Job Recommendation

I was given the opportunity to assist in the hiring process during one of my local internships. My boss handed me the resumes of about fifteen candidates that he was considering and gave me the task of ranking them with the most qualified candidate on top. He was anxious to hear my input because I knew about ten of the candidates through classes at BYU.

I was especially close friends with one of the candidates, named Jeff. He was a good family friend of my wife and I had spent a lot of time with him to help him prepare his resume. While I thought he would do a good job, his resume lacked experience and he had only completed a handful of college credits. My decision about how to rank Jeff's resume became a real ethical dilemma for me.

On one hand, I knew that Jeff was not the most qualified applicant. In fact, on paper, he may have been the least qualified. I felt uneasy about placing Jeff at the top of the pile because I did not feel as though I was fulfilling my duty to the company because there were more qualified applicants that might have been able to generate more profits. On the other hand, I thought that Jeff deserved to catch a break and I thought that he would excel if he was given the opportunity to work with me. In addition, I enjoyed our friendship and preferred to work alongside him over the other candidates. I felt uneasy about placing Jeff at the bottom of the pile because I wanted to help him and felt that he had not had as many opportunities to prove himself as the other candidates.

In the end, I placed Jeff at the bottom of the pile but made sure to point out his resume out to my boss. I explained to him that while he was not qualified for the job, I recommended that he at least be interviewed because I thought he would actually do well. My boss took a glance at his resume and then threw it away in the trash. While I did not get the results that I had hoped, I felt right about the ethical decision that I made.

LA Gear

Who wasn’t a fan of flashy, neon, high-tops during the late 80’s and early 90’s? LA Gear came screaming into the market during the late 80’s with a stock that everybody wanted a piece of. The company held close to its strategy: to “capture the LA lifestyle” and “be the brand that everybody admired”. There were certain values that management claimed to hold closely and that were aligned with their strategy:

• Stay on the cutting edge of fashion
• Produce high quality products
• Target high-end customers

The Wall Street Journal, Business Week, and Forbes all praised their success, often patting them on the back for their clear strategy and values. Then, in the early 90’s, fashion made a significant change from “glitter to grunge”. Founder and CEO Robert Greenberg was unable to leave his style behind and did not make the transfer to grunge. While trying to emphasize the performance of the shoe, several athletes were contracted to show them off. Things began unwinding quickly when a pair of LA Gear sneakers worn by a college basketball player literally fell apart on national television causing the basketball player to fall to the ground. It came out that several of their manufacturers were not being used by LA Gear’s competitor’s because they were know for their lack of quality. Finally, as inventory levels began to rise, LA Gear turned to any place possible to sell its shoes at a steep discount. High-end retailers became upset and refused to sell the brand because it has lost its image.

While the strategy and value of LA Gear appeared to be in excellent alignment, we learned that what the company said and did were very different from each other. They ended up going the opposite direction of the values that they claimed. This misalignment led LA Gear into a slow bankruptcy that was sold in 1997 for a fraction of its peak value.

Stew Leonard's

The task of helping mom buy groceries for six kids was never one that I volunteered for unless a it involved a trip to the "Disneyland" of grocery stores. As a little boy living in Connecticut, my mom and I would would drive past several grocery stores during our 40 minute trips to Stew Leonard's. Workers often wore costumes, gave out large samples, and let the children pull the bell to make the cow "moo". Now, 15 years later, the grocery store has been attracting children from all over by putting on events like Friday Disney Movies and Saturday festivals including autographs by the characters, games, and dancing at Stew's Grill.

This dairy-themed grocery store has not only had success with children. They have focused their time and energy to hire the best employees and to keep them happy in an effort to keep all customers coming back. The 40-year old company has never had a lay-off, 81% of the management team has been promoted from within, and in February of this year, they were as one of the 100 best companies to work for the tenth straight year.

“The secret is simple: A great place to shop must first be a great place to work,” said Stew Leonard Jr., the company’s CEO. In 1992, Stew Leonard's earned an entry into The Guinness Book of World Records for having "the greatest sales per unit area of any single food store in the United States." With steadily increasing revenues now topping $400 million (2010), it's apparent that Stew Leonard's has successfully found a way to differentiate themselves from competitors.

Netflix

With more news in the video rental space, I couldn't resist to explore the strategy of Netflix. When Netflix is mentioned, most people think of a red envelope that includes a DVD found in the mail (see left). The number of DVDs mailed per Netflix Subscriber has been declining over the past few years, with a dramatic decrease during 2010. Even more surprising is the fact that Netflix is encouraging this decrease. Their logic makes more sense upon understanding their strategy to make way for its digital streaming channel. While content acquisition costs remain high, Netflix is confident that its digital library will become a profit pool for them as the number of subscribers increase. Not only is postage not necessary, but the digital library is much easier to manage then actual DVDs that need to be shipped across the country through its several distribution centers. Apparently this strategy is working for them as they just announced that they added 3 million subscribers during the past quarter, giving it a total of 20 million. From the business aspect, it seems as though there strategy has few flaws; however, as a current Netflix subscriber, I would be quick to cancel their service if the red envelopes stopped coming in the mail. In other words, I think they have a long way to go before they dominate the market with their small digital library.

Blockbuster Inc.

Blockbuster filed for chapter 11 reorganization on September of 2010. Over $800 million dollars of debt was wiped from their balance sheet. Blockbuster's outline or its reorganization plan has received extension after extension and now they are asking creditors for more money. Some creditors appear willing while others are fed up and looking to put the movie rental company for sale.

Five years ago, Blockbuster's future appeared stable as they were crushing Hollywood Video, their main competitor. Blockbuster seemed to ignore the warning signs of decreasing revenues or the fact that their customers began to think of them as a "dinosaur". They failed to realize that Hollywood Video went out of business because nobody wanted to drive to a store to rent movies anymore, not because Blockbuster had bullied them to bankruptcy. While a major shift in the way people rent movies was about to take place, Blockbuster maintained the attitude that they would continue down the same path because it worked in the past.

Redbox and Netflix were the "one-two punch" to knock Blockbuster into bankruptcy. However, leaks of their new plan have some creditors willing to inject more capital. It appears that they have finally realized that they are able to deliver new releases to customers up to 28 days faster than any other company due to their close relationships with studios. They have a game plan to be able to deliver a movie via kiosks, stores, by mail, and digitally where they can focus on the needs of all of their customers. With Blockbuster's new position as the only company in the world to offer movies through all four channels and with the ability to get new releases to its customers even faster, expect a full turnaround.

Relevant Wall Street Journal Articles:

Blockbuster Asks for More Cash

Blockbuster Gets More Time for Bankruptcy Plan