them.  Most importantly (this is true in the religious sense as well), to correct the transgression.  To apologize.   To make restitution.  Whatever is right and lets everyone move forward with a clear conscious and a vow to do better.

Sound like a plan?

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Hurricane’s Comin’

I went to bed last night after watching my favorite weather forecaster give a rather dire outlook for this week. When I moved to North Carolina I opted for hurricanes over blizzards, I guess, and now it appears that one is headed right for us.

I ran out earlier to pick up a case of water bottles just in case the forecasts are accurate. The local Walmart had nary a bottle anywhere, and the long aisle of empty shelving reminded me that I wasn’t the only person who had this idea four days ahead of when this thing is supposed to pay us a visit. I’ve got lots of ice to hold the food and lots of wine to hold me so I think I’ll be fine.

On the drive home I thought to myself that it was pretty cool how everyone is going about their business and preparing. There weren’t any D batteries at Walmart either and there were lines at the gas stations I passed. People are trying, as we were constantly told in the Boy Scouts, to “be prepared.” Which leads me to today’s screed.

There is a hurricane headed for your business. It might not be on your radar yet or you may have red flags raised over your beaches, but you can rest assured that at some point a massive, devastating storm will hit you. The thing is that you need to have a disaster place in place and preparations made long before that time arrives. Was Chipotle ready for the massive e. coli outbreak? It almost destroyed them and they still haven’t recovered. What if the power grid fails for whatever reason and all of your refrigerated inventory must be thrown out? What’s the plan to deal with that and are there financial plans in place to recover?

You need a crisis response team and a disaster plan. Your key players from all your relevant business functions – operations, public relations, marketing, quality assurance, legal, etc. – have to have been briefed on the plan long before it’s executed. I’ve written before about how my organization’s web servers failed after 9/11 due to a lack of dust filters that forced the shutdown of the emergency power we were careful to have at our disposal. When the crisis had passed, we rewrote the disaster plan to account for yet another “just in case.”

Hurricanes happen. The question isn’t how to prevent hurricanes but how best to prepare and recover from any damage they cause when they do. I’m ready for this one. Are you?

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Filed under Helpful Hints, What's Going On

Blockheaded?

This Foodie Friday we’re going to have a think about blockchain. If you’re thinking that “food” and “blockchain” don’t relate as well as, say, peanut butter and jelly, apparently you’re underinformed.

If you’re unfamiliar with blockchain, you probably ought to do something to learn about it since it’s weaving its way into everything these days. Basically, it’s a list of records called blocks which are linked to one another cryptographically in a publicly available ledger. It makes tracking things easy and it’s an extremely secure method for doing so.

Applying blockchain to food is happening. Think about a chicken you find at the market. What if you could scan the package and know everything about the contents? When the bird was born and where, what its diet was, if it’s GMO-free, etc., when and where it was processed, packed and shipped, ad infinitum. Cool, right? It’s also possible with food that routinely gets mislabeled as something else: fish. It makes everything traceable, which is a big help with respect to food safety.

I see two issues. One is the cost. Think about what’s happened in digital advertising. We’ve layered on technology to buy and sell ads and at the same time, we’ve added a huge layer of cost. Blockchain in the food area won’t be cheap, I’m sure. We’ve also made the entire industry less transparent, and while blockchain is just arriving in the ad world, it points to the fact that there are a lot of bad actors out there.

This points to the bigger issue which is an old, familiar one: GIGO. Garbage In, Garbage Out. Who is to say that the information in the system is accurate? The data may say one thing while the truth might be quite different. Criminals will learn how to cheat the blockchain just as they have learned how to game the ad business out of billions of dollars every year. While we will be able to trace food we won’t be able to tell if it’s been adulterated without a robust system of inspection.

Do I think this technology belongs in the food business? Probably – the benefits of things such as pinpointing shelf-life or finding the sources of bacterial outbreaks quickly are huge. I guess I wonder about the cost – at what price will this all happen? Will the benefits only accrue to those who can afford to pay for the food that’s blockchain certified? What do you think?

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Filed under food, What's Going On