THE BLOG

Outsourcing the Government to Wal-Mart

05/02/2009 05:12 am ET | Updated May 25, 2011

Admit it. We are in uncharted territory. We're spending more than a trillion dollars to prop up an economy that was overly-stimulated during the dot-com bubble and then propped-up again by the Fed during the real estate bubble. When Republicans are talking about nationalizing banks and the Obama administration is taking a more expansive role in virtually every industry, we have to recognize that our next bubble may be the viability of our government. We can't afford to have that bubble burst. In fact, the Chinese, our biggest offshore "pusher" that have helped facilitate our consumption and borrowing addiction, have warned us. They've asked us to tame our government-sanctioned stimulus sensibilities for fear of piling on the future America's debt burden. You know when the largest Communist country in the world is educating the U.S. on the risks of too much government intervention and debt that we've crossed some sort of line that only Ayn Rand would have imagined a generation or two ago.

So, within the context of this new version of the New Deal landscape, let me propose a blasphemous concept. Given the huge logistical exercise that the Obama administration will be conducting in health care, environmental, infrastructure, and virtually every other policy matter, why not learn from the masters of how to make big things work better: Wal-Mart? This resilient and entrepreneurial company has pranced across the planet creating annual revenues that surpass most mid-size countries' annual GDP. Of course, Wal-Mart and McDonald's were the only two American companies that experienced growth in their 2008 stock prices in this new survivalist economy, so they may be the right role model for these trying times.

Yes, I know you hate Wal-Mart. So, do many Americans. In fact, between 2000 and 2005, the company's stock price dropped more than 25%, partly due to the fact that almost 10% of Wal-Mart consumers had stopped shopping there due to the company's well-documented reputation of being socially-irresponsible (or for the conservatives in the crowd, at least severely politically incorrect). But, this company has remade itself in some truly impressive ways...partly out of necessity. But, ultimately, Wal-Mart is a brilliant case study of how a behemoth can do well by doing good and do that with the kind of speed that Barack and his team need.

Exhibit A: Health Care. While Wal-Mart still trails many of its competitive retailers in terms of the health care benefits it provides employees, it has made large-scale changes such that the percentage of employees covered is 15% higher today than it was in 2006 (at the same time that most companies are going in the opposite direction by reducing benefits in this recession). It helps to be the world's largest self-insured employer, but this fact means that the company has innovated in all kinds of ways that would be deeply instructional to the U.S. government: hundreds of in-store health clinics have recently opened which are meant to provide affordable access which saves big money for local government public health facilities, $4 generic drug prescription programs have saved over $1 billion for customers and employees, a $20 per month catastrophic care program for employees, an investment in digitalized and secure medical records (one of Obama's most well-received health proposals) for its employees and retirees, a contract with the Mayo Clinic to provide all transplants for Wal-Mart employees as a means of a single source approach to reducing the costs associated with these expensive procedures, and a "Life With Baby" education program aimed at reducing the rate of premature births and early infant diseases for employees. Whether its making health care more affordable and accessible or revolutionizing some of the systems associated with this slightly-archaic industry, Wal-Mart's best practices are noteworthy for the White House.

Exhibit B: Environmental. Prior to 2005, Wal-Mart was appropriately scolded for its passivity with respect to how it was reducing its environmental footprint as the world's largest company. While today no one would mistake Wal-Mart for Patagonia or any other eco-focused retailer, it's remarkable what changes have been made in such a short time based upon the company's collaboration with a variety of environmental organizations. Wal-Mart created its own environmental standards - since there weren't any federal standards to rely upon - regarding eco-packaging and they imposed these on Procter & Gamble, General Electric, and even the folks who make the Radio Flyer wagon (you may have heard the much-told story of how a Wal-Mart employee saw how much waste occurred when they unpacked their child's gift, which gave this employee the incentive to recommend changes to their Wal-Mart superiors). Additionally, they created a supplier index and eco-rating system that they rolled across all of their product categories. With the largest private trucking fleet in the world, the company is changing the design of these trucks to create 25% better fuel efficiency which will save Wal-Mart $500 million annually by 2020. And, they've made great efforts to provide more eco-friendly products for their customers such that they now sell more than 100 million fluorescent bulbs annually.

We have a lot to learn from Wal-Mart. Through no contractual obligation, Wal-Mart employees were elbow-to-elbow assisting Katrina victims faster than feeble FEMA due to some independent decision-making by local store managers. Within a couple of days, the senior leaders of Wal-Mart made the kind of decisive decisions sorely lacking in the Bush White House. They committed 1,500 truckloads of free merchandise, food for 100,000 meals, job security for all displaced Wal-Mart workers in the area, and they contributed $20 million in donated cash to the efforts. And for those who think a Wal-Mart job is a dead-end experience, realize that the company has a well-respected career development program that promotes line level workers quickly such that two-thirds of all Wal-Mart managers are elevated hourly employees. You may not like Wal-Mart, but the vast majority of their employees do seem to be committed to the company and every single employee has the potential to earn a quarterly bonus based upon store performance.

Yes, I know that Wal-Mart deserves to be the corporate piñata for a variety of other business strategies and tactics and their commitment to many of these new-found practices may seem to be as much bottom-line and reputation-driven than a new-found religion (and, I'm not sure that the ratio of Prius' to Hummers in their headquarters parking lot has escalated any faster than any other American corporate giant). But, what the Obama administration needs to succeed today isn't more politically-correct zealots. What it needs is an efficiency expert that can implement logistics very quickly on a grand scale as Barack's agenda is vast and the stakes are high. The last time I checked the U.S. government wasn't all that good at efficiency, logistics, or speed (although I will say that our government has gotten much better in these areas during the past decade).

Don't be surprised if we're going to be "bending toward Bentonville" in these next few survival-driven years. If you need a little proof that Wal-Mart's reputation is making a comeback, take the case of Wal-Mart.com's signage in the bastion of liberalism, San Francisco. My college fraternity brother was President of Wal-Mart.com a couple of years ago. He told me about how his employees were occasionally embarrassed to tell their friends in the Bay Area (where Wal-Mart.com is headquartered) that they worked for the company. And, for potential sabotage reasons and to limit their exposure in this geographic hot bed of political protest, Wal-Mart.com chose for years to downplay their Bay Area office building signage presence. So, given Wal-Mart's recent "coming out" as a good corporate citizen, I guess I shouldn't be surprised that the other day when I was driving to the San Francisco airport, there was a huge sign on a bayside office building proclaiming Wal-Mart.com was headquartered in that building.

For those of you who are still having a hard-time digesting the idea of Barack being mentored by Bentonville, would you consider a joint venture with Wal-Mart, instead of an outsourcing or consulting contract? I can certainly think of better investments for the U.S. government (and all of us who "invest" in our government) than A.I.G.

Chip Conley is the Founder and CEO of Joie de Vivre Hospitality and the author of PEAK: How Great Companies Get Their Mojo From Maslow.