The opening line in Edwin Starr’s 1970 Motown hit and protest song, “War, huh yeah, What is it good for? Absolutely nothing … !” asks and answers a burning question of that era. My adaptation, as it applies to a corporation’s vision and purpose, is a burning question for leadership in 2016. Let me cite a recent example.
Originally, part of Sam Walton’s vision was to grow his business by serving and supporting small towns. He said, “Our key strategy was simply to put good-sized discount stores into little one-horse towns which everybody else was ignoring. We knew our formula was working even in towns smaller than 5,000 people and there were plenty of those towns out there for us to expand into.” Sam’s purpose included the benefits of those infamous economic clichés trickle-down-economics and a rising tide lifts all boats, by delivering them to every small town that opened a Walmart. It might have been part of what he saw as a higher purpose. But over time we’ve seen how big box stores have hollowed-out main streets and how small towns have been left scrambling to remedy the economic realities. Then, ten years ago, Walmart’s vision seemed to have a higher purpose as it opened more stores in more small towns, bringing some hope … until January 2016. Sam Walton must have rolled over in his grave as Walmart leadership delivered the coups de grâce to small towns, doubling back on what was obviously a flawed vision with no higher purpose.
So in January Walmart announced it was boarding up 154 stores in small towns across the United States (269 worldwide), thereby, trickling down the folly of what has to have been a lack of vision. And as for a higher purpose and a rising tide, it has drowned all hope in these towns.
A decade ago––which is short-term for visionary leaders––under then CEO, H. Lee Scott, Jr., the goal appears to have been to expand into more underserved, small markets. The stores would draw from the county and regional populations and sales, revenues and market share would grow, which would lead to increased share value ($88 in January 2005). Perhaps, at the time, it seemed like good business, good planning and a good vision with a higher purpose. It wasn’t.
Warren Buffett once said, “Looking in the rearview mirror, things always look clearer.” But ten-years later the rearview from Bentonville, Arkansas isn’t so clear, in fact, it’s damn dark. Those small-town stores are bleeding, the market share strategy has run its course, those long-term goals have not materialized and stock is down (i.e., $68/share April 2016). Walmart’s leadership decided it was time to salvage shareholder value and jettison stakeholder value (i.e., small communities). So much for vision and a higher purpose.
Communities are important stakeholders and the commercial component of a community is its lifeblood, providing services, employment, and support for the long-term well being of the community. We have learned––at least some leaders have––how crucial this role is in achieving long-term, socio-economic balance and serving a higher purpose. If the last two centuries have taught us anything, it is that unbridled gold rushes, one-company towns, global cost chasing and relentless pursuit of shareholder value truncates a long-term vision and undermines a huge segment of the economy––leaving ghost towns as a boarded-up legacy.
Walmart’s recent decision suggests that the company’s collective leadership are disciples of Milton Friedman, who in the 1970s declared from his University of Chicago podium that “the only purpose of a corporation is to serve shareholders.” Of course, today, overwhelming evidence shows the damage Friedman’s principle has wrought on our socio-economic system. Supposedly we’ve learned that such a myopic focus on shareholder value is, as Jack Welch tactfully declared, “the dumbest idea ever.” And yet somehow this “dumb idea” persists. Walmart’s leadership needs to answer the question: “Vision … What is it good for?”
Great leaders look beyond ten years, they take on a higher purpose and make everything a personal commitment. That means their vision includes the lives of their children, grandchildren and the entirety of future generations, and the communities where employees and customers live. They don’t approve ten-year plans that could deliver positive short-term value to shareholders but could create long-term negative consequences for the communities they serve. Great leaders do not lead based on the connection between their compensation and share value, they lead based on the connection between their vision and a higher purpose, and their personal integrity, character––and the lives of others.
The ghost of Milton Friedman is still whistling past the 20th century, corporate graveyard and I assume Sam Walton’s ghost is now doing the same, singing: “Vision … What is it good for? Absolutely nothing!”