The Hub Cool News

New Coke

new-cookeNew Coke’s champion said his greatest failures happened when he lost sight of the bull, reports Stephanie Strom in The New York Times (2/25/15). When the late Donald R. Keough, "who led Coca-Cola through the disastrous introduction of New Coke in 1985," said "bull," he meant it literally. "When I was 15 or 16 years old, I got a job buying bulls to ship back to processing plants," he once told The Times. On his first day, after overpaying, his boss chastised him, saying: "Concentrate on the bull, not on the language of selling."

Following the popular uproar that followed New Coke’s rollout, it was apparent Mr. Keough had indeed forgotten the bull. "All the time and money and skill that we poured into consumer research could not reveal the depth of feeling for the original taste of Coca-Cola," he said. After noting that cynics accused Coke of introducing a new flavor profile to spark demand for the original formula, he commented: "The truth is that we are not that dumb and we are not that smart." Old Coke — re-dubbed Classic Coke — was off the shelves for "just ten weeks."

Mr. Keough wrote a book called The Ten Commandments for Business Failure," in which he recounted his most famous disaster. One of the commandments was: Assume infallibility." As he told The Times in 2008 : "The word ‘success’ has always made me nervous, because I believe built into that word are a couple of viruses — arrogance and complacency — and left unchecked they can ensure failure." At one point, he also "suggested that his tombstone should read: ‘He’s not that dumb and he’s not that smart’." Donald Keough was 88.

Grace Thomas

grace-thomasAmerican Girl’s latest doll is designed to spark the entrepreneurial spirit, reports Ruth Simon in The Wall Street Journal (2/12/15). As with all American Girl dolls, this one has a name — Grace Thomas. She’s nine years old, and "is a budding bakery owner." Julia Prohaska of American Girl explains: "Marrying the idea of girls’ high interest in baking and cooking with entrepreneurialism was just a natural fit." American Girl is owned by Mattel, which itself has "rolled out entrepreneur Barbie, with her smartphone, tablet and briefcase."

Ted Ganchiff of the Science & Entrepreneurship Exchange, thinks the time is right: "We are creating generations of people who are terrified to make a mistake," he says. The new American Girl doll "plays out in three related books … The story of Grace … illustrates what’s needed to run a bakery, such a registering the business and obtaining a license … the books explain that launching a business can be ‘messy and overwhelming’" but tries to offer practical advice, like buying supplies in bulk, for instance.

According to Ewing Marion Kauffman Foundation, "women have opened roughly 200,000 new businesses a month over the past five years … Men, by contrast, have opened approximately 325,000 new businesses a month during the same time period." Inspiring more girls to start businesses doesn’t necessarily come cheap, though. In addition to the accompanying Grace Thomas books, American Girl sells "a miniature bakery with make-believe ingredients" for $500. The Grace Thomas doll itself goes for $120.

The Big McFix

ronald-mcdonaldMcDonald’s former CMO Larry Light says the chain’s problems can be fixed. Writing in The Wall Street Journal (2/11/15), Larry notes that McDonald’s recovered from similar challenges during his tenure, back in 2002. The turnaround, he says, "took less than a year to show results." The key was the so-called "Plan to Win," which "aligned the entire organization to execute ‘the right actions in the right way to achieve the right results.’ The basis for it was a laser focus on the customer," built from the inside out.

"Customer focus is important," Larry writes, "but employees come first. In 2003, we invested in an internal marketing effort to re-build employee pride," gaining "internal alignment across 119 countries." "We launched the new advertising approach internally, reaching out to about 1.5 million employees before the marketing was launched externally." Rebuilding trust was essential, and achieved, in part, through Paul Newman’s endorsement of its salads. Relevance is also critical, and today that is tightly linked to "changes in attitudes toward food."

Transparency matters, but can be a downside if it exposes ingredients "that customers don’t want to eat." "McDonald’s must revive Ray Kroc’s food-quality passion," Larry writes. Service also must be truly fast. Larry thinks McDonald’s should not try to copy Chipotle’s customization unless it can do so without sacrificing speedy service or quality food. And he thinks McDonald’s has been distracted by Chipotle and others that aren’t direct competitors, and needs to re-focus its menu, which today features more than 100 items.

Radio Silence

radioshackThe decline and fall of American leisure time tells the tale of RadioShack’s demise, reports Christopher Mims in The Wall Street Journal (2/9/15). Hard as it is to believe now, in the 1960s, workweeks were growing shorter and Americans had plenty of time on their hands. "Leisure time is opening markets to us," said Charles D. Tandy, who bought RadioShack in 1963, when it had just nine stores. "Everyone’s spare time is our challenge." This began to change in the 1970s, as RadioShack opened "three stores a week."

At the time, "citizens’ band radio hobbyists" drove RadioShack’s growth. This changed in the 1980s, with the rise of personal computers, and RadioShack was an early leader with its TRS-80, for which "Bill Gates himself wrote the operating system." Steve Wozniak bought parts at RadioShack, and "a teenage Michael Dell saw his first PC" at a neighborhood RadioShack. The retailer’s mistake was that it "unwisely decided only to offer its own software on its earliest PCs, and so it was soon eclipsed by Apple and then the IBM PC."

At that point, RadioShack had little choice but to become a consumer electronics retailer — besides, hobbyists were turning their attention from hardware to software. One might think it could have re-gained its footing among today’s DIY crowd, but that’s a niche market: Make Magazine "has a circulation of only about 125,000." RadioShack in many ways is a reflection of America’s "culture of disposable everything," which became dominant precisely because "we no longer have time for anything else."

Iron & Golden

quarter-pounderIron Chef Geoffrey Zakarian has some advice for McDonald’s, reports James B. Stewart in The New York Times (2/5/15). Admitting that he’d never before eaten at a McDonald’s, Geoffrey recently sat down at "a bustling outlet on Manhattan’s Third Avenue." After sampling a chicken wrap, he said: "You can get a much better wrap at Chipotle … McDonald’s should stick with what it does well." If that would be a hamburger, Geoffrey’s verdict wasn’t much better: "Well, it is what it is," he said. He did like the coffee and the fries, though.

At Geoffrey’s Lambs Club, a burger costs $22. "It’s cooked to order, served on a challah bun and comes with hand-cut fries and house-made condiments." He doesn’t suggest that McDonald’s should follow his lead, but rather "talk more about the quality, the source of the ingredients, address the health concerns. I assure you that if they had a great story and a better company culture, this same burger would taste better," he says. Then there’s the matter of the McDonald’s "loud and chaotic" ambiance, with harsh lighting and bright colors.

Karl Backus of Bohlin Cywinski Jackson — which led design of the Apple stores — says the typical McDonald’s "seems to be treating all of us like we’re messy kids … It’s like everything was chosen to be swabbed down." Both Karl and Geoffrey think it’s a matter of focus, in terms of food and ambiance. Ravi Dahr, a Yale professor of management and marketing suggests McDonald’s "needs to rethink all the elements of the value chain that impact the overall customer experience." A McDonald’s spokesperson says such changes are in the works.

Golden Crutch

golden-archesThe gap between a McDonald’s commercial and the actual experience just got wider, suggests Kate Bachelder in The Wall Street Journal (2/4/15). Kate found this out the hard way, while attempting to buy a beloved Egg McMuffin at the McDonald’s in Washington DC’s Union station. Instead of the expected transaction, "an enthusiastic cashier … began clapping and cheering, and the restaurant crew quickly gathered around her and joined in." Kate was confused, and then the cashier said, "You get to pay with lovin’."

In a riff on the restaurant’s long-running "I’m lovin’ it" advertising campaign, McDonald’s is now randomly choosing customers to "Pay with Lovin”" as part of a short-running promotion. You may have caught this during the Super Bowl, which featured a McDonald’s commercial in which "customers who say ‘I love you’ to someone, or perform other feel-good stunts, are rewarded with free food." (video) In Kate’s case, she was asked to pull a slip of paper from a pencil box, which read: "Ask someone to dance."

What "looks touching on television … is less so in real life," says Kate, who "stood there for a mortified second or two, and then the cashier mercifully suggested that we all dance together." The crew "tried to lure cringing customers into forming some kind of conga line." Kate’s advice, as "a McDonald’s customer of long and happy experience," is simple: "It won’t work … McDonald’s," she says, "should dump the ‘love’ mantra and get back to the excellence mantra that made the Egg McMuffin a worldwide phenomenon."

Buckley’s Best

red-wing-peanut-butterWilliam F. Buckley Jr. was the "patron saint" of Red Wing brand peanut butter, reports David Segal in The New York Times (1/14/15). Mr. Buckley developed a passion for peanut butter while in boarding school, as his father would always include a couple of jars of the spread in a bi-weekly care package. Years later, as editor of the National Review, he wrote about peanut butter, identifying Skippy as his favorite brand. (link) Douglas Manly was running a rival brand, Red Wing, at the time, and, on a lark, sent Buckley a jar and a note.

Buckley sampled Red Wing and thought "he had found paradise on earth in a jar with a yellow cap," says Christopher Buckley, a son. So devoted was Buckley to Red Wing that he agreed to speak at a ribbon-cutting ceremony for a new peanut roaster at the company’s plant. Among other things he said that if Red Wing were served at US-Soviet disarmament talks, the peanut butter would cause the Soviets to "give up their assets, communism and Karl Marx." Red Wing thanked him with a lifetime supply, sent every six months, with the label, Buckley’s Best.

Exactly why Buckley preferred Red Wing isn’t known, but Douglas Manly suspects it was because it was fresher than other brands. Ironically, Red Wing was developed as a knock-off of Jif, as a private-label brand. "We worked on it until employees who were part of a taste panel could not tell the difference between Red Wing and Jif," Douglas says. Sadly, the Red Wing plant was acquired and closed by ConAgra in 2013, although ConAgra says it will continue to use the recipe to make the butter for Wegmans, Price Chopper and others.

Fiskars Responsibility

fiskarsA 365 year-old company expects to introduce 245 new types of scissors over two years, reports Sarah Kessler in Fast Company (1/26/15). That company would be Fiskars, the timeframe is 2014 and 2015, and to be precise, "scissors" includes "garden shears, loppers, craft punches and other cutting tools." Seventy-two of the 245 will be "what the company calls ‘new innovations,’" that are more than just incremental or cosmetic changes. Among them is a pair of scissors that "don’t lift fabric," which is really important to those who sew.

Another "new innovation" is a pair of "loppers with pivoting gear and a technology for cutting thick materials." This is important for those who "cut a lot of thick things like burlap and leather," who apparently are growing in numbers thanks to Pinterest. You likely know Fiskars best as makers of those stylish orange-handled scissors (image), introduced in 1967 and now its flagship product. Fiskars’ first variation on that theme was a pair of left-handed scissors, and "after 48 years, it is not out of ideas."

Fiskars is equally persistent about testing its new ideas, having "built what looks like a torture chamber for scissors." One machine "uses a prototype to cut thousands of snips out of a moving roll of paper to test how long it will take for a blade to dull." Another "tries to pull handles off blades to test whether they’re safe." An aquarium-style machine "spews a corrosive mist" to assess rust potential. The engineering team can put "10 years of wear" on a pair of scissors in a single afternoon, and if it survives, it just might be ready for prime time.

Data v. Empathy

starbucks-logoBig data makes us smarter, but also more timid, writes Rich Karlgaard in Forbes (2/9/15). The issue, says Rich, is that we tend to shrink from our instincts for fear the data will prove us wrong. As an example, he cites sportswriter Bill Simmons, who thought he saw signs of decline in LeBron James, but hedged in his analysis because he thought data might say otherwise and didn’t want to be embarrassed. Compare and contrast with, say, Steve Jobs, who went with his instincts, and "knew when to say no to data." Easy for him, apparently.

For others, it’s a fact that data "can show us patterns and opportunities that 99% of businesspeople would miss." If you have a subscription-based business, for instance, you would have "data on customers and their subscription terms." You also have "data on service problems. In theory the two data pools can alert your sales team to which customers might not renew because of a bout of dropped calls near the end of the service contract." Using the data to identify and close gaps in the brand experience has tangible value.

Then there’s Starbucks, a study in contrasts between two Howards — Behar and Schultz — some 15 years ago. Both Howards subscribe Starbucks’ "culture of warmth and belonging where everyone is welcome." However, where Schultz is analytical, Behar is empathetic. Rather than a data dive, Behar simply visited stores and found a cultural disconnect among its employees. His report to Schultz and the Starbucks board: "We don’t need more data. Our problem is simple. Our employees are unhappy. Is that enough data for you?"

Penney Catalogs

jcpenney-catalogRon Johnson wasn’t the only JCPenney CEO who lost customers by misunderstanding them, reports Suzanne Kapner in The Wall Street Journal (1/20/15). Former and current JCPenney CEO Mike Ullman admits he made a mistake by pulling the retailer’s print catalog. That was in 2010, and at the time Mike thought "catalog shoppers would migrate online." He was wrong. "We lost a lot of customers," says Mike. It turned out that shoppers "still like browsing through the decidedly low-tech artifacts of page and ink."

This despite research via retail consultancy Kurt Salmon that says about "44 percent of consumers" would like to be mailed fewer catalogs. However, Salmon’s research also finds that "31 percent of shoppers have a catalog with them when they make a purchase." So, Penney will mail a "120-page book" featuring items from its "home department … to select customers in March." Home goods "have historically been among the top-selling items in Penney’s catalogs." "We are trying to get back those lapsed customers," says Mike.

Restoration Hardware is also embracing catalogs — mailing 13 of them, a total of 3,330 pages — to customers, which created some backlash. Bonobos, founded as an online menswear retailer, sees beauty in pages as well. "We found that the catalog allowed us to tell a fuller narrative about the brand and our products in a way that we were struggling to online," says Bonobos marketing chief Craig Elbert. He also says "catalog customers tend to spend more" and that catalog customers who shop in their bricks stores are their "best customers overall."

Nano Management

tesla-logoTesla and SpaceX founder Elon Musk gets to what’s right by focusing on what’s wrong, reports Mike Ramsey in The Wall Street Journal (1/12/15). "I have OCD on product-related issues," Elon says. "When I see a car or a rocket or spacecraft, I only see what’s wrong. I never see what’s right. It’s not a recipe for happiness." He may not have been referring to his own happiness as much as that of certain "high-level managers" at Tesla, who "quit or were fired" because of Elon’s "insistence on doing things his way."

So intent is Elon Musk on what he calls "nano-management" that he "set up an office in the middle of the factory floor" during the Tesla S launch in 2012. "If you are fighting a battle, it’s way better if you are at the front lines," he says. "A general behind the lines is going to lose." Just three weeks ahead of the delivery of the first car, Elon "demanded that the sedans have larger rear tires because he felt they looked better." This was unrealistic for a number of reasons, but Elon insisted, and the "design change went through without a hitch."

This style doesn’t play well with everyone, but that’s fine with Elon. "He used to say that he only wanted ‘special forces’ working for him," says Ricardo Reyes, Tesla’s media relations head. "No normal people." Supporters say this "relentless perfectionism has steered Tesla to where it is today." His "unwavering determination" helps explain why "investors have flocked to Tesla and shrug off the fact that the auto maker has never made an annual profit." "You take Elon out of the company and the market cap would go down 80%," an analyst says.

Delightful Design

intuit-labsBeautiful design is the organizing principle at Intuit, writes Brad Smith, the company’s CEO, in Harvard Business Review (Jan/Feb 2015). The essence of beautiful design, says Brad, is not simply "ease of use" but also an emotional connection based on "deep customer empathy … how customers feel about our products and whether they take pleasure in using them." Yes, we are talking about financial software — a category not typically thought of as "driven by emotion or design." However, where there’s money involved, inherently there is emotion.

Consider, for example, that "most taxpayers are owed a refund — and for 70% of them, that refund is the single largest check they’ll receive during the year." This insight shifted Intuit’s focus from "the pure functionality of its software" to "the emotional payoff of reducing drudgery and speeding the way to a big windfall." Eventually, this led to development of SnapTax, an app that enabled users "to take photos of their W-2 forms" and "completely prepare and and e-file federal and state returns from their smartphones."

Intuit refers to its brand of design thinking as "design for delight," or D4D, and it is premised on everyone within the organization "thinking about design" — not only of its products but also throughout the organization. "In HR we talked about the overall design of the job application and interview process," Brad writes, while those in the finance department considered how to streamline purchase orders. The path to D4D began in 2007, and the goal is for Intuit to be "considered one of the most design-driven companies in the world" by 2020.

Fender Remembers

richard-mcdonald-165Brand chief Richard McDonald on the past, present and future of the Fender experience (Hub cover story interview, Jan/Feb 2015). John Lennon once said that Shake, Rattle & Roll was the greatest rock ‘n’ roll song ever written, and that it could not be improved upon. The same could be said of another icon of the genre: the Fender electric guitar. In the early 1950s, a radio repairman named Leo Fender designed and built the first Fender Stratocaster and Telecaster guitars, and the Precision bass.

Sixty years later, Leo’s wildly innovative designs remain essentially unchanged, captives of their own excellence. His inventions by no means were the first electric guitars, but they set the standard Leo’s legacy of innovation is both a blessing and a curse to those who lead Fender today. On the one hand, the man is an inspiration. But how do you innovate when the product is perfect? It’s a question Richard McDonald, EVP Brand, a former touring musician himself, must answer every day. Fortunately, Richard gets a little help from the likes of U2’s Bono and The Edge, recently appointed to Fender’s Board of Directors.

Richard also has a mandate to leave behind the way Fender guitars were bought and sold in the past, bringing the brand ever closer to its customers. For the first time, Fender is now selling instruments directly to consumers, online. It has also banned the ‘Manufacturer’s Suggested Retail Price,’ bringing a whole new level of transparency to the brand relationship. The price is the price. Most important, Richard and his team take an expansive view of innovation and the brand experience that starts exactly where Leo Fender did. It’s not about the guitars. It’s about those who play them. Read The Interview with Richard McDonald of Fender.

Mattel Meetings

mattelMattel CEO Bryan Stockton wants to "overhaul a culture of conference rooms," reports Paul Ziobro in The Wall Street Journal (12/23/14). "We need to push ourselves a little further, let ourselves be a little freer, a little less formulaic," he says. Too many meetings apparently have hampered creativity at the toymaker. For example, a "school crest for the fictional Monster High … was debated over at least eight meetings and went through nearly 30 iterations." A Mattel site re-design "involved nearly a year’s worth of monthly meetings."

Some Mattel executives say "they were so inundated with meetings that they would put fake appointments on their Outlook calendars so people would think they weren’t available and could get other work done." Accordingly, Bryan has instituted some new rules, including no meetings "without a specific purpose … no more than 10 people" in a meeting unless it "is for training purposes" and "no more than a total of three meetings to make any decision." The rules are intended to help Mattel "get back to thinking about toys."

Bryan also hopes to reignite Mattel’s magic with the return of Richard Dickson, who had left the company in 2010, as Chief Brands Officer. Before Richard could get started, he says he had to sort through "wheelbarrows of information" and, in the case of Barbie, "a hodgepodge of ideas." He settled on Superhero Barbie because, "Girls have a bit of princess fatigue." He also plans "to re-brand Fisher-Price as a child development company" and generally "reshape the company’s approach to toys" with a creative team housed in "a former airplane hangar."

Ugly Duck Boots

duck-bootsLL Bean’s homely duck boots have become "a totem of agrarian-chic trendiness" reports Claire Suddath in Bloomberg Businessweek (12/10/14). The style is 102 years old, and Bean traditionally has sold about 100,000 pair a year, primarily to "loggers and farmers," according to LL Bean spokesman Mac McKeever. However, sales of the "leather and rubber" boots "have quadrupled over the past three years and are on track to hit more than 450,000 in 2014." They are currently "on backorder until at least February."

It’s a trend Bean has seen building for the past two years, "specifically in urban areas filled with college students, who were embracing understated, even bland styles that highlighted their authentic ordinariness," sometimes known as Normcore. "I think a lot of it has to do with the fact that they’re still handmade. People really value that stuff right now," says Mac. This homespun appeal is exactly what makes it so hard for Bean to keep pace with demand, as duck books are made on "old fashioned stitching machines … still run by hand."

The duck-boot boom recalls the Hush Puppies phenomenon of the 1990s, as documented by Malcolm Gladwell in a New Yorker article called The Coolhunt. At the time, those buying the shoes associated them with their grandparents and the buying spree began in SoHo thrift shops. Birkenstocks, the hippie sandals, made a comeback this year, as well. How long the duck boots bender will last is anybody’s guess, but Mac McKeever says Bean is already noticing the next big thing — "a spike in sales of wool coats."

Hope & Grace

philosophyA beauty brand is embracing the unpopular cause of mental illness, reports Andrew Adam Newman in The New York Times (11/28/14). Philosophy, "the beauty brand owned by Coty, is introducing an effort to raise a projected $10 million over the next five years to combat mental illness." Hope & Grace, as the campaign is called, is named after the brand’s "two most popular products … Hope in a Jar moisturizer and Amazing Grace fragrance." One percent of sales from the two products will be donated to the cause via grants.

"The DNA of the brand is really about inspiring women not only to look their best but to feel their best," says Coty CMO Jill Scalamandre. Jill says the impetus is "how big the issue is, with one in four women struggling with a mental health challenge." The effort is supported via videos on the brand’s website, televised public service announcements, and a forthcoming song called Hope, by Natasha Bedingfield, "with 20 percent of the proceeds from iTunes downloads going to the initiative."

The focus is "on issues that particularly affect women, like postpartum depression and psychological trauma linked to domestic abuse," which have largely been ignored by other companies. "The stigma around mental illness is so entrenched," notes Dr. Belisa Vranich, with issues such as breast cancer and pet causes far more popular. However, Joe Waters of Selfish Giving sees an upside in less popular causes. "Taking on issues that are less popular is disruptive, in a good way, in terms of making people notice what brands are doing," he says.

Amazon Achilles

amazon"Stores may have found the vulnerable soft tissue of Amazon: its lack of stores," says NYU’s Scott Galloway in a New York Times piece by David Streitfeld (12/2/14). "This is the revenge of the brick," says Scott, who "argues that the future belongs to multichannel merchants — those who let customers order online and pick up in a physical location, or who ship online and allow for returns in a physical location, or who allow browsing in a store but ship to a home." Scott predicts Amazon will soon open "dark" stores to enable this.

This will happen, says Scott, within a year’s time and may involve a "transformative acquisition" of, say, Best Buy or Radio Shack. Word that Amazon would open a store in Manhattan over the holidays turned out to be false, as the 470,000 square foot building it recently leased there will be mostly Amazon offices, with ground-floor retail space rented to others. In the meantime, Amazon pursues its disruptive ways — so much so that it is even disrupting itself by offering "free or nearly free music, video and e-books."

If this is Amazon’s plan, it has apparently already cost the retailer about a quarter billion dollars in its third quarter. The idea, some say, is that offering free content will "draw tens of millions of people into its ecosystem," who will then buy "devices, entertainment and services as well as basics like milk and toilet paper." "They’ll have your credit card purchase history, be able to do data-mining on your needs, offer massive selection with a reputation for low prices," says Scott. "I don’t think they want to own a piece of retail," he adds. "They want to own all of it."

The Glass Man

corningwareThe late Donald Stookey discovered Corningware after putting a piece of glass in an overheated furnace, reports the Economist (11/22/14). The glass turned a milky white, and when Donald dropped it, bounced off the floor "with a clang like steel." It had crystallized with incredible intensity. This was "patented in 1960 as Fotoceram and marketed as indestructible Corningware dishes, so popular in America that by the 1980s six pieces of it (originally white with blue cornflowers) could have graced every household." (image)

Donald’s many other inventions were not by accident. Among other things, he "perfected a glass which, in daylight, looked like marble, and now covers the north face of the UN headquarters in New York." He used "a process called ‘nucleation,’ in which the smallest stable trace of any element, added to molten glass, became a nucleus around which crystals would grow until, by cooling, he chose to stop them." He made glass "photosensitive, so that after exposure to ultraviolet light photographs could appear within it."

During "wartime the Treasury Department almost took up his idea of making pennies not of scarce copper but of copper ruby glass, with Lincoln’s portrait magically suspended in them." He also came up with the "idea of making spectacles for spies, which, when exposed to light would reveal secret messages … He made glass that was rubbery and easier to saw" and "imagined a future in which glass, with its raw material so abundant everywhere, could replace not only petrochemical plastics but also metal and wood." Donald Stookey was 99.

Trader John

trader-joesThe man who transformed Trader Joe’s into a "billion-dollar enterprise" has died, reports Paul Vitello in The New York Times (11/13/14). John V. Shields, 82, was not Trader Joe’s founder, and before he took its helm as CEO had no experience in the grocery business. He was a department-store executive who was hired by founder Joseph H. Coulombe. The two had been Stanford University fraternity brothers. During his tenure, Mr. Shields expanded Trader Joe’s from 27 stores to 138, and its sales from $132 million to $2 billion.

He kept the retailer’s quirks — the Hawaiian shirts worn by its staff, and the "exotic low-cost offerings," while also establishing a "management system that made the company’s retail culture exportable. He standardized the layout of stores, started a management training program and brought market analysts into the decision-making process, innovations that made Trader Joe’s one of the nation’s most profitable grocery chains." He carefully located new stores in college towns and "gentrifying communities."

Mr. Shields "personally interviewed store manager candidates … Applicants who did not smile in the first 30 seconds, he once said, were crossed off the list." He said that people were either right for the "crew" or not. "I would talk with the new people for about two hours," he told an interviewer. "and I always ended up saying, ‘Look, at the end of 30 days, if you are not having fun, please quit." Joseph Coulombe said his friend’s lack of grocery background was irrelevant, explaining: "We’re closer to the fashion business than the supermarket business."

Hollywood Capitalists

mickeyHollywood is setting examples that other industries should follow, reports the Economist (11/1/14). In some ways, "food and consumer-goods makers" already resemble the movie business, with its focus on "a narrower range of ‘blockbusters’" and endless pursuit of "buzz." Of course, any successful business requires creative people, and understand "how to harness their strengths for commercial gain without strangling their free-spiritedness." Hollywood does this well by hiring "a fresh creative team for each film," giving them control and credit.

Few other industries foster Hollywood’s brand of teamwork, notes Mark Young of USC, or temper it with a heavy dose of job insecurity. Indeed, people tend to "work hard and collaborate well in the movie business in part because" they are freelancers who know they "will not get hired for the next film unless they prove themselves on the current one." Hollywood also embraces "constant revisions," and encourages "constructive criticism" that improves the product. Failures "are tolerated because they are so common."

The movie business is remarkably good at "launching brands that achieve global prominence in a matter of days." It invests nearly as much on promoting its films as it does on the films themselves, and "manages to come up with new brands on a near-weekly basis. The key is to treat the marketing as a core part of the project, rather than as an afterthought." Ultimately, Hollywood fixates on profitability, and, like Silicon Valley, increasingly relies on outside financing, which "protects against crippling losses when a film flops."