Market Basket Analysis
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If you live in the New England area of the United States, you probably know about DeMoulas supermarkets. Mostly branded, "Market Basket", these 71 stores dominate the area, often pushing aside large national (really international) chains, such as Stop & Shop and Hannaford. Recently, however, the stores have been all but shut down by a labor and leadership dispute that is about the way in which the company is run and who should be at the helm. Why do we bring up a supermarket in a blog about project management and sustainability? We actually never intended to do this until we ran into an editorial by former US Secretary of Labor Robert Reich, who served under Gerald Ford and Jimmy Carter. Now, before you read the editorial, we want you to be aware that we are aware that this is not a political blog, and we usually try to stay away from pure politics and economics. And this editorial does drift into the philosophical and political area in the way it discusses capitalism and labor. But at its heart, the editorial makes a beautiful point quite beautifully, whether you agree with Reich on anything else. We think the editorial is important because:
We place the editorial below, with the highlighting our own, so you can draw your own conclusions. --- In recent weeks, the managers, employees, and customers of a New England chain of supermarkets called “Market Basket” have joined together to oppose the board of director’s decision earlier in the year to oust the chain’s popular chief executive, Arthur T. Demoulas. Their demonstrations and boycotts have emptied most of the chain’s seventy stores. What was so special about Arthur T., as he’s known? Mainly, his business model. He kept prices lower than his competitors, paid his employees more, and gave them and his managers more authority. Late last year he offered customers an additional 4 percent discount, arguing they could use the money more than the shareholders. In other words, Arthur T. viewed the company as a joint enterprise from which everyone should benefit, not just shareholders. Which is why the board fired him. It’s far from clear who will win this battle. But, interestingly, we’re beginning to see the Arthur T. business model pop up all over the place. Patagonia, a large apparel manufacturer based in Ventura, California, has organized itself as a “B-corporation.” That’s a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community, and the environment, as well as shareholders. The performance of B-corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab. To date, over 500 companies in sixty industries have been certified as B-corporations, including the household products firm “Seventh Generation.” In addition, 27 states have passed laws allowing companies to incorporate as “benefit corporations.” This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them. We may be witnessing the beginning of a return to a form of capitalism that was taken for granted in America sixty years ago. Then, most CEOs assumed they were responsible for all their stakeholders. “The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in 1951, “is to maintain an equitable and working balance among the claims of the various directly interested groups … stockholders, employees, customers, and the public at large.” Johnson & Johnson publicly stated that its “first responsibility” was to patients, doctors, and nurses, and not to investors. What changed? In the 1980s, corporate raiders began mounting unfriendly takeovers of companies that could deliver higher returns to their shareholders – if they abandoned their other stakeholders. The raiders figured profits would be higher if the companies fought unions, cut workers’ pay or fired them, automated as many jobs as possible or moved jobs abroad, shuttered factories, abandoned their communities, and squeezed their customers. Although the law didn’t require companies to maximize shareholder value, shareholders had the legal right to replace directors. The raiders pushed them to vote out directors who wouldn’t make these changes and vote in directors who would (or else sell their shares to the raiders, who’d do the dirty work). Since then, shareholder capitalism has replaced stakeholder capitalism. Corporate raiders have morphed into private equity managers, and unfriendly takeovers are rare. But it’s now assumed corporations exist only to maximize shareholder returns. Are we better off? Some argue shareholder capitalism has proven more efficient. It has moved economic resources to where they’re most productive, and thereby enabled the economy to grow faster. By this view, stakeholder capitalism locked up resources in unproductive ways. CEOs were too complacent. Companies were too fat. They employed workers they didn’t need, and paid them too much. They were too tied to their communities. But maybe, in retrospect, shareholder capitalism wasn’t all it was cracked up to be. Look at the flat or declining wages of most Americans, their growing economic insecurity, and the abandoned communities that litter the nation. Then look at the record corporate profits, CEO pay that’s soared into the stratosphere, and Wall Street’s financial casino (along with its near meltdown in 2008 that imposed collateral damage on most Americans). You might conclude we went a bit overboard with shareholder capitalism. The directors of “Market Basket” are now considering selling the company. Arthur T. has made a bid, but other bidders have offered more. Reportedly, some prospective bidders think they can squeeze more profits out of the company than Arthur T. did. But Arthur T. may have known something about how to run a business that made it successful in a larger sense. Only some of us are corporate shareholders, and shareholders have won big in America over the last three decades. But we’re all stakeholders in the American economy, and many stakeholders have done miserably. Maybe a bit more stakeholder capitalism is in order. The editorial was retreived from Robert Reich's own web page - here. |
Sweet, out of this world sustainability
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When looking at the intersection of project management and sustainabilty, we at EarthPM are often intrigued by the places where we find sustainability in action. This post is about a combination of several aspects we've recently blogged about:
And... where on earth do we go to for this post? Mars. Yes, Mars. But not the planet, the company, Mars, Inc. The website they've put together to describe their efforts in sustainability even has a title like our blog here at Projects@Work - "People, Planet, Performance". So we can tell they've got it right! What caught our eye was this article from Triple Pundit. In it, they describe Mars' 2040 target to eliminate all fossil fuel energy use and greenhouse gas emissions (GHG) from its direct operations. You can read about that in their press release here, and you can go to the Mars site directly and read about it here, in a section called "sustainable in a generation". For your convenience we summarize some of the background philosophy here: "Why does Mars care about climate change? Why have we committed to making our operations Sustainable in a Generation? Why do we invest in scientific research to improve agricultural crops? The answer lies in our objective to create a mutuality of benefits by doing business in ways that are good for Mars, good for people and good for the planet. To ensure focus and effectiveness, we root our business decisions in scientific understanding. We strive to understand and quantify our impacts using accepted, publicly available data where possible, and to develop science-based strategies in response. Our targets are based on what is needed to solve the problem, rather than relying solely on what we can achieve in the immediate future. One of the key scientific inputs we have used in this process is the concept of Planetary Boundaries1, a highly-respected analysis based on a review of existing research which identifies nine environmental impacts and the point at which each one will cause catastrophic harm to human wellbeing." This is great, but what got us even more curious was the element of sharing data - going with more "open data" (as we blogged about on EarthPM's blog recently, in relation to Aneesh Chopra's book, Innovative State). That aspect of Mars' work can be summarized in a project-oriented effort called The Cocoa Genome Project. This is "a five-year program launched in 2008 by Mars, IBM and the US Department of Agriculture to sequence, assemble and annotate the cocoa genome. In 2010, a preliminary version of the cocoa genome was publicly released in order to allow scientists to apply this knowledge as soon as possible to benefit growers. The genome findings were made available to all—including competitors—through the Public Intellectual Property Resource for Agriculture (PIPRA) and the Cacao Genome Database. PIPRA is a non-profit initiative that provides developing countries with access to agricultural technologies". Has this reaped any benefits? According to Mars: "Breeders are already using this knowledge to identify traits of disease resistance, enhanced yield, efficiency in water and nutrient use, as well as climate change adaptability among the world’s cacao trees. Ultimately, this will result in healthier, stronger and more productive cacao cultivars which will improve farmers’ yields and income. As well as supporting breeders on the ground, the Cocoa Genome Project has also enabled Mars to develop genomics capabilities in collaboration with a diverse set of partners—work that will help to modernize cocoa production and improve the flexibility of the supply chain." So the investment is paying off. These two elements shown in Mars' business plans - long-term thinking and open data - are exemplary. So have a handful of M&Ms and applaud Mars' efforts. Are these principles being integrated in your organization? |
Sustainability Rising
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We’ve talked about the McKinsey surveys before. But to give you some brief background, we’ve been reporting on the McKinsey report since 2010. It is primarily an on-line survey sent to business executives to gauge the temperature of sustainability efforts within their respective companies; strategic alignment, priority, and importance of sustainability for example. According to McKinsey, the most recent survey was available to executives from February 11, 2014 to February 21, 2014 and 3,344 executives responded. So it is very current information. The executives were from a variety of “regions (of the world), industries, company sizes, functional specialists, and tenures.” The survey is a wealth of knowledge about what is going on in the mind of the corporate world with regard to sustainability. The purpose of this post is to explore one particular area of the survey results, alignment of sustainability with overall business goals, visions and values. The following is a chart from this public report.
(Note 3 states that the question asked between 2010 and 2012 was “align with business goals” and was expanded in 2014 to include mission or values.) As you can see, there has been about a 45% increase (from 30% to 43%) in alignment as a reason that companies are addressing sustainability. For those of you who follow this blog site and EarthPM.com know how much emphasis we are placing on integrating sustainability (rather than bolting it on as a separate entity) into project management. We are also advocating that the integration begin at the “top of the chain”, the portfolio level. For us, the portfolio level within an organization is the best place to fully integrate sustainability thinking into the culture. The organization's portfolio of projects sets the stage for the direction (vision/mission/values) of an organization because the profolio drives prgrams and projects. It is the top level. Integration into the culture at that top level of the organization will ensure (hopefully) that the thinking will follow down to programs and projects, the trifecta of project management. What we have seen over the years since we began researching our first book, through publication and up to date, is that there is a definite movement to integrate sustainability into the organizations core thinking (mission/vision/values). We all know that the more your key stakeholders are engaged in the process, the more likely the project will succeed. As project managers, we think about incorporating sustainability into the corporate culture as our project. This recent survey is very encouraging for our project’s success. While alignment is the most compelling reason there are several other reasons for companies to address sustainability according to this survey. I’ll explore those in a later blog posting. |
"Sustainability rising”, I really like that phrase. It happens to be one of the headings in the new McKinsey Global Survey Results
Good, Gooder, Goodest
| We highly recommend that you watch this TED video first. It would be a good thing to do.
Or, you could skip it, read this, and then go back and watch it. But you should at LEAST spend the few minutes it takes to watch it. In it, the speaker, Simon Anholt, describes the rationale, history, and makeup of the Good Country Index. As he says, it's not about good, better, and best, but good, gooder, and goodest - meaning good as in "the opposite of selfish". He's put together a set of measurements which assess companies and yield a ranking from top to bottom of the world's "goodest" countries. In and of itself this is insteresting to project managers. Why? In our book, Green Project Management, we say that a project run with green (read that now as sustainable) intent is the right thing to do but it also helps the projet team do things right. It means - as Simon Aholt says (although in relation to countries) that the success of the project actually goes UP if there is more focus on collaboration, more of an outward than inward view, more of an unselfish (think multiple-stakeholder rather than project-team) execution of the project. But beyond that connection, Anholt's TED talk points to a website called goodcountry.org which has this Good Country Index we mentioned above. And what is a major component of the weighted table (one of our favorite PM tools) that makes up this mega-database of counrty goodness? It's a section called Planet and Climate. Here is a deep link directly to that section. In it, Anholt's team analyzes:
These elements make up part of the score of a country's goodness. And if they apply to countries, and countries get their Gross Domestic Product (GDP) via a portfolio of programs and projects, then clearly, the same applies to us as project managers. That's the origin of the very name of this blog! Have a look at the scores in this area, and then kick up a level and look at the other elements. It's interesting information, presented in a visually pleasing and intuitive way. Don't worry, we know what you're thinking. You're probaly wondering which country was number one, right? Which one won the World Cup of goodness, beating the good and gooder countries to be the very goodest...right? Well, we're going to let you tell US since you watched the video. Or, you can march right back up to the top of this post and watch the video to find out. If you do, watch it from a project perspective. Subsitute projects for 'countries'. Maybe you, just like that mystery country, can be the goodest project team around. Goodest wishes! |
Plastics!
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Even before The Graduate, and Mr. McGuire’s one word advice to Benjamin, “plastics”, plastics were already becoming a material of choice for so many products. Like other “miracle” products, materials and solutions,at times there is little consideration for the long term effects. In the excitement of the miracle, lost is the question that we, in sustainability, are always asking; “to what degree are you considering the sustainability factors that affects these products (projects) during the entire project lifecycle and beyond” (its greenality). The problem is that the urgency to evaluate those long term effects (beyond the project life cycle when the product is in use) is overshadowed by the urgency to execute on the idea. The connection to projects is that projects are where those ideas become reality. The urgency became a reality in a recent report from one of our favorite sustainability websites, Green Biz, www.greenbiz.com, “Plastics cost the environment $75 billion each year” by Danny Bradbury. The report is about the cost to the environment from consumer goods companies through their use of plastics. The article is based a report "Valuing plastic". Vauling Plastic is a report from the Plastic Disclosure Project, a joint U.N. Environment Programme with natural capital analysts Trucost. It is an evaluation of the environmental and social impact of plastics used by businesses. The interesting piece, to me, is that It also assesses the financial cost to companies were they to be financially responsible for their plastics usage. In other words, if these companies truly considered the greenality of their products, projects and processes, perhaps an additional $75 billion could be added to the bottom line (profits). In effect, the reports shows, the food industry accounted for 23% of the financial cost with the soft drink industry a distant second with 12% of the costs. Further, environmental considerations include: toxicity of the plastics, fouling land usage, causing the death of some animals (6-pack holders straggling water fowl for instance), etc. According to Andrew Russell, the director of the Plastic Disclosure Project, "Avoiding plastic entering the environment at all will avoid a lot of them (the issues). Making sure there is a very high percentage of recycled content in the product or packaging, and making sure the plastic is recycled at the end of its life (my emphasis), all have enormous favorable impact." So, what can we do, as project managers, to help to alleviate or at least mitigate this problem and, by the way, add to your organization’s bottom line? We certainly can make recommendations, not only as PMs, but as members of the organization. One of the major issues we deal with is transparency. Real transparency comes from communications, and we are communicators. Making people aware of plastic content of products, recyclability, use of recyclable materials, facilitates transparency. According to the report, only about ½ of the companies assessed, report any quantitative data on plastics usage. That is not transparency. One of the obvious choices is that we should recommend that the plastics we use are recyclable, reusable and that the materials we use in the production have a significant content from recycled material. Plastics can be costly in natural capital, “the limited stock of Earth’s natural resources that humans depend on for our prosperity, security and well-being — including things such as clean air and water.” (http://www.greenbiz.com/blog/2013/09/09/who-are-leaders-natural-capital). To preserve both the natural capital and the organization’s bottom line, one word, plastics. |
