When Fast Company senior writer Charles Fishman decided to write The Wal-Mart Effect, Wal-Mart declined interview requests and fact-checking inquiries.
Making matters more difficult, suppliers who initially agreed to interviews backed out of discussing the retailing giant for fear of recrimination. So armed with a few sources, dogged pursuit for any information about the company, and a fact checker, Fishman helped flesh out the good and bad realities of the second-largest company in American history. You can read exerpts from the book here and purchase it here.
Q: Early in the book, you asked aloud whether Wal-Mart was good for the country or bad for the country. After researching and writing the book, do you feel you came any closer to answering that question?
A: I punched through the question in the conclusion of the book. My answer to the question, "Is Wal-Mart good for America or bad for America?" is not only that it's the wrong question to ask, but it's an unconstructive question. It's a TV shout-show question that gets people [yelling] at the top of their lungs. Wal-Mart is good for America in stupendous and unprecedented ways, and Wal-Mart is also bad for America and the world in equally dramatic ways because of its size.
In economic terms, Wal-Mart is a new kind of corporation. We need to think about Wal-Mart differently in order to think about it in a constructive fashion. It's literally like asking, "Is the car good for America?" Yes, but the car is also bad for America. And it's not going anywhere. So let's have airbags, seat belts, and fuel-economy standards.
By the same token, we'd be foolish to give up a lot of the powerful economic virtues that Wal-Mart confers. And we need to understand in great detail the negative effects that Wal-Mart has so we can find ways to mitigate them. One way to mitigate them is to insist on Wal-Mart behaving differently. They're talking a lot more about their own environmental impact and the life of workers. We also need to decide what the role of the corporation is in America. We still control the economy of our country. We get to make the rules, and Wal-Mart has to play by the rules we set up.
Q: When Wal-Mart reached a certain point, it became a loathed entity. You can draw some parallels to feelings about Microsoft and Google. Is there no such thing as a benevolent giant? If a company reaches a certain size, is it going to be on everyone's radar screen and invariably draw more ire?
A: I think there's something to that. But I know of a lot of very large companies that don't draw ire. There are no organized groups opposing General Electric as far as I know. We buy our light bulbs and toasters from General Electric and fly in airplanes with General Electric engines. We live in a General Electric world. Toyota is crashing through all of the barriers in American automotive history, but you don't see people going to the barricades as Toyota opens factories in America. We're actually quite happy that someone is opening auto factories in America. I don't buy [the argument that] the reason they attract attention is because they're large. There's a little bit to it, but this has to do with Wal-Mart's public image, and the fact that they've never paid attention to it. I think the people in Bentonville [AR] are stunned about the level of anger and sometime vitriol that is aimed at them [today], when they sort of feel like they haven't done anything [differently]. They think, "Where were you angry people in 1993, 1983, 1973, or 1963?" In many ways, the business practices haven't changed in any significant way except for scale.
If you read the first three pages of Sam Walton's biography, Made in America..., they are about how dumb reporters are. The guy who is one of the ten most important business people in the history of America and who, from a standing start, creates the largest company in human history, starts his story, saying, let me tell you how dumb reporters are. That's part of the DNA of the company. Talking about what they're doing and how they're doing it has never been something that was a priority for Sam Walton or Wal-Mart. Sam thought you were just giving away secrets to the competition. He never opened a store that people didn't flock to, so he didn't need the publicity... Changing the culture inside Wal-Mart so that it's okay to talk about yourself takes time. Those things are not projects; they're long-term commitments.
Q: Do you feel like media relations and crisis communications are something that Sam Walton would look at like an extraneous cost?
A: He felt like any kind of media relations effort fell into that category of adding costs without serving [their] customers. When Sam Walton died, the company was [worth] $40 billion [in sales], a tenth of the size it is now. It's a different company now, and it's OK to acknowledge the important principles that Sam Walton bequeathed to the company, and it's OK to also say this company with 5,000 stores can not operate as if it had five stores. A five-store company does not need a media strategy. The largest company in history definitely needs to talk about its impact on the world.
Q: You talked about Hanes developing a Wal-Mart team [whose team members' sole role was working with Wal-Mart] and the two of them working together to eliminate truck redundancy [thereby reducing pollution and gas waste]. Isn't this a story any corporation would love to tell the media?
A: Exactly. Hanes and Wal-Mart discovered together that Hanes was trucking underwear to a Wal-Mart distribution center using its own trucks while Wal-Mart trucks were driving right by the port of Jacksonville empty. They let the Wal-Mart trucks pick up the merchandise directly. That's the equivalent of turning off a light in an empty room. Everyone wins. And Wal-Mart does that all of the time. They find the ways that businesses have always [operated] – that turn out to be wasteful and unnecessary – and eliminate that waste in a way that's almost all good for everybody. [Telling these stories] gives you a sense that its run by people, not simply a faceless corporate monolith. I think Wal-Mart – and all of us – would benefit from understanding a much richer sense of those kinds of stories – how it does what it does. Some of it might turn out to be not flattering, but a lot of it would be remarkable in ways we don't understand.
Q: Is it safe to say, in terms of corporate social responsibility and consumer interest in impelling corporations to behave better, the world has grown up, but not Wal-Mart?
A: I would put it a little differently. Wal-Mart grew up, but in some important ways, it acts like it's not a grownup. The PR and media strategy – its relationship to all constituents except for suppliers and customers – that's the area where Wal-Mart has not evolved to match its scale. Size really matters. The four year-old boy and the 24 year-old boy are the same person, but if the four year-old jumps on your back, it's kind of cute. If the 24 year-old is a NFL linebacker that jumps on your back, that's not cute. Some things that Wal-Mart does should have changed simply because Wal-Mart's bigger.
Q: A lot of people said they would speak to you, but then backed down at the last minute for fear of upsetting Wal-Mart. Were you actually surprised when someone actually saw an interview through?
A: I asked Wal-Mart to participate in the reporting of the book at a number of different times in a number of different ways: literally at any level that Wal-Mart was willing to participate. They declined every invitation to participate. I was so concerned to get everything in the book right that I hired, out of my own pocket, a professional fact-checker who went through and verified every fact in every sentence in every paragraph on every page. I'm a good reporter, but he found things that needed to be fixed in every chapter. So I spent thousands of dollars having my own book fact-checked in order to make sure that what I was printing was as close to the truth as I could get given that I didn't have access to anyone at Wal-Mart. I took my responsibility to get it right very seriously, even thought Wal-Mart wouldn't participate.
Because of Wal-Mart's history of not talking to the media and insisting that it's suppliers not talk to the media, literally much of my time was spent trying to find people who would talk and allow me to use their name. I got turned down by dozens of people who had things to say, but [wouldn't go on the record]. I was unwilling to use blind sources, because I didn't think that would help the credibility of the book. I always think that once someone is determined to write a story about your organization, you are better off cooperating because you have much more of a chance of having an impact on the nature of what gets written than if it you don't cooperate.