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Must we always value innovations financially?

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Imagine for a moment that your college senior is a computer science wiz at MIT and is currently deciding between three job offers. The first is Facebook.  The second is a leading video gaming company.  The final one is less familiar – a start-up in Seattle. It’s called Convoy.  The company reduces the percent of time trucks spend on the road with an empty load. Which job would you want your child to take? I know, “Whatever makes my child happy,” is the emotionally correct answer. “What are the career trajectories?” is another question that you might suggest your child explore. Listen for a second to your inner voice, and ask your child to do the same.  Where do you think he or she would make the most difference to the world? Markets value current and future financial returns.  By building a social media…

A prominent group of CEOs just signed up for a much harder job

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  The Business Roundtable includes CEOs from some of the most recognizable large companies in the US, such as Chase, GM, Johnson & Johnson, and Apple. Think of it as the bluest chips of the Blue Chip listings.  Collectively these companies employ over 15 million people, buy almost half a trillion dollars annually from small and medium-sized businesses, and donate eight billion dollars to charities. Frankly, if politicians followed their advice, we’d have a lot more innovation and infrastructure in our nation. At long last, the Business Roundtable CEOs have outlined – in a policy position – a radical change in the stated intent of a corporation and its leadership. The new direction: that the purpose of a corporation is not to maximize shareholder return but rather to pursue a fundamental commitment to all stakeholders. The stated policy places employees, suppliers, and communities…

Lessons from a retail chain winner and loser

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It was the best of times for Best Buy and the worst of times for Toys “R” Us in the news this week. Years ago, analysts expected Best Buy to go the way of Borders, a bookseller disrupted by Amazon’s online magic. Instead, Best Buy has held up well against Amazon. It not only avoided the fate of electronics chains that did go bankrupt (e.g., Radio Shack and Circuit City) it’s a stock we all should have purchased. Toys “R” Us, on the other hand, announced its bankruptcy this week. Economists love natural experiments, and the Best Buy versus Toys “R” Us comparison offers one for retail markets. Why did Best Buy succeed where Toys “R” Us failed? What lessons can we glean? The key takeaway: You cannot beat Amazon at its own retail game. You must win at a different game. Toys…

Forgotten wallets, Brennan’s, and Disruption in the Food Business

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A trip to my local grocery store is an almost-daily ritual, as I hate to plan dinner ahead of time. The store is also a lovely 15-minute walk from my La Jolla home, making last minute dinner decisions doable without driving. The checkout staff contains familiar faces. When I recently forgot to bring my wallet to the store, I asked Bob if he would let me sign an IOU. He’s the round-faced 35-ish-year-old clerk who always looks like he is thinking of songs rather than codes as he rings up my produce prices. “After all, I’ll be here tomorrow … just like I was here yesterday.” “No way! It’s not our policy,” Bob replied, with a tone implying I was trying to pull a fast one over him. Did his response make sense in an era when Amazon acquired Whole Foods, and two-hour…

Macy’s slow demise

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  P&G leader Arthur Jones once said, “All organizations are perfectly designed to get the results they get!” This truism should be tattooed on every leader’s chest so that one glimpse in the morning mirror reminds them of the CEO’s responsibility. If they don’t like their organizational results, they must change the underlying design that created them. After closing 40 stores last year, Macy’s recently announced it plans to shut down another 100 this year. Its CEO blamed a change in the retail environment, taking no responsibility himself for Macy’s poor showing. Hmm. A CEO that increased Macy’s borrowings to buy back its stock, as the corporation did last year, has a lot of explaining to do. Frankly, I am mad at Macy’s. The company pursued an acquisition strategy that rolled up iconic regional department stores to leverage advertising, purchasing power, and back…

How Lyft can surpass Uber

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My daughter, Lauren Christianson, does experiential marketing out of an agency (Cunning) in NYC, producing events for clients such as ride-share company Lyft, Uber’s main competitor. Experiential marketing immerses customers in the brand’s promise, such as Lyft’s fun and irreverent brand personality. This past Halloween, for example, Lauren used special effects make-up artists to transform actors in San Francisco and New York City into zombies. People could request Lyft Zombie Mode and have a zombie delivered to their gathering. Other recent work includes Lyft Ghost Mode, a promotion for the new Ghostbusters movie, where users could take a ride in an Ecto-1 vehicle. (See picture.) There was also Lyft Jazz Mode at the New Orleans Jazz and Heritage Festival, where riders could order a vehicle with live jazz musicians playing. Both companies are networks (also called two-sided markets) — digital platforms enabling individual…

KOHL’S: Will Another One Bite the Dust?

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  Kohl’s Corporation, headquartered in Menomonee Falls, Wisconsin, started with a unique business model: just the soft goods. It offered consumers a comfortable buying experience at lower-than-department store prices. Some people, especially Midwesterners, swore by the brand. My sister-in-law— born, raised, still living in Milwaukee, and likely never to leave — visits Kohl’s regularly for good deals and an easy shopping experience. As it grew, Kohl’s extended its geographic reach to about 1,200 stores, creating a publicly traded stock that made for a good story until it wasn’t. Along the way, the company added more design-driven merchandise, deploying its design center located in the heart of NYC. Kohl’s became omnichannel, as all good retailers must. (Read this report on the retail industry.) Kohl’s. Macy’s. JC Penny. Is there a difference? How can you win in an environment of too much retail for a…

A winning membership business model

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The woman wore brown leather hot pants, a beige silk blouse, dangly earrings and over-the-knee black heeled boots. Thankfully, she was thin. Her partner, also in his late 20s, wore grungy jeans and an expensive leather jacket whose collar hit his rock-star-length locks. Next to them was an elderly Hispanic grandmother trying to keep tabs on three grade-schoolers, most likely children of her working daughter or son. An elderly blond women, her face the work of a terrific plastic surgeon, stood comfortably in very high-heeled shoes. Her Channel sunglasses matched the color of her Fendi handbag. Added to the mix was a teenage male covered in tattoos, wearing black flannel Turkish pants and a sleeveless matching top, despite the 72-degree weather. Each shopper’s cart was brimming, all with very different mixes of merchandise and groceries. Welcome to Costco where you feel you are…

The Reality TV Show every CEO should envision

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You have been imprisoned twice for a total of 8 years for non-violent offenses, both incarcerations related to drug use, drug sales, and property theft. You are off drugs now. You had no legal employment prior to your first imprisonment, but landed a job when you left prison in 2008; unfortunately you were laid off in 2009 as the economy worsened. Unemployed, you succumbed to drugs again and committed the same crimes. You got your GED the second time in prison. A few gang-related tattoos are visible above your shirt collar, and there’s a scar on your face, the result of a prison fight that you did not cause. With a young child at home and a woman you love, you are determined to follow a different path this time.  Your body and voice are strong, but your grammar is weak. You have…

Lessons for leaders from NBC’s newsroom fiasco

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Stars and companies fall from grace. Because of the public hanging, the fall is never pretty. And it’s far easier to explain what happened in hindsight than predict with foresight. Still, looking backward is how we learn our lessons. So here’s my take on NBC’s shocking change in fortune. Breaking your brand promise destroys trust. News anchors must convey the objectivity, rationality, and truthfulness their viewers demand. CBS’s Walter Cronkite is the gold standard. When your chief newsman appears on late night shows and tries to be funny or raises his hand to be Jay Leno’s replacement—as Williams did—you have a potential branding issue to manage proactively. Restlessness places brand promises at risk. Restlessness emerges when the status quo produces a feeling or reality of stagnation. John Stewart is exiting the Daily Show as he felt his viewers did not deserve a host…

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