If Barak Obama were the President and CEO of a company, he would probably give a speech like the one given yesterday by Lee Scott at the National Retail Federation conference. Lee is departing Walmart at the end of the month, but he used his last public speech-”Changing How We Change America“-to highlight the challenges facing the country and the retail industry, and the opportunities these challenges create. In many ways, yesterday’s speech was an updated version of the “Twenty First Century Leadership” speech Lee gave back in October 2005, where he said the following:
“In the group meetings [with various stake holders] I referenced earlier, we talked about jobs, healthcare, community involvement, product sourcing, diversity, environmental impact: all the issues that we’ve been dealing with historically from a defensive posture. What became clear is that in order to build a 21st century company, we need to view these same issues in a different light. In fact, they represent gateways for Wal-Mart in becoming the most competitive and innovative company in the world.”
A lot has changed since those comments were made, and the objectives Lee outlined back in 2005 are arguably more difficult to achieve today due to the economy. At times during his speech yesterday, Lee sounded like a politician on the campaign trail (perhaps he’ll run for office someday), but I generally agreed with his comments. It’s true, we cannot solve the problems facing the country and the economy if we “fall back to partisanship, gamesmanship, and selfishness.” And as I wrote in my final blog posting of 2008, I also agree that these difficult times create new opportunities for success, if we seek them out and are willing to work for them.
The strongest link between Lee’s 2005 speech and yesterday’s remarks came when he said “Let me be clear about this point…there is no conflict between delivering value to shareholders and helping solve bigger societal problems. In fact, they can build on each other when developed, aligned, and executed right.” Later in the speech he made another point that I agree with: “We know what makes a difference and what does not-because our customers tell us every day at our cash registers and our supply chain reaches all around the world. And it does not have to be sustainability. And it should not just be about sustainability [emphasis mine].”
These last two sentences surprised me when I first read them. Isn’t “sustainability” what Walmart’s been promoting the past few years, the key attribute of “twenty-first century leadership?” After thinking about it and watching the video of Lee delivering his speech, here’s what I think he meant: the term “sustainability” is so high-level and defined so broadly that it’s become a catch-all for various issues and opportunities. In many cases, sustainability is wrongly equated with just climate change. What I think Lee meant is that we have to decompose sustainability into its various elements in order to better address each issue. And that “sustainability” doesn’t capture all of the issues that we need to address as a country, such as education reform. Lee went on to say, “There are a lot of big issues out there. There is just as great a need and opportunity-whether it is healthcare, diversity, responsible sourcing, immigration, or any other.”
Why does Lee’s speech matter? For the same reason his 2005 speech mattered-if something is important to Walmart, it becomes important to its supply chain partners too (and the rest of the retail industry). It’s no accident that sustainability became a priority for many companies shortly after Lee’s 2005 speech. And high-level speeches ultimately get transformed into specific initiatives, actions, and metrics (e.g. packaging scorecard). In the weeks and months to come, I expect Walmart to announce initiatives focused on the issues highlighted in Lee’s speech, and these initiatives will likely involve its supply chain partners.
I question, however, if other companies will have the same resolve and commitment to the cause as Walmart does, particularly in this economic environment. Just today, the Commerce Department reported that retail sales dropped 2.7 percent in December, more than double the 1.2 percent decline that Wall Street expected. And retail sales were down 0.1 percent in 2008, compared to a 4.1 percent gain in 2007. Lee said in his speech, “To those of you who say that now is not the time for healthcare reform, for a new energy policy, for higher quality schools, for comprehensive immigration reform…I say you are wrong.”
Perhaps, but if you have to layoff ten percent of your staff or shut down the business for good, it’s awfully hard to see the forest through the trees.
