(bell ringing)
- [Narrator] This is Duke University.
- Good afternoon, it's my
pleasure to introduce you
to our guest speaker for the
Distinguished Speaker Series,
Mr. Doug McMillon, President
and CEO of Walmart stores.
In 1984, Mr. McMillon started
out as an hourly associate
in Walmart distribution centers.
In 1990, while pursuing his
MBA at the University of Tulsa,
he rejoined Walmart as assistant manager
before moving into merchandising
as a buyer trainer.
He went on to serve in
successful leadership roles
in all of Walmart's business
segments including Sam's Club
and the Walmart international operations.
Mr. McMillon was named
the president and CEO
of Walmart stores in 2014 and has served
on Walmart's board of
directors since 2013.
Under his leadership,
Walmart is bringing together
its stores, logistic networks
and digital commerce
capabilities in new ways
to empower customers to
shop wherever, whenever,
and however they want.
Mr. McMillon serves on
the board of directors
of the consumer goods forum
and the US business counsel.
He has also been recognized
as a young global leader
by the World Economic Forum.
- That was a long time ago.
(audience laughing)
You can take that off.
(audience laughing loudly)
- Please join me in giving Mr. McMillon
a warm Fuqua welcome.
(audience applauding loudly)
- So it's a great
privilege to have you here.
- I'm excited to be here.
- Thank you so much.
We discovered today that we both joined
our respective organizations in 1984
and so my question to you is that,
earlier I said that makes
us both dinosaurs, but,
but to be more serious,
what kept you at Walmart
for all those years,
as opposed to the more
traditional path of these days
of jumping around from job to
job and company to company?
- Yeah, my first time with Walmart
was just to make a little
money during the summertime
to help pay my way through school
and I didn't mean to be
there very long at all.
I think the two things looking
back that kept me there
were challenge and culture.
The values of Walmart aligned
with my personal values
and I haven't been bored one single day.
This is really a challenging
industry and I like that a lot.
- Where we diverge is that
coming back to this theme
of youth, you became very
successful at a very early age.
You were CEO before,
if my math is correct,
before you were 40 years old,
when you took on the CEO
of the Sam's Club role.
- Right.
- What was it that allowed
you to progress so quickly
into leadership roles in your career?
- Well it wasn't part of
the plan but I think looking
back what happened is that I
really liked what I was doing
and I volunteered a lot for extra stuff.
I walked in the door at Walmart,
and for those of you who
have job offers from us
that you have not accepted yet,
listen to this story.
(audience chuckling)
I walked into Walmart and they
handed me a responsibility
for almost a billion
dollars worth of purchasing
the first morning.
I was in charge of
fishing tackle for Walmart
when I walked in the office the first day.
And without a lot of
training, no training really.
And so I had responsibility,
I had accountability,
and I liked what I had and
tried to make it better,
and I kept volunteering.
When there was a project
or my boss was out of town
and somebody needed to go to a
meeting I would say, I'll go.
And I would find myself
in these situations where
sometimes I didn't always know the answer
and I got comfortable as
we're encouraged to at Walmart
in saying I don't know, but I'll find out
and I'll get back to quickly.
It's a good formula for
success inside our company.
And so people saw me
handling a responsibility
one level up which made it
easy for them to promote me.
So I ended up getting
moved pretty frequently.
- Did you ever hit a point
where you felt like you got
in over your head because
you were so willing
to embrace these roles?
- This week.
- Yeah, well, that
doesn't count, too late.
But did you ever hit a
point where you thought
uh-oh, I may have derailed
my career because I've been
taking on things so rapidly?
- Yeah, one day I got
paged to come to our chief
merchant's office and I
was buying candy and food
and he said you've done a
good job with candy and food,
I want you to go by ladies wear.
You work in ladies wear on
Monday and you're responsible
for ladies woven tops
and related separates.
And I said okay, and I
walked out of the office
and found the first female
associate I could find
and said, what's a woven top?
(audience chuckling)
- What is it?
(audience laughing loudly)
- So if you get pushed into
these jobs and you have to
learn quickly how to
adapt who to listen to,
in my case I was never
going to be able to select
what should be on the
floor of a Walmart store
from an apparel point of view,
so finding suppliers that I could trust
and letting them make some decisions
and me managing the situation
and managing the inventory is kind of how
I approached that job.
But I had so many different jobs each time
you had to start over.
I think that's what kept me there
is I was challenged every so often
with something dramatically different.
Go work in international for awhile.
Go to Sam's Club, go to
merchandising, learn real estate,
they just kept me interested.
But you have to constantly
be reminding yourself
how much you don't know.
- Presumably on this career journey
you found mentors who
helped you with the things
that you did not know.
How did you become
connected to those mentors?
- Well probably very
similar to how all of you
would build relationships
here or in the workplace.
You get attracted to
certain skill sets or people
and I think along the way I
figured out that this person
had a way to think about merchandising,
the art of merchandising that
I really liked and respected,
what can I learn from them on that issue?
This person is great at execution
and I see consistent results
and they're strong managers.
What can I learn from that person?
Just like taking tools and
putting them into your toolbox.
The toolbox that I work with today
has tools on it with
Lee Scott's name on it,
the former CEO of Walmart,
has Mike Duke tools,
it has Don Harris tools,
it has Vanessa Castagna tools,
that's what happens,
you just pick up all these
skill sets from others.
- You have a group in front of you
at the front end of their careers
and they'll be making
choices presumably around
do they stay where they are in the company
or do they decide to take
on a new opportunity.
I have to believe that given your success
at Walmart and various roles
and becoming a CEO at such an early age,
that you've been approached
to do other things.
How did you weigh those
choices in your head
in terms of do you stay or do you go?
- I think you got, life is short,
and you got to be where you
feel like you should be.
And it just, I didn't, again,
intend for this to happen with me,
I just ended up in this environment
that I really liked so much.
When people call, I don't
tend to get down that path
very far before I'm saying
no and getting back to work.
Other people listen, and
there's no harm in listening
to opportunities and some
of you may go to work for
businesses and then leave
and go start businesses,
and there's nothing
wrong with that either,
you've got to find your own
journey and your own path.
But, again, I think
you've got to find a spot
where you're aligned from
a values point of view,
whether you're joining a company
that somebody else started
or you're starting your
own, it's about purpose,
it's about values.
You're trying to, when you look back,
you got to begin with the end in mind.
When you look back on
your professional career,
you want to feel fulfilled,
like you've accomplished something.
So everyday that you go to work,
if you don't see yourself on that track
and you go for too many days
where you feel that way,
you probably do need to
do something different.
But if on the other hand
you feel like you've found
the right spot there is
nothing wrong with staying
and just building something.
- How much of your time do
you spend thinking about
building and sustaining
the culture of Walmart,
which is built on such
a strong foundation?
- Yeah, a lot.
Specifically, shaping the
culture and changing the culture
is what my leadership team and I
are focused on at the moment.
To understand that you need to know
what our four core values are.
They're respect for the individual,
strive for excellence,
serving the customer,
and acting with integrity.
And those four core
values have been around
in Walmart for a long time.
They were written down after
watching Sam Walton work.
When he started the company,
he didn't say these are
our four core values
and stamp it into stone,
he just was an entrepreneur working
and others around him saw those behaviors,
they wrote them down and said
these are the things that we believe in.
So our behaviors, culture,
needs to match those set of values.
As companies grow and as time goes on,
you, it gets misshaped and
you lose, in some cases,
aspects that were there
when the founder was there.
For example, Sam Walton
held people accountable.
If you work in Walmart you
frequently are presented
a Sam Walton that looks
like a grandfather.
Loving, appreciative,
he was all those things,
but he also held people
accountable to performance
and I have heard first hand
stories of him doing that
and know that he did it.
So striving for excellence,
one of our four core values,
embedded in that is accountability,
personal performance accountability.
We need to, in today's
Walmart, drive that up.
We're trying to shape
the culture behaviorally
as we embrace technology,
as we change in a transformational way,
how Walmart serves customers,
be consistent on those
core values but sharpen up
the behavior associated with with them.
And we talk about this all the time.
So that that the engine that is culture
generates the right results.
- If I can, if I can talk
about respect a little bit
as one of those core values.
We're living in a society now
where we're deeply divided
and what one person thinks is right,
another person thinks is wrong,
and so you have to make
certain choices that you feel
represent the interests of Walmart.
You were telling me the
story about a wrestling toy,
can you elaborate on a choice
you had to make years ago?
- Yeah, we were talking earlier about
when do you make a public
stance and when do you not?
And it may be that in the
coming months and years
that we have to do that because
we've had to do some of it in the past
and it may continue to be the case.
And my first experience
was almost 15 years ago.
I was managing the toy department
and a number of other
merchandising areas at Walmart.
And a buyer walked into my office
and they had a wrestling
action figure in their hand
and it was a male wrestler
holding the head of a woman
that he had ripped off
of her body in his hand.
So this action figure had her body,
a detached head and a male wrestler.
And the buyer had written
an assortment order
and so they didn't
approve every single item.
The buyer had never seen this.
The supplier had it in their assortment
and they just shipped it into the store
so it was a surprise to all
of us, including the buyer.
And they said what do we do?
And for me that was a no
brainer, get it out of the store.
Issue a recall and get it out today
and I want to know that the
stores have acted on that
and it's no longer in our
assortment by the end of the day.
That person went back
to work to go do that.
Well CNN somehow heard about it
and they popped a web poll up.
It may be hard for you to believe,
it was 15 years ago, but
the internet did exist.
(audience chuckling)
I'm hearing that sound,
that squelching sound
we used to hear when we
connected to the internet in my head.
And at the end of the
day, thousands of people,
I can't remember exactly
how many had voted,
and it was literally a dead heat.
It was 50/50.
The question was did Walmart
make the right decision
pulling this action figure
from their assortment
and it had the picture of
the action figure on it
and it was 50/50.
I was shocked.
I'm still shocked.
But that, I think, is
indicative of the world
that we live in today for
probably several reasons.
And so we, Walmart, are a
retailer, we're a merchant,
we're trying to serve customers,
and we want to serve everybody.
So how do we navigate in an environment
that feels so divided in many cases,
hopefully it's not as
divided as it appears,
and not alienate groups of people
while standing for who we are?
And when we face these situations,
the first thing that
goes through my mind is
what is our purpose, what are our values,
now how do you address this circumstance
that's right in front of you?
- So let me fast forward from 15 years ago
to an incident in the last couple of years
where you made a public statement
urging the governor of Arkansas
to veto the religious freedom bill.
Can you help us understand?
It seems like these are things that CEOs
have to think about more often,
when will you make a public statement?
Can you walk us through what
led you to make that choice
and then maybe tell us a little bit about
the after effects of that choice?
- The circumstance was approaching,
we could see it coming.
And we were hoping that we
wouldn't have to say anything
because it would not happen.
And we were communicating along the way,
if this were to happen this
is kind of the response
you would expect from me and us.
Because Walmart has four core values.
One of them is respect for the individual,
we believe in diversity and inclusion.
Just like we want all kinds
of people to shop at Walmart,
we want all kinds of
people to work at Walmart.
And so in some circumstances,
you can't be silent when
literally your core value
as a company is being touched in a way
that your own associates feel it.
You have to step up and say
something and set an example.
It wasn't popular with everybody.
And you have to be comfortable
receiving criticism
in a leadership role.
It's not what you want to do,
but you have to get used to that.
When this last election happened,
some CEOs wrote letters
to try and help people
deal with the circumstance
regardless of how they felt about it.
In our case, we happened to
have an officer's meeting
that Friday and what we call
a Saturday morning meeting.
Once a month we still get
together on Saturday mornings,
believe it or not,
it's a meeting that
dates back to Sam Walton
and we celebrate the
culture of the company,
talk about our business,
we have special guests in,
we have fun, celebrities come,
and we talk about our business
and we talk about culture.
So I had two public internal
meetings to talk about
what this moment meant to us.
And it really does in our
lens look pretty simple.
We are who we are.
Regardless of politics,
politics will change.
Leaders will change.
We work in 28 countries,
we have all kinds of
political environments
that we operate in around the world.
But we know who we are, we
know what our purpose is,
we know what our values are,
we know what we stand for.
And so just talking out
loud about who we are,
what I expect from our teams.
I mentioned to you just a minute ago,
I swung into a store here
this morning in Durham
and got a chance to visit
with a group of our associates
in the training room for about 45 minutes.
And in that room we had
associates from Ghana,
El Salvador, people that
were born and raised
here in North Carolina.
We had African Americans, Caucasians,
Hispanics, and they've
become not just a team,
but a family.
And they used that word
with me about each other.
And that's who we need to be.
We need to be, Walmart needs to be,
at every moment and this moment
a group that brings people together
and makes people feel
comfortable when they shop
or when they work at
Walmart that they can be
who they are and that we're going to stand
for what's important everyday.
- Recently you've made a very
big investment in that family,
I think it's been characterized
as a $2.7 billion dollar
investment in terms of
increased wages, training,
and education for your associates.
Can you, can you
explain to us what has
happened as a consequence
of this decision to increase
wages for your employees?
- Retail's changing just like
every industry's changing
and we want a high caliber
productive workforce
that can work with technology,
serve customers, and run
stores within a store.
Run a toy department, run
an electronics department,
and to equip them and for
us to attract the talent
that we need to attract, we
wanted to make an investment.
We felt like the timing was right,
that it was a good business decision.
So we raised wages, we
raised our minimum wage,
we raised the average,
we took the top end of our
wages and we moved them up.
We invested in store structure,
we're investing in technology,
I was in Morrisville last night,
which is going to be one
of our academy stores.
And in the back room,
because we've been able to
bring our inventory levels down,
we've taken some space and
there are three classrooms
back there where people will
be taught as new associates
how to work with our technology
and how to run a business.
And we'll teach them retail basics,
and we talked to one
department manager today,
who's one of our best department managers
I bet in the market, who is,
she speaks Spanish as
her primary language,
she's learning English and her English
is better than mine probably.
And she needs to be an assistant manager.
We need people like
that equipped to be able
to grow and develop.
And, you know, our
stores are better for it,
our in-stock levels are up,
our clean, fast, friendly
scores have improved.
We did see a decline in market cap
the day that we announced
the second traunch of this,
of $21 billion dollars in a day.
Our share price went down by that amount.
That was a breathtaking day.
Because you know, many of
those that are investing
in Walmart shares want us to
deliver an earnings increase
next quarter but we made
a decision, the board,
along with the management team,
that we're going to make some decisions
over these next few
years that are going to
position our company to
be here 50 years from now.
And businesses come and go
and retailers come and go
and I carry around on my phone
the top 10 retailers by
decade over the years
and they grow and they die.
And Walmart's now over 50 years old,
we're almost half a
trillion dollars in revenue
we've got 2.3 million associates.
Our success in the future
is not promised to us.
We will have to change in some ways
dramatically to be here in 50 years
and that's what I'm trying to do.
I'm trying to change Walmart in a way,
together with our leadership team,
so that's it's here in 50 years.
- One of the things about
being a CEO is you do have
to make strategic bets, you
do have to change the company
and it's not always the case
the markets respond favorably.
Tell us how you deal with that pressure
from the markets where you
lose $21 billion dollars
in a day of market cap,
how do you stay the course
and what are the things
that you look to that
give you the confidence
in staying the course?
- Communication's key.
And in this instance and in others,
we've tried to share with
everyone what the strategy is
and to give them milestones
that they can measure us against.
And we're on track with those milestones
and so the investment community
then has a decision to make.
Do I believe in the strategy,
do I believe they can execute it,
and am I okay with the
timeline, the time horizon?
And in our case, what's
happening right now is that
many investors are saying,
we think you're doing,
you have the right strategy
and we believe you can
execute it but we don't know
how fast you can execute it
and we don't know exactly
what the outcome's going to be
and retail is changing so
much that we're just going to
take a wait and see attitude.
Our share price is just
kind of staying like this
for the most part as a result of that,
which is just something
that we have to live with.
Now, every quarter we're
giving up dates on clean,
fast, and friendly
scores, inventory levels,
talking about what we're
doing with price investments,
how we're growing in e-commerce,
and our results will drive what happens
with the share price.
- Talking about e-commerce,
I know that you consider yourselves to be
big competitors with Amazon
and that you see a real future
in this e-commerce idea.
Tell me, tell me about the strategy,
what advantages do you
have with the combination
of an online presence
with bricks and mortar
versus the pure online play.
And we've kind of seen this
story before in the early days
of Amazon and Barnes and
Noble and so what have you
taken away from that example?
- I think the way that we
think about it is we have to be
the best brick and mortar
retailer out there.
And we have an opportunity
to grow our business
and grow share in the
things we've always done.
At the same time, we're
growing e-commerce business.
We've got a business now that's
north of $12 billion dollars
and should be much bigger.
We're accelerating the
level of growth that we have
with the investments
we're making including
the acquisition of Jet so that
that business, on its own,
performs better, etc.
And then we find ways
to put them together.
The way we put them together
ultimately is simply trying
to do things for customers
that save them time,
save them money, give them
access to the broad assortment
that they want, and make
it a delightful experience.
And whether you're doing that
with artificial intelligence
and machine learning or you're doing it
with a physical store,
it's still the same outcome
that you're trying to provide.
And so we believe that by
creating this seamless experience,
this is what we've been using
as a term to describe it,
our customers are going to
be able to almost forget
whether they're buying
online, buying in a store,
buying on a mobile app,
and I personally already live that way.
I don't know how you live but, like,
I was on vacation Christmas
last year an when it was over
I'd kind of checked out of
work to the extent that I could
for a few days.
And looking back on it
my wife and I had ordered
a lot of goods online
delivered to our home,
we had ordered goods that
we went and picked up
at Sam's Club at the drive thru,
where you don't have to go in the club.
We have a pick-up point in our market
that's not even a store,
it's just a place where you
pick up your grocery orders.
We'd used that, we'd gone to
a store and done a pick-up,
we'd shopped in a Neighborhood Market,
we'd shopped in a Super
Center and never really
thought about how we were shopping.
That's just how we shopped.
It was what we needed at
that moment for the purpose
that we were trying to meet at that time.
And I think that's how
retail's going to be.
We're growing our Marketplace.
We've got millions of items
now online so you're going to
be able to find what you want.
We're going to stand for price
and this mobile experience
or voice or whatever comes next,
we've got to play in those
arenas so that as the internet
solves problems, which
is probably the best way
to think about this is
just that the internet's
going to solve all kinds
of problems, it already is.
That's how these
businesses are being built.
That will be true for shopping as well.
You could almost think
of it as wants and needs.
On anything that's a need,
the internet, technology,
and we, retailers, can
solve that stuff for you.
If you just want to be in
stock on 64 ounce Heinz ketchup
all the time, we'll have it
in your refrigerator in stock
without you really having to
think about it at some point.
But on the wants side
where you want to explore
coming in a store and smelling the citrus
or seeing what's new in Christmas,
you may still want to do that sometimes,
or doing that online in some
sort of a mobile fashion.
Mobile, this for Black Friday,
mobile was 70% of our digital orders
and it's growing like that.
However you want to do that,
expiration will have the tools
so that you can do it.
- You have to, you have
to embrace technology
and the opportunities that provides
in order to stay relevant.
How do you get your employees to embrace
these technology changes
when those changes could lead
to fewer jobs within Walmart?
- We have a lot of different
parts of the business.
We've got technology associates,
engineers, data scientists,
mathematicians that
live in Silicon Valley.
We've got talent in India,
we've got talent in Arkansas,
we've got talent all over
the world and they're focused
on a certain set of things
that we're building.
Then we have to also convert
the entire enterprise
to being a digital enterprise.
And there will be more
automated fulfillment
opportunities in the future.
Technology, both software and
hardware, is going to play
a role in the business that
will transform the business.
And ultimately I do think we'll have
a higher level of productivity.
We've got 1.6 million
associates in the United States.
I think that we will equip
people with technology in a way
that they will be more productive because
while change is happening fast,
it's not happening that fast.
I mean, our store traffic's
still up and we haven't,
we're not Barnes and Noble.
We sell bananas, we sell milk.
(audience chuckling)
It's a little bit of
a different situation.
I think ultimately there's a
societal question about jobs
that's a much bigger question.
From a Walmart point of view,
I think that's how it'll play out.
- Tell us, tell us a little bit more about
the Jet acquisition, which is
a fairly recent acquisition,
and how that plays into your
overall e-commerce strategy.
- Yeah, do any of you shop on Jet?
Okay, we've got three people, four, five!
Everybody pull out your
phone, download the Jet app,
and it'll help you understand
why we made the acquisition.
We see an opportunity to
take trust-building pricing
to customers in a different way,
partially through what Marc
Lore and the Jet team built.
The smart decisions around,
I can use a debit card
instead of a credit card and save money,
I can give up a return
privilege and save money,
I can buy two that ship
from the same place
and I can save money,
and pass those savings on to the customer
so that you build a basket.
There's a more efficient
and more environmentally
sustainable way to do e-commerce.
Shipping eaches in brown boxes
is not going to end up being
a really good environmental
solution for all of us
so we need to be smart about how we build
an e-commerce business, not
only from an environmental
point of view but from an
economic point of view as well.
And shipping multiple items
is just more efficient
than shipping one at a time.
Many of the things that
Jet developed will apply
against the Walmart brand,
will operate both brands.
Jet over-indexes with
millennials, more urban,
has some brands that
weren't available at Walmart
like Blue Buffalo dog food
and some things like that.
There'll be some separation of the brands.
Through those two brands and Sam's Club,
we'll just build them much
bigger e-commerce business
in the US.
And we're hard at work nailing
all of the fundamentals
that need to be in place to
be able to deliver that now.
- Speaking of the
environmental consequences
of your business, it wasn't
that long ago that Walmart
was held up as an example of
waste and excessive packaging
and so on, and now you're
becoming a poster child
around sustainability and
environmental friendliness.
How did that transition
happen and what are you doing
to make that happen?
- Yeah.
We went through a period where
we were the Cinderella story.
Everybody liked Sam Walton,
Walmart was this underdog,
and then at some point we became big
and didn't get the memo.
And society's expectations were greater
than what we understood.
We had grown up thinking
if we serve customers well
and we have good jobs and
have good relationships
with our own associates,
we all started at the
store level anyway, right,
so we're all one family here.
As long as we're good with
customers, associates,
everything else is okay.
But it's not that simple and
when you get to be that size,
you have this opportunity
to make a bigger difference
in the world that in some
ways we weren't seizing.
We were facing criticism,
and being in Arkansas,
we started out with this phase of, well,
don't pay any attention to
what those New York papers say.
They don't really know us.
For a few years we just
blew that off thinking,
well, they just don't
understand who we are
and that we have the best of intentions
and we're good people, don't
they know we're good people?
That criticism goes on and then
there's this moment in time
when Hurricane Katrina hit
and New Orleans flooded.
And we were on conference calls,
that was a on a Labor Day
weekend and we had this habit
of shipping in free water and
sending things in to areas
that had been impacted
by natural disaster.
We're on a conference call
and Lee Scott's our CEO
and I was responsible for
Sam's Club and we were
shipping a bunch of stuff
into the New Orleans area,
Louisiana, Mississippi both,
and we were watching on TV
as people were literally
fighting for their lives.
You may be too young to really
remember this, some of you,
but people on their roofs of
their homes spray painting,
there are two of us and one dog, save me.
And we're watching this stuff happen
and Lee interrupts the conference call.
I don't know how many of us were on there
but there might have been 20 of us or so
and he said, hey, what if we
respond differently this time?
What if, instead of doing
the things we just kind of
habitually do that may help a little bit,
we recognize how
significant this problem is
and we just throw
everything we've got at it.
We decided to do that
and we stopped counting
what we were sending and
we sent not only goods
but we sent a lot of money
and we sent our people.
We had market managers and
store managers and club managers
driving from Ohio and
all around the country,
living and sleeping inside of
Walmart stores and Sam's Clubs
to help get them back open
and to serve the community.
We had a vice president
landing emergency helicopters
on our parking lot, we had
an officer of the company
administering CPR to a
customer in our Walmart store,
just heroic stuff.
When all those people came home,
and the situation calmed down,
we started celebrating them.
And when we did, we
touched a nerve of pride
that we had previously
felt in the company.
And we looked at each other
and said how could we have this everyday?
How could this Walmart that
we know as being so special,
how could that exist all the time?
And it opened the door,
and I give Lee all the
credit for opening that door,
to let NGOs and the most
critical people of Walmart
come talk to us, the people
that hated us the most.
They might've had concerns
about healthcare, labor,
the environment, and some
of them wouldn't even
come talk to us.
One of them, in particular,
agreed to meet with us
in a hotel outside of our
hometown in the basement
with the shades drawn if we both
came from different entrances.
(audience chuckling)
And we sat in a circle and
I thought he was going to
ask us questions about the environment
and all he wanted to talk about
was wage rates and healthcare.
And I was, at first, perplexed by, well,
this guy's an environmentalist
and we invited him here
to criticize us and all
he wants to talk about
is labor and healthcare.
To make a longer story
a little bit shorter,
a dot got connected for
me and for us around
what sustainability really is.
And there are four systems conditions
to create a sustainable planet.
And one of them is you have
to take care of the people
on that planet so social environmentally,
social sustainability and
environmental sustainability
are inextricably linked,
which then leads to
what's your wage rate, what
are you doing on healthcare,
what kind of ladder of opportunity
are you creating for people,
and what are you doing
about the environment?
We decided to eliminate waste,
become supplied by renewable energy,
sell more sustainable products.
And today we've expanded
into policies related to
Thai shrimping and
Bangladesh factory safety.
We actually sent architects
to Bangladesh to do
scans of buildings to make sure
they're architecturally
sound and created fairs
for people to come in and buy fire doors
and fire safety products to
put into those factories.
And the best and safest
factories, we stayed in because
people in Bangladesh needs
jobs when other companies
made a decision to leave.
And we do all that through
the lens of use the platform
of the company to drive social
and environmental sustainability
that is good business.
These things are good business.
What we did in Katrina
to respond to Katrina
was good business.
It looks expensive
sometimes on the front end
but it pays back over time.
That creates an environment
where people like me
want to work and stay.
And all that fits together.
- You're, you talk a lot
about creating an atmosphere
of transparency and trust and everything
you've just talked about is
kind of supporting evidence.
How do we more broadly
deal with the trust issues,
where I say we more broadly,
I mean the business community
has created a real loss
of trust in terms of
the social contract and the
belief that we're trying to do
anything other than line our own pockets.
How do we restore the trust
around we're trying to improve
the lives of customers,
employees, improve our footprint
in communities and so on?
And do you feel, do
you ever get frustrated
that despite all the great
things that you're working on
that there's no real shift
in the public perception?
- I think it's a concern.
The words free enterprise or capitalism
can be looked at in a negative fashion.
I don't think it's just true now,
it was probably true in the '70s and other
periods of time as well.
And over time you are what you are
and the truth should come out and fairness
should win the day.
I think transparency is part of the answer
and when you make a mistake as a business,
you need to admit it.
To the extent that you can
and should as you weigh
all these things, be
completely open and transparent
about everything and
then it is what it is.
And I hope not to be
lumped in as an industry
or as a business with
others that we don't deserve
to be lumped in with.
And when we make a mistake or fall short,
let's talk about it as
much as we possibly can.
We have a sustainability report
that we issue once a year
and we've set goals, for example,
on social and environmental sustainability
that we fall short on and
what we try to do is to say,
we're hitting this one,
we're hitting this one,
we delivered that one, but
we're short on this one,
this one, and this one and here's why.
And I think that's the
approach that we need to take.
I think the world is for
sure getting more transparent
and it will be more
transparent in the future
than it has been and when that
light gets shined on Walmart,
we want you to like what you
find as much as possible.
And when there's something
that's not right,
let's be honest about it and
let's go do something about it,
whether it's the packaging or the product
or compliance and ethics.
One of the things I have
experienced at Walmart
is we've gone from, as I
guess all businesses do,
we've gone through these phases.
I talked earlier about those
customers and associates,
and then it broadened
to be more stakeholders.
Working in international for five years,
we had a real focus on
compliance and ethics
and I've learned what it
means to really set up
a fully functioning compliance
program and ethics program
and the talent, the
process, and the systems
that are necessary to do that.
And compliance has a
function just like legal
or just like merchandising
or just like operations.
And to be a great company,
you have to be good at
all of those functions.
You can't just be good
at one or the other.
You may find yourself,
if you go to work for one
of the larger companies
dealing with that breadth.
And I personally like the
breadth and variety of it
and maybe you will too.
- One of the things that's
challenging about being a CEO
when you have millions of
employees and customers is
helping those people
understand what you do
on a daily basis.
You're active on social media.
Is that your way of
kind of shining a light
on your daily routines
and so on or is there
kind of a deeper strategy behind
your social media activity?
- Oh, I didn't want to be.
Our team talked me into
it and shamed me into it,
started telling me how old
and out of touch I was,
which hit a nerve, so I decided to do it.
I started with Instagram, now on Facebook.
And what it's kind of evolved
to is a recognition tool.
We had an associate early today, Chris,
one of our assistant
managers, that had this idea
to take our lawn and garden area
and since we're not using it right now,
build a bunch of bikes for
Christmas and group them
by size and put big price
point signs on them.
I don't know how many kids
there are in Raleigh Durham
but they're all getting a
bike from that Walmart store
because we built them all.
But he showed initiative
and it's really impressive
what he did so we snapped a photograph
and if it's not already
posted it'll be posted today
on Instagram and Facebook
as a way to recognize him.
When we're out in stores
and clubs we try to do that
and try to tell the story.
And the responses I get back
are almost exclusively from associates.
There's some customer
interaction and it's actually
a terrific tool if we've
got a weakness in a store,
I hear about it from a customer.
If we've got a need in a store,
associates will frequently say
come to store number such-and-such
but don't tell my manager I invited you.
(audience chuckling)
That kind of stuff.
It's really working to
surface issues and it's
primarily a way to recognize people.
It's not probably what I would
prefer to do, personally,
a lower profile would be more enjoyable.
- I'm going to follow up on that.
I'm going to ask one more question
before I turn it over to the audience.
This low profile, that desire
has been kind of knocked back
because you've now become
the star of these ads.
And so how did you get talked into,
how did you get talked into being the?
- Yeah, I was misled.
(audience laughing loudly)
This person walks into my
office and they said, hey,
well, it starts with this.
They know how much I care
about the company's reputation.
I grew up in Walmart.
I am a product of Walmart.
I am proud of Walmart.
And I understand Walmart
in a way that those of you
that don't work there don't.
I've seen great people, smart
people, hard working people.
I've seen us build a
business that is incredible.
And I'm really proud of it.
And our reputation
doesn't match the reality.
We're not perfect, we've
got all kinds of problems,
but the reality is somewhere here
and the reputation is some
down here and that bothers me.
Our team knows that and a
person walked into my office
and said, Doug, we want
you to show up at a store
and we want you to film
this little commercial.
It won't take you very long,
it'll be about 30 minutes.
We're not going to do much with it,
we're just going to put it on
a few social media type things
on the internet, you may never see it,
but let us try it and see if it scores,
see how people respond to it.
And the next thing I know, it's on TV.
(audience laughing)
That's what happened.
- Okay.
- I'm ready for it to be done.
(audience chuckling)
- So you're not planning
a whole series of these.
- No, please, no.
- Oh, okay.
- Please, no.
- Alright, so let me turn
it over to the audience
for any questions that you might have.
Yes?
Get a microphone here.
- Congratulations on your
basketball victory last night.
I fell asleep when it was 31-31
but I woke up this morning
and saw the score.
Were any of you there?
How are you still awake?
(audience chuckling)
- [Male] Hey, Doug, thanks
for coming down today.
There was an article in
the Wall Street Journal
two days ago.
It talked about productivity
of people who report
to a younger manager is down by 12%.
Productivity of people who
report to younger managers
is down by 12%.
Tell me what challenges you face.
How do you, do you face
that issue at all, you know,
when you have people who
are more senior to you
in the different positions,
how do you manage that?
- Everyday that goes by I'm getting older
and it's less of an issue.
(audience laughing)
I used to hear all the time,
you're so young for your job
and I don't hear that as much anymore.
(audience laughing loudly)
There were some really
uncomfortable moments
when I was in my 30s and there were people
that reported to me that
were 50 years old or older.
And I think what I learned
is that listening and respect
is really key.
It kind of reminds me of my
first day in a Walmart store.
When I walked in as an assistant manager,
the department managers
looked at me and sized me up
in the first few moments.
Is this a person who's going to be a jerk
or are they going to listen to me,
are they going to try
to tell me what to do
even though they have no
idea what they're doing,
are they going to listen
to me and support me
and give me what I need
so I can be successful
because I've been doing this for years.
I choose this, over and over again.
And if you listen to people, support them,
and give them what they need,
eventually they don't
care what your age is.
I'll just tell you one more quick story.
The first day I moved into the office
they had me in a merchandising department
with a lot of people that
were more senior than I was.
And one of those people
walked up to me in the hallway
the first day and said,
what are you doing here?
And I said, what do you mean?
Well, you're a young MBA graduate
with no store manager experience.
That's not where we get buyers.
We're all experienced store managers.
You're not going to fit here.
This isn't going to work for you.
And I thought, well, that was harsh.
(audience chuckling)
- Yeah, welcome.
- Yeah.
Within a week or two, that
same person was saying,
hey, Doug, come over here, how
do you turn this computer on?
(audience laughing loudly)
Seriously.
We'd just gotten this new
tool called Retail Link
and you could run all these queries
and learn what was selling
and the buyers were expected
to learn how to use that new tool.
So we became really good friends.
(audience chuckling)
Now I'm the old guy saying
how do you work this thing?
- [Male] Hi, thanks so much for coming
and speaking with us today.
One of the themes and ethos
that seems to permeate
a lot of our classes here
is that you can do well
by doing good and that
might mean by taking care
of your employees,
investing in your suppliers,
investing in your community.
You talked a little bit about
the investment you made,
the $2.7 billion, and explaining
that strategy to investors.
Can you talk a little bit
about some of the push-back
that you faced from the investor
community over the years
when you have tried to
do good as a company
and how have you overcome that resistance?
- Yeah.
The story that I told you about
our sustainability transformation,
our mindset shift after
Katrina, in the first few years
when we would try to talk
to Wall Street about it,
they tuned out so we would
have an investor conference
and we would talk about the numbers,
we'd talk about what was
going on in core operations.
And when we started to
talk about sustainability
you could literally see their eyes go down
and they went on their laptop or whatever
and they just tuned it out.
They weren't upset that we were doing it
even though we were
trying to explain this is
good for our business.
We went from paying people
to pick up the cardboard
behind our Sam's Clubs
to selling the cardboard
because we finally figured
out it had a value.
The first year we went through this change
when I was at Sam's, we
went from paying people
to making $50 million dollars
in income selling cardboard.
We just had the wrong mindset.
Sustainability is good
business, financially.
And we can show it to you on the P&L.
But Wall Street, the first
few years, just tuned out.
And now there's a group,
there are different groups,
there is a group that says anything you do
must translate into improved
cash flow and earnings growth
or you shouldn't do it.
And I just disagree with that.
I don't think that's the whole story.
Yes, we're expected to grow earnings
and I believe the investments we're making
will grow earnings in time.
I just may have a different
time horizon in mind
than that particular investment group.
Now there are all kinds
of other investment groups
that do care about this
and they come to see us,
and they encourage us,
and they challenge us on
what we're doing as it relates to fish,
or what we're doing as
it relates to healthcare
or other areas.
And they invest in the company
but they're not our biggest shareholders,
they're just one piece of the puzzle.
In the case of Walmart,
we have a huge advantage
in that half of the company is still owned
by the founding family.
And they have a mindset
that's longer term,
that cares about culture,
that cares about associates,
and cares about sustainability,
social and environmental.
When we are interacting with the family,
the family wants to
know what are you doing
for our associates,
what are you doing around sustainability,
so I get this balance.
And the investors, the
Walton family, in particular,
loves the tension that I feel
and the management team feels
to deliver results and do
good because it's that tension
that causes you to make
your best decisions.
But it does require you to
have your thinking cap on.
You're constantly
balancing different things
as you try to deliver
this ultimate outcome.
There's one over here.
I can hear you I think.
- [Male] Cool, yeah, thanks
for sharing about like
the family and the diversity
of Walmart, that's really cool.
How do you foster that kind of diversity
and that familial
environment within Walmart
with such different
types of people that are
part of your organization.
- Yeah, one thing that we
do is we have associate
resource groups that
represent their interest
within the company and
they're influential with me
and with others.
We've got a PRIDE group,
African American group,
all kinds of groups, new ones
popping up every now and then.
And we engage with them
and we hear from them.
These Saturday morning
meeting opportunities
and other meetings that
we have give me a chance
to talk openly about
diversity and inclusion
and what kind of culture
we're trying to create.
And we just, I think
have, to a large extent,
woven diversity into
everything we do whether it's
our advertising, we had
a customer stop us today,
the item was called Little
People in the toy department,
and this particular
customer was a Caucasian
but with an African
American child and she said
I want an African American version
of this Little People item.
And Walmart's usually really good at this
but you messed up on this one item.
But I shop here because
you're really good at this.
Well, that's an example
of our business benefiting
from the fact that we think in
a diverse and inclusive way.
And I've already been in
touch with the toy merchant
and they're going to fix it
on that one SKU so that we
don't have that problem in the future.
It's good for business, we
benefit from having diverse teams
and are trying to become
even more diverse over time.
Talking about it all the
time, promotional decisions,
communication, all that is key.
In this situation you can't
talk about something one time
or make a set of decisions
one time and then go on
to something else.
You're constantly like a gardener,
working on keeping these things alive.
- [Male] Thank you.
Hi, we see some acquisitions
in the Brazilian market
with other stores, or other flags.
How do you keep the culture
from the United States
to those completely
different stores that Walmart
acquired over the past years?
- As we've grown globally
and made acquisitions,
we've looked for companies
that are culturally aligned
with us, act with integrity,
have strong governance,
and hopefully a business model
that's somewhat familiar with ours.
Most recently, this acquisition in Africa
would have fallen into that category.
Operating in sub-Saharan
Africa is quite different
than operating in Canada
or the UK, for example.
But the management team had
a culture and a set of values
that was very much like ours so we found,
even after the acquisition,
that they had very good
compliance and ethics
and governance in place.
Picking the right one to
begin with is important.
And then secondly, having
the right checks and balances
in the business so that
you can check in on things
from time to time.
Some independence is also important.
- [Female] Hi, thank you for being here.
Some of the stories that
you've shared seems like
you've created a culture
where people can come to you
with feedback and come to you with ideas.
How have you found that
you've been able to build that
and maintain that in such a large company
where your associates and
customers feel empowered
to speak up and share
their ideas and feedback?
- Yeah, to the extent you can
you need to try and keep it small.
I go to meetings sometimes
where you can tell people are
just trying to impress
and they're on play mode
and they just want to talk for 30 minutes
about all the great things they're doing.
And those really aren't
very productive discussions.
We make more progress when we talk about
what's not going well and when
we're just frank about it.
And I think a career tip would be
if you want to get promoted, build trust.
Build trust by being honest
and just get straight to it.
If something's not good, say it.
I made a mistake over
here, or that's not right,
I need to work on this.
Yeah, these things are going well
but this is what I'm focused on.
That'll help your career maybe
as much as anything else.
- [Female] Hey, thanks for being here.
You talked a little bit about,
or we have talked a little
bit about how Walmart
has really taken the lead on
so many different elements
from operations to
culture to sustainability.
And I guess I wonder whether
or not with all the power
that Walmart wields in today's economy,
do you feel any obligation to
kind of be a thought leader
and kind of share some
of your lessons learned
and share some of those best practices,
especially around things
like sustainability?
Or is there some balance
to that around maintaining
a competitive advantage
and kind of how that
impacts your reputation as well?
- Yeah, great question.
When we first started on
this journey, early in,
that came up and we made
a conscious decision
on matters related to sustainability to be
completely open about them.
And I had this great
opportunity at one point to call
one of our biggest competitors.
We had made a change in one
of our units to move from
a Freon refrigeration system
to a closed-loop CO2 system,
which, in the case of a leak,
has a lot less harmful impact
on the environment than the
previous system we were using.
And just to use that one
example, I called the competitor
and said we think we've
invented something new
that is more efficient
financially and better
for the environment and we
wanted to invite your team
to come see it.
That was fun!
(audience laughing)
There was silence on the
other end of the phone
for a moment, like waiting for the but,
or the whatever that
was going to come next,
and then eventually the
person said, really?
Where is that place?
I'll send somebody.
And I thought that was really cool.
We compete on lots of things
but there are areas where
legally we can share
information and we should.
And we challenge other
people to do the same with us
and it happens sometimes.
And now these groups have formed.
We've got these groups within
the company that engage
universities and NGOs
and suppliers and others
that are kind of think
tanks on subjects, toxins,
how do we get toxins out
of our products, packaging,
sustainable farming,
those kinds of things.
And so you end up open-sourcing Walmart.
Walmart, to some extent,
has become an open platform.
I would like for it to be even more so.
- [Male] Thanks.
Do you or your wife
prefer organic food only?
And what do you think about organic
and natural food, in general?
(audience laughing)
- I've been married a
long time and I've learned
not to speak for Shelly.
(audience laughing)
On behalf of myself,
we drink organic milk,
we use organic eggs, we do
eat some organic products,
and at Walmart we're carrying
more and more organic.
As we think about feeding nine
billion, 10 billion people
in the world, policies
around GMO, pesticides,
I got to go to a farm in Iowa not long ago
and learn how cover
crops are helping in Iowa
with some of the issues
we've had with rivers
to offset the need for
pesticides and how we might weave
some of those policies
into our own decisions.
And we work with Kellogg's
and General Mills and Cargill
and everybody else trying to
develop policies that create
a more sustainable
environment in this country
and in others.
I think using Walmart
as a platform to do that
is smart and for me, personally,
our family eats everything
from Walmart and Sam's Club
so I need it to be great
and safe and healthy.
- Okay, I think we have time
for one more question here.
- [Male] Thanks for
speaking with us today.
Over the past many years, I
know Walmart has been actually
banned in some of America's
largest cities, New York,
San Francisco, and only recently
come to Washington, D.C., Chicago.
Are those efforts that
Walmart now feels comfortable
saying we're okay living
without having stores
in those largest cities
or are those locations
that you're still pursuing
and hoping that maybe
the message of sustainability
in more recent times
will help local municipalities
come to accept Walmart?
- Yeah, there have been fights
in all kinds of markets,
big and small, politics
and sometimes labor,
don't want us to be part of the equation.
We don't want to be somewhere
where we're not wanted.
The reality is in those situations
where we've gone through
and opened, customers want us to be there.
And so you've got this disconnect between
what politics and the market might say
and what the people that
live there actually want.
- Thank you very much for your time today.
And I know the audience
sort of loved all those
experiences from you.
Here's a little small
token of our appreciation
for your time today.
- Thank you.
- Thank you very much.
- Thank you.
(audience applauding loudly)
