Lee & Me: My Meeting With Wal-Mart's CEO, The World's Most Powerful Businessman

Lee & Me: My Meeting With Wal-Mart's CEO, The World's Most Powerful Businessman
Seventh Generation
Friday, June 30, 2006







If you spend your days immersed in the corporate world, there’s really
only one way to describe a business trip I took last December: I was
invited to an audience with the King. I was called to the commercial
realm that is ostensibly the world’s 20th largest economy and the home
of more indentured servants than any other. And so it was that I went to
the very palace of the corporate kingdom some people love and others
love to hate—to Bentonville, Arkansas, and the headquarters of Wal-Mart,
for my meeting with CEO Lee Scott.

I have spent over a month contemplating this journey. Why does the
president of the world’s largest company want to spend time with me—the
president of a tiny Vermont business, author of a book about corporate
responsibility, and a frequent, harsh, and vocal critic? How can I
engage with the essence of a giant like Wal-Mart to meaningfully alter
its trajectory and harness its potential to be a power for equity,
justice and environmental sustainability? It’s a tall order.

A story that appeared in the Economist magazine the week before my trip
goes a long way toward explaining why they called and why I went.
According to the article, a survey by Zogby International has 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.” Those aren’t good numbers no matter how high your
sales are. (And Wal-Mart sales are high. The company is responsible for
an astounding 2% of the country’s GDP and accounts for 8.90 out of every
$100 spent in U.S. retail stores.)

The factors that account for Wal-Mart’s low standing in the polls are
neatly summarized at http://www.walmartwatch.com. Suffice it to say that
Wal-Mart hasn’t been the most responsible corporation on the planet, and
people have started to notice.

So there I am. Monday morning, December 19th, 2005. Burlington
International Airport. The announcement about my 7:10 am Delta flight
from Burlington to Atlanta sends a shiver down my spine. The gate agent
says 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 its
load due to limited braking ability. Removing over 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
world’s biggest company? Thankfully the need to argue my case isn’t
necessary. I win this particular lottery.

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 have no interest in
selling them anything except perhaps some new ideas!

Driving from the airport to the year-old 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 and then the store.

Andy Rubin, the VP of Corporate Strategy, meets me along with a
collection of buyers responsible for infant & toddler products from
Wal-Mart and Sam’s Club, including diapers, wipes, pacifiers, clothing,
and furniture. We discuss chlorine, PVC, phthalates, organic cotton,
toxic chemicals, the Precautionary Principle, and the power that
Wal-Mart has to change the world.

By the time we’re done we’re running late, and I’m not happy. Now 15
minutes of meeting time with Lee Scott has been lost, due 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 current
state and future direction of this gigantic company, you’re always left
with a feeling that it’s just too 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 of Wal-Mart that I have delivered as part of almost
every speech I have given.

Lee, dressed in a dark grey suit and a black sweater, stands holding the
door open as I enter the building. I need to look down at his name badge
to be sure it’s him. I’m impressed that he’s humble enough to greet me
himself!

I enter a nondescript conference room where the senior management team
is immersed in a conversation about holiday sales. Present are Lee Scott
, CEO & President of Wal-Mart Stores, Inc; Lawrence Jackson, Wal-Mart
EVP People; John Westling, Wal-Mart SVP; Andy Ruben, VP Corporate
Strategy; Doug McMillon, President of Sam’s Club; Greg Spragg, EVP Sam’s
Club; and Lee Tappenden, VP International Merchandizing. It’s quite an
assembly!

Saturday’s numbers were off, even though same-store sales on holiday
items were up 40% over last year. Lee explains the challenges of
customers waiting later and later to do their holiday shopping. He’s
received an unhappy call from his boss S. Robson Walton, Chairman of the
Board of Directors of Wal-Mart Stores, Inc. and son of the legendary
Wal-Mart founder Sam Walton. Walton phoned early Sunday morning wanting
a sales update, and 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. But why are they discussing this in front of me? They
didn’t bring me down here to figure out how to run a sales promotion on
Christmas ornaments.

I am lost and frankly a bit confused as the conversation drags on for
several minutes. Lee stops and admits that this is a conversation that
never quits this time of year and is, in fact, an obsession. He talks
with some pride about the incredible sales of the company’s different
divisions, how much toilet paper and laundry detergent they sell. It’s
billions isn’t it? he asks the President of Sam’s. And you’ll do how
many billion this year? he asks the head of U.S. Wal-Mart stores.

Finally we get to the introductions. Lee says he doesn’t know much about
me and asks for a description of who I am and what I’ve done, other than
write a book that he and his management team have read. This catches me
off guard. I thought for sure that someone had prepared the equivalent
of an FBI dossier on me for Lee’s review before I arrived.

I run through the two minute version of the story of my life, and then
seize the opportunity to ask my own questions. I ask Lee to describe the
legacy he wants to be remembered for at Wal-Mart. He struggles with the
question, falls back on the Sam Walton story, and describes himself as
continuing a tradition rather then designing a new purpose for the giant
company. Pressing him again for a better answer, he talks about the team
he wants to build and leave behind when he “turns out the lights in the
office for the last time.” In effect, he keeps saying it’s not about
him.

Pressed again, at this point a little uncomfortably, he talks about
being the best they can be, about diversity programs, environmental
initiatives, the careers they help their associates build. But nothing
that feels like a clear purpose or focused direction.

I take a different tact. I admit that I, like hundreds of other critics,
have my own perspective on what Wal-Mart is doing right (not much) and
wrong (a lot) when it comes to corporate responsibility. On 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, they answer. Everyone else comes down here and tells us what they
think we should do. We’re used to it at this point.

(I didn’t know it at the time, but I was part of a large parade of
impressive visitors making the trip to Bentonville, from McKinsey to
Eddleman Communications, hundreds of environmental NGOs, and the leaders
of America’s most well respected companies. I had no idea at the time
how good I had to be. Wal-Mart, as Charles Fishman writes in his
excellent new book, The Wal-Mart Effect, is like a gigantic, humungous
deer caught in the headlights of an oncoming meteorite.

Well I’m not here to take you to task, I say. 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, and a disciplined understanding of your footprint
on the planet. I want to help lead you to a clear and rational plan for
what you’re going to do, how long it will take, and why certain issues
can’t be addressed now; all in a way that everyone who’s interested can
understand and get their heads around.

Look, says Lee. We’re already doing that. We talk to the activists. We
have launched hundreds of initiatives. We have nothing to hide.

What about those initiatives? In a 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?

“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 inspirational, and I’m not sure how to achieve them, at least not
yet. This obviously will take some time.”

Sounds good doesn’t it? So how come no one believes him? That’s the $64
million question. And so it is that we move on to issues of transparency
and credibility.

Doug McMillon, President of Sam’s Club says that with over 1.6 million
employees Wal-Mart as a company has no secrets.

Yes, I say. You’ve got 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, but let everyone else do it instead, you
end up with a chaotic picture that ensures that what ever message you
want to communicate is lost.

Look at your website, I continue. There’s little meaningful information
about your company from a social and environmental perspective. So you
effectively force people like me to visit the websites of your most
ardent critics to get that information, because I can’t get it directly
from you. You’re letting your critics frame the story and tell it from
their point of view. Your voice is lost.

There’s a pause that’s more than pregnant. I’ve struck a cord. They get
it. There’s transparency and then there’s transparency. They’re starting
to get what it means to take that next step.

Lee, who has been president for only five years, says that they’ve spent
most of their time bringing in the sandbags to reinforce their bunker.
They’ve effectively helped organize the whole activist community by
refusing to engage in any meaningful dialogue. The labor community
(WalmartWatch, WakeupWalMart) has seized this opening that Wal-Mart has
inadvertently created.

A big mistake, says Lee. We helped organize our enemies better than they
could have done themselves. (In fact, Wal-Mart has unintentionally
succeeded in uniting a diverse collection of activists, from labor and
environmental advocates to health care and women’s rights campaigners,
that otherwise rarely even speak to each other.)

But they say they’ve changed. Starting 18 months ago, for some reason
that wasn’t entirely clear, Wal-Mart launched an initiative of
conversation and engagement. We talked about all the NGOs and activist
groups that have secretly made the trip down to Bentonville to see if
Wal-Mart was really willing to own up to its 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 has become a giant
social pariah, the ultimate embodiment of corporate evil. So bad, that
NGOs are afraid to let their peers, donors and friends know that they
had even talked to Wal-Mart. The blight it would leave on their
reputation would cost them donor support and credibility, they say. I
say that Wal-Mart shouldn’t accept that these organizations want to work
with them but won’t risk their reputations to openly talk about the good
and bad that they find.

Lee talks about secret meetings with politicians who were terrified of
the fallout from labor unions if the meetings were to become public. He
talks about entering buildings through secret entrances, conversations
that “never happened.” The secrecy sounds painful.

Lee also talks about how horribly ugly their stores are, and the
negative impact they have on a community because they look so
inappropriate and out of place. He talks about what it feels like to
watch the news, and to see Wal-Mart pop up in those ubiquitous text
“crawls” at the bottom of the screen on all the news channels. “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 says that moments before he walked into the room, AP broke a story
about a federal investigation into the company’s handling of merchandise
classified as hazardous waste. Lee asks why every single negative act by
any Wal-Mart employee anywhere seems to make the headlines. They are out
to get us, he says, meaning the labor unions. In any way they can.

We talk about the failure of Wal-Mart to create a coherent and
understandable framework for the huge enterprise they run. I suggest a
more aggressive approach to setting expectations around what they can
and can’t control; but not without making firm and clear commitments
about what they’re willing to change and by when. Remember, I say.
Transparency, in its most absolute sense, is about both the good and the
bad things you’re doing.

Look, I continue, here’s just one example: you could revolutionize the
household cleaner business overnight if you required full ingredient
disclosure on the label of every cleaning product you sold. You could
take the industry to task on an exemption that is enjoyed by almost no
other consumer product. Not only would the entire industry comply, but
most of the toxic and carcinogenic chemicals would be removed from their
formulas before the new labels were printed.

Doug McMillon, an extremely open and likeable guy, says they’re the most
critical people you’ll ever find. No one gives us a harder time than we
do ourselves, he says. You wouldn’t believe what goes on inside this
room.

Maybe, I respond, but unfortunately most of that criticism doesn’t make
its way outside these walls. No one really knows who you guys are or
what you believe. The fact that you’re thoughtful and compassionate is
lost on the entire world.

Lee explains that they’ve got a $25 million activist campaign against
them, a campaign that seeks to put the company out of business. This
labor issue, that’s one place we can’t go, he says. 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. (The truth is that the last thing
that Andy Grossman, Executive Director of Wal-Mart Watch, ever expects
to happen is the complete shut down of Wal-Mart. He knows full well
that’s never going to occur.)

Lee strikes me as a passionate, authentic and, at times, embattled soul.
He was humble, self-critical, and gently defensive at first, but sensing
my true earnestness to help, he increasingly opens up and seems to
become more deeply engaged with the possibilities here. He seems to see
this challenge and the opportunity it represents with new eyes.

I end the meeting by asking if I can help. Absolutely, they say. And so
I will. I’m eager to test the boundaries of change here. Because when
you think about it, there’s not much greater good that I can do than
corral this giant and get it to see its work as nothing more and nothing
less than a labor of love for the next generations.

As fellow business people, citizens of our nation, members of the human
race, and residents of a planet in trouble, we have no option but to
help, cajole, push and even shove this retail behemoth onto the side of
sustainability and responsibility, open dialogues, and new choices. It’s
not only the best answer, it’s probably the only answer.

The opportunities are endless. Imagine a Wal-Mart committed to ending
poverty and revolutionizing the U.S. healthcare system to provide
preventative health care for all. Think about a Wal-Mart pushing for
transparency on its products’ social and environmental impacts. Picture
a Wal-Mart promoting an agricultural system that relies primarily on
sustainable methods and lobbying for a world in which the United States
is the primary engine for a just and equitable future.

They can do it. And I’ll go even further and say that after my meeting,
I very much suspect they would like to.

P.S. Andy Rubin, the VP of Corporate Strategy, and I are still talking.
We’ve exchanged phone calls, emails, and have shared a dinner together
up here in my neck of the woods. We’ve reviewed the outline for their
first ever Corporate Responsibility report, talked about a policy for
chemicals, and discussed designing a meeting to work on the process of
redefining their corporate culture. Progress is slow. But the news has
been a bit more positive of late. Stay tuned…

And in case you’re wondering―despite some pretty passionate interest in
selling Seventh Generation at Wal-Mart, the answer is still no. At least
for now.








© 2005 United Food and Commercial Workers International Union.
This site is in no way connected with Wal-Mart Stores, Inc. or any affiliate of Wal-Mart Stores, Inc.