Most Influential CEOs: Walmart's Mike Duke Grows a Greener Operation
Some call it a PR move, but the head of the world's largest retailer says he will put the earth first.
Coinciding with the regime change in Washington, the nation of Walmart, with its population of over two million and an annual GDP of over $400 billion, was transitioning power from the 10-year term CEO and President Lee Scott to Mike Duke, its then vice chairman, leading Walmart International.
Focusing on sustainability wasn't all Duke's idea. It was Scott who, in 2005, (in an image-reinventing effort) laid the groundwork for reducing Walmart's bigfoot-size carbon footprint with a three-fold environmental agenda that included using 100% renewable energy, creating zero waste, and stocking its shelves with green products. But it's Duke's mark as CEO that will ultimately determine not only Walmart's success in the sustainability effort but also the future of the greening of Big Business on a global scale.
The 60-year-old Duke is Walmart's fourth CEO and the first to have climbed the retail behemoth's ranks without personally working with Sam Walton -- who died three years into Duke's career with the company. When Duke was hired at Walmart in 1995, he was a 23-year veteran of the retail industry with positions at Federated Department Stores and May Department Stores. Though he considers himself a "retailer at heart," Duke originally pursued industrial engineering with a degree from the Georgia Institute of Technology. "The engineer in me likes data. I like research. I like metrics. More than anything I love an elegant process for arriving at innovative solutions that are both profitable and sustainable," he told the audience gathered for the 2009 meeting.
Duke's penchant for strategic thinking and problem solving has been manifest throughout his Walmart career in leadership positions in the logistics division, US operations, and international operations. As senior vice president of logistics, Duke developed his first major system redesign with a consolidated "one door per store" merchandise distribution system. It required Walmart's truck fleet to carry full loads for each store delivery thereby reducing road miles, carbon emissions, and docking space.
Under his leadership of Walmart International, the company opened nearly 8,000 retail units under 55 different banners in 15 countries. His "major in the majors" strategy furthered the goal of global expansion by focusing on markets with the greatest growth opportunities and pulling out of less profitable markets, as he did in Germany and South Korea.
Most recently, Duke put his engineering noggin to work on a complex, earth-shaking (or rather earth cooling) system that will no doubt be a part of his legacy -- the Sustainability Product Index. In an effort to evaluate the environmental impact of every product Walmart shelves, the index creates a single source of data for measuring sustainability within each of the company's 100,000 global suppliers in the areas of energy and climate, material efficiency, natural resources, and people and community. To further the goal of going green, Walmart funded and co-created a Sustainability Consortium that includes government and university leaders, NGOs, and other corporations.
The company has even launched a program to sell food from local farms, a move that has greatly surprised skeptics. Writing in Atlantic magazine last month, food writer Corby Kummer came around to the opinion that Walmart's local food program, called Heritage Agriculture, "could do more to encourage small and medium-size American farms than any number of well-meaning nonprofits, or the US Department of Agriculture."
Through its network, Walmart now encourages farms within a day's drive of one of its warehouses to grow crops that otherwise would take several days to arrive in trucks from faraway states. "In many cases the crops once flourished in the places where Walmart is encouraging their revival, but vanished because of Big Agriculture competition," Kummer points out.
For initiatives like these and others, including a recently stated goal in cooperation with the Environmental Defense Fund to eliminate 20 million metric tons of greenhouse gas emissions from its global supply chain, Duke has earned Walmart the reputation as a "Green Giant." They also helped earn Duke a top five spot in the Ethisphere Institute's most influential people of 2009 list. That year Forbes named him eighth among the World's Most Powerful People. (Of course, such accolades haven't stopped Walmart's detractors from claiming that the new green ethic is nothing more than green-washing, and that all of Walmart's initiatives combined will not offset the environmental damage caused by the store's operations.)
While the personality type of an engineer doesn't usually conjure images of a "people person," Duke is well-known for being a nice guy. He cites his love for people as one of the factors motivating his career in the "people business" of retail. Duke stated in his 2010 Global Sustainability Report, "More than any other retailer in the world, I believe Walmart has the opportunity to make a positive difference in people's lives. We do this through our mission of saving people money so they can live better. We are also doing it by expanding our definition of sustainability to include people and their communities." Long criticized for its disastrous impact on local communities, Walmart has stepped up its philanthropic efforts, exceeding last year's donations to US non-profit organizations by $89 million for a total of $467 million.
"You can be both caring and performance-driven," Duke told students in a Management of Financial Institutions class last month at his Georgia Tech alma mater. "Success in business is totally about performing, but doing it in the right way -- caring about people." In pursuit of a high-level corporate position he advised, "start with the customer. And spend an excessive amount of time on the front line even when you're in the corner office. Don't take a job that doesn't allow you to talk to customers."
For Duke's greening of Walmart, the CEO hasn't had to sacrifice the green. This year the company saw a 7% profit margin to $14.3 billion and reclaimed the top position on the Fortune 500 list of America's largest corporations from the previous year's title-holder, Exxon Mobil (XOM).
Maybe nice guys do finish first after all.
For more on Walmart, see Josh Lipton's Pop Biz report below.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter