Value and Values: Building a High-Performance Company

Panelist Introductions & Company Profiles

• Mark Benioff (Salesforce): Largest CRM provider globally; grew 37% last year on a constant currency basis; voted Forbes' most innovative company for two consecutive years.
• Ken Hicks (Foot Locker): Leading global retailer of athletic shoes; managing a turnaround with a focus on 30,000 associates.
• Walter Robb (Whole Foods): Co-CEO of the world's largest natural and organic food retailer; operating 78,000 team members.
• Jay Rizzullo (Disney): CFO of the Walt Disney Company; reports that corporate social responsibility metrics rise to the CFO to align financial and ethical decisions.
• Tom Wyatt (Knowledge Universe): CEO of an early childhood education provider serving 130,000 children daily across multiple brands.

Drivers of High Performance & Cultural Strategy

• Salesforce:
  • Performance is driven by rapid adoption of new leadership models and transparency via social collaboration tools.
  • The company replaces traditional hierarchical meetings with live-streamed sessions using the internal "Chatter" platform to allow global employee participation in real-time.
  • Benioff states that legacy technology like Windows is obsolete, asserting, "Windows is dead," and companies must rebuild software systems to keep pace.
  • The company operates on a 1-1-1 philanthropy model (1% equity, 1% employee time, 1% profit), with employees given six paid days annually for volunteerism.
• Whole Foods:
  • Success stems from a 32-year consistent mission and a culture of empowerment where store managers can spend up to $150,000 without approval.
  • Regionalized operations distribute decision-making intelligence to where customer action occurs, fostering a "cycle of innovation through collaboration."
  • Discontinued selling tilapia produced with female hormones and committed to eliminating red-rated (unsustainably sourced) seafood by Earth Day.
  • Announced a commitment to full transparency and labeling of Genetically Modified Organisms (GMOs) within five years (by 2018).
• Disney:
  • Heritage is rooted in creativity and storytelling, supported by a consistent message of trust and family safety.
  • The CFO oversees CSR to ensure difficult financial decisions (e.g., cutting profitable but ethically misaligned activities) align with brand authenticity.
  • Implemented an internal "carbon tax" on business units to force innovation toward cleaner technologies rather than relying on carbon offsets.
  • Adherence to values (e.g., labor practices in supply chains) is considered accretive to long-term value, despite potential short-term financial impacts.
• Foot Locker:
  • Turnaround strategy involved replacing a top-down command structure with a bottom-up values development process involving store associates.
  • Values include excellence, teamwork, and community; 97 of 99 district managers started as part-time stockroom workers.
  • The company provides a personal day for community service with no verification required to trust employee engagement.
  • Clear communication of a "North Star" vision was distributed via cards to sales associates to ensure role alignment.
• Knowledge Universe:
  • Success relies on the emotional ties between teachers, children, and families, with a focus on kindergarten readiness outcomes.
  • Turnaround efforts included Gallup engagement surveys and a new "North Star" strategic plan to align 30,000 employees.
  • Mission has been strengthened to prioritize education, with all leadership teams actively engaged in literacy initiatives.
  • Empowered center directors to make rapid decisions, such as accepting children with autism when other providers refused service.

Alignment of Values, Brand Trust, and Financial Performance

• Consumer Trust:
  • Consumers increasingly view brand consistency across products and employee behavior as the primary driver of loyalty; a single negative event can damage a brand's reputation.
  • Younger demographics (Millennials) drive 30% of retail business by 2020 and prioritize a company's ethical stance when making purchasing decisions.
  • Empowered employees act as brand advocates, with specific examples including Whole Foods creating Braille tags for a blind child and Knowledge Universe centers accepting autistic children.
• Talent Acquisition & Retention:
  • Millennials filter potential employers based on social impact; companies like Salesforce and Disney attract top talent by integrating philanthropy into the daily work culture.
  • Knowledge Universe notes that 30% of retail business is shifting to millennials, who care deeply about supply chain ethics and corporate social responsibility.
  • Salesforce hires naturally attract socially conscious individuals, with over 90% of employees participating in self-organized service groups.
• Wall Street & Investment Outlook:
  • Investors generally focus on short-term performance (average equity hold of six months) rather than long-term cultural investments.
  • There is a disalignment where investors do not explicitly question CSR efforts, though they indirectly value the talent retention and brand reputation these efforts generate.
  • Foot Locker's private equity investors are noted as rare examples of capital providers who understand and support the long-term value of company culture.
  • Panelists conclude that while Wall Street may not care about values directly, they care about the results of those values (speed, openness, talent quality).

Forward-Looking Statements & Future Challenges

• Technological Transformation:
  • Benioff predicts that the next 5-10 years will require "new leaders" running companies completely differently using new management models and social technologies.
  • All companies face the pressure of becoming "software companies" and must utilize big data and social networks to redefine trust.
• Market Expansion & Social Impact:
  • Whole Foods is expanding into Detroit (opening June 5) to address "food deserts," aiming to lower life expectancy gaps and fight elitism and racism in food access.
  • Knowledge Universe is expanding its global footprint, including a center in Bangalore, India, to serve international corporate partners like Cisco.
  • The industry anticipates a future where accountability and transparency are the only viable business models, with nowhere for companies to hide.
• Risk Factors:
  • Full GMO labeling by 2018 carries the risk of losing sales if competitors do not follow suit, but is deemed necessary for brand authenticity.
  • Adhering to high environmental and labor standards may incur short-term financial costs, such as the internal carbon tax reducing unit returns.
  • The rapid pace of social media means a single employee action (e.g., the "Molly Catchpole" Bank of America incident) can trigger a brand crisis.