Wal-Mart, take your victory lap.
Wal-Mart announced yesterday that the company has blown past an ambitious goal of selling 100 million compact fluorescent light bulbs by the end of 2007 — three months early. This is no small deal for the Arkansas based retailer, or the environment. Over the lifetime of the CFLs, Wal-Mart estimates that these energy-saving bulbs will have the effect of taking 700,000 cars off the road or conserving the energy needed to power 450,000 single-family homes. And although the swirly bulbs are pricier (at least for now) than their incandescent cousins, Wal-Mart customers can save up to $350 a year on average by making the switch, the company says.
Wal-Mart CEO H. Lee Scott clearly deserves a lot of credit for this. To understand the impact of his decision to make CFLs a priority for Wal-Mart, I’d recommend re-reading my pal Charles Fishman’s award winning analysis, How Many Light Bulbs Does It Take To Change The World? Not only does Fish do the detailed math of what the bulb means for the consumer and the environment, he tells a nail-biter of a story of how Lee Scott convinced GE’s Jeffrey Immelt to radically disrupt GE’s own light bulb business. Fish writes: “Once Wal-Mart decides to make swirls an important product, the appeal for GE also becomes clear. It’s the power of the big dog: GE can either help Wal-Mart sell swirls, or some other lightbulb company will. In either case, GE’s regular-bulb business shrivels.” Tough call. We now know who won. Everybody.
I met Scott briefly after his appearance at the annual meeting of the Clinton Global Initiative last week. His plenary was the event opener; he was on stage with Al Gore, President Hamid Karzai of Afghanistan, President Gloria Macapagal-Arroyo of the Phillipines, Archbishop Desmond Tutu, and World Bank President Robert Zoellick. The topic: The Need for Global Change. The panel was moderated by Clinton himself. Scott opened with some folksy humor – when he was misintroduced by the announcer, he quipped, “Since I was just introduced as the president of Afghanistan, it dawned on me that there are tougher jobs in the world than the one I have.”
Clinton lobbed him a rambling question on big business and sustainable thinking: “How did you decide this would be good for your shareholders, your company and most of all for your customers? At least in the US, the Wal-Mart customers are people who have to watch every last dollar they spend…. [Since] median incomes are flat, they’re spending more for energy, health care, housing and higher education – how can you make this work for them?”
“You think about the people in this audience [from governments, NGOs] and that the world is facing significant challenges. And at Wal-Mart, the question you had to ask yourself – is there a role for business in these issues that society faces? You have to come to terms with what has traditionally been the argument that there is a conflict between contributing to the social good and running a business. And thanks to great guidance from associates – both internal and external – what we’ve realized as a company is that if we’re going to resolve the problems that are talked about in this forum, it’s going to take all of us. We can’t wait for government. Business already has a bias for action and business has the ability to allocate capital – both human capital and financial capital – to address these issues. Business has the opportunity to create innovation that can resolve many of the issues that we’ve talked about, specifically to climate change. What has, I guess, shocked us is that there are benefits far beyond what we thought about.”
When quizzed on where they were on the light bulb goal – he dodged it with a simple, “we’re on track.” Turns out they were.
But he did offer another interesting product innovation update:
“First of all, our whole premise is that we save people money so that they can live better. What we’ve found as we’ve gone down this journey of sustainability is that the first things we’re doing is that we’re taking waste out of this whole stream of products and things that all of us are using. And they’re not exotic decisions. One in fact I talked to General Mills about, is that they straightened the noodles on Hamburger Helper. And that more noodles now go into the box and the boxes are now smaller. And thousands of tons of waste are eliminated.”
This drew giggles of delight from the audience, and deservedly so – the noodle bit was delivered perfectly deadpan, but finished with a big grin. It’s real news: We reported on this change by General Mills in the upcoming issue of Fast Company Magazine. Scott undersold the accomplishment – the redesigned packaging shaved 20% off the box, requiring 500 fewer distribution trucks on the road each year without changing the consumer’s expectation of the product. And it’s sort of funny to think about what must have happened behind the scenes as Scott was on the phone with people from General Mills quizzing them on how they might save the earth through better packaging. I like to imagine him tearing off the top of the Hamburger Helper box and peering in, personally pondering the noodle question, perhaps the flavor packet. In any event, it won over the crowd.
“It’s basic business practices that ultimately cause the price of the product itself to go down … and it’s better for the environment. [Is Hamburger Helper actually cheaper now? HH fans, please advise – em] I’d underestimated that our suppliers were waiting for us to ask [about sustainability] – when we started asking the question. When we started asking the question, it all actually accelerated.”
This remark drew guffaws from the media pit I had been herded into – there is no doubt things accelerate when H. Lee Scott is on the line. As folksy and poised as he is when chatting about straight noodles or swirly bulbs, his is going to be a tough call to take when he rings you up to big dog your business into sustainability submission. But I bet Jeff Immelt is glad he did. As we all should be.