The Value of Values with Walmart CEO Doug McMillon

0:05Doug McMillan might be the most important CEO in the world. That's because he is the CEO of Walmart, which is the largest company in the world, both by revenue and the sheer number of people they employ. They have over 2 million employees. But it's because of Doug's commitment to leading Walmart into the future based on its values that makes him so important. So I sat down with him to talk about his 33-year career, in which he went from packing trucks in the loading bay to becoming the chief executive, to discuss the value of values and how Walmart can have an impact on the whole world. This is a bit of optimism.

0:50Doug, thank you so much for sitting down with me. This is really exciting for me. I honestly believe that Walmart is one of the most important companies and you're one of the most important CEOs in America today because the scale that you work at and you're so values-based as a company, I think you absolutely represent an image of what our nation could be like again. A, am I wrong? And B, how does that feel? Like a lot of pressure. It feels really big. Sorry. Be real for a second. I think that Walmart is, and as we strive to fulfill our potential, can be a really positive force in the world. It's 2.1 million people.

1:40We're in 19 countries with retail operations, but we have operations in other places where we source and things like that. This is my 33rd year here. I started as a teenager. These people are for real, and they are hardworking, well-intentioned people driven by purpose with values. and yeah, we have imperfections and things we need to get better at. But it's inspiring to be part of this and try to make a difference in the world by serving people in an effective and broader way. How would you articulate what Walmart stands for now? Our current definition, which I still am displeased with to a degree, but it's been helpful, is that we're a people-led, tech-powered, omni-channel retailer dedicated to helping people save money and live better.

2:24So what I like is it starts with we and people led. And we are proud of what we're doing with technology today and what we will do with technology. It's very exciting. And I like that it says we're dedicated to a purpose. But if you simplify that a bit, it's a team dedicated to serving others. That's basically the essence of the place. And if I could boil Walmart down to one word, if I had to, and we've been talking about this for a while now, so there's some thought behind this. If I had, in my experience, to boil Walmart down to one word, it'd be serve. And if you gave me two words, it'd be servant leadership because that's what I see and that's who I think we are.

3:00Walmart's had a bumpy road over the years. Some of us can remember in the news there were some scandals in terms of health care and sort of not keeping people just below employed. So they had to use public health care systems, welfare systems. There was a time where everybody wanted Walmart in their towns. And then we went to this weird period where people wanted Walmart not in their towns. A, what happened then? And how are you bringing Walmart away from that, out of that? Because it seems like the brand has made a turn. You become highly attractive again for talent and for the community. It's a long story, and I'll try to be brief.

3:35But if it goes on too long, just interrupt me. But the company started like a startup. It was a startup. And we were focused, and Sam was focused on serving customers and partnering with associates, all being in it together. And then eventually shareholders will benefit if those two stakeholders are pleased and happy and excited. As you grow, when you get big and people start criticizing you for harming mom and pops or not paying people enough or other things come up that are imperfect and Sam Walton passes away, the American dream story of an entrepreneur fades in time. And now you're a big company instead of being that startup.

4:12There's this natural societal pressure that comes with that. We were winning and we had a really good model that worked, but we weren't mature. We didn't see the whole thing. We didn't think about systems. We didn't think about our impact on the whole system. We thought about what we were good at. So when the criticism started and I was here and close enough to leadership to know what the conversations were like, I wasn't in one of the biggest jobs, but I was around. It started with, well, we're great people. we are well-intentioned, ignore it. We'd already been taught, even Sam would say, ignore the newspapers because they were saying good things about us.

4:56That's not really helpful. We need to be humble and hungry. So ignore the papers. Because then the papers start saying bad things and we're still in that kind of, they don't understand us. They don't know how good-hearted we are. They don't know. They just don't know. So that phase of ignoring them didn't work. the criticism builds. So then we went through a phase of, well, just tell them the truth. So we'll fight back. So if they say this, you tell them the truth. Well, that was a later news cycle and nobody cared about the good news and the damage was already done. So that phase lasted for a while.

5:26And then you got to give Lee Scott a lot of credit. Lee was our CEO at the time and I was reporting to him. He started a conversation with us about, we are imperfect and we know that and we can do things better. So instead of fighting back with facts, let's take a period of time and go see the people that think they hate us and hear the harshest criticism we can find. And what has merit? Let's apply it. Let's actually focus on making the company better. And there's a weird moment for us where there's a speech Lee gives, because we don't normally give speeches. We just talk to each other. But 2005, shortly before Hurricane Katrina hit New Orleans, he made a very aspirational set of commitments for us that were related to people and the planet.

6:12And it felt very uncomfortable for a lot of people around here because it was so aspirational, but it's actually what we needed. And it was informed by all the criticism we had been hearing. Some environmentalists and others that didn't want to meet with us met with us secretly because they didn't want to be seen with us and gave us that harsh criticism. And once we started seeing the merit of some of those things, we actually started changing. Then Katrina hits. Walmart helps in New Orleans in a way that the country sees it, which feels good for a minute there, people thought good things about the company.

6:40Lee then turned to the rest of us and said, did you like that? And we're like, yeah. He said, okay, what would it take for us to be that company every day? And things started to change. But then other things happened down the road. The internet happened and we were slow to embrace it and we're under pressure financially and otherwise. And so it's taken a while for us to kind of get back on our feet and understand that we need to change a lot all the time. The thing that happened when I first moved into this role is that the leaders paused for a minute to say, wow, it looks like we need a lot of change.

7:16Our sales were declining in some areas. We didn't have much of any commerce business. We could see where the customer wanted to go and we weren't there. After a period of discussion and reflection, we realized we really just need to focus on what won't change and shouldn't change, and then be open to changing everything else and tell people that. So we solidified a purpose and values, the culture to serve those values, and then said things like, if we don't need stores, we won't have stores. If customers don't want them, we won't have them, which gives you a real license and a kind of a breadth to drive change.

7:48You connect with and talk to a lot of the CEOs from the biggest companies in the country. Do you have an opinion about how they speak behind the scenes versus what the direction of American business is? Because I know sometimes there's two narratives. You know, the number of times that I've had conversations with CEOs where they will happily admit that Wall Street is a frustration and the pressures that they feel that they are making decisions that they know aren't necessarily good for the long-term value of their businesses, but they make them anyway. And it's kind of amazing that they will talk about those things behind the scenes, but they'll never obviously talk about those things publicly.

8:23I'm very curious because you, A, have been at the company for a long time. I think you're able to take risks that a lot of them probably envy, that they wish they could take some of the risks that you're taking, make the changes that you're making to adapt your company for a new world. Do you have an opinion of sort of like what the direction of American business is going and what we need our leaders to do to take it there? I have a big advantage. We at Walmart have a big advantage in that we have a Walton family that still owns about half the company. They have a long-term view. They care about things like values and purpose.

8:55When I meet with them, they ask me about things like becoming a regenerative company, working on sustainability, how are associates doing? Are we paying enough? Talk to me about health care. Good stuff. I do and we do have the opportunity to make longer-term decisions. So we've taken hits for investing in wages. We've taken hits for investing in e-commerce and technology that are short-term painful and mid - to long-term beneficial. And so I'm grateful for that. If I was in a different situation, I can totally understand how this short-term pressure can create an imbalance. Boards need to have some guts.

9:33CEOs need to have some guts. And the people that are short-term investors don't need to be focused on and too heavily weighted. I got tickled one time we were talking to an investor and they were asking me about the long term, long term, long term. And then they defined long term and it was less than a year. And I was like, dude, your definition is so different than mine. I look at this as we want to make decisions now that help us to be here for the next generation. I believe this company has some really good characteristics. It tries to figure out how to give people a good value. We don't try to figure out how to charge more.

10:07We try to figure out how to charge less. We work on the environment. We do things that I would like the next generation to have access to. So my, in our view is we're trying to make decisions that will help us be there for the next generation of retail. But I do talk to a lot of CEOs who want to do that, but they can't because of all the pressures. It's just, it's hard in some circumstances. Are you optimistic that we will get to a time where those CEOs can be more long-term focused? Can be more like Walmart? I think some do. So I don't mean to throw everybody in one bucket, and I don't think you do either.

10:43It's a continuum. But the balance for a lot of years has been tipped to short term. Yeah. I mean, even when the business roundtable came out and said we have a view that we should serve all stakeholders, that was really a time horizon issue. Some people really criticized that and said, no, business should just focus on profit. Well, you can't have profit if you don't have a planet. It's just a question of time horizon, and we just have a longer-term horizon. So that was the business community trying to say to the world, we want to have a longer-term horizon. And think about systems and think about these various stakeholders.

11:13And some of the pressure we got back was stay in your lane. So I do think it's a continuum to change it. I'm not sure what we have to go through to get there. It's hard for me to imagine something changing quickly. There's so much volatility in the world. We were talking about this recently. Just processing the volatility and the direction of things is difficult. and to resist that and make good long-term decisions takes leadership. And you knew Sam, right? You knew Sam Walton. I got to meet Sam Walton. You got to meet Sam Walton. What was it about what he stood for that inspired you to want to have a career?

11:52You spent, as you said, 33 years here. Yeah. I mean, you could have gone off and had other jobs and done other things, and yet you've worked your way through this organization, done so many things. What kept you here? When I was 16, my dad, who was a dentist, decided to move us to Northwest Arkansas to open a practice here. And shortly after, he said, you're going to pay your own way through school, so you'd better get to work to make some money. And so I went to McDonald's and the Kraft Cheese plant. And there weren't that many employers in Bentonville and the Walmart warehouse. And the Walmart warehouse paid$6.50 an hour, which was more than the$3.35 at McDonald's.

12:28So I took the Walmart job and I started unloading trucks during the summer while I was in high school. And immediately the people that I was around in that warehouse were infectious in terms of their love of their work and the company and the stories they told about their career, their life, and about Sam and about what the leaders at that time were doing. There was this one guy named Johnny that I was unloading trucks with that was talking about how he had$200 ,000 in profit sharing and a new truck in the parking lot, and Walmart had changed his life, and it's a great place to build a future.

13:00And so I'm 16 years old thinking, I don't really love unloading trailers in this heat, but wow, there's something going on here. And every step along the way, I went to school and went to graduate school and worked for Walmart or the Walton-owned bank group during that period of time. And then I came back here as a buyer after completing my MBA program, started in 1991 in the home office. All the way through, including that moment, the people that I came into contact with were the people I wanted to be around. And I loved how they thought, and I could see a really bright future.

13:32What was the biggest surprise? I mean, you lead the largest company in America, both sides of the coin, which is one is like, wow, I have the ability to do this that I want to get done. And why can't I get this thing done that I want to get done? I think the surprises that went through my mind was just, I thought I loved this company and felt a lot of ownership. But when you move into that job, there's a whole nother level of that. But the other thing is risk taking. I'm not a person who gambles or takes risks. I'm a pretty conservative person. But it became clear that for the company to be here in the future, we had to do some more dramatic things.

14:07And that was tough for me because I'm more conservative. And I've had to learn to be part of taking some really big risks, whether it's the wage investment or the acquisitions we've made. Without change, you can't succeed. With change comes risk. And on a platform like this, it's visible to everybody. So that creates a lot of personal risk. And I had to learn to get comfortable with that. Was the company open to change prior to you coming in? Or was it trying to sort of just stay the course? Mixed bag. Mixed bag. We have so many people in so many different circumstances. Almost anything you want to say about Walmart is true somewhere.

14:52Fair. So I think generally we had to take some bigger risks. And the board, our chairman, Greg Penner, the management team that I was a part of, was up for those. buying jet.com, buying flip cart and phone pay in India, investing in the modernization of our tech stack. We had a lot of tech debt. We've largely dealt with that now. The wage investments, 2014, 2015, we made some big wage decisions. And we had one day when we went to New York and our market cap went down$20 billion because of our wage investment. That was a tough day in one way, but it's also like the best day. Those are the best days I've had in my career is when we've been able to announce big wage investments for our associates.

15:37Yeah. And Wall Street doesn't like that at times. It's so funny though. The companies that I admire are the ones that are willing to take risks to do the right thing. CVS taking cigarettes off their shelves because it's the right thing to do. It plays to their purpose. They get punished by Wall Street. American Airlines making a mid-contract correct decision to pay their flight attendants and their pilots more. Didn't have to, but an ask for nothing in return, Wall Street punishes them. And yet in every circumstance, the stock price and the EBITDA come back higher than they were before because they were the right decisions to make.

16:09It must be very satisfying knowing that when you make the right decision, it pays off for the long-term holders in the end. What's something specific that you've been a part of at Walmart that if every project or everything was like this one thing that you were part of, you'd be the happiest person alive. It's probably the experience that we went through before we set our sustainability goals. That introspection around how are we impacting the environment with products and waste and things like that and learning together what sustainability meant. And realizing that you can make decisions to remove packaging, change packaging of reading, going on field trips, experiencing things differently, listening to the critics, that was a really sweet time.

16:59And it culminated in what I described earlier, which is a mindset shift for the company that's now been in place since that mid-2000s period. A few of us had time to go and meet with Paul Hawken. He's a famous environmentalist. and I was expecting and was prepared for a discussion about the environment. And before we could talk about the environment, Paul asked us questions about our people. Tell me about your wage rate. Talk to me about health care. It was people, people, people. I later learned, I read a book, I think it's called The Natural Step that describes the system conditions for sustainability.

17:34And one of the principles is if you don't take care of people, they will kill the last animal and harvest the last plant to take care of their family. So people and the environment are obviously late. And so when I think about our footprint, internal and our relationship with suppliers, designing this in a way that people are taken care of through the process. Our people paid overtime in the factories that make products for us, regardless of the country or company they work for, in addition to our own associates. That is so woven in, and that was a really meaningful conversation. And it's so obvious when you think about it, which is if somebody's in a survival mode, the environment is the last thing they're thinking about.

18:13Hierarchy of needs. Hierarchy of needs. As long as somebody feels taken care of, then they can do the thing to take care of the people and the environment around them. That makes so much sense. That's so good. Can you tell me an early specific happy childhood memory? My dad coming home from Vietnam. Tell me what happened. I was very young, but I remember a mom telling me we were going to the airport to get him. Walk me through that whole... I'd rather not. I don't get too emotional. And how old were you? I was probably four. Really, really young. Of all the amazing things that happened in your life, where you could have immediately said, here's something that stands out for my childhood, what was it about that memory, that it's the first thing that you said immediately, that you gave no thought?

18:54We need our parents. My dad passed away in 2020. But I had this combination of a dad with really high expectations, unconditional love, but really high expectations, and a mom that was an effective encourager, whispering in my ear, you can do it. And she is super competitive. So that combination of characteristics was really a great environment to grow up in. So what specifically was it about that memory that you went to there first? Just the safety and the joy. I think being in a home where one of your parents is away in a place that's dangerous, you feel that with your remaining parent. So that reunification meant everything was going to be okay.

19:46What would your dad say about the work that you do now? Do a good job. Don't let anybody down. and take care of yourself. He was worried about me. The thing that I love about that answer, the fact that you went there, but even the story about the environmental, that that stands out as a pinnacle point in your career, is they're all reminders to take care of people. And they're all reminders that you keep people safe. And then everything else sort of falls into place. I think this is poetic. I think it's beautiful. I think in a really magical way, you have become your father. I hear the way that you speak and I hear the way you talk about your people.

20:27And you do have high expectations for your people, yourself, your organization, but not at any cost. That taking care of people and pushing harder, it's in that order. That is your job now for the people in your charge, which I think is a beautiful thing. Can we get back to business? I just learned something about Walmart recently that I didn't know. So I've railed very publicly that GE used to be the leadership factory for America. And that many of the standard normalized ways in which we run American business today, if not global businesses, so goes American business, so goes the world, where you have mass layoffs on an annualized basis.

21:07It's a go-to strategy to make the numbers work, where we pit our people against each other, quarterly results become king, and short-termism is the name of the game. And you said, somebody asked you about your long-term plans and it was less than a year where that's so normal. I've been saying that we need a new leadership factory where it used to be that if you worked at GE, you could go run any company, but look what's happened to American business. They've all become GEs and we need a new model. One thing that I learned about this recently, 70 companies are run by alumni from Walmart. Walmart has become the leadership factory for America.

21:40I don't understand why more people don't know that. When you're preaching these values of people first, you're preaching these values of keeping people safe. I think more people need to know that those values are starting to spread to American businesses. And it is entirely possible that the way that you try to lead could actually become the future of American business. Making change and doing the right thing, even if you get punished in the short term by Wall Street, actually will become more of the model. I think people need to know that. Why don't? Maybe Jack Welch is really good at preaching and I don't know.

22:11Sometimes you guys are too humble. We're not writing books. You're not writing books. We're focused on something else. Right. He wrote a book on leadership and put his own face on the cover. That should tell you everything. Yeah, I guess that's what it is. But I want people to know that that's happening. Yeah. That must make you proud. It does. Yeah. We have so many people. We have so many leadership jobs. And there's so much breadth and complexity in our business that it's a really good training school for CEOs. and there are people that have left to go run big companies and also people that have left to go do their own startups and we cheer for all of them.

22:48We're able to retain talent and we're not worried about those departures and I hope that what they take with them is a purpose-driven values-based approach and that's what I see. I'm excited about what that'll mean long-term. Many of them are in ownership situations where they've got this short-term pressure that we talked about earlier but a lot of great people out there doing good work. And when I run into them in places, it's always wonderful to see them. So let's have a real long-term question. So what is your vision for 20 years for Walmart, 30 years for Walmart, 50 years for Walmart? What is Walmart's role in our nation and around the world?

23:24We just need to achieve full potential. It's a lot of people and there's a lot going on and We're not as good as we can be. And if we are, we will help people in ways that we've yet to help them. And it'll be more than just saving them money, of course. It'll be surprise and delight, saving them time. People are so busy and they need less stress. And one of the reasons why e-commerce has done so well is because it can save you time.

23:53Produce new items to them that surprise and delight. But then there's health care and there's financial services. and there's the impact on communities and the planet. And I think we've got an opportunity. And today we, around the world, are learning about healthcare. We're in an exploration phase. In the U.S., we've got a little over 40 healthcare clinics. We operate a large pharmacy business, a vision business, optical, hearing, OTC, over-the-counter drugs, but we haven't been in the care business. So learning about how the U.S. healthcare system works and the role of value-based care and taking on risk for someone's life with the incentives being to keep them healthier, not to send them to the hospital.

24:34We're working on all of that. Financial services, people need to save more. Too many people don't have the financial literacy skills that they need. My grandfather took me to the bank when I was a really young guy. I was probably 10 or 11 years old and talked to me about compound interest and helped open a savings account. Not a lot of kids are getting that opportunity. So if we can design financial products that help them learn and help them manage whatever they make, you can make a little or a lot and still blow it. You know, we need to help people manage their money better. And then with communities, you know, creating jobs, paying taxes, all the stuff we always do, but volunteerism and other things that we can do to help strengthen local communities.