Years ago Indra Nooyi made an audacious strategy shift beyond unhealthy snacks and drinks. She was prescient—as well as disciplined and tough—but the challenges are still daunting. ... The infractions might seem insignificant—one missing can of Pepsi on one shelf in one store in one city in one country—but for Nooyi it is this level of detail that sets her company apart. “We ought to keep pushing the boundaries to get to flawless execution,” she declares. “Flawless is the ultimate goal.” ... You can’t blame anyone at PepsiCo for feeling a sense of urgency—or embattlement—in recent years. Their staple products, soda pop and potato chips, are only slightly less demonized these days than cigarettes. ... now in her eighth year in the grueling crucible that is the leadership of one of America’s most globally recognized brands, it just may be a moment to exhale. You could even call it vindication. From the start of her tenure she dared to acknowledge what was obvious to everyone outside the business but unutterable to those inside it: Junk food makes people fat and harms their health. Nooyi began emphasizing products that are at least a bit healthier than the traditional chips and soda—a pivot some observers thought could sink the company. Now shoppers are proving her right.
Subaru can barely make enough cars to meet demand and has the best profit margin in the industry. But expanding might jeopardize what makes it work so well ... Since 2011, Subaru’s global sales have surged 45 percent to 913,100 vehicles, a pace bested only by a few burgeoning Chinese brands and Fiat Chrysler which has been intent on making Jeep a popular choice in Europe and Asia. ... Almost any car company one can name is far bigger than little Fuji Heavy Industries, Subaru's parent. BMW? More than twice the size in terms of unit sales. Kia? Almost three Subarus. Even Mazda sells 50 percent more cars. ... Being small, though, is the reason Subaru has become such a big deal. With manufacturing capacity maxed out, it now has to decide what kind of company it wants to be. ... Traditionally, the company has spurned the volume game for steadier prices and better relationships with its dealers. Because supplies are so tight, a Subaru sitting on a sales lot right now might be the closest thing the car business has ever seen to a fixed price. Last month, the average incentive on a Subaru in the U.S. was a minuscule $481, compared with almost $2,000 on a Mercedes and almost $3,000 on a Ford. This is also why Subarus today retain their value better than any other brand, according to a TrueCar analysis.
How an unproven, widely mocked technology scared the Soviets into ending the Cold War. ... For decades, Ronald Reagan’s Strategic Defense Initiative (SDI)—an ambitious ground- and space-based “shield” to protect the United States from nuclear ballistic missiles—has been mocked and criticized. First proposed by the president in 1983, it was immediately dubbed “Star Wars” by the mainstream media and dismissed as unscientific, infeasible and even counter-productive. The Union of Concerned Scientists, 100,000 members strong, was fierce in its opposition. The Arms Control Association declared that SDI would end arms control, while some Soviets felt SDI would end the world. Domestic critics became furious, and the Kremlin went ballistic. But while Reagan’s critics might not have taken his pet technology seriously, the Russians certainly did. Even though SDI was decades away from being implemented, if not beyond the reach of technology altogether, the threat the shield presented—along with Reagan’s dogged commitment to it—was enough to scare Soviet leader Mikhael Gorbachev into reforms that would eventually bring down the Soviet Union. In short: “Star Wars” never worked as Reagan wished. It worked even better. And I should know, because I saw it happen.
And predicts the rise and fall of nations. ... Sometimes art imitates life; some games do so as well. In the case of chess especially, the parallels with power politics are many and uncanny, persisting over the centuries. Originating on the Asian subcontinent, chess moved to Persia ("checkmate" comes from shah mat, "the king is dead") but really began to diffuse widely during the great age of Arab conquest, starting in the 7th century of the Common Era. The structure and rules of the game remained consistent for centuries within Muslim domains, but in Christian countries to which chess spread, innovations emerged.
Ayungin Shoal lies 105 nautical miles from the Philippines. There’s little to commend the spot, apart from its plentiful fish and safe harbor — except that Ayungin sits at the southwestern edge of an area called Reed Bank, which is rumored to contain vast reserves of oil and natural gas. And also that it is home to a World War II-era ship called the Sierra Madre, which the Philippine government ran aground on the reef in 1999 and has since maintained as a kind of post-apocalyptic military garrison, the small detachment of Filipino troops stationed there struggling to survive extreme mental and physical desolation. Of all places, the scorched shell of the Sierra Madre has become an unlikely battleground in a geopolitical struggle that will shape the future of the South China Sea and, to some extent, the rest of the world. … It was hard to imagine how such a forsaken place could become a flash point in a geopolitical power struggle. … To understand how Ayungin (known to the Western world as Second Thomas Shoal) could become contested ground is to confront, in miniature, both the rise of China and the potential future of U.S. foreign policy. It is also to enter into a morass of competing historical, territorial and even moral claims in an area where defining what is true or fair may be no easier than it has proved to be in the Middle East. … The Spratly Islands sprawl over roughly 160,000 square miles in the waters of the coasts of the Philippines, Malaysia, Brunei, Taiwan and China — all of whom claim part of the islands. Since the 18th century, navigators have referred to the Spratlys as “Dangerous Ground” — a term that captures not only the treacherous nature of the area but also the mess that is the current political situation in the South China Sea. … Why the fuss over “Dangerous Ground”? Natural resources are a big piece of it. According to current U.S. estimates, the seabed beneath the Spratlys may hold up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas. On top of which, about half of the world’s merchant fleet tonnage and nearly one third of its crude oil pass through these waters each year. They also contain some of the richest fisheries in the world. … What China has done with Mischief, Scarborough and now with Ayungin is what the journalist Robert Haddick described, writing in Foreign Policy, as “salami slicing” or “the slow accumulation of actions, none of which is a casus belli, but which add up over time to a major strategic change.”
AS IF a global financial-market meltdown, the deepest U.S. recession in seventy years, an existential crisis in the euro zone and upheaval in the Middle East hadn’t already created enough trouble for one decade, now the unrest and anxiety have extended to some of the world’s most attractive emerging markets. Just in the past few months, we’ve seen a rough ride for India’s currency, furious nationwide protests in Turkey and Brazil, antigovernment demonstrations in Russia, strikes and violence in South Africa, and an ominous economic slowdown in all these countries. ... Adding to the uncertainty, as the carnage and confusion in Syria remind us, is the fact that there is no longer a single country or durable alliance of countries both willing and able to exercise consistent global leadership. ... it is all the more remarkable that there’s been so little noise from China, especially since the rising giant has experienced a once-in-a-decade leadership transition, slowing growth and a show trial involving one of the country’s best-known political personalities—all in just the past few months. Given that Europe and America, China’s largest trade partners, are still struggling to recover their footing, growth is slowing across much of the once-dynamic developing world, and the pace of economic and social change within China itself is gathering speed, it’s easy to wonder if this moment is merely the calm before China’s storm. ... Don’t bet on it. ... In a world where governments can’t afford to go it alone to protect their interests, China will struggle to build durable partnerships that extend its power.
- Also: Wall Street Journal - Has China’s Debt Crisis Moment Arrived? < 5min
- Also: Financial Times - Spike in China money rates, cash-crunch fears < 5min
- Also: Bloomberg - Top China Banks Triple Debt Write-Offs as Defaults Loom < 5min
- Also: Wall Street Journal - Party’s Over for Australian Dollar < 5min
Levi Strauss may have invented jeans, but it never saw yoga pants coming. Inside the effort to win back the hearts, and butts, of shoppers ... At the foot of Telegraph Hill in San Francisco, in a renovated grain mill with soaring ceilings and wooden beams, Bart Sights is refining his recipes for denim. In his hands, stained dark blue from day after day of plunging fabric into buckets of indigo dye, he holds a list of steps for creating a particularly vexing style: women’s skinny jeans. Most such jeans contain so much synthetic fiber they appear slick, cheap, and unlike real denim. Sights has been searching for a way to give the fabric just the right amount of stretch, in just the right places—enough to flatter the figure, but not so much that they stop looking like jeans. ... The company, founded in 1853, has survived the Civil War, the Great Depression, and other epochal threats, but in the last two years it’s been tormented by an enemy none of its executives saw coming: yoga pants.
He’s resting on a couch, but this discussion—explaining how his team will rebound from a moment that most Seattle fans still can’t bring themselves to watch again—is more interrogation than psychotherapy. “If you hope I’m going to cry over the deal, I’m not,” Carroll says. “I’ve moved past that.” ... Carroll believes he made the right call. He’s never wavered there. Where some people say “worst possible decision,” he says “worst possible outcome.” That’s his distinction, and he’s sticking to it. ... the same critics who panned Carroll for throwing late against the Pats lambasted him for the decisions he made against UT. He never ignored that moment or banished it from his memory or said it didn’t hurt like hell. He confronted it. And it has fueled him. Says Carroll, “It’s much easier for me [to move forward] than most people.” ... There’s a famous story about the epiphany Carroll had around this time. He was reading a book by John Wooden that described how it took the old UCLA coach 18 years to win his first national title. And then Carroll slammed the book shut, inspired. He took the USC job in December of that year and started to write down not only what he wanted to accomplish but how he would go about it. He filled legal pads and the outsides of manila folders with so many notes that he ran out of space to write. He dissected every aspect of performance. Details that seemed small—like having players preorder for the Trojans’ omelet station in order to save a few minutes at breakfast each morning—were implemented to improve efficiency. He asked his assistant coaches to explain their vision in 30 words or less ... To Carroll, it became less about the victories and more about the process.
All told, along a three-hundred-mile stretch, I found twenty-six Chinese lingerie dealers: four in Sohag, twelve in Asyut, two in Mallawi, six in Minya, and two in Beni Suef. It was like mapping the territory of large predator cats: in the Nile Valley, clusters of Chinese lingerie dealers tend to appear at intervals of thirty to fifty miles, and the size of each cluster varies according to the local population. Cairo is big enough to support dozens. Dong Weiping, a businessman who owns a lingerie factory in the capital, told me that he has more than forty relatives in Egypt, all of them selling his products. Other Chinese people supply the countless underwear shops that are run by Egyptians. For the Chinese dealers, this is their window into Egypt, and they live on lingerie time. Days start late, and nights run long; they ignore the Spring Festival and sell briskly after sundown during Ramadan. Winter is better than summer. Mother’s Day is made for lingerie. But nothing compares with Valentine’s Day, so this year I celebrated the holiday by saying goodbye to my wife, driving four hours to Asyut, and watching people buy underwear at the China Star shop until almost midnight. ... No Upper Egyptian woman would wear such garments in public, but it’s acceptable at home. This is one reason that the market for clothing is so profitable: Egyptian women need two separate wardrobes, for their public and their private lives. ... In general, Chinese dealers prefer Egyptian Muslims to Christians. This is partly because Muslims are more faithful consumers of lingerie, but it’s also because they’re easier to negotiate with. The Copts are a financially successful minority, and they have a reputation for bargaining aggressively. This is what matters most to Chinese dealers—for them, religion is essentially another business proposition. ... differences seem perfectly matched for the exchange of lingerie. The Chinese dealers are small, and they know little, and they care even less—all of these qualities help put Egyptian customers at ease. ... “Their strategy is to make economic linkages, so if you break these economic linkages it’s going to hurt you as much as it hurts them.” ... In “China’s Second Continent,” published in 2014, Howard French estimates that a million Chinese live on the continent, and China does more than twice as much trade with Africa as the United States does.
If you want to understand the nonconformist culture of Southwest Airlines, you’ve got to start with its holiest site: the shrine to Herb. Walk into the company’s headquarters, located in a five-story gray building next to the Love Field airport in Dallas, go past the front desk, and proceed down a broad hallway until you get to a horseshoe-shaped employee lounge with a soaring atrium. There you’ll find a museum of sorts honoring Southwest’s Wild Turkey–swilling, Marlboro-smoking co-founder and former CEO, Herb Kelleher. In one towering poster on the wall he’s shown hamming it up in a sequined Elvis costume; in another he’s arm wrestling an aviation rival for charity. Push a red button and you can hear a recording of three versions of Kelleher’s famous laugh—the guffaw, the chortle, and the roaring belly buster. On the walls there are embossed plaques with a selection of his favorite sayings, none more emblematic than this gem: “If you rest on your laurels, you’ll get a thorn in your butt.” ... The company is in the process of reworking or jettisoning altogether much of Kelleher’s tried-and-true strategy—with plans to fly in a totally new strategic direction. In fact, after years of consistently outsmarting and outperforming the traditional carriers, Southwest is today remaking itself to operate more like them. ... The goal? To attract more of the most lucrative customers: high-fare-paying business travelers flying long distances.
Alibaba is the hottest e-commerce company of the past five years, a fusion of eBay and Amazon whose 386 million active users accounted for $394 billion in sales in fiscal 2015—six times the sales volume of its biggest Chinese competitor. The company created a huge marketplace and a sophisticated distribution network just in time to serve a generation of Chinese consumers attaining middle-class prosperity. “We are seeing Chinese consumers adopt new retail formats and online shopping faster than any of their global counterparts,” says Jasmine Xu, president of e-commerce for Procter & Gamble Greater China. Those trends fueled a rise so impressive that even the mighty Amazon became an Alibaba partner ... Today, however, Alibaba looks mortal. Its growth has slowed, hampered by China’s ebbing economy and by competition from a growing crop of rivals like JD.com. Its stock has fallen 26% from its post-IPO highs, from $115 to the mid $80s. To reignite its growth, chairman and founder Jack Ma and CEO Daniel Zhang plan to lean on U.S. companies—brands that hold enormous appeal in China. “This is an incredibly important strategy for the future of Alibaba,” Ma says. ... Alibaba is pitching itself as a shortcut to the world’s most populous market. Alibaba is helping foreign companies with marketing, data analytics, and shipping. And more recently it has sweetened the pot with a newer service, Tmall Global, that lets U.S. brands sidestep many of the taxes, regulatory hurdles, and logistics hassles that trip up foreign companies in China. ... Tmall, went live in 2008 with a business model sharply distinct from Taobao’s. Tmall is Zhang’s brainchild. He positioned it as a marketplace for higher-quality clothing, food, and electronics, with a focus on luxury brands. ... Tmall owes its growth to China’s rapidly expanding, brand-conscious middle class. Currently there are 109 million Chinese people with a net worth between $50,000 and $500,000, according to Credit Suisse, which estimates that those ranks could surpass 500 million by 2022. It’s a demographic that’s very comfortable with e-commerce: 40% of Chinese consumers buy groceries online, for example, compared with only 10% of Americans.
In pulling back the curtains, Amazon, one of the most private public companies in the world, revealed how it is racing to piece together an immensely complex puzzle—much of which it is having to build from scratch, at giant expense and with painstaking attention to the minutiae, as it tosses out assumptions that American customers have taken for granted for decades. In doing so, the company, an upstart here, has thrown itself into a knife fight with two privately owned and much more established Indian competitors—Flipkart Internet Pvt. and Snapdeal, owned by Jasper Infotech Pvt.—as well as a clutch of smaller Indian startups that are nipping at all of their heels. ... It is a fight that Amazon is far from certain of winning, yet one it cannot afford to sit out. The company predicts that India will be its biggest market after the U.S. within a decade and that the Indian e-commerce market as a whole will ultimately be gigantic. ... It is not hard to see why the battle for India is this fierce, nor why Bezos, famously obsessed with analytics, would see it as essential for Amazon’s future. The numbers alone are dizzying. India’s population of 1.25 billion is four times as big as the U.S.’s and more than double Europe’s. And since the median age is 27—a full decade younger than Americans’—the trajectory will be steep. India will overtake China as the world’s most populous country in just seven years, according to the UN. It is now the world’s fastest-growing major economy, and the IMF projects 7.5% growth next year. The roads and railways might be creaking under the strain. Many laws governing business are a confounding tangle, including a law forbidding foreign companies from selling products directly to Indians. That law effectively renders Amazon India a platform for vendors—akin to its “fulfillment by Amazon” program in the U.S. ... Barely one-quarter of India’s population has access to the Internet at home, whether on a smartphone or computer, and only a small fraction of those have ever shopped online. ... By some estimates the company is spending nearly $25 million a month in India already.
Muji was launched in Japan in 1980, as Mujirushi Ryohin, which means “no-brand quality goods.” It was intended to be a generic line for the Seiyu Supermarket Group, boasting the tagline “Lower prices for a reason.” Initially, Muji included only forty different products, mainly food and household goods. Today, it is an independent two-billion-dollar company, selling more than seven thousand items ranging from furniture to soap. It keeps prices low by paying close attention to processing and packaging (most of Muji’s paper products are unbleached), and by using undesirable and industrial materials, which are cheaper in bulk (it once famously sold “U-Shaped Spaghetti,” made from the discarded ends of pasta). ... According to its 2015 year-end report, Muji is currently in what it calls its “jump” phase (preceded by “hop” and “step”), defined by growth abroad and efficiency at home. ... Muji has succeeded in part by incorporating the aesthetic consequences of cost-cutting into its design philosophy.
Hard realities in these three fields are inconvenient for vested interests and because the day of reckoning can always be seen as “later,” politicians can always find a way to postpone necessary actions, as can we all: “Because markets are efficient, these high prices must be reflecting the remarkable potential of the internet”; “the U.S. housing market largely reflects a strong U.S. economy”; “the climate has always changed”; “how could mere mortals change something as immense as the weather”; “we have nearly infinite resources, it is only a question of price”; “the infinite capacity of the human brain will always solve our problems.” ... Having realized the seriousness of this bias over the last few decades, I have noticed how hard it is to effectively pass on a warning for the same reason: No one wants to hear this bad news. So a while ago I came up with a list of propositions that are widely accepted by an educated business audience. They are widely accepted but totally wrong. It is my attempt to bring home how extreme is our preference for good news over accurate news. When you have run through this list you may be a little more aware of how dangerous our wishful thinking can be in investing and in the much more important fields of resource (especially food) limitations and the potentially life-threatening risks of climate damage. Wishful thinking and denial of unpleasant facts are simply not survival characteristics.
Price tags are a consideration of titanic importance. They’re more important even than the ideal number of window displays (five, with two for women’s wear and one each for men, kids, and home), or whether jeans should be hanging or folded (hanging for more fashion-forward styles so you can see the detailing, folded for basics). ... Price is by far the biggest reason Primark is the undisputed victor in Britain’s cheap-fashion war. Secondary are its up-to-the-minute designs, jazzy stores, and tireless promotion on social media. Primark doesn’t sell online and barely advertises. Instead, customers advertise it for free, posting thousands of selfies with their latest outfits, using the #Primania hashtag to be rated and critiqued. The best images get cycled onto giant in-store LED screens to spur impulse buying. ... It’s a relentless curator and promoter of clothes so ridiculously cheap that buying them on a whim because you like someone’s outfit on Instagram is an entirely reasonable idea. ... The idea is to offer prices Americans are used to seeing on less-than-hip clothes from Kohl’s or Walmart on trendy pieces that change from day to day. ... If Primark has a father, it’s a man named Arthur Ryan, but he’s not easy to get to know. Having hardly ever given an interview or a speech, he’s the Keyser Söze of retail. ... Weston is emphatic that Primark’s prices don’t come from cutting corners on labor. “We buy clothes from the same factories that everyone else buys from,” he says. “Everyone.” Instead, he says, undercutting competitors is basically a matter of volume—selling low-margin items many, many more times. ... In an industry where retailers cancel orders that are already on freighters and force suppliers to take financial hits when product doesn’t sell, that edge gives suppliers the confidence to cut better deals for Primark
Every airline has its horror stories, of course—air travel is full of opportunities for customer disenchantment. But United has proved an industry leader: On all major performance metrics—delays, cancellations, mishandled bags, and bumped passengers—United has, since 2012, been reliably the worst or near worst among its competitors. In 2012, according to the U.S. Department of Transportation, United was responsible for 43 percent of all consumer complaints filed against U.S. airlines. It finished last among North American nondiscount airlines in the 2015 J.D. Power & Associates customer satisfaction survey. ... It’s been five years since United Airlines and Continental Airlines combined to form what was at the time the world’s largest carrier, and the merger hasn’t gone well. In 2012 and early 2014, when American Airlines Group, Delta Air Lines, and Southwest Airlines reported large, and in some cases, record profits, “the new United” lost money. ... Then there was the coffee, an issue that, while hardly central to its business, symbolized United’s inability to get things right. On Nov. 19 the airline announced it was changing the coffee it serves on its planes and in its lounges from a brand called Fresh Brew to the Italian premium roaster Illy. It was welcome news to customers and to the flight crews used to fielding complaints. It was also a tacit admission that the choice of coffee after the merger, a decision that consumed thousands of man-hours, took nearly a year, and involved everyone from Smisek to the airline’s head chef to the flight attendants, hadn’t worked out.
It’s a story that has become a part of business folklore in China. In 1985, Zhang Ruimin, the young general manager of the loss-making Qingdao Refrigerator Plant, decided it was time to turn things around. He got his factory workers to smash 76 defective refrigerators with sledgehammers. To drive the point home—that there would be no tolerance for low quality—he delivered the first blow himself. ... This moment marked a significant turning point in the history of Qingdao Refrigerator Plant (now known as Haier), so much so that the sledgehammer is now housed in the company’s in-house corporate museum. Three decades later, Haier is the world’s largest white goods manufacturer and boasts cutting edge innovation. ... None of this would have been possible without CEO Zhang Ruimin at the helm. He led the company through several path-breaking business model changes, which helped the company build a strong brand, grow both organically and through acquisitions, globalize and evolve a business model where the company “gets close to the customer”. The beauty of it is that he forced the company to change even before competition or technology made it imperative that it did so. ... Zhang is now leading the company through yet another transformation. He is, in essence, ‘breaking up’ the company and throwing rigid organizational structures and processes out of the window. The enterprise will, in effect, become an investment platform and the departments and divisions will be like entrepreneurial teams, which he calls “micro-enterprises”.
The untold tale of Target Canada’s difficult birth, tough life and brutal death ... Fisher, 38 years old at the time, was regarded as a wunderkind who had quickly risen through the ranks at Target’s American command post in Minneapolis, from a lowly business analyst to leader of a team of 400 people across multiple divisions. Launching the Target brand in a new country was his biggest task to date. The news he received from his group that February afternoon should have been worrying, but if he was unnerved, Fisher didn’t let on. He listened patiently as two people in the room strongly expressed reticence about opening stores on the existing timetable. Their concern was that with severe supply chain problems and stores facing the prospect of patchy or empty shelves, Target would blow its first date with Canadian consumers. Still, neither one outright advocated that the company push back its plans. “Nobody wanted to be the one to say, ‘This is a disaster,’” says a former employee. But by highlighting the risks of opening now, the senior employees’ hope was that Fisher would tell his boss back in Minneapolis, Target CEO Gregg Steinhafel, that they needed more time. ... Nobody disagreed with the negative assessment—everyone was well aware of Target’s operational problems—but there was still a strong sense of optimism among the leaders, many of whom were U.S. expats. The mentality, according to one former employee, was, “If there’s any team in retail that can turn this thing around, it’s us.” ... Roughly two years from that date, Target Canada filed for creditor protection, marking the end of its first international foray and one of the most confounding sagas in Canadian corporate history. The debacle cost the parent company billions of dollars, sullied its reputation and put roughly 17,600 people out of work.
As Nadella, a 24-year veteran of the company, would have known, the process of turning a Microsoft Research project into a product would often happen slowly, if at all. That's partly by design. The company's research group was set up in isolation from the product teams to allow researchers to envision the future without worrying about how their inventions will make money or fit into the company's mission. ... But Nadella's tight deadline left executives with no time to debate the separation of church and state. ... Microsoft is overhauling its research arm and the way it works with the rest of the company. The goal is to quickly identify technology with the most potential and get it into customers' hands before a competitor replicates it. ... To break down the walls between its research group and the rest of the company, Microsoft reassigned about half of its more than 1,000 research staff in September 2014 to a new group called MSR NExT. Its focus is on projects with greater impact to the company rather than pure research. Meanwhile, the other half of Microsoft Research is getting pushed to find more significant ways it can contribute to the company's products.
Capital allocation is a senior management team’s most fundamental responsibility. The problem is that many CEOs don’t know how to allocate capital effectively. The objective of capital allocation is to build long-term value per share. ... Capital allocation is always important but is especially pertinent today because return on invested capital is high , growth is modest , and corporate balance sheets in the U.S. have substantial cash. ... Internal financing represented almost 90 percent of the source of total capital for U.S. companies from 1980-2013. ... M&A, capital expenditures, and R&D are the largest uses of capital for operations , and companies now spend more on buybacks than dividends. ... This report discusses each use of capital, shows how to analyze that use, reviews the academic findings, and offers a near-term outlook. ... We provide a framework for assessing a company’s capital allocation skills, which includes examining past behaviors, understanding incentives, and considering the five principles of capital allocation.
Five Principles of Capital Allocation:
1. Zero - based capital allocation
2. Fund strategies, not projects
3. No capital rationing
4. Zero tolerance for bad growth
5. Know the value of assets, and be ready to take action to create value
That now-infamous overhaul, under then-CEO and former Apple retail guru Ron Johnson, sought to reposition Penney as a flashier retailer with fancier merchandise. But it backfired: Customers fled, sales tumbled by almost a third, and Penney was crippled financially. Three years ago the board brought back Mike Ullman, the CEO it had unceremoniously chased out in favor of Johnson, to stop the U.S.S. Penney from sinking. And last summer he handed the reins to Ellison—an executive the opposite of flashy. ... It’s fitting that Ellison, a lifelong musician, plays electric bass, an instrument that rarely gets a flashy solo but without which no band can click. He made his reputation in retail at Home Depot, helping engineer that chain’s turnaround by focusing on unsexy but primordial things like the supply chain and the integration of stores and e-commerce. He’s a data devotee who grounds every decision in information—including that seemingly intuitive shoe move. ... The trees look nice, but the forest is daunting. Penney’s sales, an estimated $12.6 billion for the just-completed year, are still down 37% from their 2006 peak. Its nascent recovery, part of its fourth turnaround effort since 2000, hasn’t swayed Wall Street—its stock trades close to a 35-year low. In the long term, the problem isn’t just that Penney has been dysfunctional; it’s also that Penney is a department store, a practitioner of a business model under siege.
All of her reactions, and her answers to the questions Motte asked as Megan used the site, went into a growing database. Expedia, the parent company of more than a dozen travel-oriented brands in addition to Expedia.com, is obsessed with figuring out how to make booking travel online more intuitive, more efficient, and more enjoyable. That means, among other things, understanding the psychodrama of trip planning: the shifting desires and paralyzing wealth of choices, the unsettling gyrations in room rates and ticket prices, the competing demands of family members and budgets and schedules, the need to balance the thirst for adventure against the fear of Zika virus in Latin America or Islamic State in Europe. ... The goal of Expedia’s usability researchers is not only to make Expedia’s various sites and mobile apps more efficient but also to make them an extension of the vacation fantasies that are always running in the back of our heads. ... What distinguishes Expedia is its dedication to understanding the psyche of the modern travel planner. That may be most apparent in the Usability Lab, but much of it happens on the sites themselves, as the company relentlessly tests new ideas about look and feel and function. ... each of Expedia’s brands has its own technology and marketing teams, and they’re encouraged to set their own course. They all benefit from the massive inventory of hotel rooms and plane tickets and the financial resources and technological firepower of the parent company. ... Two-thirds of the A/B tests Expedia runs show no effect or a negative effect, and most of the successful ones are only marginally so.
Think of it as the nuclear option: deploying the most powerful and dangerous weapon available, the one you use when conventional warfare has failed. Just as with real nuclear weapons, that option carries clear risks, starting with losing the presidency in November, and ultimately threatening the party itself. But If a critical mass of Republicans and their conservative allies believe—as many have argued publicly, and more have privately whispered—that Trump could irrevocably undermine what the party says it stands for, and would pose a clear and present danger to the country if he ever attained the White House, it may now be their only chance. ... Trump has one glaring Achilles Heel: He can’t admit any failing, any mistake, any weakness of any kind. He tells us he has the world’s greatest memory; the “The Art of the Deal” is the second best book ever written (the Bible comes first). Without plunging into dime-store psychology, there seems to be a profound sense of insecurity, most of all about being mocked, laughed at.
To an outsider, Wawa appears like a normal, run of the mill convenience chain — except to residents in Pennsylvania, Delaware, New Jersey, Maryland, Virginia and Florida. To them, Wawa is a community hub that deserves praise, fan mail and even country songs. ... On a separate occasion, a Thanksgiving food drive supports employees and customers in need. Whether it’s helping out store associates or donating thousands of dollars to charity, many Wawa stores take pride in their communities. It might seem unusual for a store that sells gas and Sizzlis. ... Later, Wawa became a go-to milk delivery company, but the service unraveled during the late 1950s and early '60s. ... Wawa opened its first food market on April 16, 1964 in Folsom, Pennsylvania. ... It’s not out of the norm for Wawa employees to stay with company 30 to 40 years. At HQ they've pasted photos in their cubicles, work memories throughout the years, alongside kitschy memorabilia. ... 41% of the company is owned by employees through Wawa's employee stock ownership program. ... “You think of a Wegmans, you think of an In-N-Out Burger, they are very slow growth, very deliberate — and i think there’s an element of that cult status that’s attached to that in some regard," Gheysens. ... Annually Wawa brews more than 195 million cups of coffee, sells 80 million built-to-order hoagies and serves 600 million customers. In 2015 the company ranked No. 34 on Forbes’ list of America’s largest private companies, bringing in $9.7 billion in revenue each year. In 2016 Wawa plans to open 47 new locations.
Amazon’s CEO has driven his company to all-consuming growth (and even, believe it or not, profits). Today, though, as he deepens his involvement in his media and space ventures, Bezos is becoming a power beyond Amazon. It has forced him to become an even better leader. ... More has gone right for Bezos lately than perhaps at any other time during his two-decade run in the public eye. His company is expanding internationally and spreading its hydra-headed product and service offerings in unexpected new directions. Bezos, too, is evolving. Always a fierce competitor and stern taskmaster, he has begun to show another side. With the Post, he’s taken a seat at the civic-leadership table. And with his various projects Bezos is also becoming known as a visionary on topics beyond dreaming up new ways to gut the profit margins of Amazon’s many foes. ... Bezos is preternaturally consistent. He still preaches customer focus and long-term thinking. Yet of necessity, as Amazon has become massive—and as he has indulged his eclectic and time-consuming pursuits—he has become the sort of leader who empowers others.