In every crisis there is an opportunity. This was
presented, perhaps less starkly, in an article in the spring 2012 Issue of the MIT Sloan Management Review,
Successful Strategic Transformation", by authors Gerry Johnson,
George S. Yip and Manual Hensmans, "Happy accidents are unanticipated
circumstances or events that ultimately support [strategic] transformation".
While those in Bentonville, Arkansas are probably not thinking that their
current situation is a 'happy accident"; Wal-Mart is presented with a unique
opportunity to create a world-class compliance program. It will most probably
be required to do so to aid in its inevitable negotiations with the US
Department of Justice (DOJ) over any fine and penalty for any violations of the
Foreign Corrupt Practices Act (FCPA), however it may also do so to demonstrate
its absolute commitment to doing business ethically to the US and world's
courts of public opinion.
The authors begin by noting that companies which
radically alter entrenched ways of doing business are the "exception rather
than the rule." Further, most companies do not adopt such new strategies
without being forced to do so by some type of financial trauma. The authors
studied 215 companies to find out if there were any key lessons from companies
which were able to affect such transformational change. Their article can
provide guidance to Wal-Mart or any other company which may find itself in the
position where it needs to make a major strategic change to a culture of ethics
The authors start with the proposition that to make
strategic transformations, companies must "foster alternative management
coalitions and value constructive tension and challenges to the status quo."
They have developed eight recommendations for making such transformational
The authors conclude by stating that this type of
transformational change does not happen overnight and readily admit that the
concepts "are the antithesis of short-term management." This would fit
precisely into the place that Wal-Mart finds itself in now. The FCPA
investigation could well take between 2-4 years; the negotiations regarding any
fines or penalties could add significant length to that time frame. Avon is
over four years into its FCPA journey and there is no public end in sight.
However, this means that the opportunity for a truly transformational change is
available to Wal-Mart or any other company which finds itself similarly
situated. The authors have laid out for Wal-Mart or any other company concrete
steps on a path forward which could give them the title of not only the World's
Largest Retailer but also the World's Most Ethical Company.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
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only and is based on the experiences and research of the author. The author is
not, by means of this publication, rendering business, legal advice, or other
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© Thomas R. Fox, 2012
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