November 24, 2008
Wal-Mart Gets a New Leader
By Tom Ryan
In a surprise announcement, H. Lee
Scott Jr., Wal-Mart’s CEO, said on Friday that he is retiring, and
Mike Duke, who heads up the company’s growing international business, will
take over on Feb. 1.
Mr.
Scott, CEO since January 2000, oversaw a rather rocky period for the retail
giant marked by slowing growth partly because store saturation
issues finally arrived. He also faced rising criticism over labor practices
and even some scandals over the hiring of illegal immigrants, gender discrimination, and a top executive stealing from the
company.
But
over the last year, Wal-Mart has led the retail pack, posting strong revenue
and profits with its renewed emphasis on low prices as well as improved
merchandise and expanded marketing. Moves by Mr. Scott
over the last three years to bring in outside executives are believed
to have helped. Mr. Scott also set up a public
relations force to take on critics, and earned wide praise for Wal-Mart’s
sustainability efforts. The stock is the only Dow
Jones Industrial Average component to notch a
gain for 2008.
Mr.
Duke’s 13 years of experience at Wal-Mart includes tenures as the head
of logistics as well as stints running its U.S. and foreign operations. As vice chairman of the international
division since 2005, he showed
a willingness to make tough decisions, including pulling out of Germany
and South Korea.
The
Wall Street Journal said this experience has made Mr. Duke “the
steadiest hand available for the task” according to Wal-Mart’s business
partners and the company itself.
The
New York Times noted that his international experience
was critical since it’s
an area expected to drive Wal-Mart’s growth. Additionally, Mr. Duke’s
experience working for Federated Department Stores and May Department
Stores for more than two decades could be useful as the chain works to
fix its apparel business. Bloomberg News said his logistics experience
particularly provided solid qualifications for the job.
While
Mr. Scott faced his own challenges upon becoming CEO, The Journal noted
that Mr. Duke will be challenged with steering the discounter through the
current global economic turmoil. Internationally, Wal-Mart is pursuing
riskier expansion in emerging markets such as Brazil and China. With supercenter
expansion slowing in the U.S., Mr. Duke will oversee a massive remodeling
effort to hold on to recently improved traffic.
“When
the U.S. economy improves, Wal-Mart’s biggest challenge will be to retain
these new customers and show that it’s more than a cyclical story benefiting
from a bad economy,” John McMillan, an analyst at Lord, Abbett & Co.,
told Bloomberg News.
Discussion
Questions: First, what do you make of the legacy of H. Lee Scott Jr.
as CEO of Wal-Mart? Second, what do you think of the hiring of Mike Duke
as the new CEO?
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Lee Scott is choosing to go out “on top.” Good move. His legacy is solid. Mr. Duke has tough economic times to deal with, but then, that is when low price companies like Walmart thrive.
Most assume that the Obama administration will not be friendly to Walmart. The Unions and Health Care industry have poured too much money into his campaign not to expect their President not to make the country’s largest company a target. Mr. Duke has proven that he is capable of being the “bad cop” as he did when he closed the Quebec stores that unionized. After a few rough years, I believe Mr. Castro-Wright will come in as the “good cop.”
You’re all being very kind. Personally I think the timing makes no sense whatsoever.
The naming of Mike Duke to succeed Scott is seen in the vendor community as a continuation, even a culmination, of profound changes in merchandising strategy and store layout Wal-Mart has been undertaking over the last three years. Since 2005, Wal-Mart has elevated to senior positions managers with new ideas about how to take Wal-Mart into the 21st century. Friday’s announcement should underscore how serious the Wal-Mart Board of Directors is about supporting this new direction that has already begun to show positive results as measured by the overall customer experience.
Mr. Duke appears to be the right person for these economic times. With an economic crisis and Walmart’s position of “Always low prices, always” imprinted on consumers, Walmart will do well. As the person in charge of the logistics and the person to make the decision to get out of Germany and South Korea when things weren’t going well, emphasis on low prices and efficiency will continue. That is a successful formula for the current marketplace.
The challenge will be what he does when the marketplace changes. Walmart had announceded initiatives in many different areas, identified a new target market, and broadened their product portfolio. While much of this may be put on hold because it doesn’t fit with the current marketplace, will ALL the initiatives be continued when the marketplace changes? Will Walmart remain focused or branch off in new directions?
I think this more acknowledges the amount of business that Wal-Mart does as an international company and should help them in this area. Mr. Duke has big shoes to fill as Lee Scott in the past few years has really been a trailblazer in terms of green initiatives and most of all, removing some of the cloud of secrecy around Wal-Mart. The company now seems more open to public discourse and, as one of the biggest companies in the world, that has helped its image across all segments of the US.
I actually heard Jim Cramer on NBC the other day, say he much preferred Wal-Mart as a shopping experience over Target. Three years ago, who would have thought?
Mike Duke is whip-smart and has deep experience in the Wal-Mart culture. His international experience will be key to maintaining the company’s growth trajectory. The global financial crisis will make it difficult for any retail chief to produce strong results–but if anyone can do it, Mike Duke can.
Mr. Scott has been a good captain of a large and growing ship. He has been steady at the helm and unwavering. When you have a company the size of Wal-Mart, there will be mistakes, incidents and problems but it’s how you resolve them that is important. Mr. Scott has always treated people with respect and dignity and conducts business in such a manner. Like many companies that reach the pinnacle of success he was not satisfied with complacency and has always motivated his team and company to execute well a legacy followed left from Mr. Walton. Wal-Mart has taken the leadership position in retail seriously and has been single-handedly responsible for the success of programs and the development of technology.
Another thing that Wal-Mart does well is groom leadership to fill voids. I’m fortunate to know both Mr. Scott and Mr. Duke. There is a common element to both: integrity. Mr. Duke has a strong background in logistics and will fill Mr. Scott’s shoes well. Both acknowledge and recognize that Wal-Mart’s success is its distribution and supply chain.
While somewhat of a surprise, it absolutely makes sense that Scott has chosen now to step down. Every CEO wants to leave a legacy of greatness, and while it is true that Scott did have a somewhat rocky tenure at Wal-Mart, the fact is that this last year has been a positive one, and sales during the down economy continue to increase, as do profits. With Scott choosing to leave at this time, his legacy will be that the chain expanded greatly under his watch, and that he left while Wal-Mart had both sales and profit increases as their competitors struggled.
As for Duke, he will have a difficult challenge. While Wal-Mart continues to expand internationally, the jury is still out as to whether or not their international strategy is a true success. Germany and Japan were disasters, and the UK continues to be a struggle as Asda competes with Tesco. Duke will need to make his own mark domestically, and there is not a whole lot of room for domestic growth.
Whatever happens, Scott’s legacy will remain intact.
Mr. Duke seems well-positioned to take over the helm at Walmart, especially as the company looks overseas for more growth than it is likely to find in the mature U.S. market. However, Eduardo Castro-Wright deserves a lot of credit for the positive improvements in the domestic stores over the past few years. After its stumble into more “aspirational” territory, Walmart has returned to its key value position while improving the in-store experience. Without knowing the internal politics that led to the change, one assumes that Duke might be a “placeholder” (given his age) for Castro-Wright’s eventual promotion.
The bigger puzzle to outsiders is the timing of Lee Scott’s move. Certainly he has steered the company through some uncharted waters and they look like the biggest market-share gainer in the retail industry. He leaves Walmart on a healthy footing and with a good internal succession plan in place.
No mention of Lee Scott’s unwavering and industry-changing commitment to sustainability? Surely this will be his greatest legacy and one that Mr. Duke will hopefully play forward, particularly in the international realm. Wal-Mart has forever changed how the US, and the hidebound retail community in particular, views environmental responsibility; Mr. Duke has the opportunity to leverage that influence around the world.
In terms of timing, it may be the industry standard to throw leadership under the bus when business is in a death spiral; however, Wal-Mart was smart to make this transition on the uptick and yes, prior to the inauguration. Wal-Mart will need the prep time to solidify its labor strategy.
Lee Scott did a good job of refocusing Wal-Mart and concentrating its resources where it can make the greatest impact. Michael Duke will be successful as CEO if he not only manages well but displays the key characteristics of my definition of a leader, “a preacher of vision and a lover of change.”
The efforts of Scott and the economy have positioned Wal-Mart well in these uncertain times. The challenge will be the positioning of Wal-Mart going forward as the environment (economic, political, social, etc.) continues to change. Duke’s legacy will be based on how he continues to evolve the market leader, both domestically and internationally.
Lee Scott Jr. helped to bring Walmart to the next level and beyond in this decade. Mike Duke, a very good choice to follow Lee Scott, will have some different types of challenges beginning immediately with the current economic situation; however, Walmart is in a position to do well, because Lee and his associates did an outstanding job with advancing and reinforcing Walmart’s image for every day low pricing, the right assortment, and the right efficiencies for suppliers, Walmart, and consumers.
I think Sam is resting is peace with a big smile. He couldn’t ask for a better set of successors.
I am very impressed with Lee Scott. He has taken the company to new levels and leaves it in great hands. This is the complete definition of leadership with the final step of finding a replacement. Well done.
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Lee Scott is choosing to go out “on top.” Good move. His legacy is solid. Mr. Duke has tough economic times to deal with, but then, that is when low price companies like Walmart thrive.
Most assume that the Obama administration will not be friendly to Walmart. The Unions and Health Care industry have poured too much money into his campaign not to expect their President not to make the country’s largest company a target. Mr. Duke has proven that he is capable of being the “bad cop” as he did when he closed the Quebec stores that unionized. After a few rough years, I believe Mr. Castro-Wright will come in as the “good cop.”
You’re all being very kind. Personally I think the timing makes no sense whatsoever.
The naming of Mike Duke to succeed Scott is seen in the vendor community as a continuation, even a culmination, of profound changes in merchandising strategy and store layout Wal-Mart has been undertaking over the last three years. Since 2005, Wal-Mart has elevated to senior positions managers with new ideas about how to take Wal-Mart into the 21st century. Friday’s announcement should underscore how serious the Wal-Mart Board of Directors is about supporting this new direction that has already begun to show positive results as measured by the overall customer experience.
Mr. Duke appears to be the right person for these economic times. With an economic crisis and Walmart’s position of “Always low prices, always” imprinted on consumers, Walmart will do well. As the person in charge of the logistics and the person to make the decision to get out of Germany and South Korea when things weren’t going well, emphasis on low prices and efficiency will continue. That is a successful formula for the current marketplace.
The challenge will be what he does when the marketplace changes. Walmart had announceded initiatives in many different areas, identified a new target market, and broadened their product portfolio. While much of this may be put on hold because it doesn’t fit with the current marketplace, will ALL the initiatives be continued when the marketplace changes? Will Walmart remain focused or branch off in new directions?
I think this more acknowledges the amount of business that Wal-Mart does as an international company and should help them in this area. Mr. Duke has big shoes to fill as Lee Scott in the past few years has really been a trailblazer in terms of green initiatives and most of all, removing some of the cloud of secrecy around Wal-Mart. The company now seems more open to public discourse and, as one of the biggest companies in the world, that has helped its image across all segments of the US.
I actually heard Jim Cramer on NBC the other day, say he much preferred Wal-Mart as a shopping experience over Target. Three years ago, who would have thought?
Mike Duke is whip-smart and has deep experience in the Wal-Mart culture. His international experience will be key to maintaining the company’s growth trajectory. The global financial crisis will make it difficult for any retail chief to produce strong results–but if anyone can do it, Mike Duke can.
Mr. Scott has been a good captain of a large and growing ship. He has been steady at the helm and unwavering. When you have a company the size of Wal-Mart, there will be mistakes, incidents and problems but it’s how you resolve them that is important. Mr. Scott has always treated people with respect and dignity and conducts business in such a manner. Like many companies that reach the pinnacle of success he was not satisfied with complacency and has always motivated his team and company to execute well a legacy followed left from Mr. Walton. Wal-Mart has taken the leadership position in retail seriously and has been single-handedly responsible for the success of programs and the development of technology.
Another thing that Wal-Mart does well is groom leadership to fill voids. I’m fortunate to know both Mr. Scott and Mr. Duke. There is a common element to both: integrity. Mr. Duke has a strong background in logistics and will fill Mr. Scott’s shoes well. Both acknowledge and recognize that Wal-Mart’s success is its distribution and supply chain.
While somewhat of a surprise, it absolutely makes sense that Scott has chosen now to step down. Every CEO wants to leave a legacy of greatness, and while it is true that Scott did have a somewhat rocky tenure at Wal-Mart, the fact is that this last year has been a positive one, and sales during the down economy continue to increase, as do profits. With Scott choosing to leave at this time, his legacy will be that the chain expanded greatly under his watch, and that he left while Wal-Mart had both sales and profit increases as their competitors struggled.
As for Duke, he will have a difficult challenge. While Wal-Mart continues to expand internationally, the jury is still out as to whether or not their international strategy is a true success. Germany and Japan were disasters, and the UK continues to be a struggle as Asda competes with Tesco. Duke will need to make his own mark domestically, and there is not a whole lot of room for domestic growth.
Whatever happens, Scott’s legacy will remain intact.
Mr. Duke seems well-positioned to take over the helm at Walmart, especially as the company looks overseas for more growth than it is likely to find in the mature U.S. market. However, Eduardo Castro-Wright deserves a lot of credit for the positive improvements in the domestic stores over the past few years. After its stumble into more “aspirational” territory, Walmart has returned to its key value position while improving the in-store experience. Without knowing the internal politics that led to the change, one assumes that Duke might be a “placeholder” (given his age) for Castro-Wright’s eventual promotion.
The bigger puzzle to outsiders is the timing of Lee Scott’s move. Certainly he has steered the company through some uncharted waters and they look like the biggest market-share gainer in the retail industry. He leaves Walmart on a healthy footing and with a good internal succession plan in place.
No mention of Lee Scott’s unwavering and industry-changing commitment to sustainability? Surely this will be his greatest legacy and one that Mr. Duke will hopefully play forward, particularly in the international realm. Wal-Mart has forever changed how the US, and the hidebound retail community in particular, views environmental responsibility; Mr. Duke has the opportunity to leverage that influence around the world.
In terms of timing, it may be the industry standard to throw leadership under the bus when business is in a death spiral; however, Wal-Mart was smart to make this transition on the uptick and yes, prior to the inauguration. Wal-Mart will need the prep time to solidify its labor strategy.
Lee Scott did a good job of refocusing Wal-Mart and concentrating its resources where it can make the greatest impact. Michael Duke will be successful as CEO if he not only manages well but displays the key characteristics of my definition of a leader, “a preacher of vision and a lover of change.”
The efforts of Scott and the economy have positioned Wal-Mart well in these uncertain times. The challenge will be the positioning of Wal-Mart going forward as the environment (economic, political, social, etc.) continues to change. Duke’s legacy will be based on how he continues to evolve the market leader, both domestically and internationally.
Lee Scott Jr. helped to bring Walmart to the next level and beyond in this decade. Mike Duke, a very good choice to follow Lee Scott, will have some different types of challenges beginning immediately with the current economic situation; however, Walmart is in a position to do well, because Lee and his associates did an outstanding job with advancing and reinforcing Walmart’s image for every day low pricing, the right assortment, and the right efficiencies for suppliers, Walmart, and consumers.
I think Sam is resting is peace with a big smile. He couldn’t ask for a better set of successors.
I am very impressed with Lee Scott. He has taken the company to new levels and leaves it in great hands. This is the complete definition of leadership with the final step of finding a replacement. Well done.