Showing posts with label Starbucks. Show all posts
Showing posts with label Starbucks. Show all posts

Monday, October 20, 2025

Corruption at the Top in France and Illinois

An important implication of the saying, a fish rots from the head down, is that it is important that corrupt heads be swiftly punished so underlings get the message that crime in public office carries considerable risk. In the matter of Ukraine’s possible accession (not merger!) into the E.U. as a new state, the old, deeply entrenched, culture of corruption in the potential state has been of particular concern in the E.U.’s executive branch, the European Commission. In both the E.U. and U.S., it’s worth asking whether some states are more corrupt than others. It is a mistake to treat all states alike in terms of where to direct federal resources and how much of a given state’s resources should be devoted to investigations of state officials. At least in 2025, Illinois and France could be said to have been “problem children” in this regard, and this doesn’t mean that Hawaii and Sweden, for example, also had as sordid corrupt cultures.

In September 2025, a state court in Paris “found Sarkozy guilty of criminal conspiracy in connection with the alleged Libyan financing of his victorious 2007 presidential campaign . . . and sentenced him to five years in prison.”[1] A day before going to prison in mid-October, Sarkozy said he would be taking a biography of Jesus and The Count of Monte Christo with him to prison, so it seems that he was continuing with his innocent-victim role in spite of the conviction and sentencing. Short of any contrition or even public recognition by Sarkozy of his own corruption, it fell on Hollande of the Socialist group to praise “the independence of the judiciary,” especially given that the incumbent, Macron, spent an hour with the convicted ex-president on the day before the Sarkozy, of the same political group, was to show up at a prison.[2] In a corrupt culture, it is natural to worry about whether judges might be persuaded that it is in their interests to reduce or rescind the sentence of a powerful political figure.

Admittedly, in notoriously corrupt Illinois, by 2025 four former heads of state had spent substantial time in prison. Otto Kerner, for example, was convicted in 1973 on 17 counts of mail fraud, conspiracy, perjury, and other charges related to a bribery scheme and was sentenced to three years. Dan Walker was convicted in 1987 of bank fraud and perjury related to fraudulent loans that he had obtained after leaving the high office. George Ryan was convicted in 2006 on fraud and racketeering charges related to bribes; he served five and a half years. Last but hardly least, Rod Blagojevich was impeached and removed from office in 2009, and convicted in 2011 on 18 counts of corruption. Whereas the president of the E.U. cannot pardon state officials, the president of the U.S. can, and U.S. President Trump pardoned “Blago’s” sentence in 2020 after the former head of Illinois had served eight years; the former head of France could only hope in vain for a pardon from E.U. President Von der Leyen, but corruption at the state level could end up appreciably shortening Sarkozy’s sentence, and the meeting with Macron could be a sign that their shared political group might work behind the scenes to free the convicted former leader.

Once begun and allowed to spread throughout a state, whether Illinois or France, political corruption involving money is much more difficult than a fire to put out. Companies such as Enron, Wells Fargo Bank, Arthur Andersen, and even Uber came to be known for their deeply dysfunctional organizational cultures. This does not mean that manager-groups at every or even most companies are that unethical.

It is fortunate that not every company is corrupt mentally, for changing an entrenched sordid organizational culture is very difficult at best, with plenty of strategic firings being just one part of the cure. A so-called “coach” hired by Starbucks, for example, to change the attitudes of the executives towards the employees (especially those who try to unionize) would have a full plate. Such a “coach” would find it very frustrating to “drive” talking-points; the obscenely stretched use of jargon wouldn’t get the consultant very far up against the entrenched acerbic attitudes that had come to dominate the organizational culture. Let’s just say the Pike’s Peak blend of coffee was hardly the only thing that was known for being bitter at Starbucks by 2025.




Sunday, July 7, 2019

Starbucks Capitulates to Overzealous Police Union in Spite of In-Store Intimidation

On July 4, 2019 in Tempe, Arizona (Tempe borders Phoenix, which is to the west), a Starbucks' employee requested that the six police employees in the small restaurant move from the bar area where customers picked up drinks, or else leave. Because the six did not come in together, customers were provided with the special treat of a prolonged police presence throughout the store before the cops huddled near the bar. Even as the police huddled, they did so with eyes strategically perched so as to maintain visuals on the customers. One cop in particular repeated glanced over his shoulder with a darting eye towards the customers as if they were threats. That customers might be uncomfortable even with the sheer number of police in the small store was obviously lost on the police there as well as Starbucks’ employees. Yet the company was strangely without any policy on the maximum number of police who could be in a store at one time and for how long (i.e., when no incident is occurring). This is strange given the high incident of police brutality, especially in Phoenix.  Just a week later, a protest took place against the brutality in Tempe. It is natural, especially in such a context, that at least some non-criminal customer would feel uncomfortable.  Meanwhile, the police felt entitled to disrespect the customers by showing such a huge presence in the small store. Ironically, the police felt instead that it was disrespectful for a Starbucks’ employee to ask them to step away from the bar or leave after a customer complained about feeling uncomfortable with such a significant non-incident police presence. This is thus a story about institutions not taking responsibility for their own respective roles in a problem.


The police circulated in the store for some time as they did not come in together, and then huddled near where customers pick up drinks. One of the police (front left) turned his head every few minutes to glare at the customers. Who would not feel uncomfortable? 

For its part, Starbucks sought to mischaracterize the customer as “anxious, nervous or uncomfortable” when the customer actually said he or she was uncomfortable. Starbucks’ spokesman Reggie Borges also claimed that the customer “continued to ask about the officers” as if obsessed.[1] Actually, the customer approached the Starbucks employee twice, and without the “anxiety” or obsession that Borges claims the employee wanted to relieve. That the customer spoke with the employee twice suggests that the employee had not been very motivated to act on behalf of customer experience. Also reflecting a disregard for customer experience, Starbucks’ allowance of any number of police in a store at a time was part of the underlying problem, not some heavily caffeinated, hyper-strung or "problematic" customer. Deliberately mischaracterizing the customer was just Starbucks' way of denying its own deficiency in not having a policy on a maximum police presence. According the the manager of another Starbucks' store, the company should have had such a policy rather than intimating that the customer was uniquely distraught. I submit that that virtually anybody would feel uncomfortable with so many police walking around in such a small space. The customer reportedly later asked the shift manager why Starbucks did not have a policy on a maximum number of police on break in a store at one time, to which the manager reportedly retorted, “I’m going to end this conversation.” 

As for the police in the store, a certain arrogance can be said to be in people who do not act out of respect for others—such as by showing such a huge police presence in the midst of customers trying to enjoy their drinks—while perceiving a request to move or leave given the disrespect as being inherently disrespectful. Clearly, the police taking their break in the store had no concern for the customers’ comfort, given the perception that the request to move or leave was itself out of line. Perhaps the public servants in Arizona held the view that the public should take whatever the police want to do, so even a request for the police to back off would be viewed as an affront. Just as it cannot be assumed that the customer was a shaking, hyper-caffeinated anxiety case, nor can it be assumed that the customer had a criminal background, as some people on social media suggested, for even innocent customers would understandably feel uncomfortable with six police walking around with guns visible in a small room.

I contend that the local police had no recognition of having too much of a presence in the store because intimidation as a deterrent by a very visible, ubiquitous presence in the public was at the time the standard tactic, especially in the city of Phoenix. The light rail company had the same view, for it was not unusual to see four or even five security guards (with police-like badges) on just a half of a car staring at passengers. 

On a Saturday on a train, I was standing with my bike, which is lawful, so imagine my surprise when I looked up and saw three security employees wearing sunglasses standing confrontationally near me and staring at me! I put on my sunglasses and stared back. Welcome to Phoenix.


Three security guards clustered in the back half of a car. Were so many guards and such clustering really necessary?

Once a passenger sitting near me asked a guard about the huge presence without an incident, to which the guard retorted, “There can be as many of us as we want; get it?!?” His aggressive tone alone raised a red flag for me in terms of the wisdom of allowing so many security employees in a small space—not to mention giving them any authority in the first place.

A stationary Phoenix policeman on a weekday keeping a close eye on a platform as a matter of routine rather than an incident. How might waiting passengers have felt? Should this have been factored in? 

The light rail company also played a role in the excessiveness shown by the local police. Twice I saw three or four passengers on a light-rail platform surrounded by about 15 police and rail-security guards for not having had a ticket. Motorists who get a ticket for speeding were not treated to such a police presence, so I suspect the reason for the over-reaction on the train has to do with the ridership.

As another example, at a light-rail platform about a half mile from the gay-pride festival during a Saturday afternoon in a local park in April, 2019, four police cars with lights continuously flashing were parked all afternoon in the street along the light-rail platform. As I passed on a train, I saw an empty platform. When I passed by again in the early evening, I saw the four jeeps whose lights were still flashing, but this time I saw four police employees with a dog going back and forth on the platform in spite of the fact that only twenty or so people were waiting for trains. 


About a half-mile from a gay-pride fest in a city park, four policemen with a drug-sniffing dog patrol a nearly empty rail platform. 

Yet when the train picked up baseball fans in downtown Phoenix, no such show of deterrence was shown. If you can visualize four police jeeps with lights flashing next to an empty rail platform, you have grasped the distinctive over-kill mentality of Arizona. My point is that given that mentality, both the police and Starbucks employees should have realized that virtually any customer would naturally feel uncomfortable with so many police in the store. That that case took place just over a month after a notorious case of police abuse of power makes it all the more perplexing to me why the customer would be treated as a special case.

Writing about an atrocious police incident that occurred on May 27, 2019 in Phoenix, Arizona, Cedric Alexander, a former police employee, police chief, director of public safety, and deputy mayor in Rochester, New York writes that a Phoenix police employee approached a newly parked car and said, “I’m going to f---ing put a cap in your f---ing head!” Why such anger? Why such rage? The four-year-old in the car had stolen a doll from a discount store.[2] Was the enraged employee of the police department so intent to put a bullet in the girl’s head because of the nature of the crime, or else the presumed sordid little criminal? An image of a Nazi SS officer shooting a small Jewish girl may come to mind. Or did the Arizona variant determine that the mother should pay with her life because her young daughter walked out of a store with a doll and the mother had not noticed? Did the fact that a discount store had made the complaint trigger the police employee’s anger at the poor?  Admittedly, it is the poor in Phoenix who regularly ignore traffic lights and even cross-walks in crossing even very busy roads. The lack of respect for law is endemic and thus astounding there—to say nothing of the lack of consideration for other people. “The public” is a term rightly with a sordid reputation in the Phoenix valley in Arizona. So I can understand why the local police could become demoralized, even disgusted and angry, but this is not an excuse, especially as police are given the governmental power of lethal force. Human nature itself may not be up to the task, given such immense power on an interpersonal level. The Stanford Experiment in the late 1960’s, for example, demonstrated how quickly people (i.e., students) given authority over others could resort to violence even though it is expressly prohibited in the authority given. Did we not learn anything regarding human nature and police power from that experiment?

The judgment that shooting someone in the head could be appropriate rather than outrageous in the case of shoplifting by a young child (assuming the child had known what she had done!) is so warped that this itself can be taken as a red flag concerning the human mind, at least on the Phoenix police force, and having the authority to use lethal force. Cedric Alexander writes that the police employee’s conduct was “unthinkable.”[3] Perhaps the human brain or mind is altered in some fundamental sense—and not in a good way—when a dose of pure power is taken in.

The girl’s mother, along with a 1-year-old, was in the back of the car. When the police employee ordered the mother to put her hands up, she was holding the younger child and so she replied that she could not raise her hands in the air. The employee then ordered the mother’s fiancée, who was in the driver’s seat, out of the car. In spite of the fact that the man complied, the police employee pushed the guy against the car and kicked his legs apart. “When I tell you to do something, you f---king do it!” That the employee had been wrong about the driver (for he had done as commanded) brings up the troubling matter of the toxicity of power when it is mixed with cognitive issues or simply stupidity. At the time, Arizona had one of the worst systems of public (K-12) education, and faulty assumptions and incorrect conclusions were quite common even in entry-level office positions (even as managers were relying on them to deal with “the public”).

Of course, the police employee may have meant the mother, who was not able to put up her hands, but then his verdict that she was nonetheless culpable would of course be warped. The employee’s decision to take the anger out on the complying driver demonstrates bad judgment (perhaps from excessive anger), aggression, and cognitive lapses. Even when the mother shouted that her door would not open, the “understanding” employee shouted, “You’re going to f---king get shot!”[4] The assumption that putting the fear of death in the woman would somehow fix the door is interesting from the standpoints of the employee’s cognitive ability and state of mind.
Even if the employee assumed from a generally negative bias or actual experience with the poor in Phoenix (who seemed too quick to lie and even become aggressive) that the mother must be lying, the disproportionate judgment that shooting the woman would fit the lie (i.e., that the lie justified death) suggests that the employee’s mind could not handle having the power of lethal force. This would presumably be a basic matter in a police department’s hiring process as well as for police supervisors.

If the police employee was enraged because his order was not being instantly followed, both his notion of human nature in others (i.e., fallible rather than robotic) and his own psychology could be flagged. To be able to get other people to do against their will what you want is a basic definition of human power. Accordingly, the employee’s power-urge was too much for him to handle the power to kill other people. Once the mother was out of the car, the employee tried “to grab the one-year-old child” out of the mother’s arms.[5] The employee clearly had an urge for instant power, and he evinced no basic compassion. Perhaps, as in a Nazi SS officer plying Jewish kids off their parents before boarding them all on separate train cars or even trains, the human mind high on pure power chocks off any sentiment of compassion.

So far we have anger, impaired judgment, cognitive issues, aggression, and a will to power. This is a toxic cocktail to be sure, and it has no place in a human brain on a police force. Extreme care in hiring is thus important, and we can deduce that the Phoenix police department had been lax in this regard too. Adding tinder to the fire was the cultural ideological “authoritarian” assumption generally in the Phoenix valley that intimidation is an effective deterrent. A major flaw in the ideological stance is that people with good motives also get intimidated, as when the police presence is ubiquitous. This can include police helicopters as well as police cars—the former flying low even on normal routine patrols and the latter circling or standing still (i.e., patrols that cease to be mobile). The key is the frequency or amount being excessive to not only human sensitivities to being nearly constantly watched or intimidated, but also having merit in actually stopping a crime. It is no surprise, therefore, that more police were sent to the scene of the doll-heist. I would bet the number of police cars was excessive given the actual threat. To be sure, the police employee probably exaggerated it in his own mind and thus to others. Maybe the police in the Tempe Starbucks store regarded the employee’s request as a threat, given that rarely had they probably gotten push back. Similarly, bullies tend to regard anyone standing up for the bullied as a threat, and even as disrespectful!

Cedric Alexander points out in his piece that government gives police employees their legal authority to use lethal force, but police “also need legitimacy,” which according to the 2014 report by the Police Executive Research Forum “lies within the perceptions of the public.”[6] The perception of employees abusing their privilege to use lethal force does nothing to help legitimacy.
 
So I am not surprised at all in reading Cedric Alexander’s report that the police chief, Jeri Williams, said in a public forum on May 27, 2019 that real change “doesn’t start with our police department. Real change starts with our community.”[7] With the excessive show of police generally (in order to intimidate so as to deter), it was difficult to view that city as a community at all. Alexander writes of the Phoenix police department that “as professionals under oath, they have the responsibility to start the ‘real change.’”[8] Such responsibility was all the more justified because police employees were part of the problem. The police chief said in the forum that the employee’s conduct (and attitude?) on the doll shop-lifting case “unacceptable.” Cedric Alexander writes critically of this antiseptic and bureaucratic word. “Terrifying, traumatizing” are more fitting, he writes; the lift-threatening behavior of those Phoenix [public servants!] cannot be written off as ‘unacceptable.’”[9] Yet this is exactly what a department not being held accountable and certainly not holding itself accountable does. Its deterrence method of saturating the city with non-incident police presence is therefore unfortunate. More than this, it can be reckoned as a passive-aggressive instance of callousness and impaired judgment.

The incident with the little girl is a case in which police believed they had considerable discretion on how they could treat (and regard!) the public. Less extreme, the police in the Tempe Starbucks store assumed that they could bring in as many police as they wanted even if the customers could rationally be expected to be uncomfortable. Criticizing Starbucks’ reaction as disrespectful is akin to the Phoenix chief’s refusal to take responsibility; it’s the other guy’s fault. The police association even brought up the irrelevant point that some of the police in the store were veterans, and so the military was disrespected![10]  Starbucks’ request was not disrespectful toward the police, given the thoughtlessness of the police in disregarding the fact that so many police would naturally cause discomfort. Such a showing goes beyond feeling safe, especially given the police employee who felt the need to keep an eye on the customers. If he did not feel safe in the store, he should have left rather than make at least one customer feel uncomfortable. The association representing the police was so busy feeling disrespected that no thought at all went into why customers could rightly feel uncomfortable with so many police in a small store.

So in apologizing to the Tempe police department for having had the good sense to follow up on a customer feeling uncomfortable, Starbucks ignored or dismissed an entire side of the story—one in which people in the Phoenix valley understandably felt uncomfortable when the local police go too far. “When those officers entered the store and a customer raised a concern over their presence, they should have been welcomed and treated with dignity and the utmost respect by our partners (employees). Instead, they were made to feel unwelcome and disrespected, which is completely unacceptable,” according to Rossann Williams, a vice president of Starbucks.[11] So much for customer experience! By Williams' strong-handed response, the customer’s legitimate concern about the excessive police presence should have been ignored and that presence in fact greeted! I submit that the Starbucks employee had rightly judged the customer’s concern to be valid, as the police presence was rather severe for a break, and that Williams would have been fine with customers awash in police presence. In effect, Starbucks backtracked in apologizing such that the police could feel free to disrespect customers by having too much of a presence in a given store. Starbucks would no longer stick up for its customers who feel uncomfortable with the over-kill of police who do not respect customers enough to limit the police presence. Instead, Starbucks would continue to greet as many police employees as want to inundate a given store. In effect, Starbucks would enable the “intimidation as deterrent” authoritarian tactic that is so ingrained in the Phoenix-area culture. It is, “a police state,” as several new arrivals have observed. In such a state, customers wanting a break from it while enjoying a drink at Starbucks could hardly be blamed, but sadly this did not stop Starbucks from tacitly doing so. Meanwhile, like the Phoenix police chief who had viewed the public as needing to take the initiative even after the police abuse of the four-year-old shoplifter, the Tempe police chief could only see his employees being disrespected. This tells me that neither department was used to being held accountable. The prerogative to being able to get away with disrespectful conduct easily views any push-back as disrespectful. It’s always the other guy. Starbucks, meanwhile, should have stood up for its customers because six cops in a small store are simple too many for customers to feel comfortable. The uniform and the lethal right to use force render police qualitatively different than customers, hence Starbucks’ refusal even after the fact to come up with a policy protecting the experience of customers is also telling.

Recommended: Bucking Starbucks' Star, available at Amazon. 

1, Sandra Garcia, “Starbucks Apologizes After 6 Police Officers Say They Were Asked to Leave,” The New York Times, July 8, 2019.
2. Cedric L Alexander, “The Police Overreaction to Case of 4-year-old and Barbie Doll Isn’t Just ‘Unacceptable’—It’s Outrageous,” CNN.com (accessed June 20, 2019).
3. Ibid.                
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.
9. Ibid.
10. Amir Vera, “Starbucks Apologizes after Six Officers Say They Were Asked to Leave a Store in Arizona,” cnn.com July 6, 2019.
11. Amir Vera, “Starbucks Apologizes after Six Officers Say They Were Asked to Leave a Store in Arizona,” cnn.com July 6, 2019.

Saturday, April 20, 2019

Behind Corporate Loopholes: Wealth and Power

A company in the U.S. wants a tax loophole to apply. Starbucks, for example, wanted to be able to use the manufacturing deduction by stretching manufacturing to include the roasting of coffee beans. So in 2004 the company hired Michael Evans, a lobbyist at K&L Gates who had just a year before worked as a top lawyer on the U.S. Senate Finance Committee, which writes tax law. Evans was able to urge his former colleagues in the Senate to expand the definition of manufacturing to include roasting in a clause added to a 243-page tax bill called the American Jobs Creation Act.  As you might imagine, Starbucks was not the only company to get a tax break written into that law. By 2013, the manufacturing deduction had saved Starbucks $88 million that the company would otherwise have had to pay in corporate income tax. In 2012, corporate tax breaks and loopholes added $150 billion in lost revenue for the federal government, increasing the budget deficit by that amount.[1] Three lessons can be gleamed from the hidden corporate loopholes. 
First, the damage done to the U.S. debt by corporate loopholes has been significant. While dwarfed by the debt incurred to finance the Iraq and Afghanistan wars ($2.4 trillion added to the debt by 2013), $150 billion of lost revenue from corporate tax benefits for that period alone is nonetheless significant. 
Second, the “insider influence” itself violates the principles of openness and fairness, which are so esteemed in a democracy. The many points of access to influence legislation can be abused by legislators and lobbyists alike by their stealth dealings, sometimes literally in the middle of the night as a bill is about to be voted on. Ideally, the many points of access refers to the fact that various groups (and citizens) can reach legislators, not that the most powerful interests can abuse their ability to contact lawmakers for private gain (both to the interests and the lawmakers, thanks to political campaign contributions). In fact, for a lobbyist, including a corporate lobbyist, to have disproportionate influence on a bill to make it financially beneficial to the lobbyist's clients can be reckoned as a conflict of interest because even the information supplied is apt to be biased. The many points of access is meant to dilute the influence of the private interests that stand to benefit most from loopholes. 
Third, the contacts that lobbyists have in government from having worked there themselves can play a major role in the loopholes being granted and even in secret. Other self-interested interests cannot check the self-interested influence of the companies or industries that would gain most, so the private benefit gets away with eclipsing the public good. A law prohibiting former legislators and Congressional staffers from lobbying for at least ten years might make a dent in the inordinate insider influence of corporations in Congress. However, the influence of a Speaker of the House such as John Boehner, who became a corporate lobbyist after resigning from Congress, would hardly be diminished in his private influence, and thus earnings. Information that only insiders have sells. 
Like water, pent-up power naturally seeks its way around an obstruction with the objective of reaching an objective. The influence of wealth inexorably finds its way into the halls of power, especially in democracies as they have many points of access. This vulnerability is particularly great in cases in which candidates for public office must raise large sums of money to get elected. Asking the candidates to look the other way when a big donor is knocking at the door runs against human nature; even if laws prevent large donations, power finds its own way in the dark. The power both of candidates/lawmakers and corporations can be so massive that space itself bends toward mutual objectives. Perhaps the question is whether trying to bend space back only slightly is worth the time and energy of passing a law. Although removing the financial need of candidates for campaign funds (e.g., by public funding of advertising) could in theory take out part of the incentives on one side of the equation, corporations could tempt the incentive for private gain in other ways, such as with the promise of a lucrative job afterwards. 
In the end, the threat to the democracy is the inordinate power from the concentration of private wealth as in large corporations. The citizens are hardly focused in their collective use of their power, so the insiders in government tend to be influenced inordinately by the moneyed interest at the expense of the public good, the good of the whole.  

1 Ben Hallman and Chris Kirkham, “As Obama Confronts Corporate Tax Reform, Past Lessons Suggest Lobbyists Will Fight For Loopholes,” The Huffington Post, February 15, 2013.

See Institutional Conflicts of Interest, available at Amazon. Conflicts within the U.S. Government, in business, and between business and government are explored, as well as the very nature of an institutional conflict of interest. 

Thursday, January 3, 2019

On the Value of Creating a Hybrid Industry by Appropriating High Tech: The Case of Amazon and Borders

From the ten-year chart of Amazon.com's stock, a clear upward trajectory can be discerned from the days of financial panic in the last quarter of 2008 even in spite of the plateau in mid-2010. On May 10, 2011, AMZN was trading at around $204 a share. At the time, Amazon's new "cloud music" service was said to be behind the surge. In general, the general uplift since late 2008 can be ascribed to the company being on the right side of the computer technology changes that were transforming not only industries, but modern society itself. As Amazon.com was benefiting from its move into music, Microsoft was buying Skype for $8.4 billion in order to get into communications. The hefty price tag can itself be taken as a confidence vote in the continuance of the technological shift as well as the value in moving to a new, hybrid industry model rather than limiting the company to its existent industry model. In other words, even in companies facing a serious technological threat in the business-environment, even top managers can fail to adopt a broader perspective within which the threat can be seen as an opportunity to change the company and even its own "micro-climate," or immediate industry. Hence by 2019, Borders no longer existed whereas Amazon was still profiting. Even the dinosaur McDonalds had tried to shift into a hybrid coffee-shop/restaurant industry model. 

10 year Amazon.com stock chart from Investorguide.com
  
Almost a decade earlier, in 2011, Borders had found itself holding paper books, music CDs and movie DVDs even as e-readers such as Kindle, on-line music in Cloud--both at Amazon.com, and on-line delivery of movies at Netflix were growing by leaps and bounds. To be on the heels of momentous technological change is very different from riding the crest of its wave.
Rather than fighting gravity itself, Borders executives would have been smart to pivot off reliance on the antiquated forms to expand on the one area that was not doomed to replacement--namely, Borders' cafe. Borders strategists would have been wise to think beyond a narrow conception of a particular industry sector. Rather than looking over at Amazon.com and Netflix, Borders executives could have studied why McDonald's was engaged in a $1 billion face lift designed to move the restaurants closer to Starbucks, a place where customers could buy a beverage, connect to wifi, and read material on the internet. In other words, Starbucks was expanding its food products (even going into consumer packaged foods in grocery stores) while McDonald's was moving closer to the coffee house model, a hybrid restaurant-coffee shop, just as Borders was clinging to paper books, CDs and DVDs rather than forging a new, hybrid industry for itself. 
Were Borders executives to have spoken to their customers, perhaps the suits would have discovered that being able to get a latte and some food, find a comfortable seat, and spend an hour or so looking at magazines and books were a significant part of the "Borders experience." Rather than being viewed as a way for customers to evade buying books, the customer experience could have been given more priority in Borders' business strategy. 
More tables and comfortable chairs could have been added in the stores throughout the store; this would play on a strength that was not so much at odds with technology. In fact, flat screen televisions could have been mounted in the expanded cafe area of a store, while other areas remained quiet.  Expanding on drink and food products--even going into premium products--would have enabled Borders to capitalize on an existing strength, using it to sell--even integrating technology with it. For instance, ebooks could have been linked; customers could perhaps have been able to "rent" ebook readers and a timed access to read from or even peruse the books.
Of course, no strategy is problem-free. Increasing food and drink around books could mean that more customers would render books unsaleable by spills or smears on the pages. Also, customers could have spent time in the stores only to read paper books and magazines for free. Retaining books could therefore have been difficult financially even if they contributed to the in-store experience. 
On the other hand, the strategy could have meant that Borders would eventually have been able to compete directly with McDonalds and Starbucks even as links are made with Amazon.com and Netflix. The "free use" risk would decrease as the food and beverages, as well as paid access to material via technology become more prominent in terms of revenue. In short, Borders could have morphed into a "hybrid" industry-wise while gradually departing from the traditional book-and-mortar bookstore model to capitalize uniquely on the evolving technology. 
In general terms, companies cannot long afford to be behind the curve while a relevant technological change is altering how customers prefer to get or use the products. The managers would do well to think beyond the steady industry in which they have been comfortable to consider more broadly how the new technology could be integrated even in creating a hybrid or new industry. Amazon.com has clearly been a beneficiary of "high tech," so there was no need to shift from a status-quo industry to a hybrid; Amazon itself could be said to have begun as its own industry, and thus qualitatively different from Walmart and Target, two traditional retailers. Simply arranging loans of $50 million to pre-pay publishers was not enough for Borders; in fact, the response evinces a traditional rather than novel perspective.


Sources:

Amazon on Investor Guide
Bruce Horovitz, "McChanges," USA Today, May 8, 2011, p. A1.

See also Kit Eaton, "Amazon Sells More E-Books than Paper Ones," Fast Company, May 19, 2011.


Sunday, January 14, 2018

Hierarchy Hampered Down in American Business

Without going into either the labor or management camp, a person can viably critique the operation of hierarchy itself in business organizations. The notion is typically associated with the concentration of power at “the top,” rather than the relation of middle-level managers to “retail” managers and their subordinates. Efficiency of power at a corporate headquarters does not necessarily translate into “downward” efficiency at the level of middle management. I submit that precisely this efficiency is rather severely compromised in American business.
“The word hierarchy derives from ancient Gree (hierarchia, literally the ‘rule of a high priest’) and was first used to describe the heavenly orders of angels and, more generally, to characterize a stratified order of spiritual or temporal governance.”[1] The early focus on the situs of a high priest rather than all priests, and the heavenly orders rather than the relation between them and the earthly orders set the tone: the top matters most in a hierarchy. I am guilty in that my theory of organizational leadership applies exclusively at the top: the leadership of an organization. Supervisory management is in my view another animal. Yet it too is important, and I contend that it is woefully neglected in American business.
Customers, for example, of retail businesses will recognize the frustration in dealing with not only  a rude or stubborn employee—even acting at odds with a company policy!—but also that employee’s gatekeeping, or outright refusal to get a supervisor as requested. The sense of entitlement that a non-supervisory employee may have rivals the sense of importance of a CEO. Getting to a store manager can nonetheless require a lot of effort and patience; typically an assistant manager is sent to put out the little brush fires. Employees may know how to exploit this gap that exists between what the employees and a store manager are doing, such as by insisting that aggrieved customers first inform the indolent employee of what will be said to the manager (a conflict of interest to be sure!).
In short, retail-level managers tend not to be involved enough where customer-meets-employees; management by walking around is too easily sidelined by the endless list of things needing to be done behind a desk. Put another way, I contend that retail management is generally interpreted as being akin to upper management, rather than something unique. The situs one or even two levels above non-supervisory employees on the front line should be actively involved on that line, and the complaint access can be greatly improved such that customers do not have to depend on problematic employees for it and spend much time and effort in reaching accountability. Hierarchy is made for efficient accountability, whereas networks (e.g., organic organizational structures and flat inter-organizational relationships) may be overrated.[2] Yet the “lower” half of a company’s hierarchy is, I submit, underutilized and perhaps even unwittingly compromised in part due to the common association of hierarchy with “the top.”
Starbucks, for example, has a centralized customer service number, which can be used to register a complaint against a store employee. The offended customer may get a gift card for a few free drinks to compensate—and such compensation, rather than an apology alone, is important—but what about the distance from the centralized unit at headquarters and the store-level employee? The unit sends a communication to a regional or district manager, who in turn is supposed to communicate with the store manager, who in turn is supposed to have a talk with the employee. Considering the sheer number of links, and the distance involved, the intended message could be compromised both intentionally and unintentionally. A district manager, for instance, may just do enough to make it seem that a real correction has been made. A store manager might dismiss the charge, as it reflects badly on the store’s management. Rarely, perhaps, would a store manager tell a shift manager to listen to what the employee is saying to customers. I also doubt whether the typical complaint results in any actual and substantive negative consequences for the employee, especially if attitude is the culprit (which is not likely re-trainable).
For all that Howard Schultz’s CEOship of Starbucks has been lauded, I have been surprised at the number of times I have witnessed rude, close-minded behavior of employees at the store level. This is not to say that good employees have not worked in the stores. My point is rather that in the company’s hierarchy, the part between the district managers and the store employees seems weakest. In my booklet Bucking Starbucks’ Star, I argue that Schultz’s corporate social responsibility ventures “at the top” do not make up for managerial and employee deficiencies further “below.” I have never seen a store or even a shift manager “working the room” in stores to see how the customers were actually served, and such managers can confront centralized reports of complaints by rationalizing, the customer got free drinks, so there’s no need for me to take action against the employee. Management as walking around, even by district managers scheduling time to work along side the crews at the various stores, and in having direct access to complaining customers, could make a dent in shoring up hierarchy in business organizations where patching is most needed. Hierarchy can be a good thing, provided it is thought through in its various, distinct levels.


See: Cases of Unethical Business, Walmart: Bad Management as Unethical, and Bucking Starbucks' Star.



[1] Niall Ferguson, “In Praise of Hierarchy,” The Wall Street Journal, January 5-6, 2018.
[2] Ibid.

Wednesday, May 13, 2015

Beyond Facebook’s Impact on Political Polarization in the U.S.

Any time “scientists” at a company purport to have done a study involving said company in any way, the public has good reason to be suspicious of the reported conclusions. Were the folks running the company really intent on providing credible information, they would use independent scholars (i.e., not being compensated by the company). Such a management would want to obviate even the appearance of a conflict of interest—their desire to provide the public with an answer being so strong. So the management at Facebook may not have been very invested in providing the public an answer to the question: how much influence do users actually have over the content in their feeds? In May 2015, three “Facebook data scientists” published a peer-reviewed study in Science Magazine on how often Facebook users had been “exposed to political views different from their own.”[1] The “scientists” concluded that if users “mostly see news and updates from friends who support their own political ideology, it’s primarily because of their own choices—not the company’s algorithm.”[2] Academic scholars criticized the study’s methodology and cautioned that the risk of polarized “echo chambers” on Facebook was nonetheless significant.[3] I was in academia long enough to know that methodological criticism by more than one scholar is enough to put an empirical study’s findings in doubt. Nowadays, I am more oriented to the broader implications of the “echo-chamber” criticism.

Although the study’s primary question concerned how much what users see on their feeds is due to the company’s algorithm, the question of whether Facebook was a contributing factor in the increasing political polarization in the U.S. was at issue. “What we do show, very definitively,” Eytan Bakshy, who worked on the study, said, “is that individuals do have diverse social networks. . . . The majority of people do have more friends from the other side than many have speculated. We’re putting facts behind this.”[4] Facebook users who self-report a liberal or conservative orientation had, on average, 23% of their friends with an opposing political ideology; and 28.5% of the hard news that such users encountered on the News Feed cut across ideological lines, on average.[5] We know from neuroscience that the human brain privileges people who are similar, so these low percentages do not necessarily mean that Facebook’s algorithm has a contributing impact. That it could be is perhaps of more significance.

According to the 2014 Political Polarization in the American Public study by the Pew Research Center, political polarization increased from 1994 to 2014; the emptying out of a “middle” is especially pronounced among the politically engaged.[6] The proliferation of news networks specializing on particular political market-segments and the ability of social-network users to pick what they encounter are arguably contributing factors, and subtle leanings from a giant company’s algorithm could play a significant role too on an aggregated scale.

The potential in terms of political influence on a mass scale with a usership as large as Facebook’s warrants consideration, however. At the time of the study, Mark Zuckerberg, founder and CEO of Facebook, had the wherewithal to subtly push a political point by carefully amending the company’s algorithm (as well as by using his public platform). Imagine Starbucks' Howard Schultz, who had felt free to use his company (and its employees) to further political issues (and positions) he values, in Zuckerberg's position at Facebook. Would users appreciate being manipulated, subtly or not, into discussions on race that tilt to Schultz's position?[7] The impact on public policy could be astounding simply on account of the proportion of Americans who actively use Facebook. The mining of user-data would give such a CEO even more power not only over particular users, but also on a societal level.[8] The problem, in other words, is that of an unelected person having such massive political power in a viable representative democracy. Similar to the rationale of anti-trust laws, limits on the size of social-media companies in terms of usership could therefore be justified with some degree of precedent.

See also "Taking the Face Off Facebook."




1. Alexander B. Howard, “Facebook Study Says Users Control What They See, But Critics Disagree,” The Huffington Post, May 12, 2015.
2. Ibid. I put the quotes around “scientists” to make the point that the conflict of interest renders the label itself controversial in being applied to the study’s investigators.
3. See, for example, Christian Sandvig, “The Facebook ‘It’s Not Our Fault’ Study,” Multicast, Harvard Law School Blogs, May 7, 2015.
4. Howard, “Facebook Study.” See Eytan Bakshy, Solomon Messing, and Lada Adamic, “Exposure to Diverse Information on Facebook,” Facebook Blog, May 7, 2015.
5. Ibid.
6. Ibid. See “Political Polarization in the American Public,” U.S. Politics & Policy, Pew Research Center, June 12, 2104.

Tuesday, November 11, 2014

Adieu to Florida’s Gold Coast: Beyond Money and Politics

In October 2014, the City of South Florida passed a resolution in favor of South Florida seceding from Florida and becoming the 51st State of the United States. Vice Mayor Walter Harris, the resolution’s sponsor, told the city’s commission that the government of Florida had not been addressing adequately the issue of the sea-level rising. Already, Miami was subject to regular flooding at high tide. This reason for secession has a serious downside, however; a better rationale may ironically come from the perspective of Floridians in North Florida.

The proposed State of South Florida would include the counties in orange. (Orlando Sentinel)

Harris was obviously frustrated. “We have to be able to deal directly with this environmental concern and we can’t really get it done in Tallahassee.”[1] However, even though a government of South Florida might indeed be more willing to legislate to save much of South Florida from the inevitable, that State would be more vulnerable to sea-water disasters. A hurricane could cut out a good part of tourism dollars along the “Gold Coast” (i.e., West Palm Beach to Miami), and still Tallahassee could count of unhampered tax revenue from the northern regions of Florida to fund clean-up and restoration projects. A government of South Florida would not have this spread-out diversity, so a major storm could effectively cripple that government’s wherewithal to respond.
So Harris’s rationale is a double-edged sword, meaning it cuts both ways. More pliability but more risk. Mayor Philip Stoddard’s rationale is more solid, and yet more effusive and thus easy to overlook or dismiss. “It’s very apparent that the attitude of the northern part of the state is that they would just love to saw the state in half and just let us float off into the Caribbean. They’ve made that abundantly clear every possible opportunity and I would love to give them the opportunity to do that.”[2] I submit that Northern motive here does not stem from fiscal or even political self-interest; rather, people living in South Florida have a bit of a bad reputation, attitudewise.

After four months living in Miami, I came away wishing that the U.S.  might someday kick South Florida out of the Union for not being civil enough to warrant inclusion in American society. On a daily basis, I found not only irate, impatient drivers honking incessantly, but also extremely rude retail employees dominating the service industry—such rudeness easily passing as passive and even active aggression toward customers. More generally, I found a mix of self-absorption and fastidiousness to be so common that it characterizes the dominant culture.  Obviously, not everyone living in the stretch of urbanization from West Palm Beach to South Miami had this mentality; in fact, I ran into some nice people who admitted to me that the real problem with South Florida is the people. How damning an assessment this is!

In short, enough residents of South Florida do not play well with others that the sordid attitude and its ensuing behaviors can enjoy the validity that comes with being the established norm. Transferring to a local bus at a light-rail station in Dade County (i.e., Miami), for example, I was literally thrown out of kilter mentally when a black 25 year-old fat guy body-slammed me into the side of the opened front-door because he thought I should have let all the Blacks on first rather than wait in line as I did. Adding insult to injury, the black bus driver refused to call the police when I asked him while I was still body-pressed by Fat Albert. “You shouldn’t have gotten on then,” the middle-aged driver said.  I submitted a complaint to the transit company, but never received a reply. At the very least, I concluded, a corrupt institutional culture enables the interpersonal aggression there.

While in Miami Beach on a bus, I was perplexed to find a driver ignoring two local black men shouting at each other in the bus. At the very least, the black woman driving the bus was not concerned about what impression the tourists standing in the aisle would have of the vacation spot. The situation quickly turned surreal when one of the black men lurched down the steps from the back third of the bus to hit the other man standing in the aisle near the back door. From my seat, I caught a glimpse of tourists falling over like dominos in the aisle toward the front of the bus. As they stood up, several of them demanded that the driver stop and call the police. Incredibly, she just kept driving. Eventually, when we stopped to let off some passengers, the driver did call the police, but only to ask if the man who was hit wanted to press charges. He did not, so the driver told the police they did not have to come. Eventually, the troubled man got off the bus of his own accord.

On nearly a daily basis, I encountered aggressively rude people in Fort Lauderdale and Miami of every race. At a Starbucks in a nice suburb of Miami, I was stunned when a woman of about 60 decided even before I had put away my things that I was leaving; she sat down at my small table while I was still drinking coffee.  “You’re leaving,” she said as if she could not be wrong. “No, I’m still here,” I replied, but this made no difference to her sense of entitlement. The employees I encountered at more than one Starbucks store were—how shall I put it—a piece of work. I called the company’s customer service on one occasion to report that a veteran (i.e., not new) employee didn’t know what a pull-over is.  Adding insult to injury, she refused to ask her manager. “No, we don’t have those,” the employee said, scolding me with her tone merely for ordering a French-roast pour-over because none was brewed.  It is Starbucks policy that if a roast is not brewed at the time, it is to be made by the pour-over method. The customer-service representative in Seattle said after I relayed the account, “You’re right; that really is beyond the pale—she doesn’t know what a pour-over is and she is not in training? Yeah, that is bad.” I agreed, adding, “That’s how it is here in Miami.” At another Starbucks, a manager explained that South Florida is challenged in the service industry. In other words, so many people are rude it is difficult to find nice people to hire. Several people living in the metro area told me that employees in the service sector there are notoriously rude, so I concluded that the culture must be really bad.

Doubtless the sordid reputation had reached many ears in North Florida by the time of Stoddard’s resolution in South Miami. He was conveniently ignoring this point when he sought to have South Florida play the victim role. They would just love to float us off into the Caribbean. Northern Floridians might want to send the commissioners there a thank you note, and not because much of the problems stemming from the rising sea-level would be obviated; rather, it may be more a question of culture—a decadent, pathological culture wanting out and neighbors to the immediate north willing to help them along to make their wish come true. In other words, the resolution might be a case of “be careful what you wish for; you might get it.”




[1] Adrienne Cutway, “Officials Want South Florida to Break Off into Its Own State,” The Orlando Sentinel, October 21, 2014.
[2] Ibid.