Sunday, January 29, 2006

Social Values and Wal-Mart

Wal-Mart has not been known for best practices in sustainable business practices. Born within the context of 20th century business models, they have ruthlessly maximzed their values within the incentives of those models.

It's at least plausible that the DNA of the company coupled with the fact that Wal-Mart focuses on serving customers at the bottom of the pyramid, bodes well - both for the company's continued success in the GME and the growth of widespread recognition of the benefits derived from using appropriate values to inform strategic business decisions.

In this Sunday's Financial Times it is reported that

Wal-Mart has committed itself to taking most of the fish it sells in North America from environmentally sound sources, in its latest initiative to improve its much criticised record on environmental and social issues.

This is a testament to the power of the GME and the incentives for expensive innovation that are implicit when business is focused on the needs of customers at the bottom of the pyramid.

The arguably most powerful company in the world is crtically dependent for its success on their customers' opinion of them. Since the North American market is quickly becoming merely an important niche market in terms of further growth, the issue of sustainable supply chains moves from strictly a "feel good" necessity to a "must have" business necessity.

Of course, the public pressure generated over the last three or four years has been the stick to get their attention. But if Lee Scott, et al, did not see addressing this issue as a critical business problem, they would not undertake the massive, and very troublesome, task of setting standards for a supply chain that includes 60,000 suppliers dispersed all over the globe.

The values required for success in the GME are, in important respects, the same values that can lead to addressing the most serious global problems.

But success is not a sure thing.

The disruptions created by new technologies often lead to economic reorganization that can create dangerous turbulence as civil society and government readjusts to new realites. It's certainly one way to think about the strains associated with the advent of industrialism at the turn of the last century.

The faster that business, civil society and government adjust, the less painful the transition. As the incentives of business success become increasingly aligned with the values needed for global success, the transition might be smoother.

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