I have spent over a month contemplating this trip. Why does the President of the worlds largest company want to spend time with me? A tiny Vermont business leader who authored a book about corporate responsibility. A frequent harsh and vocal critic. How can I engage with the essence of this giant to meaningfully alter it’s trajectory and harness it’s potential to be an power for equity, justice and environmental sustainability. It’s a tall order.
This story in the Economist Magazine that appeared the week before my trip might help explain why!
Wal-Mart: Everyday Low Blows
Chicago December 10, 2005 The Economist
A survey released last week by Zogby International found that 38% of Americans have a negative opinion of Wal-Mart, and that 55% have formed a less favorable opinion of it “based on what they have recently seen, heard or read.”
Wal-Mart is embroiled in a fight for it’s reputation, it’s place in the business community, the world stage and perhaps even it’s ability to sustain it’s growth in a way that translates into increasing economic value.
The facts as reported by Wal-Mart foes:
Wal-Mart fails to provide health insurance to over half its employees. Who pays for it? We all do. Wal-Mart workers top Medicaid rolls in at least 16 states. Over half of the children of Wal-Mart employees have no health insurance.
Wal-Mart is the subject of the largest class action lawsuit in history by current and former female employees who were paid and promoted at significantly lower rates than their male co-workers.
The average pay for a Wal-Mart sales associate is $1,000 below the poverty line for a family of three. Retail rival Costco pays its workers 65% more on average than Wal-Mart, yet earns more profits per employee.
BUY AMERICAN
Wal-Mart, which in the late 1980s and early 1990s trumpeted its claim to “Buy American,” has doubled its imports from China in the past five years alone, buying some $12 billion in merchandise in 2002. That’s nearly 10% of all Chinese exports to the United States.
PUBLIC WELFARE
Wal-Mart Employees Cost California Taxpayers $86 Million in Social Services A study by the Labor Center at the University of California at Berkeley estimates that each year, U.S. retailer Wal-Mart Stores, Inc.’s California employees use $86 million in state-funded aid programs such as health services, food stamps and subsidized housing.
In route to Bentonville
Monday morning December 19th 2005, the announcement about my 7:10 am Delta flight from Burlington to Atlanta sends a shiver down my spine as the gate agent announces that 14 of the 37 passengers will be selected to be taken off the flight. Light snow on the runway requires that the plane lighten it’s load due to limited breaking ability. Removing 35% of the passengers from a single flight goes beyond anything I have ever experienced. Mentally I prepare my argument as to why I shouldn’t be one of the 14. How many people are granted a meeting with Lee Scott, President of the worlds biggest company.
Thankfully the need to argue my case isn’t necessary.
I’m honestly not quite sure where Northern Arkansas Regional Airport even is. The fellow sitting next to me on the flight out of Atlanta to Arkansas tells me 95% of the passengers on the plane are headed to Wal-Mart. He spends three weeks out of every month in Bentonville working for a warehousing & distribution company based in Boston. We talk about my trip. I mention my not infrequent concerns about Wal-Mart. Almost reflexively he seems to defend his client. He talks about what good people they are, how hard they work to meet the social and environmental challenges they face. A fact that if true is lost on most of the people I know. He’s perplexed that I’m have no interest in selling them anything – except perhaps some new ideas!
Driving from the Airport to the year old store in South Rogers store I stop repeatedly to make sure that I’m not lost. The deeply rural scenery seems to lack enough people to keep a super center in business, but after a 15 minute drive I find a highway first and then the store.
Andy Ruben the VP of Sustainability has rushed from a Bris to meet me. The Rabbi drove in 3 ½ hours from Kansas City for the occasion. This was Andy’s second bris in less than two years having experienced it for the first time when his son was born. What’s he doing in Bentonville?
Meeting us at the store were a collection of buyers responsible for infants & toddlers products from Wal-Mart & Sam’s Club, including diapers, wipes, pacifiers, clothing, furniture.
We discussed chlorine, PVC, phthalates, organic cotton, toxic chemicals, the precautionary principle and the power they have to change the world.
By the time we’re done we are late and I’m not happy. I’m also nervous as I have been on and off for weeks. 15 minutes of meeting time with Scott lost to our not paying attention to the time we spent in the store.
No matter how much one tries to prepare for a meeting about the state and future direction of this gigantic company, one is always left with a feeling that it’s just to big to get your arms around. After weeks of preparation I have what I believe is a clear perspective and some sound strategic advice to compliment the years of relatively blistering critiques I have delivered as part of almost every speech I have given.
Lee, dressed in a dark grey suit and a black sweater stood holding the door open as I entered the building. I needed to look down at his name badge to be sure it was him.
As I enter a nondescript conference room the senior management team is immersed in a conversation about holiday sales. Sitting around the table were Lee Scott – CEO & President, Lawrence Jackson – Wal-Mart EVP People, John Westling – Wal-Mart SVP, Andy Ruben – VP Sustainability, Doug McMillon – President Sam’s Club, Greg Spragg EVP Sam’s Club, Lee Tappenden – VP International Merchandizing.
Saturday’s numbers were off even though same store sales on holiday items were up 4% over last year. Lee explained the challenges of customers waiting later and later to do their holiday shopping. Lee received an unhappy call from his boss, son of the legendary Wal-Mart founder Sam Walton. S. Robson Walton, who is Chairman of the Board of Directors of Wal-Mart Stores, Inc. called early Sunday morning wanting a sales up date, the news was not great. Lee called him back midday on Monday to let him know that the week was off to a better start. Sales are an obsessive focus. An almost unconscious part of every conversation. Why are they discussing this in front of me?
I was lost and frankly a bit confused as the conversation dragged on for several minutes. Lee stopped and admitted that this is a conversation that never stops this time of year and was in fact an obsession. He talked with some pride about the billions of dollars that different divisions (Sam’s, international ect.) do, how much paper products and cleaners they sell “it’s about $3 billion isn’t it, he said to the President of Sam’s and you’ll do over $4 billion this year he asked the head of US Wal-Mart stores.
Then we got to introductions, Lee said he didn’t know much about me and asked for a description of what I’ve done. This caught me off guard, I figured that someone had prepared the equivalent of an FBI dossier on me that he had reviewed before I arrived.
I ran through the two minute story of my life and the seized the opportunity to ask my own questions. I asked Lee to describe the legacy he wanted to be remembered for at Wal-Mart. He struggled with the question, falling back on the Sam Walton story, describing himself as continuing a tradition rather then designing a new purpose for the giant of a company. Pressing him again, he talked about the team he wanted to build and leave behind when he “turned out the lights in his office for the last time.” In effect, he kept saying it’s not about me.
Pressing again, at this point a little uncomfortably, he talked about being the best they could be, about diversity programs, environmental initiatives, the careers they help their associates build. But nothing that felt like a clear purpose or focused direction.
I then took a different tact. I admitted that I like hundreds of others had my own perspective on where they were, what wasn’t working, how to proactively manage the endless bad press they get. How they could go about seizing their potential. Did they want to hear my thoughts. “Why not, everyone else comes down here and tells us what they think we should do, were used to it at this point.”
“We’ll I’m not here to take you to task, you know the drill, what everyone thinks you’re doing wrong, I want to share a vision of possibility based on real transparency, self criticism, engagement with your toughest critics, a disciplined understanding of your footprint on the planet that leads to a clear and rational plan and framework for what your going to do, how long it will take, why certain issues can’t be address now, why they can’t, in a way that everyone who’s interested can understand and get their arms around.”
Look, Lee said, were already doing that. We talk to the activists, we have launched hundreds of initiatives, we have nothing to hide.
And initiatives they have launched.
In a speech recent speech titled “Twenty First Century Leadership” Lee asked,
What would it take for Wal-Mart to be that company, at our best, all the time? What if we used our size and resources to make this country and this earth an even better place for all of us: customers, Associates, our children, and generations unborn? What would that mean? Could we do it? Is this consistent with our business model?
Environmental loss threatens our health and the health of the natural systems we depend on. The challenges include:
- Increasing greenhouse gases that are contributing to climatic change and weather related disasters.
- Increasing air pollution which is leading to more asthma and other respiratory diseases in our communities.
- Water pollution which is increasing while safe fresh water supplies are shrinking; water-borne diseases causes millions of death each year, mostly among children.
- Destruction of critical habitat, causing unprecedented threat to the diversity of life, the natural world and us. And that’s just to name a few.
As one of the largest companies in the world, with an expanding global presence, environmental problems are OUR problems. The supply of natural products (fish, food, water) can only be sustained if the ecosystems that provide them are sustained and protected. There are not two worlds out there, a Wal-Mart world and some other world.
Our environmental goals at Wal-Mart are simple and straightforward:
- To be supplied 100 percent by renewable energy.
- To create zero waste.
- To sell products that sustain our resources and environment.
These goals are both ambitious and aspirational, and I’m not sure how to achieve them…..at least not yet. This obviously will take some time.
Sounds good – right – but how come no one believes him?
We moved on to issues of transparency and credibility.
Doug McMillon, President Sam’s Club said, that with over 1.6 million employees we as a company have no secrets.
Yes, I responded, over one million people all telling their own version of your story. That’s why it’s so confusing to understand. When you don’t tell your own story and let everyone else do it, you end up with a chaotic picture that ensures what ever message you want to communicate is lost.
I said, “look at your web site, there’s little meaningful information about your company from a social & environmental perspective, you effectively force your people like me to visit the websites of your most ardent critics to get the information that I can’t get directly from you. You let your critics frame the story and tell it from their point of view, your voice is lost.”
Pause. I struck a cord. They got it. There’s transparency and there’s transparency. They just began to get what it means to take that next step.
Lee, who has been President for only five years, described that they’ve spent most of their time bringing in the sandbags to reinforce their bunker. They have effectively helped organize the whole activist community be refusing to engage in any meaningful dialogue. The labor community (WalmartWatch, WakeupWalMart) has seized this opportunity. A big mistake, said Lee, we helped organize our enemies better than they could have done themselves.
But they say they’ve changed. Starting 18 months ago for some reason that wasn’t entirely clear, they launched an initiative of conversation and engagement. We talked about all the NGO’s and activist groups that have secretly made the trip down to Bentonville to see if Wal-Mart was really willing to own up to it’s problems and consider substantive change. We talked about the fact that none of them would ever even admit to having made the trip. The company is has become a giant social pariah, the ultimate embodiment of corporate evil. So bad, that NGO’s are afraid that to let their peers, donors and friends even know that they had talked to Wal-Mart. The blight it would leave on their reputation would cost them donor support and credibility.
I said that they shouldn’t accept that these organizations wanted to work with them but wouldn’t risk their reputation to openly talk about the good and bad that they found.
Lee went on to talk about secret meetings with politicians who were terrified of the fallout from labor unions if the meetings were to become public. He talked about entering buildings through secret entrances. Conversations that never happened. The secrecy sounded painful.
Interesting, the day I returned to Burlington I cam across the first public mention of some of these “secret” NGO advisors. A story titled “Ethical Business North America,” in the electronic newsletter of Ethical Business magazine wrote:
But Wal-Mart has enlisted Conservation International to endorse its environmental programs and Peter Seligmann, chief executive of the environmental lobby group, calls Wal-Mart’s environmental commitments an important development and signal.
Neal Elliott of the American Council for an Energy Efficient Economy, a Washington energy think tank, agrees. “Having the nation’s biggest retailer on board is going to make a big difference in how much attention other companies pay to this issue,” he says.
The Sierra Club, usually a staunch critic, agrees. The group’s executive director, Carl Pope, says Wal-Mart’s new commitments are “important first steps for a company with such a profound impact on our environment”. And others, including the Rocky Mountain Institute, say the ripple effects on the supply chain could be huge.
The proof most say will be in the pudding. A spokeswoman for the Global Reporting Initiative predicts that if Wal-Mart can fulfill the promises with metrics against specific proposed targets, then the company could win over many skeptics.
Lee went on to talk about how horribly ugly their stores were and the negative impact they have on a community because they look so inappropriate and out of place.
He talked about what it feels like to watch the news, and across the bottom of the screen comes a message “airplane crashes in Florida, 20 feared dead, Wal-Mart store manager abuses African American in Florida Store, global warming talks in Canada at a standstill.”
He said moments before he walked into the room an AP story broke:
U.S. Inquiry Into Wal-Mart’s Handling of Waste
Wal-Mart Stores is being investigated by federal authorities over how it handled merchandise classified as hazardous waste, the company said yesterday.
Lee asked, why does every single act by any Wal-Mart employee make headline news. They are out to get us, in any way they can. By they he generally meant the union.
We talk about the failure of Wal-Mart to create a coherent, understandable, framework for the huge enterprise they run. I suggest a more aggressive approach to setting the expectations of what they can & can’t control, but not with out making firm and clear commitments around what they are committed to change and by when. Transparency, in a more absolute sense about the good & the bad impacts.
“Look,: I said, in a heartbeat, “you could revolutionize the household cleaner business, if Wal-Mart required full ingredient disclosure on the label of every cleaning product they sold not only would the entire industry comply, but most of the toxic and carcinogenic chemicals would be removed from formula’s before the new labels were printed.”
Doug McMillon, a 39 year old extremely open and likeable guy – a great potential asset said, we’re the most critical guy’s you’ll ever find, no one gives us a harder time than we do ourselves. You wouldn’t believe what goes on inside this room. “Unfortunately,” I responded, “most of that criticism doesn’t make it’s way outside the room. No one really knows who you guy’s are. What you believe. The fact that you’ve even thoughtful, compassionate guys is lost on the entire world.”
Lee continued, who’s got a $25 million activist campaign against them, a campaign that seeks to put us out of business, this labor issue, that’s one place we can’t go, there are people who believe that the best thing that could happen is that we simply shut down, that’s just not going to happen.
Lee is what I would describe as a passionate, authentic, at times embattled soul. Humble, self critical, gently defensive at first, but sensing my true mission of help, he increasingly opened up, and became more deeply and deeply engaged with the possibility of seeing this challenge & opportunity with new eyes.
As a fellow business, a nation, as a race, as a planet we have no option but to help, cajole, push and shove if necessary this Gulliver of a giant onto our side. The side of sustainability and responsibility, open dialogues and new possibilities.
The opportunities are endless. Imagine a Wal-Mart committed to ending poverty, revolutionizing the US healthcare system to provide preventative health care for all, transparency on products social & environmental impacts, a US agriculture system that relies primarily on organic, sustainable agriculture, a world in which the US is the primary engine for a just and equitable future.
They can do it. I even suspect they would like to.
I asked if I could help, they said absolutely. I’m eager to test the boundaries of change. There’s not much greater good that I estimate I can do beyond harnessing this beast in a labor of love for the next generations.
To be continued.