November 30, 2006
November 29, 2006
“I can’t imagine them selling anything other than Spam,” says Jeff Lieberman in a Wall Street Journal article by Steven Gray (11/29/06). “Just the name elicits that image of the blue label on the square tin with that loaf of horrendous looking meat.” In some ways, it’s hard to imagine why Hormel would even try to sell anything other than Spam, “which it introduced in 1937 and is essentially ground pig shoulder meat, salt, water, modified potato starch, sugar and sodium nitrite, all of which is baked in a seven-story oven inside Hormel’s factory in Austin, MN.” Spam is indeed “a surprise star of the packaged-food industry,” having cornered the market of “middle-age, blue-collar men who place a premium on hearty foods that are affordable and easy to make.”
For the more adventuresome, Hormel has even come up with innovative line-extensions such as “single-serve packets and new flavors such as Stinky French Garlic.” And that goes over big: “Today, the 115-year-old company, founded by George A. Hormel, the son of German immigrants, has a market value of about $5.2 billion” and its stock price has more than tripled over the last decade. But that isn’t good enough for Hormel’s ceo, Jeffrey M. Ettinger, who won’t rest easy until Hormel is found on the shelves at Whole Foods. And he has just the product to do it: Hormel Natural Choice, “a line of preservative-free deli-style meats” that eliminate additives using a process called High Pressure Pasteurization (in which “87,000 pounds of water pressure per inch kills bacteria”).
“We thought it’d be icing on the cake if Whole Foods wanted to take it …” says Scott Weisenbeck, a Hormel group product manager. They didn’t — although Wal-Mart and Kroger did. Meanwhile, Hormel has also appointed Dan Hernandez as director of innovation, in a bid to get “Middle Americans to try ethnic fare.” (it owns a number of ethnic brands, and also the licensing for Chi-Chi’s products). In addition, “Hormel this month kicked off its most ambitious advertising campaign in years,” via BBDO Minneapolis, featuring “a svelte, cocoa-toned woman raving about using Hormel’s chili to make penne pasta.” Then again, there’s always Hormel Microwavable Trays, a line of “‘shelf stable’ entrees that can sit on a shelf for at least 18 months and can be heated up in just 90 seconds.” It’s “now the fastest-growing product in Hormel’s grocery segment,” accounting for $846.5 million in sales. ~ Tim Manners, editor
November 28, 2006
The guy at Microsoft who’s in charge of toppling the iPod not only uses an Apple G5 computer, but also keeps a picture of Steve Jobs on his desk, reports Jay Greene in BusinessWeek (12/4/06). That guy, J Allard, owns nine iPods, too. And he’s been known to quote Mr. Jobs: “The only problem with Microsoft is that they have no taste … They have absolutely no taste.” (YouTube clip here). Maybe that’s why, when it came time to pick a color for Microsoft’s iPod — the Zune — J (the technogeek formerly known as James) chose … white. Or brown. Maybe that’s why, when it came time to design the Zune, J chose to prove Steve Jobs wrong by proving him right — with a device and a business model that is right off Apple’s blueprint.
Maybe. Maybe not. Yes, Microsoft built its own device (like Apple) and offers “its own music-selling service” (like Apple). But J Allard did one thing — perhaps the most important thing — that Apple did not do. Zune comes with wi-fi. That means you can “beam songs” to your friends’ Zunes. And he convinced record labels “to let consumers share music in a tolerable way; Zune includes technology that limits beamed songs to three plays or three days, whichever comes first.” As J explains his pitch to the record companies: “My customer becomes your street team.” The model in this case is not Apple; it’s Microsoft’s own Xbox, which also arrived with wi-fi, putting it in just the right place “when online gaming took off.”
What J Allard is doing with Zune — and what has already happened with Xbox — may, in fact, be the cultural change that Steve Jobs implied wasn’t possible at Microsoft. It could represent a shift away from a culture that said software comes in boxes and hardware is made by someone else. It could be that the very thing Microsoft thought limited Apple’s growth (“creating both proprietary hardware and software”) will prove to be its own growth engine, ultimately powered by the coming wi-fi “cloud" –where internet connectivity is everywhere. J Allard says the real mistake is focusing on the device rather than the experience. And the lesson for Microsoft is simply to look ahead: "Apply too much of the wisdom and knowledge that got us here, and you end up right where you started," he says. "Take a fresh look from a new perspective, and get a new result." ~ Tim Manners, editor
November 27, 2006
As Jeff Bezos sees it, what the internet did for content it could also do for products, reports Kevin Many in USA Today (11/22/06). “I haven’t figured out a way to explain this very well yet,” Jeff admits. His idea is premised on the concept of excess capacity — both online at companies like Amazon and offline at companies like General Motors. In a nutshell, if you wanted to start your own company, Amazon could rent you the space you need on its computers, “its transaction capabilities to sell things and collect money and its distribution system to store and ship items.” Says Jeff: “We can take all the things that used to be fixed costs and let people pay by the drink” (whatever he’s drinking, I’ll buy a case, please).
What Amazon is providing, basically, is a sales and distribution platform. If General Motors, meanwhile, were to apply the same thinking to create a manufacturing platform, it “could enable the creation of dozens of new niche-market car companies, all using GM to make … their designs.” Comments Kevin: “If you tease out Bezos’ plan, you get to a point where a high school cheerleader sitting at home with a laptop could theoretically harness computing power, design capabilities, manufacturing and distribution from around the world, and make a market a cute little pink hot rod …”
As Kevin points out, the concept is "not that far afield from today’s contract manufacturers in Asia, which make batches of cellphones or toys or shoes on demand. Except Amazon’s concept suggests a new level of sophistication and ease-of-use. Point, click and make a product to sell to the world." As Jeff Bezos says, "It’s letting people create a business by remote control." Just as "blogs, videos, music, animation and websites form individuals and small companies constantly challenge traditional media companies … that same scenario" could plow "through one consumer segment after another: food, clothing, cosmetics, sporting goods, musical instruments and so on," says Kevin. "It could be a wonderful, vibrant, scary chaos." ~ Tim Manners, editor
November 22, 2006
To walk through the front door of Sigrid Olsen’s new fashion boutique in SoHo is to walk through the back door of her own home in Hamilton, Massachusetts, reports Claire Wilson in The New York Times (11/19/06). “I want my customers to feel as comfortable in my store as they would be visiting their best friend’s home,” Sigrid explains. “I want them to feel as though they’ve entered a work in progress, as most homes are.” The space, designed by Pompei A.D., consists of “a loose configuration of roomlike settings.” For example, fitting rooms surround a “luxurious bedroom suite.” The cash desk is in the kitchen (because the kitchen is where everybody congregates).
Because Sigrid began her career as an artist, the space is accented with artifacts including “an easel, a stool and some well-used paintbrushes.” Some of her artwork graces the walls and the coffee table in the “living-seating area” is “strewn with design magazines and art books.” Says Ingrid: “Just like my house … but without the fireplace” (here are some pictures) But the idea, says Ron Pompei, the designer, is not so much a celebration of Sigrid’s lifestyle as it is an open door to the shopper’s own sense of self, and artistry. “Rather than ask customers to take on the value of the brand … we created a retail space that encourages them to express themselves in new ways,” says Ron.
He adds: “We try to create a landscape where people will meander, make a circle, discover the stairs and look for more … Sigrid is saying to the customer, ‘You are a complex woman, with many different aspects to your life’.” Ron also color-coded the different rooms: “The different blocks of color … is a signal that you turned a page,” he explains. The Sigrid Olsen label is a Liz Claiborne division, and it sold through some 55 stores, catering to older (i.e., over 30) , suburban women. This new 3,500 square foot location, on West Broadway between Prince and Spring Streets, is Sigrid Olsen’s first store in New York City. ~ Tim Manners, editor
November 21, 2006
Orange is the color of money for Blue Moon beer, reports Joseph T. Hallianan in The Wall Street Journal (11/20/06). Or make that oranges. Keith Villa of Molson Coors came up with the idea to merchandise Blue Moon — a Belgian-style wheat beer — as the one beer to have with a slice of orange. That worked. “When people saw a beer with an orange slice on it, it piqued their interest,” says Jim Doney of Chicago Beverage Systems. Once that idea caught on in bars, Monarch Beverages carried it through in stores: “Wherever there’s an orange, there ought to be a stack of Blue Moon,” says Jim Zerons of Monarch Beverages. That worked, too.
“Last month alone, his distributorship sold 16,500 cases of Blue Moon … and Blue Moon is now his third-largest-selling draft beer, behind Miller Lite and Coors Lite.” But while consumers now know that Blue Moon is to be garnished by oranges, few know that it is manufactured by Molson Coors. It looks like a craft beer, and Molson Coors has carefully cultivated that impression by “playing down the beer’s connection to its corporate parent; avoiding TV ads; using distributors who know how to sell smaller brands; and targeting key markets and accounts.” The only agency involved is Omnicom’s Integer Group, which creates point-of-sale materials.
The result is, Blue Moon is expected to “sell between 400,000 and 500,000 barrels … this year,” making it “the third- or fourth-largest craft brewer in the U.S., behind … Boston Beer … Sierra Nevada Brewing … and New Belgium Brewing.” And although it is made by Molson Coors, its production level, at “fewer than two million barrels of beer a year” technically qualifies it as a “craft beer.” Molson Coors’s accomplishment is one that both Anheuser Busch and Miller would like to replicate — in fact, Miller has introduced Leinenkugel Sunset Wheat beer, which, “for all practical purposes is a clone of Blue Moon.” They may have a long road ahead: “Blue Moon’s success … has been a slow process, taking more than a decade” to earn “respect.” Plus, by most accounts, the beer tastes really good. ~ Tim Manners, editor
November 20, 2006
“Chinese and Western specialists approach pharmacology from very different angles,” but Novartis is hoping to find new cures by encouraging Sino-American collaborations, reports Nichcolas Zamiska in The Wall Street Journal (11/15/06). “For centuries, Chinese doctors have tinkered with different mixtures of medicines, guided in part by trial-and-error, to see which ones are the most effective. Working with that body of knowledge, they operate on the assumption that the traditional remedies work, even if by Western scientific standards it’s not completely clear why.” So, they know the cure works, but they don’t know which “target it hits.”
Western researchers, meanwhile, “often begin the search for a drug by identifying a target, and then looking for a chemical compound that has the desired effect. If they do find a drug that works, they usually understand the mechanisms behind it. That helps in refining the compound to make it more effective and in convincing regulatory authorities … that the medicine is safe and effective.” So, Novartis has hired a botanist named Shen Jingui of the Shanghai Institute of Materia Medica to venture into remote regions in areas such as China’s Xinjiang province, “to ferret out rare plants and herbs traditionally used in treatments for ailments ranging from aches and pains to cancer.”
Novartis hopes that if it can “isolate the particular compounds active in the Chinese traditional medicines by testing the raw extracts from the plants” Shen Jingui collects, the result will be “a new generation of blockbusters to fight diseases such as Alzheimer’s.” So far, Jingui “has provided around 1,000 natural products.” Of those, a total of nine “have shown particular promise against specific disease targets and two have been selected for further study.” Dr. Paul Herrling of Novartis says that hit rate is actually pretty good as compared to traditional research methods. The cost involved is also relatively small. He comments: "China has thousands of years’ experience of using plants in Chinese traditional medicines … why not use the Chinese experience as a kind of filter?" ~ Tim Manners, editor
November 17, 2006
” … Science is supposed to consider all reasonable ideas,” writes Sharon Begley in The Wall Street Journal, “but Alzheimer’s disease is not your normal field of science.” (11/17/06). Ever since Alois Alzheimer wrote a report — 100 years ago — about a senile patient, Auguste D., the scientific community has fixated on the “globs of beta-amyloid,” Dr. Alzheimer observed on his patient’s brain. The assumption was that the resulting “plaque” was the cause of the disease. But for the last 20 years, at least, there have been doubters who have suspected that these “plaques might be innocent bystanders to the real, ‘upstream’ culprit. If so, targeting the plaques … would do nothing to help the 4.5 million Americans who suffer from Alzheimer’s.”
Until now, these doubters couldn’t even get their papers published in mainstream journals. “Among the major journals and funding agencies, the attitude was, ‘if it isn’t amyloid, it isn’t AD,” says Mark Smith of Case Western Reserve University School of Medicine.” But in October, a different kind of paper — one that considered the possibility “that amyloid plaques don’t cause Alzheimer’s” — was published in a journal called Alzheimer’s & Dementia. In fact, this paper looks at the possibility that the plaques may actually be “a response (and maybe a therapeutic one), not a cause. If so, ridding the brain of plaques could cause harm.”
Sharon Begley observes: “… Concluding that beta-amyloid and plaques cause Alzheimer’s is like believing a scab on your knee causes pain. The scab is the body’s response to an earlier injury. Similarly, there is evidence that amyloid plaques don’t cause Alzheimer’s.” John Trojanowski of the University of Pennsylvania points out: ” … The field was lulled into a false sense of confidence that beta-amyloid was the culprit. But there is great deal of uncertainty that the beta-amyloid hypothesis will be validated … We need to have a balanced portfolio of targets.” And Robert Mahley of the J. David Gladstone Institutes comments: "I definitely think it’s time to think along other lines of treatment … Big pharma has had all its eggs in the [amyloid] basket, and is starting to worry about that." ~ Tim Manners, editor
November 16, 2006
“A particular kind of cinematic language began to atrophy when the screen’s silence was broken,” writes A.O. Scott in The New York Times Magazine (11/12/06). That language would be the language of the “sight gag” as perfected by Charlie Chaplin, Buster Keaton, Mack Sennett, Harold Lloyd and Harry Langdon. It is, in short, a language of “gestures and camera placements” versus a language of “double entendres and stinging comebacks … Physical comedy did not exactly die with the rise of the talkies, as any fan of The Three Stooges, Jerry Lewis or Jim Carrey will attest. But it did suffer a loss of prestige; what … was the highest form of laughter is frequently seen as the lowest, fit for the amusement of children or French people.” So says A.O.
With a nod to a 1949 essay by film critic James Agee, he continues: “However much we enjoy them, pratfalls and sight gags tend to be viewed as juvenile or vulgar — mere slapstick, lacking in cerebral stimulation or satirical bite. This is in part the residue of an old cultural hierarchy: dialogue-based film comedy had its roots in the legitimate theater, while the banana-peel buffoonery of the silent clowns always carried a disreputable whiff of vaudeville. Polite opinion likes it best when funny keeps company with smart. Humor that is mute — or that deals with nothing more refined than the laws of gravity or the problems of digestion — often seems dumb: either childish, or implicitly, lower class.” Of course, that is exactly what gave silent-screen comedy its appeal.
“The genius of a well-executed gag is that getting it requires neither schooling nor explanation,” A.O. writes. “And the laughter that results … overrides our sensibilities and sensitivities, our politics and our better judgment, disables our intellectual capacities and leaves us speechless.” In other words, it makes us laugh — really laugh — as opposed to just giggle or smirk. Which brings us, inevitably, to Borat. As a movie, says A.O., it didn’t even seem like a movie — it wasn’t even really television; it was YouTube, at best. Until, that is, the scene where the tall-and-thin Borat chases the short-and-fat Azmat — both starkers — “through hallways, elevators and a crowded banquet room. “It was dumber than dumb, but, says A.O., it was moment when the movie “achieves the condition of cinema, climbing the ladder from titter to yowl, past belly laugh and into the wordless Utopian realm of the boffo.” ~ Tim Manners, editor
November 15, 2006
Jerry Lee says he knows why radio ads work better than television ads, and his track record at WBEB-FM in Philadelphia suggests we’d do well to listen to him, as reported by Robert Strauss in The New York Times (11/15/06). Jerry started running WBEB fresh out of college, in 1963. At the time, the F.C.C. was pretty much giving away FM frequencies because at the time, only about a third of homes in Philly even had an FM radio and cars didn’t have them at all. WBEB was snapped up by a fellow named David Kurtz, who was working as an engineer at Philco at the time. It was the last frequency left on the FM band and David hired Jerry to figure out how to make money with it.
WBEB entered the market as WDVR, it was competing against “four other FM stations in Philadelphia that played what was called ‘beautiful music.'” You know, “instrumentals, lush orchestras.” Jerry noticed that only about 6 of 10 songs in that format were familiar to most listeners, so he figured he’d make it 10 out of 10. He also noticed that the other four stations shut down at midnight, so Jerry thought, hey — “Why don’t we go on 24 hours and pick up listeners little by little?” Within “four and a half months” Jerry had propelled the station to number-one in its market, “and by 1968 … he was billing $1 million in ads annually, more than any station in New York, Chicago, or Los Angeles … let alone Philadelphia.”
When the Telecommunications Act of 1996 kicked in, triggering radio station consolidation, Jerry and David not only didn’t sell out to the corporate giants, they increased their promotions budgets — precisely because the big guns were cutting theirs. Jerry put together a creative group to make spots for advertisers and invested in more market research among the women who are the station’s primary listeners. He also put more money into TV spots, which is a little bit ironic because Jerry thinks radio has it all over TV as an ad medium. As Jerry explains it: “On radio … your ear gets a customized version of a commercial … You conjure up your own image.” David Kurtz died last year and Jerry Lee now owns the station all by himself. WBEB today plays “adult contemporary” music, is “rated in the top 3 in Philadelphia” and is “appraised at $185 million.” ~ Tim Manners, editor
“In one of the more unlikely collaborations of modern medicine, Britain’s largest children’s hospital has revamped its patient handoff techniques by copying the choreographed pit stops of Italy’s Formula One Ferrari Racing team,” reports Gutam Naik in The Wall Street Journal (11/14/06). The idea came to Dr. Allan Goldman, “head of the pediatric intensive care unit at Great Ormond Street Hospital,” a racing fan, while watching a Formula One race on tee-vee. He and a colleague, Dr. Martin Elliott, “noticed striking similarities between patient handovers at their hospital and the interchange of tasks at a racing pit stop.”
What they noticed was how well the pit crew handled its handovers — switching the tires, cleaning the air vents, adjusting the front wing, and sending the car on its way — in just seven seconds. Hospital handoffs “seemed downright clunky by comparison.” So, Drs. Goldman and Elliott “invited members of McLaren, a British team that fields race cars in Formula One contests, to provide insights into pit-stop maneuvers. Their interest was more in improving accuracy than improving speed, per se. Their primary discovery was this: “…. Pit-stop handovers were successful … because of an obsession with tiny mistakes.”
Everybody knows what the big problems are; it’s the cumulative effect of the small problems that nobody notices that can add up to “bad outcomes.” They also found that “each member of the Ferrari crew is required to do a specific job, in a specific sequence, and usually in silence. By contrast … the hospital handover was often chaotic." The doctors came up with a new, Ferrari-style protocol, and then compared a total of 50 handovers — half of which occurred before the Ferrari principles were applied and half after. The result: "… The average number of technical errors per handover fell 42 percent and information handover errors fell 49 percent." ~ Tim Manners, editor