CEO Rides The Tide at Procter & Gamble

The Wall Street Journal: Procter & Gamble CEO David Taylor “eschews talk of reinvention. He aims to keep P&G on top by playing to its historic strengths … Mr. Taylor said he is confident that P&G’s best prospects remain rooted in fundamentals. That means selling to the masses by way of big retailers on the strength of meticulously collected consumer research, a massive research-and-development operation and the world’s biggest advertising budget. P&G, he says, needs to learn to do these things faster and more effectively.”

“Executives say they are seeing results. Take the company’s new environmentally friendly laundry soap, Tide Purclean. It was conceived and brought to market in nine months … A big time saver was a new process in which leaders from different areas work concurrently. So instead of completing the chemistry of the product and handing off to the team that makes the bottles, those parts of the business work side by side.”

“At one point Mr. Taylor intervened to head off what could have turned into a long deliberation: determining the color of the bottle cap. The team worried a cap the color of Tide’s signature orange would distract from the environmental message. But they wanted to be sure the detergent was still recognizable to customers. Mr. Taylor told the team to go with orange.”

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30,000 Feet: The Ascent of Bad Behavior

The Wall Street Journal: “A lot of things happen on airplanes that don’t regularly occur at the mall, theater, ballpark or neighbor’s house. The thin air and high stress, plus attitudes toward airlines and their employees, seem to foment rude, even violent behavior—not to mention all the disgusting things your mother told you never to do at home.”

“The International Air Transport Association, a Geneva-based airline trade association, says unruly passenger incidents are growing at a rapid clip world-wide. Airlines reported 10,854 unruly passenger incidents to IATA in 2015, up nearly 17% from the prior year. That’s about 30 incidents a day … “’t does seem the issue is getting worse,’ says Chris Goater, IATA spokesman in Geneva.”

“Asked whether air-travel conditions—high load factors, cramped seating, baggage fees and space shortages, delays and long lines—play a role, Mr. Goater of the IATA says airlines don’t think there’s evidence.”

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Robo-Shop: Not an Automatic Win

The Economist: “The idea is that a combination of smart gadgets and predictive data analytics could decide exactly what goods are delivered when, to which household. The most advanced version might resemble Spotify, a music-streaming service, but for stuff. This future is inching closer, thanks to initiatives from Amazon, lots of startup firms and also from big consumer companies such as Procter & Gamble.”

“Buying experiments so far fall into two categories. The first is exploratory. A service helps a shopper try new things, choosing products on his or her behalf … The second category of automated consumption is more functional. A service automates the purchase of an item that is bought frequently … If a shopper automates the delivery of a particular item, the theory is that he is likely to be more loyal.”

“But neither Amazon nor the big product brands should celebrate a new era of shopping just yet … One problem may be the e-commerce giant’s prices, which fluctuate often. Another report … found that far more British consumers would prefer a smart device that ordered the cheapest item in a category to one that summoned up the same brand each time. That suggests that automated shopping, as it expands, might make life harder for big brands, not prop them up.”

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Chick-fil-A & Arby’s: With Sugar on Top

Business Insider: “Chick-fil-A leads the industry in customer satisfaction, regularly topping the American Customer Service Index’s annual ranking. Compared to employees at 15 chains, employees at Chick-fil-A are the most likely to say ‘please’ and ‘thank you,’ and to smile at drive-thru customers, according to QSR Magazine’s annual drive-thru report.”

“In this area, Chick-fil-A has a leg up on the competition due to its structure. Each franchisee operates just one location, allowing for more hands-on training. Typically, franchised chains like Arby’s, KFC, and McDonald’s don’t have a set limit on how many locations a franchisee can open, with franchisees operating up to hundreds of restaurants.”

“Realizing the difficulties in achieving consistent quality across 3,300 locations worldwide, Arby’s began prioritizing customer service a few years ago in an effort to catch up to chains like Chick-fil-A. In 2014, the chain began requiring all employees to attend an annual Brand Champ training. The training attempts to both help employees understand why Arby’s operates the way it does and assist workers in achieving their own goals, in and out of Arby’s.”

“One of the biggest distinguishing points between the chains that are thriving and those that are struggling is customer service. Customers return to and become loyal to chains where they can expect accuracy, friendliness, and a simple ‘please’ and ‘thank you’.”

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Secret Sauce: From Condiment to Cliché

Ben Zimmer: “These days, ‘special sauce’ (or sometimes ‘secret sauce’) inevitably comes up whenever someone is describing a closely guarded feature that is regarded as crucial to the success of a product or service … But ‘special sauce’ didn’t become truly special until McDonald’s added the Big Mac to its national menu in 1968, after months of secret experiments in its food labs and extensive field testing … Those who came of age in the 1970s can still recite the Big Mac ingredient list by heart: ‘two all-beef patties, special sauce, lettuce, cheese, pickles, onions, on a sesame-seed bun’.”

“As a mnemonic and earworm, the jingle was extremely effective, and it also helped launch a more figurative meaning of ‘special sauce,’ for key ingredients beyond the world of burgers … Meanwhile, it turns out that the Big Mac special sauce isn’t such a closely guarded secret after all: A 2012 YouTube video by a McDonald’s executive chef revealed that the sauce could be made at home with mayonnaise, pickle relish, mustard and a few other condiments.”

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Abercrombie & Fitch Tries ‘Inclusion’

The Wall Street Journal: “Abercrombie & Fitch, once the mean girl at the mall, wants shoppers to know it has grown up. The brand that drew teen fans to its stores with shirtless male models, dim lights and heavy perfume is cleaning up its image amid a sharp drop in sales. With a new marketing campaign, and a redesigned logo and website … Abercrombie hopes millennials who knew the brand in high school will give it another chance.”

“What was cool in Abercrombie’s heyday is decidedly out of fashion now. Today’s teens embrace diversity and reject anything that resembles bullying … like a teen culling her Instagram posts after a breakup, Abercrombie is deleting all existing pictures on its website and social-media channels.”

“New pictures will feature brighter lighting, looser styling and a more optimistic mood … Abercrombie plans a new store prototype for 2017; meanwhile, it’s making changes at existing locations … Shoppers can expect more variety within the brand’s jeans, jackets and sweaters” … Abercrombie’s Fran Horowitz comments: “We are a positive, inclusive brand, with a nice sensibility, very different from what they encountered in the past.”

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Brilliant Books: How Local Goes Global

The New York Times: “When Peter Makin opened Brilliant Books five years ago, he quickly realized his business wouldn’t survive in this remote locale if his only customers were local buyers … he believed that online buyers would flock to Brilliant Books if they experienced the same customer service that shoppers in his physical store do … He began offering free shipping … and hired a full-time social media manager, who promotes the store and has used Twitter and Facebook to talk to readers who would never find themselves near Traverse City.”

“One of his most successful ways of getting repeat business is his store’s version of a book-of-the-month program, which makes personalized recommendations for each of its nearly 2,000 subscribers every 30 days. Rather than use an online form to track preferences, Brilliant sends each new subscriber a customer card to fill out by hand and mail back. Employees then scan the card into the system so that when it is book-selection time, they can see what the customers said they liked and how they said it.”

“Once the selections are made, the back-end system orders books from the publishers and prints postage and address labels. After the books arrive, the staff mails personalized packages. The investment is paying off: Sales are up 14 percent this year, and Mr. Makin anticipates that 30 percent of Brilliant’s sales will come from online orders — doubling last year’s total. Facebook customers buy more nonfiction titles, while Twitter conversations generate more sales of young adult and children’s books.”

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Innovation & The Theory of Jobs To Be Done

The Wall Street Journal: “Businesses succeed when they help people do certain jobs. They fail when they lose sight of what that job is … Jobs are defined by the customers who hire companies to do them. The jobs are … expressed in verbs and nouns, not adjectives and adverbs. Some of the most successful companies in the world … are those whose very names have become synonymous with the job they help you do, such as Google, Uber, Xerox and TurboTax.”

“By contrast, ‘I need to have a chocolate milkshake that is in a twelve-ounce disposable container’ is a preference that confines both the customer and beverage provider to the milkshake category … The job customers ‘hire’ the breakfast milkshake for is … ‘I need something that will keep me occupied with what’s happening on the road while I drive. And also, I’d like this to fill me up so that I’m not hungry during a 10:00 a.m. meeting’ … Putting it that way forces drive-through owners to think much more broadly about what’s for breakfast.”

The Theory of Jobs to Be Done, as presented in Competing Against Luck by Clayton Christensen, et. al., recommends “creating internal processes that flex according to the needs of the job to be done, not the needs of the organization. When you buy something on Amazon, it will tell you something along the lines of: ‘If you order within the next 2 hours and 32 minutes, you’ll receive your product Tuesday.’ That isn’t Amazon simply trying to keep you posted. It’s a way to force the company’s internal processes to stay focused on what matters to the customer—the basic, all-too-easily forgotten job that customers need done.”

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How Wyndham Wins the Loyalty Game

The Wall Street Journal: “The top performer in a new comparison of hotel loyalty program payback is Wyndham Hotel Group, which revamped its Wyndham Rewards loyalty program 18 months ago to make it a lot more beneficial to travelers … average payback at Wyndham is nearly 14%. For every $100 you spend at Wyndham, Ramada, Days Inn, Wingate and other hotels, you can get back $13.60 worth of stays on points.”

“Wyndham … changed its program in 2015 to price every award room the same: 15,000 points. There are no capacity controls or blackout dates and you earn 10 points for every dollar spent, so points accumulate quickly. Wyndham says redemptions are up 90% since before the change and seven million people have joined the program since the 2015 relaunch, a 17% increase to 47.5 million members.”

“Wyndham says it is investing $100 million in the loyalty program, most of which is going to hotel owners to buy rooms for free stays. Since most hotels are franchised under a brand name but owned separately, hotel owners pay the chain a small percentage of room revenue to cover points given out, and then hotels that provide free rooms when points are redeemed get paid by the chain. In Wyndham’s case, the chain is subsidizing the cost of the free rooms for hotel owners.”

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