Monthly Archives: March 2005

Upstream from Whole Foods

farm.jpg

[S]mall farms are actually surviving and even flourishing to an extent no one guessed 20 or 30 years ago.

So says Bruce Gardner, dean of the Agriculture College at the University of Maryland.

The United States had 6 million farms in 1944, and by 1970 that number had declined to 3 million, a rate of loss of almost 3 percent each year. If the pattern had held, we would have just over a million farms today. Instead we have 2.1 million, and the rate of decline has slowed to a trickle, with today’s total essentially the same as that of 1990.

Gardner suggests that this uptick in the fortunes of the small farm is due to labor performed off farm.

I am wondering, though, if this might not also reflect the Chez Panisse “eat local” philosophy and the Whole Foods retail phenomenon. All that “natural produce” has to come from somewhere and this probably isn’t going to be Monsanto.

Consumer taste and preference is fragmenting in a plenitude effect. Markets follow suit. Small suppliers were once swamped by economies of scale. Now smallness, especially when it confers speed and adaptability, confers advantage.

In the food category, this advantage is multiplied by a preference for freshness, local origins, and a state of chemical innocence. Of course it makes no earthly difference whether something was harvested by hand or machine, but we still like things that are “hand picked” (read: not entirely alienated from human contact).

All this should put small farms in a nice position. If I read Gardner correctly, the small farm slide stopped in 1990. It would be fun to match this against the dissemination of the Chez Panisse trend and the rise of Whole Foods. Might match.

And this is the thing we didn’t anticipate. Even the writers who invented our “cyber punk” view of the future missed it. Smallness would flourish. Big corporations would have their place in the world. They would, like Microsoft, do what they could to eat their way through all the little, smarter companies. But there would still be lots of little companies left. (Clearly, I am on the verge of a children’s story here. Consider these parentheses a prophylatic.)

The rise of the new economies would not mean the triumph of bigness. It was going to mean the triumph of bigness and smallness. And the death of the middle.

That the small farm should return to us, that’s really not something anyone anticipated. Intellectual bowed their grave and noble heads to mourn the passing of ‘the world we have lost” and the rise of the “cash nexus.” Most sanctimoniously did they agree that small farms were a goner, the first and perhaps most final fatality of the rise of the industrial world.

Darn, wrong again.

References

Gardner, Bruce. 2005. The Little Guy is OK. New York Times. March 7, 2005.
here

Martha Stewart

martha.jpg

Martha Stewart leaves her West Virginia prison this weekend. Decisions must be made.

Strategically, there are three options for the post-prison Martha:

1) act as if nothing happened, carry on as usual.

2) act as if something happened, but acknowledge it only outside the public Martha.

3) act as if something happened, and build it into the public Martha.

To judge from the public pronouncements of the Stewart team, Option 1 beckons. But it’s a terrible idea.

Five months of prison has refashioned Stewart’s image. To pretend otherwise, to return Stewart to her “little miss perfect” persona as a Connecticut arbiter of middle class taste, that’s just crazy. Or to put this another way, there’s always going to be an elephant on the sound stage, and this one’s wearing prison blues.

The old Martha Stewart was forbidding, inaccessible, a goddess of the status heights of Connecticut. She had to stoop to conquer and conquer she did.

This persona (and brand) is destroyed. Thank goodness. Like it or not, Stewart is more interesting and complex than before. She has suffered. She has come down from the mountain. Martha can now claim to know about life, and not just about style. She can feel our pain (having suffered some of her own).

In sum, option 3 is not just an option but an opportunity. The question is whether prison changed Martha Stewart. Is she capable of exhibited this for public purposes? Will the management team she has surrounded herself with rise to the occasion? Open questions, all.

“This blog sits at” wishes her well. And that’s not something any of us would have thought to do before. And that’s a measure of the opportunity.

References

Barnes, Brooks. 2005. Susan Lyne: Relaunching of Martha: Keeping priorities straight

Fournier, Susan. 2003(?). Harvard Business School Case Study on Martha Stewart.

post script

I am doing another hour on the Debbie Millman show on Voice America today, 3:00 to 4:00 eastern seaboard.

Department of Defense, a new business school?

DoDSeal.gif

The military organization was once a lot like Hobbes’ Leviathan. Decision making was resident on high—in the senior officer’s corps. The ordinary soldier was a limb operated at a distance—by someone else’s intelligence.

That’s changing. Militaries are now thinking about a distributed, networked intelligence that would give the ordinary soldier new agency. The American Department of Defense (DOD) has created the Office of Force Transformation, the Command and Control Research Program, and the doctrines of Network Centric Warfare (NCW) and Effects based Operations. The DOD will spend $17 billion to support NCW and transform DOD from a command and control organization into something more distributed and networked. The effect of this new approach is one of the untold stories of the war effort in Afghanistan and Iraq.

But it is not just the U.S. that has been experimenting with a dynamic military. Israel has a longer tradition.

Izhar Shay (former paratrooper in the Israeli Army and the chief executive of V-Secure Technologies), […] and other veterans say the Israeli military trains its soldiers to think quickly and act nimbly, adjusting to circumstances as they arise rather than waiting for orders. While the American military in the post-9/11 era increasingly favors those same qualities, notably in the Special Forces that it deploys deep inside enemy territory, Israel has been giving its warriors greater latitude to call their own shots ever since its founding more than half a century ago.

Today comes notice that this training is having an interesting diffusion effect.

“[a] disproportionate number of Israel veterans begin their own businesses, often in highly competitive technical fields.

This means that the Israel military is supplying a de facto business education, as Betsy Cummings suggests in the title of her excellent article in today’s Times: I got my MBA in the Israeli Army.

Right, then. Business schools have a new challenger. It’s the military. I only know the marketing departments in question, but I don’t think any one of these is supplying the kind of training in dynamism now on offer from the DOD. It’s a great big irony. As I understand it, “graduates” from the military used to flourish in the corporate world partly because they were so good at “command and control” bureaucracies. To think that their advantage is a knowledge of dynamism…well, this is a pretty remarkable shift in the order of things.

Can business schools take on their new competitors? In the language of the 8 ball: chances look slim.

We might argue that business schools are much too removed from the hurly burly of the real world to understand that dynamism is the order of the day. University professors live in protected circumstances. Their slow, still world is one of the last places of stasis. The real world does intervene very much or very often. The organs of intelligence, the Wall Street Journal and BusinessWeek, mediate very nicely. The professor and the student are never “up against it” in the way that a soldier is on the battle field. Professor and student never learn to manage complexity in the face of real dynamism, to say nothing of life threatening dynamism.

Consider the “case study,” the much vaunted technology method of the business school. The only dynamism here comes from the shifting terms of the debate with which students break into the case and lay it bear. Case are anti-dynamic. The terms of the debate may change. Terms of reference never do. Teachers and students do not have to shift frame (or construct frame) to “crack the case.” Case studies are a little like Chinese puzzleboxes. The trick is to find the piece of the case that slides open and lets us in. Things don’t change as we go. Cases with a higher fidelity would reveal their secret only if we approached them, in quick succession, as a sonnet, an early VCR manual, and a Balinese symphony, thinking about our assumptions even as we think with them.

Business schools talk a lot about competition. Let’s see if they can engage in it when the competitor is not another lumbering business school but the realest of the real worlds.

References

Anon. Network Centric Warfare: Report to the Department of Defense
here

Cummings, Betsy. 2005. I got my M.B.A. in the Israeli Army. New York Times. March 3, 2005.
here

Alberts, David and Richard Hayes. 2003. Power to the Edge. Washington: Command and Control Research Program, DOD.

$17 billion dollar figure from John Clippinger’s website here

innovation and commoditization

It is a conventional notion that all markets are ruled by commoditization. In a mature product category, competitors steal one another’s advantages, price becomes the great discriminator, and “consumer goods” lose altitude until they are mere “commodities.”

Technological innovation is one way to fight commoditization. Trends are another. (Innovation from within versus innovation from without, you might say.)

In a perfect world, we do both. We innovate fiercely from within. P&G is a great example here. And we respond to shifts in consumer taste and preferences as these are variously driven by new, sometimes conflicting, cultural trends. Somebody ends up playing the commodity game. But it’s not us. We reap value by adding value through our creation or responsiveness to innovation.

There is a nifty little essay in today’s Wall Street Journal by Adam Hanft on the bankruptcy of Winn-Dixie, the 900 store supermarket chain.

…if you are in the supermarket business, one would think you’d be vigilant about trends, monitoring consumer behavior with [care].

That’s what makes the inability of Winn-Dixie—and in many ways, the entire super market industry—to track market changes and adapt to them such a stunning failure.

Hanft thinks Winn-Dixie’s problem is endemic.

This lack of marketing sophistication and a consumer-driven approach screams at us from the entire super marketing buying experience. (What other industry rewards those who spend less, which is what the 10 items or less Express Lane does?)

Supermarkets don’t manage the shopping experience well, that don’t build their own brands, and they don’t monitor trends.

In sum, Hanft is accusing the industry of consenting, of manufacturing, the commodity effect. It’s a radical argument. It says that commoditization doesn’t have to happen, that marketing sophistication can pull the centre of gravity upwards. Some players will always play the commodity game, but it doesn’t have to be the general approach.

Interesting, interesting, interesting. This is the new economics meets the new economics, I guess.

References

Hanft, Adam. How Super in Your Market. Wall Street Journal. March 1, 2005, p. B2.