Market View: Cast off the Wall Street yoke

March 15, 2003
Stock analysts are running the food business! We've become more interested in what they will report rather than what we actually sell
I want to give praise and exaltations to Coca-Cola Co. It has done something that I believe it will be a big boon to sales and profits. It has stopped the quarterly-profit reports. It was reported that, "the company has made a policy change with regard to providing future earnings guidance. In the future, the company will no longer provide any quarterly or annual earnings per share guidance. Further, the company will not update its outlook for full year earnings per share expectations for 2003 as the year progresses. In the future, the company will continue to provide investors with perspective on its value drivers, its strategic initiatives and those factors critical to understanding its business and operating environment."Wow! This is just what every other company should have been waiting for -- the chance to do the right thing by following suit. Put your ego aside and admit that you are second, but just do it.  Why would Coke do something so dramatic? Company Chairman Douglas Daft said, "We believe that establishing short-term guidance (for the stock market analysts) prevents a more meaningful focus on the strategic initiatives that the company is taking to build its business and succeed over the long-run."Coke management said that its shareowners are best-served by this because, "we should not run our business based on short-term 'expectations'. We are managing this business for the long-term. We are quite comfortable measuring our progress as we achieve it, instead of focusing on the establishment and attainment of public forecasts."Ladies and gentleman, the stock analysts are running the food business! We've become more interested in what they report than what we actually sell. R&D decisions are often vetted with the question, "What will ,'the Street' think?" This is the big chance to cast off the Wall Street yoke and put sense back into the food industry. I am really disarmed when people say, "Nice idea John, but naive.  Nobody could really put consumers ahead of Wall Street."  Well as the old saw goes, "People who say it can't be done should get out of the way of the people doing it."Again, congratulations to Coke. I hope many others will follow.                                                                *     *     *A few months ago a reader told me he enjoyed my column but felt that every article should be subtitled You are doing it all wrong. At first I was overjoyed that someone actually reads my column, but then began to think that I may be giving the wrong impression if he believes I'm always being critical. I'm not really critical of the food industry. I think it is the best food industry in the world, and I think our food companies are doing a lot more right than wrong.  However, I have come to realize that one of the scarcest assets any food marketer has is time, and that includes time to think. Everyone is either in a meeting or going to a meeting. If they are not in a meeting, they are trying to get the work done that should have been done while they were in the meeting. Therefore, in this short column, I try to get readers to think. Getting someone to think is not just patting them on the back each month and telling them what a good job they are doing. It involves (or should involve) putting some controversial topic on the table and taking a position for the purpose of getting the reader to think about it. Hopefully if I choose the right topics to encourage thinking, good things will eventually follow.Making people think it is a dangerous task for me because I am always perceived as contrary. I once gave a seminar on customer service to a group of managers for a convenience store chain. This chain is routinely rated as one of the best in the U.S. I was hammering them on each area that I thought the company could improve, and finally after about two hours, a person in the audience stood up and asked, "Do you think we do anything right?" I was surprised because I thought the company did most things right, but I didn't think they were spending their valuable time to be praised. They wanted to improve, and to improve we have to face our shortcomings no matter how large or small. That is how we improve.  My objective with every article is to get people to think, which is the first step towards improving. As I have always said, "Good is the enemy of Best."John L. Stanton is a professor of food marketing at St. Joseph's University in Philadelphia. He can be contacted at (610) 660-1607; fax (610) 660-1604; e-mail at [email protected]; or

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