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Chapter 4
KEEPER OF THE CAUSE
am Walton founded Walmart in 1962 with a simple idea—to
serve the average workin’ American by offering “the lowest
prices anytime, anywhere.” At the end of his life, Walton described
his vision this way: “If we work together, we’ll lower the cost of
living for everyone . . . we’ll give the world an opportunity to see
what it’s like to save and have a better life.” With Walton at the
helm, the decisions that went into building Walmart—from where
to locate the stores to how big they would be—were all made with
this Cause at the forefront. And as a result, people loved Walmart—
both those who worked there and those who shopped in their
stores. People wanted Walmart stores in their communities. The
business grew, and Walton, who had grown up during the
Depression, became one of the richest men in America.
And then, somewhere along the way, the Just Cause went fuzzy.
By the time Mike Duke took over as CEO in 2009, it was clear that it
was no longer the driving force behind the company. Indeed,
Walton’s original vision was now little more than marketing slogans
and hollow words written on the office walls. The company had
become obsessed with profit, growth and dominance at the expense
of the very Cause that drove their success in the first place.
Mike Duke earned a reputation at Walmart for being an expert in
efficiency. When it was announced that Duke would be the next
CEO, his predecessor, H. Lee Scott Jr., stammered, “I kind of
thought—and I think the board thought—that the company could be
better managed.” He went on to explain, “Mike is not only a good
leader but a really good manager. . . . I don’t think in business you
can forget the fact that you don’t just have to lead, you have to
manage.” If the board was hoping to correct management issues or
enhance performance, then giving a man like Mike Duke the reins
might have been a perfect choice . . . for the short term. But if the
board was concerned that Sam Walton’s Just Cause had been
diluted, then a man like Mike Duke was about the worst person to
get the company back on track.
Duke’s own words when he accepted the position revealed the
kind of mindset with which he was going to lead. “[Walmart] is very
well positioned in today’s economy, growing market share and
returns, and is more relevant to its customers than ever,” he said in
the press release announcing his new role. “Our strategy is sound
and our management team is extremely capable. I am confident we
will continue to deliver value to our shareholders, increase
opportunity for our over 2 million associates, and help our 180
million customers around the world save money and live better.”
Notice the order of the information? Duke’s first thought was
growing market share and returns. Though he talks about being
relevant to customers he doesn’t actually mention delivering value
to them until the end of his statement. It’s a strange quirk of human
nature. The order in which a person presents information more
often than not reveals their actual priorities and the focus of their
strategies. Where Sam Walton started with the people’s interests,
Mike Duke started with Wall Street’s.
Under Duke’s leadership, Walmart’s stock price did increase . . .
for a while. However, focusing on numbers before people comes at a
cost. The once beloved brand also found itself embroiled in multiple
scandals over the treatment of their people and their customers. In
2011, Walmart was the target of one of the largest employment
discrimination class action suits ever filed, brought by female
employees who claimed they were victims of systematic
underpayment and underpromotion. In 2012, there were walkouts
and protests by workers who demanded to be treated with dignity
and respect and paid a livable wage. Where before communities
would rally to bring a Walmart into their neighborhoods, now they
were rallying to keep them out. The company’s plans for expansion
in Denver and New York, for example, were halted by mass protests.
There was also a congressional investigation into allegations that
Walmart bribed foreign officials to court favor abroad. Needless to
say, morale at the company plummeted and much of the love people
had for the stores was replaced with contempt.
What happened at Walmart happens all too often in public
companies, even the Cause-driven ones. Under pressure from Wall
Street, we too often put finite-minded executives in the highest
leadership position when what we actually need is a visionary,
infinite-minded leader. Steve Ballmer, as we’ve already discussed,
was one such example. John Sculley, who replaced Steve Jobs at
Apple in 1983, was another. Instead of trying to continue advancing
the Cause, Sculley was more focused on competing head-to-head
against IBM. The damage he did to the culture seriously hurt
Apple’s ability to innovate. In 2000, after being passed over for the
CEO job at GE, Robert Nardelli took over at Home Depot (his
nickname at GE was “Little Jack,” because of how much he
emulated and hoped to succeed Jack Welch as CEO). His relentless
drive for cost cutting all but destroyed a culture of innovation at
Home Depot. In 2004, the COO, Kevin Rollins, replaced Michael
Dell to become CEO of Dell. Focused on growth, he presided over
the largest layoffs in the company history, a rise in customer
complaints and an SEC investigation over accounting issues. These
men were all skilled executives. However, their finite mindsets left
them ill qualified for the job they had been given. In fact, Sculley at
Apple and Rollins at Dell did such damage to their respective
organizations that their more infinite-minded predecessors, Steve
Jobs and Michael Dell, were brought back to try to repair the
messes they made. The problem isn’t how skilled an executive is
when they take over as CEO. The problem is whether they have the
right mindset for the job they are given.
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