I’m just getting back from a busy couple of weeks. One of the biggest things I did during my time away was head down to Arkansas to attend Wal-Mart’s Sustainability Milestone Meeting in mid-November. It was an interesting experience to say the least, and a largely positive one at that. Here’s my diary from the trip…
It catches me off guard, even though I should have expected it. I’m seated in the front row of the Sam Walton auditorium. Lee Scott, Wal-Mart CEO is pacing in front of the room with a cordless microphone, dressed in grays and blacks, mock turtleneck, frequently adjusting his glasses. He waves everyone in the room to their feet. I may be the only one in the room that doesn’t know the cheer. My momentary anxiety is relieved when I realize that it’s pretty easy to learn! I didn’t know that the Sam’s Club cheer always follows the Wal-Mart cheer.
I’m at the quarterly Milestone meeting, the public place that punctuates the progress of Wal-Mart’s sustainability initiative. The turn-out for Wal-Mart associates is low, seats are empty. Lee notices. The senior management team was out in full force. From the infamous Susan Chambers and Doug McMillan, President of Sam’s Club to the CFO and the head of Global Purchasing.
From Cynics to Cautious Fans
Later that night, I’m at the hotel bar with a collection of people consisting mostly of former Wal-Mart deep skeptics turned cautious fans. There’s Adam Werback, former Sierra Club President, Greenpeace International Board member and now President of Act Now, a Wal-Mart service provider. Gene Kahn, founder of Cascadian Farms, now Vice President Sustainable Development at General Mills. Veteran sustainability insider Jim Hartzfield, from Interface carpet. Representatives from Environmental Defense, As You So, and the Environmental Health Coalition. And lastly, fellow SVN member, Wal-Mart supplier, and the person mostly responsible for my first meeting with Lee Scott, Aaron Lamstein from Worldwise pet products. We’ve gathered to watch the mid-term election returns, but the bar is to noisy to hear much and all I can see is that Fox news has decided to turn their election coverage into a sporting event, drawing football-like diagrams that seem to suggest it’s all just a game.
I am exuberated. Not only am I at the center of the most interesting convergence of business, the environment, corporate responsibility, labor, health care and god knows what else, but, improbably, the idea of Wal-Mart as the Jolly Green Giant is gaining traction, sending shivers into its supply chain, and turning those who had probably sworn never to step foot into a Wal-Mart store let alone the company’s world headquarters into fans.
When people ask me what I’m doing here, I pause and try to find a way to explain my presence. I am not a supplier. I am not a paid consultant. I do not represent an NGO. But I am a friend, informal advisor, critic, occasional cheerleader and bridge between the behemoth and its most adamant disbelievers.
A year ago, I entertained audiences by encouraging fellow cynics to join the fight against the best and biggest example of bad business, the world’s largest and most successful corporation, one that had figured out (and brilliantly so if I may say) how to escape responsibility for its devastating impact on people, communities, small businesses and the environment.
I am no longer leading that cheer. Yesterday, viewing some organic cotton running shirts sold at Wal-Mart for $11.99, I contemplated a shopping trip. In the end, I resisted. I guess I’m not quite ready to take that final steps into the heart of the belly of the beast―becoming a customer and a supplier.
Meanwhile, Back At the Ranch…
Halfway into the Milestone meeting, a middle-aged woman from a family of 16, many of whom were Wal-Mart employees, tells the story of how she was inspired to take responsibility for her own health and the health of the planet with very simple steps. Here is a spirit of hope and possibility I had not expected to find.
Asked by the President of Sam’s Club what management needed to do better to support her, she says she has a long list. He politely suggests she needs to choose only one thing. But he can’t really stop her. Turns out that she was hired by Sam Walton and encouraged to become a member of the Wal-Mart family as a path to lifelong career development. Aside from mentioning that she was overworked and underpaid, she asks him why Sam’s Club employees can go to the employee cafeteria and purchase a gigantic slice of pizza and a soda larger than your bladder could hold for $2.60 while a salad and bottle of water cost $5.00. For me, this is the best moment of the day. He says he doesn’t know but will look into it.
It’s my understanding that that very afternoon prices were lowered on salads and water at Sam’s Clubs nationwide in time for lunch the following day. I also hear that in a private conversation following the presentation this employee challenged management on the salary caps that prevent her from ever making more money. Sam would never have done that! She even asked if management had caps on their own salaries, knowing full well that they did not.
This level of candor, self-reflection and criticism is not what I expected to find. It is an essential and positive part of a culture that needs to build upon these basics to create the next generation of Wal-Mart associates, associates who not only understand company strategy well enough to carry it out, but to build upon it, improve it, and add value to it. That’s a tall order, one that requires a process that has yet to begin.
Back to Lee. Sales are not good. In fact, they are pretty terrible. Lee discusses how in the past that means they would have sent store associates home before 11:00am to save money. “We don’t do that anymore.”
Lee believes Wal-Mart can deliver sustainability without a premium price for their customers. “Better quality at the same price. Less cost, less returns. Even if business is not good, we will not cut back on our sustainability efforts because they are good for business. We are ahead of where I hoped we would be on our sustainability efforts. Even though most people have done nothing, we have been propelled forward by the great efforts of a few.” Doug McMillan adds that “sustainability can make Wal-Mart a cool place.”
Knowing just how bad business has been, I am impressed! Bill Ford at Ford Motor Company walked away from his environmental commitments in the face of less pressure. While many businesses still see sustainability as a “nice” thing to do, Lee sees it as essential to his corporate strategy.
Compact fluorescent light bulbs are symbolic of sustainability’s dual promise of environmental responsibility and economic benefits. By the end of 2007, Wal-Mart aims to have sold 100 million of them, bulbs that will generate $3 billion in electricity savings for their customers, avoid the consumption of 22 billion pounds of coal, and eliminate 45 billion pounds of greenhouse gases. They are selling them with an impressive in-store display that educates customers on the benefits. You can even go on-line and link in to their interactive energy saving calculator.
The structure of the rest of the four hour meeting invites each of 14 sustainability teams, or “networks” as they are called, on an imaginary five-minute elevator ride with a Wal-Mart senior manager. Each team is challenged to tell their story and ask for specific additional management support. The teams are inconsistent in their presentations. Without coaching, their uneven performance is not surprising. Without any clear mandate from management that specifies process and expectations, the results range from exciting to unclear.
So what are these networks up to? The Global Greenhouse Network has determined Wal-Mart’s carbon footprint to be 19 million metric tons. The Global Logistics & Supply Chain Network will save $29 million in 06 and $33 million in 2007 from efficiency initiatives. The CFO wants to know what that means in earnings per share. The Waste, Operations & Internal Procurement Network has found more money: $60 million in reduced 2006 waste disposal costs. The Textiles Network will sell $90 million worth of “alternative” fibers, including organic cotton, bamboo and others. But they echo a common complaint: There’s not enough support from marketing to communicate these products’ benefits to customers.
It Not Just About Organics
The Food & Agriculture Network tells the audience it’s not all about organics. That’s good since Wal-Mart’s organic sales have not met expectations. It’s also about local foods, supply chain efficiencies, and less waste. But what about just getting customers to eat healthier? Gene Kahn, founder of Cascadian Farms, now head of Sustainability at Kellogg offered a different critique of organics the previous evening. At less than 1% of all food consumed, it will be a long time until organics impact the diet of most Americans and even longer until than can afford it. He said we need to focus on producing healthier food and educating Americans about the benefits of these better choices. I think about Hannaford, one of Vermont’s grocery chains, and their new nutritional rating system. I hope that it’s on Wal-Marts radar screen.
The Pulp & Paper Network presentation disappoints me. They highlight how they soon won’t be selling multi-packs of paper towels in individually wrapped rolls. Wow! Why would anyone even do that in the first place? They talk about high sheet counts after having supported the industries move to less and less sheets per roll. No mention of recycled content! No mention of chlorine bleaching!
I’m impressed with the Jewelry Network. They are tapped into issues of traceability and sustainable mining. They are networking with the industry from Tiffany to Zayles.
The Chemical Intensive Products Network, which includes household cleaners and pesticides, proudly announces that they are looking at phasing out three chemicals–Propoxur, Permethrin and Nonyl Phenol Ethoxylates (NPEs) from the products they sell. The problem I see is why did they target these three? In a press release the previous week, the group failed to explain the process or criteria that led to the selection decision. They may be great choices, but they wouldn’t be at the top of my list. Without greater transparency on the process, I worried where this is all headed.
To Be Continued…
Linda Dilman, the new Executive Vice President of Sustainability, Health and Wellness announces that sustainability initiatives will begin to appear on everyone’s evaluation! Good move. Jim Ellis, of Blue Sky Consulting and the architect of much of Wal-Mart’s sustainability efforts challenges everyone by ending the day with a simple message. “You’re not thinking big enough,” he says. You need to move away “from compartmentalizing social issues.”
Lee reminds everyone that “sustainability is a business initiative and a business imperative. Sustainability will provide you with the leadership and cross-functional experience critical to the future of Wal-Mart leaders.”
I am exhilarated. I am watching the Jolly Green Giant bend down and pick daisies rather than run blindly across the field crushing all in its path. I am hopeful, glad to have come, and ready to provide any and all with advice.