Starbucks’ Caffeinated Successes, Parker’s Plans For Pens, “Raider or Savior” – Now Playing On Netflix

 

SBUX Refreshers

Starbucks’ Caffeinated Successes: Starbucks’ latest reported earnings (the last quarter was the final quarter in its fiscal year) delivered a well deserved jolt to its stock price. Closer inspection reveals many things to like about Starbucks’ strategy and execution that quarter: increase in same-store revenues (7%), increases of its grocery store packaged products (33% growth!), higher profits for the full fiscal year, higher guidance for next year, etc. More stores will open next year too.

What is specially impressive about this is that others such as McDonald’s and other peers of Starbucks have been hurting in the same time period.

So one of the things I wonder about is – what does this mean specifically for McDonald’s plans to compete head to head with Starbucks with its McCafe formats? Will McD’s amp up its McCafe plans or tone things down? My bet is on the former.

One of the other interesting things about Starbucks is how its been able to leverage LivingSocial in a way that other companies are not able to leverage “daily deals” companies:

Starbucks followed that with an offer on daily deals site LivingSocial in early September that allowed people to redeem a $5 coupon for $10 of products. In less than 24 hours, 1.5 million people bought the coupon, many of them new customers who then signed up for rewards cards and became repeat visitors, Starbucks said.

Starbucks can teach others in the fast-casual restaurant industry a thing or two here. 

++

Parker Pen

Handwringing Over The Demise of Handwriting: When I was 6 years old, my parents bought me handwriting “improvement” books that I faithfully used to create my own brand of cursive. 

Today, in the U.S. and the West, at least, writing by hand is something most people do either when writing a check (but electronic checks do away with that need too) or when signing a greeting or birthday card. An interesting article on Fast Company talks about all of this, in the context of Parker Pens: 

A recent survey by Docmail in the U.K. found the average person hadn’t handwritten anything for 41 days and a third hadn’t written in six months.

Naturally, one must ask, what happens to the makers of pens and other “writing instruments”? Will they go quietly or not?

At least in the case of venerable Parker Pens (now owned by Newell Rubbermaid), they are trying to innovate

What Parker is doing is doubling down on its core business, but adapting its pen technology to suit a public that no longer wants to fiddle with ink–in those rare moments when they do choose to write with a pen. And it’s also aiming squarely at the premium market where it can sell fewer products at higher margins to keep its revenues flowing.

and target the developing world where most people still write by hand – calligraphy and penmanship is still valued highly there. But still, I wonder if the writing on the wall spells doom for the pen industry.

Zooming out, this is an example of how entire industries are being changed – for good and bad – because of the breathless and breakneck speed of innovation engendered by the tech industry. In the late 19th century, the buggy industry was wiped out because of automotives. Companies in industries that have cheaper, easier “substitutes” (reference: Porter’s Five Forces) should be on alert and regardless of temporary profitability, need to be thinking of their strategies. 

++

Latest Netflix Movie – “Raider or Savior”: News that Carl Icahn took a 10% stake in Netflix caused a stir yesterday.

Shareholders and others that want return on their Netflix investments clearly view Icahn as a savior and sent Netflix’ stock up 20% or so. Icahn, an “activist shareholder” has a history of helping, cajoling or bullying management and boards of directors to clean up, shape up or ship out. In his own words:

While sometimes selling the company is the right approach because of the synergies that come from a takeover, my overall strategy is more complex: it is to force lackluster managements to sustainably improve their performance. This is frequently an arduous and complex process. Simple solutions are rarely obvious…In numerous cases, we have taken board seats to work with existing managements to help build value.

Netflix’s management of course will view this as a very hostile view. Reed Hastings, Netflix’s CEO, is super smart and has clear ideas on how to manage and run things. Things are about to get a bit pricklier because while Icahn now owns ~ 10% of Netflix, Hastings only owns 4.4% of Netflix (what about voting vs non-voting stock, etc.? I don’t know that yet).

He is already telling the world what he (Icahn) thinks should happen:

“Netflix should be consolidated in my opinion,” Icahn said in the interview. “There will be demand for Netflix. There will be buyers who want to buy it, and it’s just a question of corporate governance: Do you do want what shareholders want?”

Good luck to Netflix’s shareholders and its management team.

Hobbits On a Plane

Hobbit-Movie

Companies and brands are forever trying to have pop culture’s pixie dust rub off on them. 

Sometimes that works, sometimes not.

A very inventive ad campaign, centered around the standard flight safety message (quick show of hands: how many people listen to it?) from Air New Zealand may be working. 

Part of a multi-million dollar ad campaign that is aimed at boosting the image of the airline, promote New Zealand as a tourist destination (the government owns the airline) and promote the movie itself of course – a host of things are in play here:

The four-and-a-half minute clip is called ‘Unexpected Briefing’ and aims to promote the airline’s partnership with Lord of the Rings prequel trilogy, The Hobbit. It features a range of the series’ recognisable characters and director Peter Jackson, who irreverently re-enacts its iconic “my precious” ring scene, before disappearing into thin air. Great-grandsons of Lord of the Rings author J.R.R. Tolkien, Mike and Royd Tolkien, also make an appearance.

The campaign’s next instalment will be a Hobbit-themed aircraft which will be unveiled prior to the film’s 28 November premiere in Wellington.

The recognizable characters, humor, self-effacement and very mild suggestiveness all seem to be helping the ad strike a chord with people the world over (a small percentage of whom will translate their reactions in real dollars, movie tickets and travel) – more than 1.2 million viewers have watched it as of today.

It certainly made me want to watch the movie and more, much more importantly, consider flying Air New Zealand to New Zealand.

Apple’s Shakeup, Random Penguin House, Google’s S-M-L Devices and Comcast and Lobbying

Nexus 10 Tablet

Yes…yet another format change – but hopefully the last for a while. Going forward, I will have daily roundups such as this one, once-a-week long-form articles (or maybe twice, time permitting).

As always, please let me know what you think. You can also vote with your wallet by interacting with the ads on this site. :-)

Apple’s Management Shake-up: Two of Apple’s top execs are being let go in what is being called a rare top-management move. The best reasoning I could find is from a Gartner analyst:

“I’d call this a big shakeup,” said Gartner Research analyst Ken Dulaney. “And at least with Forstall, it looks like it has to do with problems with usability, which is the iPhone’s trademark. And if Apple feels they’re not at the top of their game, they’ll do what they have to do to get back on top.”

No one is talking about the iPad Mini move though. One could argue that it was a defensive move, which is very unlike Apple. So for some time they did lose some potential sales to 7 inch tablet makers. Then again, one could argue that Apple doesn’t always have to create a category. Entering a pre-existing category and executing flawlessly also works extremely well.

Google’s S, M and L devices: Google announced a 10 inch Nexus tablet. So now it has a S, M and L Nexus – phone, mini Tablet and Tablet. As far as sticking to the Nexus brand and doing classic brand extensions, nice move. I use both Apple and Android devices and can see why each one appeals to different types of users.

So the question is – in a year or two, will customers “self select” themselves as Apple customers (that just want things to work) vs Android/Google/Nexus customers that like to tweak and tinker and change things? Amazon of course can’t be discounted, though at some point, if the Kindle starts eating into Nexus sales I wonder if Google will change the terms of its licensing for Amazon.

The holiday season will be interesting to see how the relative sales of each ecosystem stack up.

The power of lobbying in the U.S.: I remember from a case in an economics class at Kellogg that talked about how $1 spent on lobbying by the Cotton Farmers (huge, corporate ones) resulted in about $7000 of benefits. Think about that, for ROI. I thought of that when reading about an interesting article in The Washington Post that talks about the power of lobbying, in the context of Comcast and how this has enabled Comcast to retain its sometimes-buyer, sometimes-supplier, sometimes-competitor power so well and grow and thrive. The article goes on to assert that this increasing and growing power is stifling the growth of competition and innovation:

In Cohen’s decade at the firm, Comcast…with $58 billion in annual revenue…(has become) the nation’s biggest provider of broadband Internet and cable television and the owner of network television programs, a movie studio and broadcast stations across the country. 

A consequence of all that power is a stubbornly strong cable television model that keeps many households paying upward of $100 a month for their service bundles, critics of the company say. Even as Verizon,AppleNetflix and YouTube have tried to capture the living room, Comcast still dominates.

Random Penguin House: A big piece of news in the book industry is that venerable Penguin and Random house are merging next year and will control 25% of the world’s English language book sales. The reasons are a combination of (a) the parent companies wanting to focus on other things and (b) more importantly, synergies: cost savings, as well as increased buyer power (in a sense, they buy authors with lucrative contracts) – which become very important given the rise of the eBook and associated margins and (c) supplier power – in the sense that they supply books to book stores around the world.

The Economist says this has some agents and writers worried:

Some agents and writers worry that any combination of the two publishers may pressure the advances that writers are paid; it will almost certainly reduce the number of titles published under lucrative contracts, though self-publishing may be boosted. Whether there is a happy ending to this story may depend on whether you are an agent, writer or Penguin Random House.

But it had to happen, especially with Amazon now trying to become a publishing house too (more on that soon).

Until tomorrow.

Experimenting with a new format

QuestionMark

I am experimenting with a new format.

When visitors come to visit this blog at www.BminusC.com, they will now see three things (other than the eminently clickable Ads peppering the site, that is):

1. A column on the left that shows my Twitter feed and includes links to articles and items I think are interesting, through the day – so if you “follow me” on twitter at www.twitter.com/BminusC then you will see these as I post them.

2. A long-form blog posts in the center column – you can read these by visiting the site, reading about them in the daily digest, or you can subscribe to this blog’s RSS feed and read them in your RSS reader through the day.

3. Posts and articles that I wrote in the past that might have continued relevance today, aka my “keepers” – which you can only see if you visit this site.

Is this a good idea? Bad idea? Are you indifferent to it? Let me know. 

Netflixed – The Book

Netflixed Book

A new book about Netflix is coming out soon and should make some waves - delving, as it does, into Netflix’s founding, its early years, how it grew, etc. – and destroying some of Netflix’s mythology in the process.

The book also seems to talk about Reed Hastings – whose business skills consistently receive top marks, but whose communication skills and “social IQ” haven’t.

The book is not out yet but the interviews with the book’s author, Gina Keating, are interesting and illuminating.

As I said before I’m a Netflix fan and have been a user for many years. These days though we use Netflix primarily for Dora, My Little Pony and other toddler shows – something that seems to be a trend…as evidenced by Netflix’s iPad app now having a dedicated, called out Kids section. Wonder what that means in terms of how users are using Netflix – not for streaming new(er) movies but more as a $8/month kid video archive, since kids can watch the same show 243 times in a row (poor parents).

So the future for Netflix, based on licensing costs, competition in the form of Amazon and various others, Google/YouTube in consumer video entertainment, is unclear though, after a long, tough year.

However, as Gina says in her interview, no one can write off Hastings (who embodies Netflix):

…that “everything is a bit cloudy right now,” but that if anyone can see through the fog, it’s Hastings. Poor people skills or not, “I would always bet on Reed Hastings after watching him for seven years,” she said. “He just has a really tremendous vision for what people want because they have 15 years of data they have collected with their website which is basically a market research platform.”

40, 60 or 80 Hours A Week?

 

Punch Clock

I once heard a story about a rich merchant who, on his deathbed, tells his sons that after inheriting his wealth, they must never let sunlight fall on them on their way to and back from work. One son wastes his inheritance by building a covered walkway from his house to the family store. The other one “wisely” understands his father’s wishes to mean that he must leave for work before sunrise and never return until after the sun sets – and of course, prospers.

These pre-historic attitudes to the many virtues of working long hours are sadly still prevalent, as illustrated by two managers’ cringe-inducing quotes in an NYT article:

One manager said: “So this one guy, he’s in the room at every meeting. Lots of times he doesn’t say anything, but he’s there on time and people notice that. He definitely is seen as a hard-working and dependable guy.” Another said: “Working on the weekends makes a very good impression. It sends a signal that you’re contributing to your team and that you’re putting in that extra commitment to get the work done.”

While I hope that these managers and their thinking is an exception, I suspect they may actually be the rule – thanks to the inertia of pre-set attitudes, among other things. 

Productivity is measured and rewarded today, especially in the “knowledge economy”, based on results and accomplishments – not the time spent at the office. Smart companies and managers should update their thinking accordingly.

The full article, written by a Harvard lecturer and Brookings Institution fellow, discusses different means to enhancing productivity while minimizing the focus on meaningless metrics like time spent at the office and is well worth a read.

The Other End of The Spectrum

At the other end of the spectrum, we have workaholics who live to work. Some do it because they are passionate about it and enjoy it and work doesn’t really feel like work. But like alcoholism, could workaholism indicate something deeper and unhealthier?

In March, meanwhile, Psychology Today cited recent research that outlines four basic types of work addict, namely (to paraphrase): The manic perfectionist, the stress junkie, the muddled multi-tasker, and the guy who never seems able to let a project go. An article in the same publication last year explored the narcissism and sundry neuroses that underlie the disease. Such categorizations may, on the surface, seem largely academic, but there is real-world aim here: namely to make people aware that they have an identifiable condition, and therefore make it more likely that they will seek help.

In the U.S., for example, telling people that you work too much or that you worked through your vacation is generally a badge of honor – regardless of role and title. 

Putting in 80 hours a couple of weeks in a row to meet a critical deadline or pulling an all nighter because a critical document or presentation needs to be sent out is understandable (though I doubt the quality of the work produced in these marathon sessions), but people that are simply unable to switch themselves, their laptops or their phones off may be asking for it:

“We’re beginning to look at work addiction from a cellular level now,” says Robinson. “The workaholic operates on the fight-or-flight response, which leads to a drench of cortisol, norepinephrine, and adrenaline. It can lead to heart disease and heart attacks, diabetes, compromised immune systems, and gastro-intestinal problems. We know this, the studies are pouring out.”

Still with me? Read the full article yourself before its too late.

Social Media Icons Powered by Acurax Web Design Company
Check Our FeedVisit Us On TwitterVisit Us On FacebookVisit Us On Google PlusVisit Us On Linkedin