Groupon to Get Rid of Worst 10% of its Sales Staff

Full disclosure:  I’ve purchased Groupons before, but that doesn’t mean I’m biased in favor of the company.  Far from it, as most of the daily deals I’m pitched are for products and services I don’t want, for which already have a trusted provider, or are in places far enough way that I’m not going to want to try them out.  I’m not sure that its the salesforce’s fault for my lack of a response as much as it is top management’s poor strategy and tactics.  Nevertheless, Groupon’s top executives have decided to improve the quality of their offerings by laying off the “worst 10% of its sales staff.“

(Reuters) – Daily deals site Groupon is replacing the worst 10 percent of its sales staff as it pushes to win stronger deals from merchants and ensure it can keep growing, the company’s chief executive told potential IPO investors on Wednesday.
Andrew Mason told investors who had gathered in Boston that the action was designed to improve the quality of the deals being offered.
Groupon currently has a salesforce of over 4,800, according to its IPO prospectus.
As of September 30, Groupon had 143 million subscribers, but in the third quarter only 30 million of them bought Groupons.
Repeat customers increased from the second quarter but only numbered 16 million, according to a regulatory filing with the U.S. Securities and Exchange Commission.
Failing to win enough repeat customers may dampen the rapid growth that currently supports the company’s roughly $11 billion valuation.
Some merchants have complained that Groupon did not help them win permanent customers, and instead delivered bargain seekers taking advantage of price cuts. A portfolio manager at the roadshow said these complaints raised doubts about Groupon’s ability to keep growing.

People who’ve read our research on downsizing know that simply cutting people, especially when you haven’t determined properly which people need to go, is a poor downsizing strategy.  I’m wondering if they properly identified who the 10% are, informed them in a fair and transparent way, and provided them with a compassionate severance package.  Absent all of that, don’t expect the quality of Groupon deals pitched to you to get better, an in fact, expect it to deteriorate.

Aneil

Distrusting Your Leader Could Make You Sick

It comes as no surprise that distrusting your leader can make you sick.  Our own research on this subject shows that distrust only exacerbates the stress that employees face, which can then negatively affect their emotional and physical health.

WAYNE, PA, Oct 20, 2011 (MARKETWIRE via COMTEX) — When it comes to trust, the public is accustomed to questioning the intentions of its politicians. Yet, the issue of trust pervades society more profoundly. Kenexa(R)KNXA +0.63% , a global provider of business solutions for human resources, addresses the issue of trust in the workplace in its annual WorkTrends(TM) report. Published by Kenexa High Performance Institute, “Trust Matters” examines the links between trust and employee retention and well-being.

In 2011, approximately 10,000 individuals in the U.S., and about 1,000 individuals in the following countries: Argentina, Australia, Brazil, Canada, China, Denmark, Finland, France, Germany, India, Italy, Japan, Mexico, The Netherlands, Russia, South Africa, Spain, Sweden, Switzerland, Turkey and the United Kingdom, took the WorkTrends survey online. The survey has 141 items that ask employees about workplace issues such as managerial effectiveness, senior management behavior, diversity practices, turnover intention and job satisfaction.

When asked about trust — the ability to have reliance on and confidence in the actions of another — 48 percent of all employees trusted their leaders. Twenty-eight percent actively distrusted their leaders and 24 percent were undecided. The research reflects that employees who distrust their leaders are seven times more likely to report they are mentally and physically unwell and almost half of employees who distrust their leaders are seriously considering leaving their employer.

Maybe taking a “mental health day” in response to stress at work can actuallybe good for your health if you have a boss or leader you don’t trust.  What are your thoughts?

 

 

Occupy Wall Street Protestors Distrust the Mass Media

Even as the Occupy Wall Street protestors garner significant attention from the mass media, apparently many of the protestors distrust them:

Stories about the protests accounted for 12 percent of all news reports by the end of last week, compared to just 2 percent the week earlier, according to Pew, which examines stories from 52 different outlets to determine the topics that drive each week’s news. But many activists said that news outlets are not telling the full story about the protests.

“If you watch CNN or Fox News, it’s all about how we have no common goal,” said Johnny Smith, 25, a trim man in slacks and a button-down shirt. Smith lives in Queens but has been spending his days at Zuccotti Park for over a week. He said that social media outlets such as Tumblr and Reddit are more reliable sources for news about the protests: “[They] did more for us than MSN or Fox,” he said.

Some protesters bore visible signs of their animosity toward major cable TV outlets. One 19-year-old activist who wore a Guy Fawkes mask and called himself “Blood Bandit” said, “Have you seen Fox News around here? Guess what, we chased them away.”

Aneil

Netflix Continues to Lose the Trust of its Customers (and its Investors)

Update 11-22-11 from The Wall Street Journal:

Netflix Inc. shares fell to their lowest point in over a year, a day after the Internet video company raised concerns about its cash level and said it will post a loss for 2012.

The Los Gatos, Calif.-based Internet video company on Monday said it was raising $400 million in cash and warned of a loss in 2012 amid stagnant revenue and increased investment in its international business. Netflix said revenue would be flat until its subscriber base rises, but wasn’t certain that such growth would happen.

The announcements come after a months-long rough spell for Netflix. Customers and investors howled after it raised prices on a popular subscription plan by 60% in July, and when it announced in September a since-aborted plan to separate its DVD-rental-by-mail service into a separate business called Qwikster

Shares, down 63% over the past 12 months, fell 6.8% to $69.42 in Tuesday morning trading. They fell as low as $69, their lowest point since February 2010.

Update 10-25-11 from The Wall Street Journal:

Netflix Inc. shares slid 35%, extending a tumble that has erased about $12 billion from the company’s market value in just 104 days. At one point Tuesday, it traded below $75 for the first time in 18 months.

It was the stock’s sharpest percentage drop in seven years.

I simply have to start investing and shorting stocks based on my own experiences as a customer!

Aneil

Original Post 10-11-11:

Elsewhere on this blog, I discussed why we dropped our subscription to Netflix, and how millions of others apparently have done the same.  Now, Netflix and its CEO, Reed Hastings, have just announced that they are retreating on their decision to split its mail-order DVD business from its online streaming business:

Only a few months ago Netflix Inc. Chief Executive Reed Hastings was on top of the corporate world. On Monday, he was forced to retreat from a strategy that backfired.

Netflix announced that it was abandoning its move to split into two business, following consumer outcry.

The Internet movie-rental company said it was abandoning a plan to split its DVD-by-mail service into a separate business named Qwikster, originally hatched so it could focus on its online video-streaming service. Customers had howled about that plan, which promised to heap inconvenience on top of a previously announced 60% price increase. Between the two moves, subscribers were livid, and a customer exodus was driving down Netflix shares.

When the plan was announced three weeks ago, Mr. Hastings, a co-founder of the company, indicated that he was willing to take short-term heat to usher Netflix into its new digital identity. On Monday, he sang a new tune.

“There is a difference between moving quickly—which Netflix has done very well for years—and moving too fast, which is what we did in this case,” Mr. Hastings said in a statement. The Los Gatos, Calif., company didn’t make Mr. Hastings available for an interview.

Now, if I’d only shorted Netflix’s stock when dropped my subscription, I could be writing this blog post from the Caribbean!

Aneil

Need a Replacement Lid for a Starbucks Mug?

Update 11-9-11:

The other lid appears to be working.  Proceed with caution!

Update 11-8-11:

They do leak after several uses.  Don’t buy them.  Let us know if you find a better solution.

We love our double-walled Starbucks tall mugs that we use a lot, but in our move to NC this summer, we lost the lids for them.  Whether it’s using them while working on our laptops, or in the car, lids are essential.  So I did what I often do, search the internet for replacement lids, and then went to Amazon to see if I buy them.  Just got them, and they work quite well, even if they take slightly more effort to put on because they’re made of silicone instead of the rigid plastic originals.  Still, they don’t leak, they dishwasher safe, and they were only $9.70 for a pair (not counting taxes or shipping, the latter which is free with Amazon Prime).

Aneil

Americans’ Trust in the Federal Government Continues to Plunge

Americans’ trust in the Federal Government has plunged to record lows, according to a recent survey by Gallup:

PRINCETON, NJ — A record-high 81% of Americans are dissatisfied with the way the country is being governed, adding to negativity that has been building over the past 10 years.

Majorities of Democrats (65%) and Republicans (92%) are dissatisfied with the nation’s governance. This perhaps reflects the shared political power arrangement in the nation’s capital, with Democrats controlling the White House and U.S. Senate, and Republicans controlling the House of Representatives. Partisans on both sides can thus find fault with government without necessarily blaming their own party.

The findings are from Gallup’s annual Governance survey, updated Sept. 8-11, 2011. The same poll shows record or near-record criticism of Congress, elected officials, government handling of domestic problems, the scope of government power, and government waste of tax dollars.

Key Findings:

• 82% of Americans disapprove of the way Congress is handling its job.
• 69% say they have little or no confidence in the legislative branch of government, an all-time high and up from 63% in 2010.
• 57% have little or no confidence in the federal government to solve domestic problems, exceeding the previous high of 53% recorded in 2010 and well exceeding the 43% who have little or no confidence in the government to solve international problems.
• 53% have little or no confidence in the men and women who seek or hold elected office.
• Americans believe, on average, that the federal government wastes 51 cents of every tax dollar, similar to a year ago, but up significantly from 46 cents a decade ago and from an average 43 cents three decades ago.
• 49% of Americans believe the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens. In 2003, less than a third (30%) believed this.

With Americans having such little trust in the Federal Government, how are we supposed to fix the many problems that are plaguing us a nation?

Aneil

Pete Carril and Anne Marie Long, Two of Princeton’s Honorary Classmates, Are True Treasures

I had the privilege of updating the records for some of our honorary classmates for the Great Class of 1984 this past week.  Two of the six people for whom I needed some current information didn’t have email addresses, and so I needed to call them.  As much as I enjoy speaking on the phone with people, I never know when someone receives a call from someone they don’t know whether they’ll actually appreciate the phone call.  That’s almost never the case, however, when I’m calling on behalf of Princeton, and these two calls I made were no different.

Pete Carril, longtime basketball coach at Princeton, answered his phone directly, and recounted how much he enjoyed coming to our Class’s 25th Reunion two years ago.  He also said he’d just returned from a 50th high school reunion to which he’d been invited, as he had taught government and economics classes at that high school.  Who knew?  He told me how important it is to have a strong background in math today for today’w work world, and I said I’d pass that along to my two children.  I also told him I was fan of basketball’s fundamentals because of how he’d coached at Princeton, and that I was also a fan of the film Hoosiers.  He told me to go out and get a copy because that style of play has disappeared.  (Luckily, I own a DVD of it.)  Of course I’m biased, but I think Pete’s coaching philosophy and style have much to commend it, given that he took Princeton to the NCAA tournament 11 times, had a 525-273 win-loss record, and was always entertaining.

My second call was to Anne Marie Long, who used to be Director of Recruiting for Princeton, helping students to land great jobs after college.  She said that in order to be help the students as much as possible, she often worked long hours into the evening to be available to both recruiters and students.  No wonder, given that her tenure included the time after the Crash of ’87.  She also enjoys returning to Princeton for Reunions, and in digging about for information on Anne Marie, I found out that she is one of our Class’s annual dues payers.  Talk about giving back! She’s retired now in Florida, but enjoys visiting the University of New Hampshire for her own college reunions, and just spent a lovely month in Mystic Seaport, CT.

I could have talked to both Pete and Anne Marie for hours, but I needed to respect their time (and get back to finishing our book sequel.   My conversations reminded yet again why Old Nassau is the Best Old Place of All.

Aneil Mishra ’84

 

Starbucks Initiates Job Creation in Low Income Areas

Our ongoing tough economy received some welcome news from Howard Schultz, CEO of Starbucks today, as reported in The Wall Street Journal:

Starbucks Corp. Chief Executive Howard Schultz, who has been on a mission to cut the national debt and boost job creation, has pledged to donate at least $100,000 of profits annually from two Starbucks stores in low-income areas to boost jobs in those communities.

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We can’t wait for Washington,’ said Howard Schultz on Tuesday.

Profits from Starbucks stores in the Harlem section of Manhattan and the Crenshaw neighborhood of Los Angeles will go toward two community organizations that work to improve education and job training for young adults in those areas. High-school students in those neighborhoods also will receive barista training at the Starbucks shops.

“We can’t wait for Washington. Business leaders have to step up and do our part,” Mr. Schultz said in an interview.

Mr. Schultz, whose political giving skews heavily Democratic, recently got more than 100 business leaders to join him in a pledge to withhold campaign contributions to Washington incumbents until Congress strikes a long-term debt deal.

Comments from readers of the Journal have been quite negative, but I say any private sector initiative that helps put people back to work has to be good.

Aneil

Is Apple Losing its Innovative Edge? The iPhone 4S Underwhelms

As regular readers of this blog know, only my budget limits my role as an early adopter of new technology.  So when I read the details about the new iPhone 4S, I was not impressed.  Yes, it would be nice to have 64GB storage, so that I could put all of iTunes music on my phone because 33GB isn’t enough.  Shooting 1080 HD video would be nice on those rare occasions when I’m going to use my iPhone as a videocamera, and I’m intrigued by Siri, the new voice application.  Here’s part of CNET’s review:

Meanwhile, for GSM customers, the iPhone 4S now supports HSPA+ 14.4, so the smartphone is capable of reaching theoretical download speeds of 14.4Mbps down, 5.8Mbps up. It’s certainly an improvement over the current model, but disappointing that there’s no compatibility with the faster HSPA+ 21Mbps networks.

Of course, the lack of “real” 4G support for LTE on Verizon or WiMax on Sprint is troubling. Apple has its reasons, no doubt. Battery life remains an issue for high-speed phones and Apple must have decided that, at this point, it couldn’t offer its optimal customer experience on a 4G handset (remember that customer experience is really what Apple is all about). Secondly, Apple never jumps on a technology that is still growing, and it must think that 4G doesn’t cover enough people quite yet.

Meanwhile, for GSM customers, the iPhone 4S now supports HSPA+ 14.4, so the smartphone is capable of reaching theoretical download speeds of 14.4Mbps down, 5.8Mbps up. It’s certainly an improvement over the current model, but disappointing that there’s no compatibility with the faster HSPA+ 21Mbps networks.

Of course, the lack of “real” 4G support for LTE on Verizon or WiMax on Sprint is troubling. Apple has its reasons, no doubt. Battery life remains an issue for high-speed phones and Apple must have decided that, at this point, it couldn’t offer its optimal customer experience on a 4G handset (remember that customer experience is really what Apple is all about).  Secondly, Apple never jumps on a technology that is still growing, and it must think that 4G doesn’t cover enough people quite yet.

Still, none of those features justify upgrading from my iPhone 4.  I still want 4G connectivity, because the internet surfing speeds of my current phone frustrate me (although the 4S is supposed to double such speeds thanks in part to its faster processor).

Will you be upgrading to the iPhone 4S?

 

Aneil

Top Down Decision Making Inhibits Trust and Innovation

The September 24, 2011 edition of The Economist reports these survey results from LRN:

It found that 43% of those surveyed described their company’s culture as based on command-and-control, top-down management or leadership by coercion—what Mr Seidman calls “blind obedience”. The largest category, 54%, saw their employer’s culture as top-down, but with skilled leadership, lots of rules and a mix of carrots and sticks, which Mr Seidman calls “informed acquiescence”. Only 3% fell into the category of “self-governance”, in which everyone is guided by a “set of core principles and values that inspire everyone to align around a company’s mission”.

The study found evidence that such differences matter. Nearly half of those in blind-obedience companies said they had observed unethical behaviour in the previous year, compared with around a quarter in the other sorts of firm. Yet only a quarter of those in the blind-obedience firms said they were likely to blow the whistle, compared with over 90% in self-governing firms. Lack of trust may inhibit innovation, too. More than 90% of employees in self-governing firms, and two-thirds in the informed-acquiescence category, agreed that “good ideas are readily adopted by my company”. At blind-obedience firms, fewer than one in five did.

In our own research on organizational change, we’ve found similar results.  When organizations have tightly controlled decision making, employees evidence both distrust in top management and are less likely to engage in the behaviors that promote innovation.

Aneil