Today, I’m thinking WalMart is on a similar path towards irrelevance as Sears started to go down some 20 years ago. And I’m thinking that 20 years from now, WalMart could very easily be a marginal brand. Here are a few of the reasons that could lead to WalMart’s demise.

1. WalMart Likes To Fight: WalMart is a fighter. It fights with their suppliers to constantly lower their prices. It fights with their employees at the local, regional and national level (for instance the gender class action lawsuit now in front of the Supreme Court). It fights with munincipalities to gain access to their marketplace. And indirectly, it fights with its customers by being understaffed, their employees undertrained and less than enthusiastic (its simply a job), and their shelves at times, understocked. From my perspective, fighting and dissatisfaction are directly linked.
2. WalMart Stores Are Tired: WalMart stores simply weren’t designed to provide an upbeat customer experience for most consumers (which is in sharp contrast to their #1 competitor - Target). Now, many stores are especially feeling tired and worn, which simply adds to an already weak customer experience.
3. WalMart Suppliers Play the Game:  Over the years, suppliers to WalMart have figured out how to play their game. Today, WalMart needs their suppliers as much as their suppliers need WalMart. Ten years ago this was not the case.
4. WalMart Feeling The Squeeze: WalMart is being squeezed by the likes of DollarTree on the bottom end of the market (small stores with really low prices), warehouse stores like Costco and upscale stores with good pricing like Target. In essence, the number of individuals feeling compelled to shop at WalMart is declining.
5. WalMart’s Sourcing Strategy: WalMart led the maretplace to China, even setting up their own trading office early on. It’s been reported that suppliers were told that if they didn’t source from China, they would no longer be a supplier in the future. With the increasing valuation of the yuan, higher labor costs, etc. WalMart’s China strategy is providing decreasing returns. 
6. Mother WalMart Doesn’t Know What’s Really Going On: WalMart in their gender class action suit currently in front of the Supreme Court essentially pleads innocense, because they didn’t know what was going on at the local level. This might sound like a smart defense, but its also a terrible way to run a business. Think about it. If corporate doesn’t know what’s going on a the local level, does it really know what’s going on?  Scary?

During the go-go days, WalMart was the place to shop. Stores were packed with customers and shelves filled to the brim with value-priced merchandise. Well the times have changed, and WalMart stores open a year or more have experienced reduced revenue for seven straight quarters. Suddenly, WalMart is desperately trying to figure out how to get their momentum back. They have a plan, although I suggest it’s going to be extremely hard. The reason being, a growing legion of shoppers are “anti WalMart”  Plus, many WalMart stores are tired, their offerings unattractive, their employees unmotivated, their value proposition weak and the competition is getting better. This is not a combination that will enable a swift and exciting turnaround. Yes, WalMart is filled with many silent problems that hold it back from achieving its glory days in the U.S. at least.

What do think? Will WalMart be able to regain their growth oriented momentum?

From my perspective, inflation at the very least gets your attention, and in many instances, it changes the way you play the game.

Let’s face it, over the past year or so, basic commodities from corn and wheat, to copper, silver and oil are all in an inflationary mode. Up to this point, manufacturers have been willing to absorb modest price increases in their raw material costs, thereby sacrificing margin. However, this is beginning to change - and this could be a game changer. The reason its a game changer is simple - it totally changes the psychological nature of the marketplace. And psychology impacts everything from pricing strategies, to buying decisions. Wait and see suddenly becomes Just Do It! Because it will likely be higher tomorrow.

Granted, not everyone is being proactive in implementing the price increase agenda. In fact, I suspect your salespeople are protecters of “the status-quo.” After all, they have been accustomed to pitching management why they needed to drop prices over the past decade, not increase them. In fact today many sales people literally don’t know how to execute a price increase strategy. If this is the case, here are a few strategies to nudge them in the right direction.

• Educate Your Salesforce: You may need to open your books so they understand the pricing pressures you’re exposed to - everything from commodity prices (copper, steel, wheat, oil …), to individual parts you must purchase. If they understand the dynamics of the marketplace, they’re better able to sell it.
• Change The Compensation Package: If you bonus your salepeople on sales dollars - change it. Sales people are not known to protect margin, at least until it impacts them directly. Bonuses must be based on margins!
• Announce It: Price increases should never be a last-second surprise. Your customers are hoping you don’t raise prices, yet are fully expecting you’ll need to raise prices. Give them a heads up so they can change their prices proactively.
• Be Proactive: Price increases in the 3-5% range are generally better received than increases of 8-10%. Small, yet significant price increases will be less likely to encourage competitive shopping. However if you’re already behind the 8 Ball, an 8-10% price increase might be necessary.
• Watch Your Accounts Receivables: Price increases can be a huge strain on your cash flow as raw material costs increase. However equally important is your accounts receivables, especially if customers attempt to stretch out their payment schedules.

Let’s be honest, this will be the first major exposure to significant inflation for many of your employees. Oh they saw $4.00 gasoline a couple years ago, however during this period, many companies held their prices due to competitive pricing pressures in the marketplace. Today, things will likely be different. All indications suggest a sustained inflationary period in front of us. And when it comes to inflation, being proactive is bliss, being reactive is a killer.

What are you doing to stay one step ahead of the inflation game?

Let me back up a second. From the beginning of this series of The Apprentice, actor Gary Busey has always been portrayed as a wild card of sorts. Someone that at times was brilliant, and at other times, totally dysfunctional and a major distraction. He appeared on camera with a frumpy hairstyle and quirky demeanor. Surprisingly in the early stages of this series, the team repeatedly protected Gary from his own shortcomings. They would work around him when necessary. Coach him when it was necessary. Direct him when it was required. The team went to great lengths to keep Gary on target so they could complete the task at hand. Then when it came to the boardroom, the team elevated him as someone that was a bit quirky, but brilliant. Consequently, each week Gary returned unscathed, and his presence and stature, elevated.

In the April 10th show everything started to change. First, some of the veneer that protected Gary started to wear thin and the team started to expose Gary for his lack of professionalism. During this show, the men’s team lost and Donald Trump met in the boardroom with Mark McGrath and Gary Busey. One was going to get fired. The Chicago Tribune captured the outcome.

We’re sure that when Gary Busey walks back into the TV room after surviving Sunday’s (April 10) boardroom on “The Celebrity Apprentice,” the men’s team will have a collective stroke. Not only have they lost pop-rocker Mark McGrath, one of their best players, but now they still have who they perceive to be their worst player still around.

On the April 17th show, survivor Gary Busey was put up on the pedestal so to speak. He was assigned the position of project manager. A position where individuals commonly are fired if they lose the task. This is how buddytv.com described the evening.

Last night on Celebrity Apprentice, when we weren’t watching the women do impressions of La Toya Jackson, all eyes (and brains) were on Gary Busey, as he led the men’s team to chaotic, embarrassing failure after their Omaha Steaks presentation failed to sizzle. His failure to manage time, manage the menu and manage his team mates, who begged anyone who’d listen to get them away from Gary, eventually led The Donald to do what he couldn’t do last week, and he fired The Busey. And so the crazy quotes were snatched from our Sunday nights.

And that’s pretty much how the whole two hours went for project manager Gary and his exasperated teammates. When doling out assignments, he gave the cooking job to Meat Loaf without asking first if Meat Loaf could cook. (To be fair, why are you named Meat Loaf if you can’t?) Gary took over planning the “variety pack” and writing the narratives to go along with their original Omaha Steak meals, which were predictably nonsensical, drawn out and bizarre, especially his Father’s Day yarn about buying a special kite for Dad. John Rich and Lil Jon were left with little to do but get a contact high off of Gary’s potent absurdity, and ended up giggling uncontrollably for most of the day. That, or they were just so frustrated by his random, rambling antics that the only thing they could do to not kill Gary was to laugh.

Last night’s show of The Apprentice quite simply was a textbook case about how team dynamics can unfold in real life.

1. The team embraced and protected a dysfunctional team member. By doing so, they were able to have access to his intermittant brilliance, but also remained exposed to their dysfunctional characteristics.
2. Over time, managing the dysfunctional team member becomes more-and-more difficult. This sunneeded stress, which ultimately negatively impacts the performance of the team.
3. A high performing team member leaves.  The net result, an already stressful situation becomes toxic.
4. Eventually the team turns on the dysfunctional team member. They take steps to make certain the toxic member becomes an emperor with no clothes.
5. The functional team members become unwilling to work with the toxic member, thereby exposing the isolated member to elements of abandonment.
6. The toxic team member ultimately gets fired.

By  protecting Gary in the early episodes, Gary became a Silent Problem as detailed in my book Without Warning. Donald Trump initially saw Gary Busey as a high performing team member - a little different, yet brilliant. By the time Gary was exposed on April 10, Gary had already earned a “get out of jail card” from Donald, which was immediately played. However when April 17th came around, the dynamics had changed. Mark Rich, Lil Jon and Meatloaf were vehemently upset that their friend Mark McGrath was fired and Gary Busey was saved. And they were more than willing to let Gary Busey die by his own sword. Yes, it was a night of team dynamics and how individuals can get pushed off the team.

How many individuals do you have in your organization with similar attributes and behavorial traits to Gary Busey? How do you vote them off the team, or do they stay?

A long list of companies and individuals that perpetuate this often deadly disease exist throughout the world. We can easily turn our attention  towards the likes of Enron, Lehman Brothers, WorldComm and numerous others. Today however, a silent problem of immense proportion is being revealed in Japan. It’s the story of  Tokyo Electric and Power (TEPCO), the operators of the Fukushima nuclear power plants that have succumbed to the wrath of mother nature and the revealing of a host of silent problems. And the silent problems at TEPCO not only preceeded the disaster at Fukushima, its history foretells its vulnerability to such an event. Let’s take a look at how vulnerable TEPCO was by looking into its history.

Bill Pesak from Bloomberg writes: Once one of Japan’s proudest names, Tepco is now seen by some in the same toxic class as Enron Corp. or Lehman Brothers Holdings Inc. Each day brings new disclosures about how Tepco doctored safety reports and underestimated risks all without holding responsible the company directors who are still collecting their salaries, never mind keeping their jobs.

Financial Times, September 2002: The admission last week by the world`s largest private electric utility (TEPCO) that it had falsified safety records at nuclear power plants has shaken the Japanese public`s trust in the industry and is likely to make a dent in the company`s finances…  Tepco this week announced it would shut five reactors that are still operating despite cracks in shrouds that surround the reactor core. The move follows its admission that there were 29 cases of data falsification at three nuclear plants in the 1980s and 1990s. The closures came despite assurances from the Nuclear and Industrial Safety Agency that the reactors were safe. Tepco`s voluntarily closure of the reactors and president Nobuya Minami`s swift resignation after the falsified records were made public are an attempt to limit damage to the company`s image. But the doctored safety reports have rekindled fears about lax safety standards in Japan`s nuclear industry, three years after a fatal accident at a nuclear reprocessing plant in Tokaimura, a small town north-east of Tokyo.

From Nuclear News: Power company failed to maintain safety checks, Kimiko De Freytas-Tamura SMH March 21, 2011 OSAKA: Days before Japan plunged into an atomic crisis after a giant earthquake and tsunami knocked out power at the ageing Fukushima nuclear plant, its operator had admitted faking repair records. The revelation raises more questions about the scandal-tainted past of the Tokyo Electric Power Company (Tepco) and the government’s perceived soft regulation of the industry. The operator of the Fukushima No. 1 plant submitted a report to the country’s nuclear watchdog 10 days before the quake hit on March 11, admitting it had failed to inspect 33 pieces of equipment in its six reactors. A power board distributing electricity to a reactor’s temperature control valves was not examined for 11 years, and inspectors faked records, pretending to make thorough inspections when in fact they were only cursory, Tepco said. It also said that inspections, which are voluntary, did not cover other devices related to cooling systems, including water pump motors and diesel generators….

And for a historical perspective of TEPCO as a companyand its tainted past. Japan’s TEPCO: a history of nuclear disaster cover-ups: The Tokyo Electric Power Company (TEPCO) is the conglomerate at the centre of Japan’s nuclear radiation emergency at Fukushima. Its operations over the past several decades epitomise the government-backed pursuit of corporate profit, at the direct expense of lives, health and safety. A nuclear safety agency official who declined to be named said: ”We can’t say that the lapses listed in the [February 28] report did not have an influence on the chain of events leading to this crisis……

 TEPCO is the fourth largest power company in the world, and the biggest in Asia, operating 17 nuclear reactors and supplying one-third of Japan’s electricity. It has a long, documented history of serious safety breaches, systemic cover-ups of potentially fatal disasters, persecution of whistleblowers, suppression of popular opposition and use of its economic and advertising clout to silence criticism.

Among the company’s record of more than 200 proven falsifications of safety inspection reports are several relating to the stricken Fukushima Daiichi facility itself. In 2002, TEPCO admitted to falsifying reports about cracks that had been detected in core shrouds at reactors number 1, 2, 3, 4 and 5, as far back as 1993.

As the historical perspective illustrates, the number of silent problems inside TEPCO is huge. In fact, cultural underpinnings that embrace and foster silent problems likely exists. And this is a major problem facing TEPCO looking into the future. One can assume the future of TEPCO does not look good. Yes, TEPCO may be silenced by its own silent problems.

Although “fair share” is a simplistic term, its a complicated problem. In fact, some might call it a “wicked problem.” And therefore, “what’s fair” is based on one’s perspective, not necessarily some universal truth. And since we’re generally incapable of agreeing on what constitutes ”fair share,” it degrades into a “I know whats unfair” debate. Consequently, the dialogue goes something like this.

Employees that work for private companies generally have to pay from ”X% to X%” of their health insurance premiums, therefore its unfair that public employees only have to pay “Y%” of their premiums.

GE made $14 Billion of profit last year and paid no taxes. I may not know what amount would be fair for GE to pay, however I know that paying zero in corporate taxes is totally unfair.

Teachers only work 9-months out of the year and are paid on average $xx,000 a year. I have to work 12-months out of the year and are only paid $xx,000 a year. I think what teachers are paid is unfair, because…

The problem with the “fair share” dialogue is that it quickly turns into a “whats unfair” edict, which makes it potentially emotional and polarizing. Plus we cannot forget, one of the reasons behind why unions were created was to achieve a “what’s fair” income. Now, a “that’s unfair” agenda is being pursued by some states.

Will or can this debate ever be solved. I don’t know. However I do know one thing for certain, the polarizing nature of the fair/unfair debate can never be discounted or overlooked. What do you think.

No surprise then, that out of the 5.9 million entries in the ESPN bracket contest, only two had this foursome making its way to Houston. Did they go on a hunch? Or just tie on a blindfold and throw darts at the bracket?

While this year is special, from my perspective, the coach and the team to watch from a leadership/team perspective is Brad Stevens and the Butler Bulldogs. Last year they were the Cinderella story almost beating Duke in the NCAA Championship game. This year, they’re back to their old tricks of playing the underdog role and toppling giants. And its Brad Stevens that I think leaders need study, understand and possibly emulate. Following Butler’s upset of Florida, this is what Brad Stevens said about his team and Florida’s coach, Billy Donovan.

“They (Butler’s players) carried their coach today in a big way. I was saying I got outcoached in a big way.”

This comment probably caught most off-guard, wondering how Stevens could even make such a statement. Was he simply playing his team’s underdog role to the max? Did he really mean it? Or was he simply giving credit where credit was deserved - to his players?

Let me change gears here for a second. Last week, the New York Times ran a story about Google’s quest to identify what it took to be a good boss. Their search looked at quantitative and qualitative data, from which they identified 8-key criteria. They being:

1. Be a good coach.
2. Empower your team and don’t micromanage it.
3. Express interest in team members success and personal well-being.
4. Don’t be a sissy - be productive and results oriented.
5. Be a good communicator and listen to your team.
6. Help your employees with career development.
7. Have a clear vision and strategy for the team.
8. Have key technical skills so you can help advise the team.

At first glance, these leadership traits have been taught for decades. Nothing new. Nothing fancy. No surprises. Pretty basic stuff. Yet its reassuring that the simple basics of being a good boss remain relevant in an era of “whats new lately” can dominate leadership classes. So let’s get back to Brad Stevens and the Butler Bulldogs. I’m of the opinion that the question about whether Brad Stevens was outcoached or not isn’t even relevant. I think the question should be, “Who is the better leader/boss?” Because I’m coming to the conclusion that Brad Stevens is a pretty darn good coach, however he is a brilliant leader/boss. This is why the Butler Bulldogs have returned to the Final 4 two years in a row. It’s why his players give 110 percent and don’t choke under the heat.

Just maybe, schools are doing a pretty good job of recruiting coaches, however they need to do a better job of finding leaders. I think its that plain and simple.

What do you think?

I’ve been intrigued with the David vs. Goliath story that unfolded over the past month, aka Butler vs. Duke in the NCAA Basketball Tournament. It’s been a story few could have imagined, and am certain will be a movie in the future. It rates right up there with Herb Brooks and the 1980 Olympics, where the US Men’s hockey team upset the highly favored Russian team, and eventually took Gold. Despite the phenomenal storyline, there is an integral business and leadership lesson that lies in each of these stories. This being “Second Chance Points.”

CBS analyst and commentator Clark Kellogg in his coverage of the Road to March Madness introduced me to the importance of Second Chance Points and Points off Turnovers (Part 2). In basketball, second chance points occur when there is a missed shot and the  team on offense gets the rebound or recovers the ball following a missed shot and scores. If a team is aggressive, smart and talented, they get more second chance opportunities and second chance points than the opposition.  How does this relate to business success or leadership?

Nobody bats a thousand every day. And from time-to-time, even the most disciplined businesses and leaders mess up. An order was incorrectly shipped. A client sales call didn’t go smoothly. A deadline was missed. A product recall is initiated. An employee didn’t follow through on a commitment they made. If you’re a competitor, you realize the potential for picking up new business increases exponentially when the competition messes up. However, on occassion good companies get a second chance - great companies almost always get a second chance. They get a second chance because they have developed a deep relationship with their customers. In essence, the company’s value proposition is always greater than the product or service they sell. And because the value proposition is high, they are given a second chance. And if they leverage their second chance opportunity, they’re even able to score points off of the initial miss. Think of these contrasting companies and second chance points. Which companies have been able to leverage second chance opportunities?

Southwest Airlines vs. Delta, American or Spirit Airlines
Apple vs. Microsoft
Google vs. AOL or Yahoo
Netflix vs. BlockBuster

I’d suggest that Southwest, Apple, Google and Netflix are positioned to leverage Second Chance Points. Because when you’re given a second chance, you have the luxury of being able to learn from your mistakes. When you aren’t offered a second chance, you die by your mistakes. This is why companies must fight their way to earn the right to be given a second chance.

So what do organizations need to do to position themselves for Second Chance Opportunities and Second Chance Points?

1. Build deep relationships with customers, employees, and suppliers.
2. Remain true to the Vision and Values of the organization.
3. Acknowledge missed opportunities, fix them and learn from them.
4. Celebrate Second Chance Points when they occur.
5. Never take for granted that you will be offered a second chance.

Second Chance Points are huge strategic advantage when you’ve earned them, because it makes it more difficult for competitors to displace you.

What do you do to earn a second chance with your customers? And let’s not forget, second chances also relate to your employee engagement.

1. Never  underestimate the power of the opposing party: Scott Walker had the numbers he needed to make it happen - it was a slam dunk. However, he either didn’t consider or he under-estimated the ability of Senate Democrats to defect, thereby preventing the formation of a quorem, which is needed to take a vote. Lesson: Always treat your opponent with respect, realizing they might also have a few cards up their sleeve that you didn’t think about.
2. Imposing punitive damages does not mend a fence: Governor Walker implemented a strategy that imposed numerous damages like a $100 fine for every day a senator misses. This was an attempt to force Democratic Senators back to the capitol. While this might work with children, its having the opposite effect in Wisconsin. Democrats are simply becoming more vigilant in their efforts to stop Walker from achieving his desired outcome. Lesson: Never parent your opponents with “You better or…” in an attempt to have them take action.
3. Win-Lose strategies are always high stake games: From the beginning, Walker and the Republican party has taken a Win-Lose strategy in this debate. The Democrats conceded early on some key initiatives, the Republicans have conceded on virtually nothing. This only furthers the divide that will persist in the State for years to come. Lesson: All negotiations should pursue a win-win outcome if at all possible.
4. Bullies should stay at home: In State politics there is a lot of huffing and puffing or I’ll blow your house down tactics/rhetoric in play. While this makes for a good fairytale, it makes for terrible negotiations. Having a bully on the team is rarely useful and it tends to extend the negotiation process - and yes, Governor Walker is behaving like a Bully. Lesson: Bullies are rarely an asset in any negotiation process.
5. You’re always on stage - anything and everything can be used against you: If you’re heading into a negotiation, you must make all private and public comments/conversations as if they were being taped by CNN. Governor Walker recently got into trouble by stating what was on his mind to what he believed to be a major political supporter - David Koch. It wasn’t David and after the conversation was leaked to the media, Walker cried fowl. Lesson: In the world of technology and social media, every word and every conversation must be on point as if it were a CNN moment.
6. Avoid backing your opponent into a corner - they just might bite: There is an old Chinese Proverb that states, “Even a rabbit will bite if its cornered.” By backing unions into a corner, Governor Walker has inspired a national debate around a State issue. While this may be good for Walker’s political aspirations, it does not help solve the problem at hand. Instead, it simply intensified the debate and the divide. Lesson: Be careful, at times you might win the battle, yet lose the war if you go too far.

Governor Walker rode into the Governor’s Mansion with full complement of Republican Assemblymen and Senators. This was a dream come true - they had a full house and they knew it. And with a full house, most will put all of their chips to the center of the table with confidence. However in this instance, Walker has been unable to collect his winnings and go home. From my perspective, Governor Walker continues down a road of botched negotiation strategy and execution.

What are your thoughts?

I thought this sign was unique and I sent a copy to Dan Pink, which is posted under the title Emotionallly intelligent signage in Green Bay Packer country. However as I thought about it more, I pondered the wisdom of this signage inside many organizations.

Most companies are designed to go fast, just like selecting a team of dogs for dogsledding. It is speed, endurance and maybe a bit of luck that wins the race. But the question is, “When is 23 M.P.H. Plenty? I believe this is a relevant question for most business leaders to ask. Here are a few of the reasons why this might be relevant.

Safety: Speed limits are put in place to ensure the safety of those traveling the road. When speed limits are exceeded, the potential for harm increases exponentially, which incidentally can also occur inside organizations. Remember speed limits minimize risk and at times, slowing down is required.

Observation: At times one needs to slow down to smell the roses, i.e. to observe the landscape. Keen observation can be linked to innovation and numerous activities essential to designing the lean organization. There is no doubt that as speed increases, our ability to observe is diminished.

Focus: As speed increases, one’s focus must increase accordingly. At times this is the right answer, at other times, it can spell disaster. For instance, Management By Walking Around doesn’t occur by going 100 M.P.H., but rather MBWA at 23M.P.H. is plenty.

Creativity: Creativity can occur anywhere and at any speed. However I can bet that when an idea is spawned, the nurturing and developmental part of the idea will force you to slow down. This is why companies like 3M and Google grant play time into their employees work schedule. Yes, too much speed can kill a good idea.

What other aspects of 23 mph is plenty resonate with you?

Such appears to be the case of Sara Lee. A conglomerate based in Chicago that has struggled for at least a decade. A recent article on Bloomberg titled, Sara Lee Disarray Costs Shareholders About $1 Billion: Real M&A is interesting. The article discusses how Sara Lee has been a company that has talked about “creating value” over the past 10 years, yet has been on a consistent journey of “destroying value.” Now Sara Lee has been on the sales block for several months now (and been divesting companies for a decade), with several offers coming up short. the article goes on to state:

 Sara Lee Corp.’s managers, who failed to boost the company’s stock buying and selling $12 billion in assets in the past decade, destroyed shareholder value by passing up three chances to sell itself in the last year. ..

What is the cost of just doing something, which some might say has been Sara Lee’s mantra for the past decade?

Sara Lee has been a company that talks about delivering shareholder value, yet has consistently come up short. If their arrows in the quiver were aimed, well they either missed their mark, or they were aimed at the wrong target. In the end, Sara Lee is a company that lost their success momentum and success formula. In this arena, everything goes bad from increased turnover, depressed worker productivity, short term thinking and others.

Today, Sara Lee’s arrow is aimed in one direction - R.I.P. And even that is proving to be difficult.