The Green Friendly Giant Is No More…
If Only They Would Have Listened…
At the first glance, this post is no different from my previous “REINVENTING” posts such as:
· Reinventing Andrew Lloyd Weber
The difference is: Mountain Equipment Coop (MEC) was the prime reason for me to start writing this series. And it reflects the painful consequence of not listening to good advice.
MEC obtained creditor protection under the Companies’ Creditors Arrangement Act (CCAA) — which allows for the sale of assets with court approval to a Los Angeles private equity firm, Kingswood Capital Management Ltd.
THE PAST
MEC’s recent press release describes the above sale in few details and defines MEC as follows:
“MEC (Mountain Equipment Co-op) is Canada’s go-to place for outdoor gear, know-how and inspiration. Combining high-quality apparel and equipment with expert advice and firsthand experience, MEC supports a wide range of activities including camping, snow sports, watersports, cycling, climbing, hiking, running and travel.
Established in 1971, MEC has been Canada’s largest consumer co-operative with over 5 million members across the country. A strong backer of community initiatives, MEC has invested $44 million and counting into non-profit organizations that support outdoor recreation and conservation”
And according to Wikipedia: “MEC “lost $11.487 million in 2019 on sales of $462 million”, partly due to “the disruption of the COVID-19 pandemic”. At that time, the co-op had 5 million members.
Now, 5 million members is a large number. Especially, when one takes into account that Canada’s entire population is only ~38 million. So, we are talking about 13% of Canadians showing MEC lots of love over the 50 years…
What’s not to like? The stores are spacious, modern, and beautifully designed. The merchandise includes most of the top brands, and the price is on par with their competitors. What truly stands out, however, is the excellent service and the know-how of MEC associates. They could tell you for hours about the difference between the running shoes from Keen and North Face, or what kind of bear-whistles one should use before visiting any of the most stunning Canadian parks…
If you read any of my previous posts addressing the devastating retail/online competition — you will understand why I dedicated the entire chapter of my book “AI Boogeyman” to this very subject. See: Chapter 2 — Retail AI & Jobs “Amazoned” By Online Shopping
And I have said many times before: “Even before COVID-19, retail bankruptcies and predictions about the imminent demise of big-box retailers — have reached almost apocalyptic proportion. As far as predicted job losses go — the retail Industry is not alone. Similar disruptive changes are affecting other industries, too! To succeed in today’s competitive marketplace, retailers must take steps to increase visibility and to further enhance the emotional side of their brand! No, it is not enough to add a slew of online tools — just to look like Amazon”
So, naturally, when two years ago I received an email and was invited to submit my candidacy to join MEC’s Board Of Directors — I responded without hesitation. Yes, it was a practical and pragmatic way to help the company and to offer my hands-on expertise.
After all, I talked about the retail challenges for years and now I had the chance to do something about it! Perhaps Warren Buffett described such phenomenon the best in his Noah Rule: “Predicting rain doesn’t count. Building arks… does”
Well, getting involved started by filling out the Nomination Form, Acceptance of Nomination Form, sending in the Cover Letter, and a copy of my updated CV. So far, so good! Little did I know what was coming my way shortly after…
1) I was asked to prove that I am actually… a member. Check!
2) Then, I was asked to prove that I purchased a certain amount of products from MEC during the past 2 years. Check once more!
3) Then, I had to prove that I submitted my proxy forms and voted in the previous election. Check!
4) And last, but not least, I was required to submit FIVE recommendations and endorsements of my candidacy from… existing MEC members in good standing
At such time, I had enough of the MEC push-backs and made it abundantly clear to the Governance Committee just how misguided their process is. My naïve assumption was that they would welcome outside advice from experienced executives. Wouldn’t it make sense, after all, to cast the widest net possible in a crisis mode — and not to limit the Gene Pool of suitable candidates?
And this is exactly what I was saying for years to other retailers such as Chapters Indigo…
In another post: “To Do What It Takes!”, I spoke about how progressive BODs have a great opportunity to guide CEOs and to become a key driving force behind business sustainability.
Years ago, I even coined a simple tag line that gradually became a part of my email signature: BODs Serve Investors, Competent Advisory Boards Are CEOs’ Best Friends. And I truly believe in what I say! Bringing competent advisers on board is a smart move!
A good adviser will help reconsider the validity of the CEO’s assumptions and a good Advisory Board improves the decision-making process. It often helps the CEO considering different perspectives. Besides, many advisers become the proverbial Sounding Boards to the CEO. So, every CEO should have an Advisory Board of his/her choosing…
Granted, no two companies face the same set of problems — which reminds me of the famous quote by Leo Tolstoy: “All happy families are alike; each unhappy family is unhappy in its own way”
Besides, in “The Wisdom Of Intelligent Advice” I recommended to BODs several simple steps to bring the best outside advice possible. In particular, I emphasized once more the need for boosting and mandating competent Advisory Boards…
Yet post-COVID-19, BODs will need to pay even greater attention to ensure that Advisory Boards offer a solid bridge between CEOs’ existing competencies and companies’ plans for sustainable transformation.
And BODs of struggling enterprises should now pay much more attention to Advisory Boards than ever before. They should never be overwhelmed by the number of channels that such advice may come from.
Learning to delegate is a crucial skill. So, instead of IGNORING good advice — a progressive BOD should rely on a competent adviser and AI technology — to separate the cold call from the warm one.
There are plenty of good AI tools available today to transcribe the voice mail and then use NLP to identify the value proposition. BODs not doing so, are negatively impacting their company’s brand and successful recovery…
The lack of a CEO’s response to a piece of good outside advice can only indicate the following: you’re dealing with an incompetent narcissist, or with the mediocre organizational structure. And I’m not even sure which one is worst…
Granted, good advice may still reach CEOs via an established referral network, but the Gene Pools of such networks pale in comparison to a non-referred universe…
Yet what is so troubling in the case of MEC is not the inability to reach the BOD. After all, I managed to talk to their governance body. It is the procedural mumbo jumbo and the focus on the form instead of substance — that killed the company…
THE PRESENT
Well, the loss of $11MM is never too pleasant but it begs the following question: if each MEC member contributed only an additional $5 — it would have covered all the losses, and even generated positive Net Income similar to the one in the previous year. Sadly, no such option was seriously considered by MEC’s BOD…
And buying more time would have allowed the company to consult its membership and solicit REINVENTION proposals from a much greater and much more diverse gene pool — just as it is reflected by MEC’s existing membership…
Only time will tell if MEC’s BOD is going to be sued by the members for neglecting their fiduciary duty. The stories such as mine of discarded advice deserve to be told. And it’s particularly troubling since 97% of all CEOs & BODs are not receptive to outside advice!
MEC members, in particular, demonstrated the power of emotional attachments to the iconic brand. Hence, no amount of post-mortem logic is going to suffice — when 5 million people are feeling betrayed by MEC’s BOD.
Perhaps it’s just BOD’s incompetence stemming from years of shocking mediocrity. But when you replace the entrepreneurial visionaries with a bunch of bean-counters serving the innovation pancakes as thin as French Crepes — the writing is on a wall…
Five million members deserve better. MEC’s reinvention strategies needed to be handled not just with QuickBooks’ logic but also with a high degree of emotions. EIQ deprived BODs are a recipe for disaster…
THE FUTURE
I wish Kingswood Capital a lot of success in turning the Green Mothership around. There is a lot that can be done to reinvent MEC and I for one am ready to offer my helping hand to MEC’s new owners…
Let’s not forget that all the Private Equity (PE) firms can buy a business. Yet, only a select few can transform it well…
Since on average, less than 10% of companies in any PE portfolio are big winners — outside “wisdom” can make a huge difference. So, if Kingswood Capital needs a strong ark to build — I’m ready to bring all the lumber. The flood is coming…
1) I’m in the business of joining Advisory Boards (ABs) with a single mission: to Reinvent Corporate Prosperity. My goal is to stop the Dreams of Wealth from becoming Nightmares of Poverty. And as a 30-yr BusinessAI™ veteran, I offer what no other advisor ever dared to do…
2) You may ask, why is my AB offering so unique? Simply put, no other advisor Proposes, Designs, Structures, Finances, and Deploys turn-key Joint Ventures to deliver RapidRevenues™ and SustainableProfits™. Just as I did w/ Verizon already 20-yr ago…
3) It’s all about RESULTS — or I do not get paid. Hence, I turn promising Unicorns into proud stallions, instead of little ponies… And it starts with learning about where the companies are now, where they want to be in the future, and how I can help such companies to get there. And to make the process smarter & cheaper, I tap into huge pools of nonconventional funding with surgical precision.
4) I am at that stage in my life where I don’t care about BOD politics and water-cooler gossips. Nor do I offer fake flatteries to CEOs. All I care about is how to solve CEOs’ problems & deliver results.
5) So, I join Advisory Boards to do so! And it is not about how to score one hit. It’s a unique process to optimize the performance & beat the odds, repeatedly — as I bring supreme business savvy to separate the wheat from the chaff…
Stay safe, stay healthy!
