An elite law firm in NYC has 12 full partners, nicknamed the Apostles, and various members wheel and deal with big business clients as an opening comes available.
What I Liked
The story has a very strong “Wall Street” feel to it, but the back and forth between two companies with their punches and counter-punches are fast-paced and real. Most stories in the genre have one or two “business” tricks, but this is much more complicated and relies less on a single tool to advance the plot. The story mixes experienced Apostles, with participating associates gunning for a promotion, and even associates and junior partners slogging in the trenches.
What I Didn’t Like
The romance side of the story detracts from the business manoeuvres, as does the one-dimensional side of one of the business clients and their opposing counsel. In addition, there is some seriously flawed treatment of a sexual assault that shouldn’t be anywhere in the story, it’s completely superfluous to the outcome.
This textbook-sized book includes ten case studies across America where former big box stores – Walmarts and Kmarts – have been put to new use after the store left or closed.
What I Liked
I was drawn to the premise of the book as I have frequently seen large big box stores in Canada, anchoring malls and plazas, move out and languish empty for a number of years. Sometimes it is a short time and another retailer moves in. Sometimes it is a long time, and it looks like urban blight. Rarely have I seen much in the way of “good news” around these sites, and I was intrigued with the idea of a series of case studies where the stores aren’t just languishing empty, but have been put to reuse.
From a policy perspective, the first thing that jumped out at me was that the stores were not all empty because the store “failed”. While the Kmarts closed, most of the Walmarts moved to larger facilities…instead of trying to renovate an existing space (and losing revenue while it was being renovated), they built a whole new store, sometimes just across the road. Secondly, I liked some of the challenges and opportunities that go with the store’s design…they are primarily utilitarian empty boxes. Which means they can be anything you want them to be, except perhaps attractive (usually). Beyond these first two, some other issues that I liked were:
Some of the restrictions the former store put on future use when selling the land (lease restrictions to prevent competition for instance);
Local ordinances that were hard-learned lessons about responsibilities of the owner when the boxes are being built with a view to future reuse (accessibility, divisibility of the interior space, extra doors, etc.) or eventual removal if it sits empty too long;
The short-term reuse by other types of businesses (like an indoor racetrack) until the lease restrictions ease at 10 years and the subsequent eviction of those temporary tenants in favour of larger more profitable retailers;
The use of some of the properties as “land banks” to use the land for SOMETHING while waiting until the value increases;
The importance of time frame for assessing success as some of the reuses look great initially but weren’t sustainable;
The importance of interior and exterior aesthetics to the new users and the public;
The consideration of the location not just as a “building” but as tied to the infrastructure around it – utilities, parking, accessibility to good transportation routes, etc; and,
The potential for complicated types of real-estate deals in place to address if you want to reuse something – current lease holder, building owner, and a land owner.
I think my favourite chapter was one that looked at a reuse of a Walmart box by three seniors services organizations that co-located into one building, and the place was thriving. Equally, I saw potential in the reuse by a few Charter schools and a couple of other “startup” organizations who couldn’t afford to build their own building, at least not initially, but they could afford to lease a space, get up and running, earn some revenue, save up, and then buy the building, while slowly expanding their use throughout the space. A library project took the “challenge” of being in a big box and turned it into a way to engage the community (a common challenge to face together, which built support for the project). Finally, there is a chapter on converting a box store into a church, and not just in one location, as it has happened in lots of places.
What I Didn’t Like
I was a bit disappointed that the book only looked at Kmart and Walmart stores, as they all have very specific footprints, which would in some ways limit their reuse. Multiple sizes of stores might have more interesting reuses. I was also disappointed with the lack of other context – how does big box reuse compare to gentrification of factory districts, how do the issues that crop up with historic buildings compare with the issues of more modern box stores, how do they compare with issues when converting schools or churches to other uses? A couple of the chapters are throwaway chapters for me as they are not truly reuse. One looks at a courthouse that took over the space, but just razed the building and built something new; another only used the parking lot; and another just had other types of retailers in the space.
The Bottom Line
An interesting series of case studies for a common modern-day problem.
Before I get to the article I like, I’ll talk a little about the context of why I like it.
Economics and psychology together, i.e. behavioural economics, has long known that post-facto “rewards” for behaviour is usually only effective if the person knows in advance what the reward is going to be. So, if you set a goal, and the person values it, they will engage in the behaviour required to “win” or “earn” the reward. Gamification only works if the person knows the rules and has some say in the reward, i.e. it isn’t random chance.
Yet around the world, “tipping” doesn’t follow that pattern. It is an unknown reward provided after the transaction (i.e. the meal, for the restaurant world), and is supposed to reflect the customer’s view of how well they were served. Better service, better tip. Poorer service, poorer (or no) tip. Yet people rarely deviate from the norms — they often will pay 10% or 15% or 20% all of the time, by their personal comfort levels, for the wide “middle” ground for the level of service. And in some cases, they do it not because they think it is the “approximate” value of the service, but simply because it is the recommended norm for “good” (often average) service.
So some people balk. They get poor service, they stiff the server. Maybe the food was cold, maybe it was late, maybe it was the wrong order. Interestingly, speaking to experienced servers, one of those events (late) isn’t even their fault (if it is cold, it’s because it was sitting somewhere waiting to come out; if it is wrong, it is because the server didn’t check the order before bringing it out, according to those experienced in the industry). They also don’t control staffing levels…so if it is normally a 6:1 ratio for tables: servers, and because two servers are away or they haven’t been able to staff the spots, and suddenly it is 9 or 10:1, that’s not really the server’s fault either. Yet it is their tips that will suffer. A variable reward, random chance in some cases, having little to do with their performance. Most people don’t have any idea if their server was good, they just know if the overall experience was satisfying. Maybe they were sitting next to a cold window or a fan, maybe they’re sensitive to bright lights, maybe they’re fighting with their spouse, and it affects their view of the meal. Or they wanted more veggie options than the restaurant has on the menu.
I have some problems with tipping as a norm, I confess, for four reasons.
First, in Canada at least, with the automated payment machines, when you type in your amount of say “15%” for it to calculate for you, it does so on top of the tax. Why would I pay a server “extra” for the restaurant collecting tax? That makes no sense. Is it a big amount? No, of course not. But if the harmonized tax rate is 15%, and you assume no alcohol to keep it simple, then your 15% tax adds 2.25% to the tip. So they get 17.25% instead of 15.
Second, I don’t like flat-rate commissions with no top end. I don’t really like it with real estate, I don’t like it with any commissioned sales, really. If I go out for dinner with my wife and son, and we go to a simple restaurant, and the bill for dinner is $60, then the “standard” of 15% is $9. If it is a nicer restaurant, the bill might be $100, and the standard tip would be $15. Did the server who served me the more expensive food do any more work than the server who served me cheaper food? Why am I paying him/her 2/3 more in tip? Perhaps their costs are higher (better clothes and shoes, etc.), but a 2/3 increase in tip? People object on the same basis for paying commissions on house transactions — is there more work involved if the house is $700,000 than $200,000? Should the agent get an extra $12,500 for helping with a more expensive home? Taxes might be proportional, but why are the commissions, separate from the perverse incentives that are created?
Third, the hourly wage for the server varies dramatically across a shift, and generally for no real reason other than the equivalent of “piece work”. When they’re busy, their tips are high, and their hourly wage soars; when it’s dead, they make nothing, even though they’re still at work. Piece-work in factories is generally viewed as highly exploitative, particularly when the “pieces” are not all made by one person i.e. an attribution problem. Similar to the comments above, the server doesn’t buy, prepare, or cook the food, nor clean up afterwards. Yet they are the “face” of the service, so they get tipped accordingly (good food, good tip; bad food, bad tip). But let’s ignore base wages for a second and look at a restaurant shift from 5 to 10 p.m. at night. From 5-6, the server might have 3 tables. From 6-7, perhaps that goes up to 6 tables, 7-8 goes back to 4, 8-9 is 3, 9-10 is 1. If we assume all the tables were tables of four with bills of $80, and they all tipped 15%, then the server would get:
5-6, 3 tables, $36 in tips;
6-7, 6 tables, $72 in tips;
7-8, 4 tables, $48 in tips;
8-9, 3 tables, $36 in tips;
9-10, 1 table, $12 in tips.
Yes, I’m exaggerating slightly, but some servers have been known to be able to handle 6, 8, 10 tables of 4 in a restaurant with a relatively static menu. In the busiest hour, the wage is $72 / hour. Really? We’re paying someone $70 per HOUR to deliver food to a table? For the night, though, they’re clearing only $204. Which, while not chickenfeed, reduces down to $40 per hour. Before tax, or any tip-sharing that goes on. Most servers I know have said even without tip sharing, they always gave some money to the bus people to incentivize them to clear their tables quickly and get the next group in. Their wage per hour though drops as low as $12 and goes as high as $72, totally based on foot-traffic, not their performance. It is exploitative, stressful, and chaotic for steady income. In the bars that serve food and a lot of drinks, the transaction totals are smaller, but the servers frequently make more. Partly because the “business” is steadier than the pure food totals.
Finally, though, we come to the article. I’ve often felt that I would prefer simply for the tip not so much to be “included” as just that the servers were paid a decent hourly wage. No tipping, or if still done, limited to something like 5%. A token amount to maintain some incentive I suppose. But the article belies all that, because it goes through a bunch of existing US statistics from the Department of Labor to show the reality of the service industry:
Tipping, while practiced around the world, assumes a unique role in America, one to which most diners are obliged, because the United States is one of the only countries that allows businesses to offload the burden of paying workers a fair wage to their customers. And though construed as a fair way to encourage hospitality and reward good service, tipping’s roots are in racialized exploitation, while recent data shows that it continues to be, at its core, racist, sexist, and degrading.
It is exploitative as it creates power plays between employers who control the opportunities without paying a living wage and the employees who earn the tips, but who are left vulnerable to mistreatment and abuse for back wages and pooled tipping managed by employers; it reflects and amplifies racial inequality and profiling (white servers are tipped more, whites get better service than blacks); and it fails to prevent and thus supports sexual harassment from customers, as the server is financially penalized if they push back.
I guess, in some ways, I just like the article as it unpacks the reality that it sucks for everyone, except maybe the employer.
Back in January of this year, Joe Castaldo published an article through Canadian Business magazine. It has a relatively innocuous title — “The Last Days of Target” — but the sub-title gives you a hint of the content…”The untold tale of Target Canada’s difficult birth, tough life and brutal death”. I didn’t see the article at the time, and I’m not even sure I would have clicked if I had. After all, wasn’t the demise of Target relatively straight-forward?
It seemed so to the casual observer. Towers, K-mart, Woolco, Zellers…all of them went down-market, bottomed out, and couldn’t make it work. Enter Target to try and tread the same path with a hopefully different ending. One more akin to Walmart. I’d been curious about Target when it opened, in the same way that I am curious when I see a coffee shop open and close in a location, only to be replaced a few months later by, yes, you guessed it, another coffee shop. Particularly when it isn’t part of a chain that will sustain it through the lean start-up months…somebody else just tried the same thing in the same spot and went bust. Yet here is someone else dreaming their dream, and repeating the same process, options, and outcomes.
When I visited Target, I saw slightly better clothing options than the previous Zellers, prices were good, nothing that stood out in electronics, toys, etc. that said: “buy me”. And, while I did buy a few things over time, I did notice a lot of empty shelves at times but far more importantly? Empty stores. No one was shopping there. You could shoot a cannon through the store, just as you could have through most Zellers outlets, particularly the one in the same location previously. Some people said Target would make money off the groceries and household consumables, but that’s not really a draw for me. I like shopping at PC stores or other various grocers. And Shoppers Drug Mart serves me just fine. I wasn’t their prime demographic, true, but I’m not against saving money if the place is reliable.
Yet reading Castaldo’s article is like reading a mix between a Harvard Business Case and a Stephen King horror novel. The errors and screw-ups and just complete incompetent management behind the scenes are mind-boggling. Back when I was in university, we did a “practical” strategic analysis of a local recycling company. We were all young business students, wanting to help them plan their strategic future, we were going to help them figure it out, bring our academic excellence to bear. After working with them over a few weeks, it became painfully obvious — their biggest threat was their own operation. They needed to make sure they could get the big doors open at the factory reliably EVERY morning so they get the trucks on the road for pickups, long before they could start thinking, “What’s next?”. And that was our recommendation…forget the future, you got to make sure the doors are open. After reading the article, I’m left with the same reaction — forget all their business acumen, how did they even get the doors open on the first store?
The article is awesome, but here are some of the highlights:
they couldn’t figure out basic distribution from warehouse to the retail stores, and to be able to restock … basic principles stores have been doing for years yet they ended up with extensive empty shelves in stores…it even took them 2 years to figure out that dates for delivery from vendors were being interpreted as shipping dates instead of when they should arrive…2 YEARS????;
choosing SAP to integrate all their systems with a two-year window and not paying enough attention to data integrity (see this excerpt: A team assigned to investigate the problem discovered an astounding number of errors. Product dimensions would be in inches, not centimetres or entered in the wrong order: width by height by length, instead of, say, length by width by height. Sometimes the wrong currency was used. Item descriptions were vague. Important information was missing. There were myriad typos. “You name it, it was wrong,” says a former employee. “It was a disaster.”)…end result? Only 30% accuracy;
registers spit out the wrong change or charged the wrong prices or oftentimes confirmed credit card payments that hadn’t actually gone through;
massively ambitious launch schedules; and,
insanely optimistic sales projections, particularly when they decided not to try and compete on groceries to get people into the store given the level of existing competition on groceries in Canada.
The standard explanations for the scope of the disaster are there…nobody wanted to be the bearer of bad tidings, they tried to make something work with new untested techno systems rather than adjusting working solutions, leaders were not experienced battle-tested problem solvers, over-extension happened before solidifying the basics, a lack of training…the usual suspects. All knowable though.
However, two examples really stood out for me. First, their internal business analysts switched off the “warning” indicators in their software for stock replenishment so that they wouldn’t look bad (not unlike removing the battery in your fire alarm because you don’t like the noise instead of seeing why smoke is filling your house). Second, one week they released their new flyer and every item on the first page was out of stock before the stores even opened that week.
While they fixed a lot of the issues, it was too little too late. Kind of like the classic cliché, they didn’t get a second chance to make a good first impression.
As an aside I love the reference to their decision to use SAP though…that decoding it was like peeling an onion, there were many layers and it made you want to cry.
Hard to believe that a company the size of Target could get SO many things wrong, and some of them pretty basic as well as known pitfalls to avoid.
On a discussion forum that I’m on, someone was noting a pet peeve of theirs was people who commit to doing a guest blog for their site and then flaking out with little or no warning.
I find the thread really interesting as it combines a bit of “professionalism” with “netiquette” with “marketing” with “writing”. In my day job, I deal with a lot of young professionals / millennials who have very different expectations of professionalism than some of us old fogies, and while this wasn’t specifically the sub-theme, in some ways it relates, at least in my mind.
We have a mental model of how people interact, and a lot of it is still stuck in the world of the tactile. Face to face, shaking hands, etc. And yet as the world globalized, we came to realize as business people that other cultures do NOT have the same expectations / roles in their rituals as a lot of us westerners. We even have a bunch of racist stereotypes hidden in business guides that resulted from these culture wars about how the “japanese” or the “chinese” do business, written as offensively to some business people in those cultures as some of the “poor blacks who find solace through music” stereotypes that permeated America for some time. Yet the reality was that our perceptions of how to do business changed — maybe not shaking hands is not a sign of disrespect, for example.
Like with globalization, the net opened up the world but this time to virtual commerce, and if we stop for a second, we’ll realize that if we offer guest blogs, then our blog is essentially an e-commerce site in that we’re offering to “sell” a guest some blog space in barter exchange for them writing a blog entry (plus some extra bits). What do the hosts get out of it? Content for our site, more visitors, an enhanced community network experience, and the knowledge / satisfaction we helped another author. What does the guest get? Visibility on our site, potentially more visitors back to their site, networking, and, umm, the satisfaction of writing an interesting blog on someone else’s site perhaps plus hopefully (!) some sales.
Now, if we look at netiquette (which is the reality of our online transactions, NOT the ethereal protocols we have in tactile world), we realize that on average overall relationships tend to be vastly more anonymous, more transactional than long-term, and most important of all? Far less secured — and I don’t mean in terms of access to credit cards. (And please, I’m talking about overall relationships, please don’t e-mail me to tell me how you met this really interesting person in Sweden 10 years ago on the net or your husband or your wife or found your long-lost 12th cousin).
If you offer me your book through Amazon, and I buy it, that’s pretty “firm”/secure because it is a simple transaction. If you offer me a spot on your blog, and I accept, that’s pretty soft. I know, I know, if you’re being professional, it shouldn’t be, but this is the online world. It’s more like an “option to buy” than a firm “purchase order”. Why?
Because if I’m the guest, I still have to do something to make the transaction happen. If we go back to the Mad Men world of hard advertising, “always be closing”, “telling isn’t selling”, etc., the transaction is still “pending”. We haven’t closed the deal, we just have an agreement in principle. In the real tactile world, people pretend that is pretty firm most of the time. Yet, as with say FutureShop or a car dealership, the minute that “customer” walks out the door without signing in blood, the reliability of that “deal” drops to the level of “possible lead” or maybe even “dead wood”. And after tons of conversations, dealers at both stores know that an agreement in principle is not the same as a sale.
The virtual world is full of people making commitments / over commitments / disorganization / websites launching with great fanfare by individuals and after ten posts going silent. Ask yourself — are you updating your own blog as often as you thought you would? Are you even keeping your commitment to yourself????
Add in the fact that your faceless entity on the other end who agrees to write a blog for your site may be (a) fully employed on the side, (b) busy, (c) afraid of failure, (d) deep in writing, (e) dead, (f) a complete flake, (g) changed their mind, (h) broke and can’t fix their laptop to access the net to read your e-mails, etc. and is too embarrassed to tell you any of those explanations. And then add in the fact that you have an agreement in principle, not an actual sale, it is not surprising when they don’t all deliver.
But a lot of that is our upfront expectation. At work, I obviously shouldn’t be expecting our millennials to be jumping up and down at the thought of last-minute overtime but I equally shouldn’t be expecting them to even accept it at all — some won’t. And that isn’t unprofessional, it is just a very different view of the employment relationship. One that differs from my “traditional” one. Not better, not worse, different. Because they are a completely different “customer” / “transaction partner” than I’m expecting / wishing they were, and I shouldn’t rely on them as if they were of the same “mental culture”.
What does this mean for those running sites asking / offering other people the chance to provide content in exchange for providing that content? Or dealing with businesses that offer e-services to us? Assume that not 100% of all “pending transactions” will close when you want them to, or at all. And have backup options ready to go in case they don’t.
For the writing world, magazines and publishers do it all the time — if the writer doesn’t deliver that front cover story or final chapter on time, they go with another cover story or fill the window with another author’s book. They’re prepared for their partners to perhaps not deliver, and have deadlines far enough in advance that they can substitute other material if needed.
Why aren’t we prepared like that? After all, we’re the ones that didn’t close the deal. And isn’t THAT unprofessional of us?
And for those of us hoping to participate as guests, the advice is simple — honour your commitments as if the deal has already closed, and you’ll stand out from the crowd of netiquette slackers whose commitment is more net-ready than world-ready.
