Death of Fox & Obel

photo (63)I’ve written many “Death of” articles – death of Blackberry, death of the penny, death of the Encyclopedia Britannica. But this one really hurts…

Before Mariano’s Fresh Market, Whole Foods, Wild Oats, and Trader Joe’s (I’m still mad at them for not giving me an opportunity to interview after I submitted an application at a different point in my life out West, but that’s a story for another time), there was Fox & Obel, the Chicago-based, River East mainstay for over a decade. With rumored celebrity investors like Scottie Pippen, 5 dollar per ounce olive oil, truffle tasting stations, in-house wet and dry aged meats (initially the only grocer that carried Tall Grass Beef from Red Buffalo Ranch, owned by Bill Curtis), top-notch wine and apéritif lists, hard-to-find regional and international accoutrements, and a Zagat-rated cafe attached, people had flocked to what is arguably the first high-end grocery store in Chicagoland. And this was despite its sky-high prices (trust me, much worse than Whole Paycheck, I meant Whole Foods).

Manning the bakery was Phyllis, a lovely woman and native of South Africa who never hesitated to scold rude customers, who took it. There was Martha, the ever-smiling assistant manager greeting patrons as they walked in and out. And Juanita, café manager and a single mother (her son’s a star athlete at a local Catholic school). Juanita knew exactly how you liked your coffee. Fox & Obel managed the unlikely balance of Chicago Gold Coast uppity-up-ness with a neighborhood feel. My business partner (of Spend Matters fame) Jason Busch Ioved the bakery so much that its muffins, pastries and bread made it into our formal LLC operating agreement for our Spend Matters advisory business (i.e., written into the agreement was that one partner had to “stop at the Fox and Obel” bakery before business meetings – I kid you not, and yes we did honor the agreement!) Unfortunately, it’s now time to amend it.

For a while we’d heard rumors of additional investors, new stores in the downtown area, North American expansion. Then bam: the bottom fell out.

My wife Jenna and I walked around the closing sales event with heavy hearts. To Jenna and me, this was not just a grocery store – Tsige cooked for us, Sue babysat our kids, and on Friday afternoons I used to bring my RJSL and Spend Matters colleagues treats from the Fox & Obel bakery. So what happened? I can certainly make a few hypotheses.

  • Decreasing passion and sense of mission – After initial success, the original founders cashed out to private equity investors. And I could sense a gradual decline in quality over the past few years. Does that mean every buyout spells doom for those acquired? No, but it does mean that if cash flow buyers (as opposed to strategic acquirers) focus too much on the short-term bottom line, it will erode the X-factor that made the establishment special.
  • Hiccups in execution – It could be as minor as less crust on what used to be their signature almond croissant (Jenna noticed it after a new pastry chef came on board; the long-time head quit when his paycheck bounced), as major as multiple health code violations (fruit flies in food preparation stations is what I’ve heard), and everything in between, such as failure to pay electricity bills on time.
  • Poor inventory – Along with declining quality, I noticed that shelves were becoming emptier. No longer was Fox & Obel the go-to place for hard-to-find items, and even its staple trappings were sometimes missing, a cardinal sin for a grocery store. I am not a grocery industry expert by any stretch of the imagination, but even I could see tension between Fox & Obel and its suppliers.
  • Erosion of the foundation – No disrespect to technology and process (many economists claim these are the only two factors that could push the famed EFPC – efficient frontier production curve – outward), but people make up every business’s foundation, regardless of the segment. Again, towards the end, I heard grumblings from Fox & Obel’s employees. Perhaps they trusted me since I was a regular, but nonetheless, I never heard any complaints over the first few years.

I could go on and on, but it won’t bring Fox & Obel back. Furthermore, I think these causes of their failure are a good lesson for just about any business. And in case you were wondering what Jenna and I bought at the final closing sale, we stocked up on Fox & Obel water glasses and Mexican Coca Cola, made with real sugar. Coincidently, the sourcing of Mexican coke is a great personal procurement lesson – which involves having to pay significantly more for a far superior product (which also requires seeking out) albeit with the same corporate brand.

I promise to tackle more cheerful topics for the rest of 2014. Happy New Year, everyone.

We’ll also let you know what new Chicago bakery (La Fournette is highest on our current list) that Jason and I decided to amend and include in our operating agreement so that the entire Spend Matters and MetalMiner office continue to remain well-fed and sugared-up.

Emotional Intelligence and Project Manager

PMAs you may know, PARR has a sister company in RJSL Group, an IT and business PMO consulting shop.  I’ve been a project manager (PM) since my Diamond Technology Partners days, and I believe good PM skill-set is a must for any manager, regardless of his or her corporate function.  Over the years, I’ve also learned that especially when it comes to PM, emotional intelligence (EI) is more important than either intellectual abilities or any specialized, functional trainings combined.  EI separates great PM from good ones and can be defined as the ability to identify, assess, and control the emotions of oneself, of others, and of groups so that they are expressed appropriately and effectively, enabling people to work together smoothly toward their common goals.  According to many experts, major skills that make up EI are – self-awareness, self-management, social awareness and relationship management.

So, how does a PM use EI?  First, project management by nature entails a highly collaborative undertaking, often extending the scope beyond prescribed boundaries.  One of the key skill-set for a great PM is the ability to influence stakeholders globally.  More specifically, project’s success depends on the PM’s ability to influence and persuade team members and stakeholders, who often do not report directly to the project owner and have very different agenda, on numerous behavioral and emotional levels.  No matter how you slice it, this requires a large degree of EI on the part of the PM.  Second, every project introduces some degree of organizational changes in order to achieve a desired outcome. The impact of change on those who are affected can be championed or rejected based on the project manager’s leadership, prompting the PM to serve as an emotional guide throughout the process.  PMs often make on-the-fly adjustments to build and maintain positive relationships while motivating and focusing others to achieve success.

As all PMs know, the ability to develop and sustain relationships leads to successful project results. Understanding EI and honing our own EI provides an invaluable edge in building the relationships necessary to excel within the project management profession.

The Problem Underneath Conflict Mineral Compliance

Originally published in Compliance Week by Matt Kelly (http://www.complianceweek.com/matt-kelly/author/825/)

I had the pleasure last week of talking to a top legal officer at a large manufacturer, someone who will be speaking at the Compliance Week 2014 conference next spring about conflict minerals compliance. The program his company has developed so far is excellent, and I won’t spoil it by naming him and disclosing all the details here—but our conversation also underlined a headache compliance executives are facing that runs far deeper than conflict minerals, one worth discussing now.

Let’s start with our man Smith and his company’s first efforts at conflict minerals compliance. The duty fell to Smith because he, in the legal department, oversees all regulatory filings with the Securities and Exchange Commission—which will include conflict minerals disclosure on the agency’s new Form SD, starting early next year. So Smith assembled a task force from various company departments: compliance, accounting, IT, and supply chain.

He then described to me how the task force mapped out its goals and the work required to get those goals done, and it all sounded very much like the conversations I had nearly 10 years ago with companies confronting Section 404 compliance with the Sarbanes-Oxley Act. Understand what the SEC wants; find your weak spots; remediate any weaknesses as best you can; disclose what you know and what you don’t know, but hope to fix in the following year. Any compliance officer of a certain age will see the parallels.

Smith quickly understood that the company’s biggest challenge would be staffing: both manpower to get the work done, and expertise to know how to do the work wisely. Little surprise, then, he turned to his company’s external auditor (a Big 4 firm) for help. The company’s exposure to conflict-minerals is small, Smith told me, so he knew that its conflict-minerals program could be audited by a small firm. The more important trick would be building the right structure for compliance in the first place, so all those disclosures will be correct—and when you need specialty teams of very bright people, the Big 4 firms genuinely do have that manpower in spades.

“Thankfully this didn’t take up too much of my personal time, since I handle a bunch of regulatory issues,” Smith told me. “The ones who really did the work were our supply-chain team; for every four- or five-hour meeting I sat through, I know they were sitting through three or four more. They were just indispensable to this whole process.”

Smith also realized that the company’s other difficult problem was IT: namely, how much money to spend on IT dedicated to managing conflict-minerals compliance. “Right now it’s going to be something cheap and easy, to get compliance running,” he said. “We know we’ll need to do something more long-term within two years. We can’t keep imposing on our suppliers like this.”

And with that bit of casual wisdom from Smith, we come to the deeper, much more intractable headache for compliance officers.

http://media.complianceweek.com/images/2013/12/16/gold_stack_350_52146db6efb90_515724_515727.jpgCompliance pressures that hit your third parties are proliferating so rapidly—anti-corruption, conflict minerals, data security, human trafficking, offshore tax havens—that they now exceed your ability to manage them all well, or in any systematic fashion. The result: you keep pestering your third parties one regulation at a time, to the point where they get compliance fatigue and don’t want to cooperate with you. As Smith put it when we spoke, “It’s a big ask we’re imposing on them, and we need to find a way to ease that up.”

Good luck with that. In theory, getting ahead of the problem should not be too hard. These regulations (and more) all ask different questions of your third parties, but the fundamental process of asking for information and verifying its accuracy is the same. You should be able to deploy software that allows you to do those things. Indeed, I have no doubt that any number of vendors reading these words will breathlessly tell me that their very product is perfect for the job.

In practice, the world operates quite differently. Regulations aren’t always clear (see: Volcker Rule), and many immediately get mired in court challenges anyway. Software products aren’t easy to scope and implement, despite what vendors might say. And above all, the sheer time commitment to install a strong, flexible IT system that works well with your third parties is a multi-year commitment. Persuading CIOs and boards to make that sort of commitment is a tall order, one that borders on hopeless. Companies never want to make strategic shifts without a clear upside on revenue—and right now, effective compliance still doesn’t have one.

So at the Compliance Week 2014 conference, our man Smith is going to give an excellent presentation (one among many) about his approach to conflict-minerals compliance. It really does sound like a logical, systematic way to address one of the big compliance challenges facing companies today. At the end, however, if you ask him how his company might leverage its success here with other compliance burdens to come, you’ll get an answer something like this.

“We need to simplify what we ask of our suppliers,” Smith told me. “This is all getting to be too much for them or anyone else, and we need something that works.”

We’ll look at that problem at Compliance Week 2014 too, but somehow I suspect it will remain on the agenda for years to come.

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