Read an Excerpt
ANNALS OF MARKETING
TOYS R US to Become TOYS R US
NEW LOGO FEATURES MORE BACKWARD LETTERS
For decades, the backward "R" in Toys "R" Us has made it one of the most recognizable names in retailing. But with the advent of the Internet, TRU realized one backward letter wasn't going to be enough to overtake swifter online competitors. So last week, the Paramus, New Jersey—based toy titan announced it had reversed the "T" in Toys and the "U" in Us, giving it three backward letters and, claimed company executives, "three times the brand awareness."
Industry observers were skeptical of the move, with one analyst insisting that spinning the two letters around made "absolutely no difference whatsoever...right?" But TRU executives were equally insistent that the change heralded a new era for the nation's leading toy retailer.
"Turning the "R" around was the most important decision this company ever made," said CEO Michael Goldstein. "It made us a household name by causing consumers to do a double take. But over time, this reversal has been taken for granted, so today we reveal that the letters beginning the two other words in our name are also backward, a move which we expect will bring even more attention to our brand by causing consumers to do triple and quadruple takes."
While the reversal takes effect immediately, company executives conceded it will take several months to change the signage at its 1,500 stores worldwide. Goldstein said the company will take a charge in the fourth quarter to pay for the change, but declined to provide anynumbers.
Analysts, however, estimate new signs alone will cost $30 million to $40 million, while printing new Geoffrey Dollars will run another $20 million. Old Geoffrey Dollars bearing the original name will be honored at all stores, a company spokesman said.
Merrill Lynch analyst Dee Sabeej said she isn't convinced the expense will be worthwhile.
"I've spent the last hour typing it out, writing it out, and doing it in my head," she said. "I've even had co-workers write it for me, but for the life of me, I can't see any difference in the old and new name. I have to conclude that either I just don't get it, or this is a remarkably stupid decision and a horrible waste of corporate resources."
However, Karl Merrifield, editor of trade magazine TOY! said that view is shortsighted.
"The key to obtaining and retaining consumer mindshare in the recreational amusements industry is to have a name that concentrates on a letter or letters," said Merrifield. "The 'R' in Toys R Us, the 'F', 'A', and 'O' in FAO Schwarz, the 'K-B' sound in KayBee. This strategy clearly works with consumers, and by bringing added attention to its 'T' and its 'U', Toys 'R' Us is now more letter-centric than any of its competitors."
BLEEDING EDGE
AT&T TO LAY OFF 120 PERCENT OF WORKFORCE
Quaker Oats Employees Puzzled by Pink Slips
AT&T last week announced it would reduce its workforce by an unprecedented 120 percent by the end of 1995, believed to be the first time a major corporation has laid off more employees than it actually has.
AT&T stock soared more than 12 points on the news.
The reduction decision came after a year-long internal review of cost-cutting procedures, said AT&T Chairman C. Michael Armstrong. The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its 108,000 employees.
From there, said Armstrong, "it didn't take a genius to figure out that if we cut 40 percent of our workforce, we'd save $2.4 billion, and if we cut 100 percent of our workforce, we'd save $6 billion. But then we thought, why stop there? Let's cut another 20 percent and save $7 billion.
"We believe in increasing shareholder value, and we believe that by decreasing expenditures, we enhance our competitive cost position and our bottom line," he added.
AT&T plans to achieve the 100 percent internal reduction through layoffs, attrition, and early retirement packages. To achieve the 20 percent in external reductions, the company plans to involuntarily downsize 22,000 non-AT&T employees who presently work for other companies.
Among firms AT&T has randomly picked as "External Reduction Targets," or ERTs, are Quaker Oats, AMR Corporation, parent of American Airlines, Callaway Golf, and Charles Schwab & Co.
AT&T's plan presents a "win-win" for the company and ERTs, said Armstrong, as any savings by ERTs would be passed on to AT&T, while the ERTs themselves would benefit by the increase in stock price that usually accompanies personnel cutback announcements.
Legally, pink slips sent out by AT&T would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were not inclined to cooperate.
"This is ridiculous. I don't work for AT&T. They can't fire me," said Kaili Blackburn, a flight attendant with American Airlines.
Reactions like that, replied Armstrong, "are not very sporting."
Analysts credited Armstrong's short-term vision, noting that the announcement had the desired effect of immediately increasing AT&T share value. However, the long-term ramifications could be detrimental, said Bear Stearns analyst Beldon McInty.
"It's a little early to tell, but by eliminating all its employees, AT&T may jeopardize its market position and could, at least theoretically, cease to exist," he said.
Armstrong, however, urged patience: "To my knowledge, this hasn't been done before, so let's just wait and see what happens."
FRONT END
HE OUTSOURCES EVERYTHING
TREND SETTERS: ALISTAIR MacLEAN
Chairman in Absentia: Royal Dutch Petroleum Virgin Nokia British Telecom
For most of his adult life, 29-year-old Scotsman Alistair MacLean has been described as a gormless pratt, a blootered nutter with a face like a wee hard disease. But what even those who can stand him don't realize is that MacLean is one of the most successful businessmen in the United Kingdom and, arguably, the world.
The secret, he says, is outsourcing.
One of the hottest trends in business, "outsourcing" is the strategy of hiring outside personnel to perform tasks that are not part of a company's core competency, enabling the company to focus on what it does best. An architecture firm, for instance, might outsource its billing to focus on design, while that billing company might outsource its marketing to concentrate on balance sheets.
MacLean, however, has taken outsourcing to its logical conclusion. He outsources everything.
"Technically, I run British Telecom, Virgin, Nokia, and Royal Dutch Petroleum, but I found I was stretched much too thin to do it all, so I decided to outsource human resources, marketing, clerical, accounting, billing, investor relations, R&D, sales, legal, communications, production, customer service, manufacturing, and new product development," says MacLean from his one-room flat in a housing project in southwest Glasgow.
But doesn't Richard Branson run Virgin? "I also outsource executive management and ego," he explains.
MacLean says he is also a member of the new pop group the Spice Girls, but outsources performance and appearance responsibilities to "Emma, she's the fat one, I think."
Considering his unprecedented success, it seems surprising that MacLean would choose to live in a crime-ridden housing project. But this hard-driving Titan of the New Economy denies it has anything to do with attempting to keep a low profile.
"Unfortunately," he says, "the costs of outsourcing eat into all my revenues and profits, so I don't see a shilling from any of my vast empire."
None of which seems to bother him. "I sacrifice quite a bit by giving up the reins, but I'm fortunate in that outsourcing has enabled me to focus on my core competencies," which he describes as "watching a bit of TV and bashing the bishop [masturbating]."
CHRYSLER RECALLS FORD MINIVANS
Chrysler said last week it was voluntarily recalling nearly 3.6 million Ford minivans, reporting that the vehicles are unsafe and uncomfortable, and adding that Windstars should be returned to any Ford dealership for a full refund, "no questions asked."
Officials at Ford angrily pointed out that Chrysler does not make the Windstar, but a Chrysler spokesman said his company was "too deep into the full-disclosure process" to be distracted. "This confession is painful for us, but we want to do the right thing by issuing this voluntary recall of the dangerous Ford Windstar," said Tim Parrish, a Chrysler spokesman. Parrish said the recall was particularly embarrassing because the Windstar was made despite the fact that Chrysler engineers knew it did not provide a smooth, car-like ride, did not comfortably seat seven, and would never provide an adequate number of cup holders, unlike the Chrysler minivan.
Asked by another Chrysler executive how the "unconscionably flawed" Windstar ever made it to production, Parrish shook his head. "We make no excuses," he said. "It was a gross negligence."
IMF WOES
In the face of increasing pressure from the International Monetary Fund, the Venezuelan Finance Ministry announced this week it has rented a small volcano and is actively soliciting virgin chickens. Responded one IMF official: "Perhaps they don't understand our concerns."
SHARP SHEEP
The British Beef Export Council, finally conceding it cannot guarantee the eradication of Mad Cow Disease, announced Monday it will discontinue cow production and instead promote the export of genetically engineered sheep with razor-sharp, serrated edges. Consumer advocates immediately protested, arguing that serrated sheep were more dangerous than infected cows. But farmers said it's too soon to judge; as for the present, they "can't get near the fluffy bastards."
Great New Economy Jobs
Bisexual Unisex Bathroom Attendant Can't Wait to Get to Work
"From 9:00 to 5:00, I am the happiest man on Earth," says Bo Peters, 23, the bisexual unisex bathroom attendant at giant New York technology law firm Kohle, Rensberg & Remus.
It wasn't always thus. Six months ago, a management consultant suggested KR&R needed a New Economy wake-up call. The prime directive: create open spaces where the firm's 150 employees could not only exchange ideas, but also get to know each other on a personal level. Literally and figuratively, KR&R tore down its walls. No more private offices. No more segregated workspaces. But Peters, who was then a clerk in the mail room, was not satisfied.
"I had a meeting with the partners, and I told them the bathroom was the last bastion of staid, impersonal corporate culture," he recalls. "They still had walls. They still defined people as males and females, instead of as colleagues."
KR&R decided Peters was right, and created one large, unisex bathroom. They also put Peters in charge. So far, his colleagues are pleased.
"Bo is so nice, I sometimes think that if there weren't doors on the stalls, he'd come right in there with you to help out," says office paralegal Richard Motama.
"I'm trying to get those doors taken out next," Peters says hopefully.
Today, half a blissful year after he took the job, Peters is a genuine New Economy success story. "A lot of people don't like the folks they work with, but me, I'm happy to see everyone," he says. "Of course, I know it could come to an end if they ever found out I was bisexual."
Reached in her office, KR&R managing partner Alison Rensberg agreed.
FIVE QUESTIONS
By age 30, Jeff Bezos seemingly had it all. Princeton-educated and a financial whiz, he quickly moved up the ranks on Wall Street to become a principal at major New York hedge fund D.E. Shaw. But then in July, after reading a magazine article about the growth of the Internet - a worldwide network of computers that is available only to a handful of people, is difficult to access, and has never been used to sell merchandise - Bezos quit his job, moved to Seattle, Wash., rented a house, and set up shop in his garage, gearing up to launch a business on the Internet's World Wide Web. The business he left it all for? Books. We asked Mr. Bezos...
1. What are you, an idiot?
"What?"
2. You left your job to sell books from your garage?
"Yes, but..."
3. You didn't quit, did you? You got fired.
"No, I..."
4. Was it legal problems, then? Girls?
"No, I really think the Internet is..."
5. So it was drugs, right?
You look like a druggie.
"I am not a druggie. Mark my words, the Internet will..."
6. "So then you're an idiot?"
"No... hey, I thought this was 5 Questions. That was six."
7. The last one was rhetorical.
RESEARCH
Breakthrough Study Finds... YOU REALLY DON'T MAKE A DIFFERENCE
In Grand Scheme of Things, Your Hard Work, Diligence, Found to Mean Squat
In an unprecedented study, British and American researchers have concluded that despite what you've been told at work, you really don't make a difference, and are not remotely integral to your company's success.
"In our research, we found that you've been encouraged to believe that your hard work and contributions are somehow substantial, and that you are a significant member of the team. But what we discovered is that in your case, there's no way," said Neil Romsby of the London School of Economics.
The study, jointly conducted by the LSE and Stanford University's Business School, uncovered a variety of slogans meant to boost employees' sense of worth, such as "Our employees are our greatest asset" and "Our value is in our employees."
"We're not necessarily saying all these platitudes are lies," said Stanford economics professor Harold Bloom. "We're just saying they have nothing to do with you. That may seem sad, but it's actually rather funny because your situation is quite obvious to everyone else."
Romsby added that it's also ironic. "When you tell your boss he is doing a good job, you know you are lying, but when your boss tells you the same thing, you actually believe it. That's priceless."
Romsby cautions, however, not to assume you are simply a meaningless number to your company. "No, that's not a fair comparison," he said, "because numbers are actually quite meaningful to your company. Unlike you."
Researchers concede the study may be difficult to accept - even though your colleagues insist it shouldn't really be a surprise - but suggest you begin by substituting the word meaningless for important whenever your boss or colleagues speak to you. For example: "Diane, this is a really meaningless project and I think you can make some meaningless contributions as a meaningless member of the team." Once you feel comfortable with that, Bloom added, substitute the word "shitty" for "meaningless," and you'll have a pretty good sense of where you stand.
In another finding, researchers also learned that contrary to your company's public relations claims, your company is not really "creating the future" or "improving people's lives." This, Romsby explained, is actually good news.
"Since you are failing to make a difference at a place that also doesn't make a difference, at least you're not really hurting anybody," he said.Copyright 2002 by Andrew Marlatt
loading...