Business – Required Reading

Bargain Fever

May 6, 2014May 5, 2014 Shay Shortt

by Mark Ellwood

ISBN 978-1-59184-580-5

“This sense that there’s always a sale can make shopping an exhausting process, as you constantly fret that you could have found a better price. An all-discount world is one where buying is a time-consuming process, and sales can even backfire if shoppers feel unfairly treated. Was there a coupon you missed that everyone else used? Maybe Amex card-holders got an exclusive mark-down, and you paid with Visa? Didn’t you read somewhere about a 10 percent discount if your name started with M? Such relentlessness could make it refreshing, relaxing even, to pay full price, as long as that meant you didn’t have to worry that a sale might start tomorrow.”

Some people love to shop, and acquiring new possessions and scoring hot deals can be better than a competitive sport if you’re wired the right way, thanks to the neurotransmitter dopamine. Look no further than extreme couponers and Black Friday enthusiasts to find this type of shopper. For others, shopping is exhausting and stressful, but budget-consciousness demands attention and effort to this necessary task. Whether you like shopping or not, most people want to feel like they’ve gotten a good deal. In 2011, up to 45% of goods were sold at some kind of discount. If you’re the sort to be skeptical about how everything can always be on sale, this book offers insights into how modern retail pricing works across a variety of industries from groceries to fashion to travel.

Bargain Fever is equal parts a history of retail, and research into what goes on behind the scenes as retailers decide how to price their wares. However, I think a lot of people will expect this to be a how-to guide to scoring deals, and it isn’t really that. This may be down to some marketing indecision on the part of the publisher; the edition I borrowed from the library is subtitled “How to Shop in a Discounted World,” but it is also listed online with the subtitle “Our Obsession with Getting More for Less,” which is much more accurate. You will definitely learn about some strategies that will make you a savvier shopper, but a lot of what you will learn will be about why some of those deals aren’t really as great as you thought. For example, most chains have enough overstock that they can support one outlet location for every five retail stores. With over 180 outlet malls in America alone, many retailers are forced to turn to outlet exclusives—products produced especially for the outlet market that were never sold in their regular stores—in order to keep the shelves full. Those products may or may not be of the same quality as their regular stock. Much of the information Ellwood provides is specific to America, but he ventures out to Japan, Germany and the UK as well.

In the midst of all this discount-mania, one of the most fascinating sections of the book was on luxury brands that distinguish themselves by rarely or never offering discounts. These firms include Apple, Nespresso, American Girl, and the most hard-core non-discounter of all, Louis Vuitton. These companies hold the line on high prices by limiting their inventory, tightly controlling production and sales, and providing high levels of customer service. However, this strategy can also backfire. Thanks to their refusal to discount, Louis Vuitton is the most forged brand in the world, and after expanding operations beyond their artisanal origins, they now face the problem of superfakes—purses produced after hours in their own factories and by their own workers, but sold on the black market. When one purse retails for a third of a worker’s annual salary, it’s easy to see how the superfake problem could become an epidemic.

Bargain Fever is a fascinating book about marketing practices, but it does not delve deeply into trying to understand consumerism, looking no further than dopamine to understand our drive to buy. Even as he unveils a staggering variety of pricing gimmicks from reference points to versioning, Ellwood tries to advance the thesis that under “shopping 3.0” there has never been a better time to be a buyer, largely due to the transparency afforded by the internet. What was clearest to me, however, was the constant tension between shoppers demanding a deal, and retailers trying to turn a profit. Ellwood has a good eye for interesting topics from extreme couponing to outlet malls to data mining, but draws overly optimistic conclusions about how the current system empowers buyers. However, the content is engrossing, even when the presentation is hampered by a thesis not borne out by the evidence.

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You might also like Salt Sugar Fat by Michael Moss.

Biography, Business, Criticism, Film, History, Psychology, Science, Sociology, Top Picks

Creating Room to Read

October 10, 2013December 31, 2015 Shay Shortt

by John Wood

ISBN 978-0-670-02598-5

“My goal is that children everywhere have access to literacy and books in their mother tongue from a young age.”

In Leaving Microsoft to Change the World, John Wood recounted the story of how a hiking trip through Nepal resulted in his decision to quit a high-paying executive position at Microsoft and start a non-profit to build libraries in the developing world. In the five years covered by Leaving Microsoft to Change the World, Room to Read grew from a tiny start up into a huge force for literacy and education in the developing world. Creating Room to Read is Wood’s update on the organization’s next stage, expanding to ten countries and opening 10 000 libraries in ten years, as well as their foray into the world of local language publishing, and the challenges of doing business on the African continent.

Creating Room to Read is an update of Leaving Microsoft to Change the World, as well as a more articulate and substantial look at the organization’s work. Wood retreads enough ground that it isn’t necessary to have read his first book, but briefly enough not to bore those who have. The new book is harder hitting, examining several serious challenges the organization faced in this critical growth period. The first national director in South Africa was fired for misappropriating funds, an entrepreneur failed to deliver on his significant matching donation, and a five million dollar pledge was withdrawn in the aftermath of the 2008 financial crisis. Wood continues to show how he applied his business acumen to the organization’s challenges, but securely established as a philanthropist, there are far fewer Microsoft references in Creating Room to Read. Those with a particular interest in Wood’s connection to the technology giant will probably be more interested in Leaving Microsoft to Change the World. There is much less of Wood’s personal life in this book, though his relationship with his parents, and their involvement with Room to Read continue to figure prominently.

Creating Room to Read revisits some of the people and places featured in Leaving Microsoft to Change the World, following up on the success of the first library in Bahundanda, Nepal, and Wood’s Vietnamese friend Vu, who Wood helped further his education before he ever dreamed of starting Room to Read. Both the revisitations, and the attention to Room to Read’s assessment and growth processes will be reassuring for readers who are looking to get to know the organization before making a donation or becoming involved in fundraising. Room to Read is not an organization content to rest on its laurels, and nor is a now seven year old book sufficient to tell the story of such an adaptive enterprise.

Business, Memoir, MetaBooks, Non-Fiction

Leaving Microsoft to Change the World

September 19, 2013December 31, 2015 Shay Shortt

by John Wood

ISBN 978-0-06-112107-4

“This love of reading, learning, and exploring new worlds so predominates my memory of youth that I simply could not imagine a childhood without books.”

For eight years in the company’s heady growth period of the 1990s, John Wood was a marketing director for Microsoft, working in foreign markets in Australia and Asia. Seeking a break from the hectic pace of his executive’s career, Wood took a vacation, hiking through Nepal. The decision to veer off his planned course and follow a district education resource person to a see a school with no desks and only seven books under lock and key in the library sparked his desire to do a book drive for the school. He committed himself to the project before he even left Nepal by sending an email to his friends and family from a cybercafé in Kathmandu. A year later, he returned with eight donkeys, each bearing two brimming boxes of books. Wood soon found that his enthusiasm and drive for the literacy project far exceeded his interest in working at Microsoft, so he made the decision to quit his job to found what would become Room to Read, but was initially known as Books for Nepal.

One of the most interesting aspects of Leaving Microsoft to Change the World is the dual nature of Wood’s relationship with the organization that he left. On the one hand, Microsoft China’s narrow view of philanthropic work stoked his zeal for his own project and helped solidify his decision to leave the company. Bill Gates, a noted philanthropist himself, shook Wood’s desire to remain with the company by failing to properly prepare for an important television interview on a visit to China. Despite Wood’s aversion to the quid pro quo culture of corporate philanthropy, he approaches non-profit work with a businessman’s attitude, and a focus on results. In the early days, he ran Room to Read like a tech start up, zealously maintaining low overhead, minimal staffing, and rapid expansion. Although he couldn’t, in good conscience, stay with Microsoft, but he wouldn’t be where his is today without the company, either.

The personal side of Wood’s story is both humanizing and disheartening. Overworked at Microsoft, he is obviously made happier by his decision to leave the company and found Room to Read, which he is more passionate about. But soon he is as much, or perhaps more, of a workaholic in his new position. He candidly reveals the lack of attention to his personal affairs, such as renewing his driver’s license and car insurance. Starting Room to Read also necessitated breaking up with his girlfriend, who wasn’t interested in traveling in developing countries, or giving up a comfortable salary. One of the few positives on the personal level seems to come out of Wood’s relationship with his father. Neither tense nor particularly close, the two bonded over the initial book drive, when Wood’s parents served as the US collection point for the books, and his father eventually accompanied him on his trip to Nepal to deliver the library.

While there are some heart-warming stories about the benefits of the libraries for the communities, and plenty of detail about the number of libraries built and books donated, the focus is largely on the business side of the endeavour. There are no details about the day-to-day workings of the library in the absence of Room to Read workers, or stories about libraries that have faced difficult challenges after their inception. Wood is a clear, if not especially skilful writer. He is able to convey his vision and passion, and articulate how his business experience and connections made him a successful philanthropist. I would recommend this book more for those who want to understand the history of Room to Read, and the business side of charity work, than for those who are looking to gain a deeper understanding of educational issues in the developing world.

Business, Non-Fiction, Science

Salt Sugar Fat

May 9, 2013May 8, 2013 Shay Shortt

by Michael Moss

ISBN 978-1-4000-6980-4

“Take more than a little salt, or sugar, or fat out of processed food, these experiments showed, and there is nothing left. Or, even worse, what is left are the inexorable consequences of food processing, repulsive tastes that are bitter, metallic and astringent. The industry has boxed itself in.”

Journalist Michael Moss has a long history of reporting on food issues, including E. coli contamination in peanut butter, and coining the phrase “pink slime” to describe the ammonia-treated beef being served in American school cafeterias in 2009, for which he won a Pulitzer. In Salt Sugar Fat, Moss turns his investigative reporting skills onto the key ingredients processed food companies use to make their food products edible, not to mention desirable and even craveable, with carefully calculated “bliss points.” Moss demonstrates how the three main tenets of the food industry—taste, convenience and cost—have left companies critically dependent upon these ingredients, and consumers at their mercy.

Moss draws on vast amounts of research that have gone into understanding flavour and taste. Even when these studies are funded, in whole or part, by industry giants, they gain credibility by the fact that these companies have every reason to want to understand exactly how they can make their products as desirable as possible. While the industry may tend to reveal the information selectively, trying to spin it in their favour, in Moss’s hands these reports are revealing and often damning, despite his even-handed reporting style. Moss relates the research without bogging down the reader, and frequently ties it back to concrete examples of products that fit the bill. He also interviews a variety of industry insiders about the impact of their products, though those who remain loyal to the industry were, understandably, reluctant to speak with him.

Although the book is divided into three sections, one for each key ingredient, Moss never loses sight of the relationship between them. He clearly demonstrates that consumers need to keep their eyes on all three balls at once. If fat is the villain of the hour, food companies may lower the fat content to appease the public, and make up for the loss in flavour by increasing the salt or sugar load. Marketing plays a key role in this subterfuge, which is also explored, if not as deeply as it could be. Companies can create an aura of health around a product by emphasizing whole grains or real fruit, despite jacked up levels of salt, sugar, or fat.

However, just removing salt, sugar, or fat doesn’t prove to be the answer. Though he clearly weighs in on the side of healthier eating, Moss offers a (limited) voice to both sides of the debate, visiting Kellogg laboratories to taste what the products would be like if the company would just remove the salt. Moss describes the results as “a culinary horror show” with dire implications for companies trying to improve the nutritional profile of their products. The emphasis for the industry has been on self-regulation, but this poses an incredible challenge that goes beyond figuring out how to remove salt, sugar, and fat from products. A company that reduces these flavour enhancers voluntarily is at the mercy of competitors who refuse to do the same, or who don’t reduce as much. As a result, they are under constant pressure from Wall Street to stay the course.

One of the most telling revelations is the role cheese and meat—heavily subsidized by the American government—play in sabotaging the American diet. Cheese and meat account for nearly thirty percent of the saturated fat consumed by the average American. By contrast, cookies, cakes and pastries account for a paltry six percent. Yet the surplus of dairy products created by the subsidy ensures that cheese finds its way into ever more products as an ingredient, so that the average American now consumes over thirty pounds of cheese per year. What’s worse, consumers don’t even seem to be able to detect the extra fat. The government comes off looking very bad indeed, with initiatives to improve eating habits and educate consumers receiving a fraction of the funding of the beef and dairy subsidies. Although the food companies bear the brunt of the scrutiny, Moss certainly doesn’t let the government off the hook.

Of course, not all the experience gleaned by the processed food industry is bad. The knowledge food executives have gained about marketing and appeal can also be applied to healthier foods. Jeff Dunn, formerly of Coca-Cola, moved onto selling baby carrots as a snack food, with the “Snack on That” campaign, which, at first description, sounds like a marketing strategy for potato chips or pretzels. Leveraging this knowledge is potentially powerful for shifting our eating habits back towards healthier choices. Also in the realm of good news, Moss discusses research demonstrating that our tastes for some flavours are adjustable, and can be recalibrated; reducing your sodium intake for twelve weeks can reset your taste buds so that you only need a fifth of the salt you could tolerate before.

Though it runs to four hundred pages, Salt Sugar Fat is an investigation, not a solution. Nevertheless it provides valuable insight into the practices of processed food companies that consumers should be more aware of.

Autobiography, Business, Criticism, History, Non-Fiction, Philosophy, Psychology, Science, Top Picks

One Click: Jeff Bezos and the Rise of Amazon.com

October 25, 2012February 14, 2013 Shay Shortt

by Richard L. Brandt

ISBN 978-1591843757

Those familiar with the work of technology journalist Richard L. Brandt will be acquainted with his style of blending biography and business history, as he has previously done with Larry Page, Sergey Brin, and Google. In One Click, Brandt profiles Amazon founder and CEO Jeff Bezos. Readers expecting an in-depth, definitive history of Amazon or a complete portrait of Bezos may be disappointed. This relatively short (224p) profile draws largely on publically available information and resources. Those who have followed Amazon and Bezos in the news will find little fresh information.

Where this book does shine is in reviewing the critical role of Amazon in the transformation of book selling in America over the last twenty years. Brandt highlights the business strategies and technologies that enabled this success. However, the section on the most recent change, e-books, is already beginning to date less than a year after publication. This is an innate peril of writing about living a living entrepreneur and business in a rapidly changing field. Unlike a posthumous biography, Brandt’s profile is likely to be quickly superseded by future accounts.

Although this book discusses common criticisms of Bezos, the author is largely friendly towards his subject. Brandt’s thesis seems to be that analysts have consistently underestimated Bezos’s business acumen to their detriment. By concluding with a discussion of Bezos’s investment in space travel and research, Brandt suggests that the sky is the limit for this entrepreneur.

Category: Business