Photo courtesy of Starbucks

by Jim Donald, former CEO of Starbucks and Pathmark

“Good morning, general store managers, assistant store managers, VPs and all 26,000 employees…Jim here…

It’s Wednesday morning and the merchandising message today is–and you are not going to believe it– but I am telling you that it is OK to steal.”

It was 5:30 a.m., and I was on the phone, in my kitchen, sending out my daily voicemail. As I paused for effect, I was thinking that the supermarket industry has one of the strictest employee honesty codes in the world.  Because of the large number of employees, the vast number of items and the low profit margins, it’s an absolute necessity to have zero tolerance for employee theft. I hadn’t informed my senior team that I would be sending out this message…hmm…better think about how to handle that one…

“You heard correctly…despite what you might think about controlling losses and theft, I am saying to all of our associates, it’s now time to start stealing…stealing market share, that is.“

Call it hokey, but this is how I needed to deliver my message to my 26,000 associates. I wanted to convey that the power of the company comes associate by associate, item by item… and it’s up to them to translate that power into sales. So I finished my broadcast this way:

“That’s my message for today…it’s OK to steal…steal market share, that is. Thanks, and I’ll talk to you tomorrow.”

That’s how I communicated though a crisis almost a decade ago when I was CEO of Pathmark Supermarkets. The economic crisis back then wasn’t as bad as today’s. But Pathmark was barely hanging on, just like a lot of companies now. Once the giant grocery chain in the New York metro area, it was one the longest living LBOs from the 1980s and still strapped with $1.6 billion in loans and junk bonds. Employee morale was at an all-time low. It was no longer a price leader. And our suppliers worried that we wouldn’t be able pay the bills.

I learned a lot at Pathmark—and during my time at Albertsons, Safeway, Wal-Mart (WMT) and Starbucks (SBUX), where I was the CEO until January of last year. Since I have some experience in crisis and now I have some distance, too, let me share just a few ideas with you:

Communicate, communicate, communicate. Especially at a time of crisis, make sure your message reaches all levels, from the very lowest to the uppermost. When Pathmark was in dire straits, I began to send out my daily message to all employees. Make sure too that you give them an opportunity to reply.

Reach deep for answers. Sam Walton once said to me, “Jim, if you ever want to know what is troubling your business, ask your front-line employees. They know, and they will tell you.” It’s true, your people on the front line are your real marketing experts. Take advantage of the fact that they’re closest to your customer everyday.

Beware the success trap. Success breeds risk aversion. And what happens when we become risk averse? We stop innovating. And we lose our best people because they become restless and even bored. Various studies by McKinsey and others lists three things that employees want from a company today: an open and honest work environment, the opportunity to be stretched and valued, and the ability to make decisions. Especially today, when so many companies are frozen by risk aversion, giving your people freedom to fail could be your competitive advantage. Complete Story….

Guest Post: Former Starbucks CEO’s tips for tough times – Postcards.

CHRIS PALADINO, a Microsoft employee who was hired in 2006, didn’t worry too much about his job when the economy began to sour last fall. The company employs nearly 90,000 people.

“I thought Microsoft was so stable, it wouldn’t be touched,” he said. Now, as one of the 1,400 employees who received layoff notices in January, Mr. Paladino is worried — about making the mortgage payments on his home.

Mr. Paladino gathered user feedback for the Xbox games division of Microsoft. This month he started his own consulting company, Promethium Marketing, with two colleagues who were also laid off.

But, “I would never have chosen to leave Microsoft,” he said. “I had a great job. I worked with a great team.”

Leaving the company has not always been so traumatic. Microsoft has a long history of making employees part-owners of the company, by granting them stock and stock options.

From executive to secretary, many employees received thousands of stock options. Microsoft’s stock price rose from about $2.50 a share in 1992 to almost $60 in 1999, and roughly 10,000 of those employees became millionaires.

When employees left the company in those days, it was overwhelmingly by their own choice. They were off to a new adventure, starting a business or a charity, or just planning to have fun, said Rob Horwitz, the chief executive of Directions on Microsoft, an information technology analyst firm that has been tracking the company for 17 years.

Notable alumni from that time rebuilt the Professional Bowlers Association; created the charity Room to Read, which builds schools in poor countries; and founded the Cranium game company (which was sold to Hasbro).

Other Microsoft alumni started venture capital firms or followed more personal dreams, creating enterprises like the Cameron Catering Company of Seattle, which focuses on green events, or the Casa Cupula, a bed-and-breakfast for gay travelers in Puerto Vallarta, Mexico. One alumnus built his own airplane and another rode along with Russian cosmonauts on a space mission. The sky was literally the limit.

The economy has changed all that. With Microsoft’s stock price now below $20 a share, any stock options granted in the last 10 years have little to no value, and the outright stock grants have lost value.

So rather than leaving on their own terms for a new adventure, some recently separated employees are now looking for any professional job they can get. (Microsoft declined to comment for this article.)

Read More…

A New Crop of Job Hunters, With Microsoft Résumés – NYTimes.com.

In the worst of times, which are the best of stocks?

So many readers have emailed me to warn that we are going into another Great Depression that I decided to find out which companies and sectors did best after the Crash of 1929. With the Standard & Poor’s 500-stock index down 39% last year and another 8.5% this year, it can’t hurt to learn what separated the winners from the losers back then.

Heath Hinegardner

The good news is that some stocks and industries did indeed do much better than average. The bad news is that the average was ghastly, and even the best stocks had three rotten years in a row.

With the help of the Center for Research in Security Prices, or CRSP, at the University of Chicago’s Booth School of Business, I sought to answer this question: If you had invested on Jan. 1, 1930, after the crash already had destroyed a third of the stock market’s value, where would you have gotten the greatest gains?

The short answer: In 1930, 1931 and 1932, nowhere. There was no real refuge in the storm; even Benjamin Graham, the great value investor, lost 60% over those three years.

According to CRSP, only one industry had positive returns from 1930 through 1932: logging. The two stocks in that tiny sector, Diamond Match and Mengel Co., whittled out a cumulative gain of 40% for the three-year period. Diamond turned timber into matchsticks; Mengel made trees into packing materials, primarily for daily necessities like tobacco and soap.

To find a major sector with significantly positive returns, CRSP needed to stretch our measurement period into a fourth year, 1933, when the market finally rebounded partway from its earlier losses by rising a record 54%. Even then, out of 120 industries, only 13 managed to generate gains from 1930 through 1933.

The only clear winner: cheap vices. Among the sectors with positive returns were cigarettes, cigars and tobacco, sugar and confectionery products, and fats and oils, which each gained between 1.6% and 7.5% annually. Those gains were better than they look, because deflation raised their purchasing power by an annual average of more than 6% over this period. It seems there was good money to be made investing in guilty pleasures that people could afford even in the hardest of times: sweets, smokes and fried food.

Complete article at:

1930s Lessons: Stocks for After a Crash – WSJ.com.

File sharers were the first to rush in. The photo-sharing service TwitPic, one of the oldest Twitter mashups, lets users send pictures to their followers by storing a photo on its servers, then passing the link around on Twitter. Now there are newer apps like Tweetcube and Twittershare, which let users share larger media like MP3s and videos.

Twitter’s limited format of short, text-based announcements are a natural match for sites like TrackThis, which you can use to get status updates on FedEx and UPS packages, and Tweetajob, which job seekers can use to get real-time updates about new job openings.

Anyone who needs help quitting smoking can use Qwitter to monitor their progress. Those looking to lose weight can turn to TweetWhatYouEat or TweetYourEats.

Hardware hackers have put a new spin on the Twitter mashup — as it turns out, just about anything that can be plugged into the internet is capable of talking to Twitter.

Programmer Ryan Rose rigged up his washing machine to send him a tweet when his clothes are done. He just follows his machine’s twitter account (it’s PiMPY3WASH) and he knows when to go downstairs and move his undies to the dryer.

Linux hacker Shantanu Goel set up a video camera and some motion-sensing software on a PC connected to the internet. If anyone breaks into his house or goes snooping through his room, the software detects the movement and sends out a tweet.

Tech-savvy environmentalists can install Tweet-a-Watt, a gadget that plugs into your wall socket and connects to your wi-fi network. Once a day, the pocket-sized device broadcasts stats of your daily energy usage to Twitter.

Whether that sort of transparency results in embarrassment or bragging rights can be determined by a system like the one created by Justin Wickett. The Duke University student wired up his home so he could turn his lights on and off remotely, just by sending a text message to Twitter from his mobile phone.

Twitter Fast Growing Beyond Its Messaging Roots | Epicenter from Wired.com.