Good Company

Arthur M. Blank

• Publisher: William Morrow
• Year: 2020
• ISBN:
  9780062974938
• Topic: Commerce
• Subtopic: Leadership

A WALL STREET JOURNAL AND USA TODAY BESTSELLER

Featuring an introduction by President Jimmy Carter

The Home Depot cofounder and owner of the NFL's Atlanta Falcons and MLS's Atlanta United shares a vision and a roadmap for values-based business.

Arthur M. Blank believes that for good companies, purpose and profit can-and should-go hand in hand. And he should know. Together with cofounder Bernie Marcus, Blank built The Home Depot from an idea and a dream to a $50 billion-dollar company, the leading home improvement retailer in the world. And even while opening a new store every 42 hours, they never lost sight of their commitment to care for their people and communities. In fact, in 2001, The Home Depot was voted America's most socially responsible company. Blank left The Home Depot that same year with a burning question: Could the values and culture that made that company great be replicated? Good Company takes readers inside the story of how he did just that-turning around a struggling NFL team, rebooting a near-bankrupt retail chain, building a brand-new stadium, revitalizing a blighted neighborhood, launching a startup soccer club, and more. "When good companies put the wellbeing of their customers, their associates, and their communities first, financial success will follow, " Blank writes. "The entrepreneurs and business leaders of today and tomorrow have an extraordinary opportunity: to prove that through upholding values we can create value-for the company, for the customer, and for the community."

Chapter 1

Family Business

Through our scientific and technological genius we’ve made of this world a neighborhood. And now through our moral and ethical commitment we must make of it a brotherhood.

—DR. MARTIN LUTHER KING JR.

Oes Pharmacy was a family business. Locals stopped by the store on the corner of Forty-Seventh and Queens Boulevard in Sunnyside, New York, to get their prescriptions filled or to pick up a jar of face cream. My uncle Sam owned the place, having bought it from its founder, Willy Oes, and he and my dad worked behind the counter, mixing tinctures, grinding powders, and filling capsules. But their job involved much more than dispensing drugs. Those were the days when druggists were often de facto community medical counselors. Dad and Uncle Sam knew the name and common ailments of every customer who walked through their door—from Mr. Arnold’s goiter to old Miss Zuckerman’s arthritis—and were there to provide advice, as well as the liniment or pills that would relieve the discomfort. One day, as Dad told it, a distraught young woman walked in and burst into tears, confessing that she was pregnant. When he inquired as to why she had come to this conclusion, she whispered that she’d kissed a boy. Dad sat her down and gently set her straight on a few facts of life.

I loved accompanying my mother as she delivered egg sandwiches to Dad for his lunch. As a toddler, I wandered across the linoleum floors, mesmerized by bright jars of Brylcreem and boxes of candy, fat bags of Epsom salts and bottles of boric acid. When I was old enough, I delivered Dad’s lunch myself and sat and watched for hours while he mixed prescriptions, decanted cough medicine into smaller bottles, and wrote the details of each transaction by hand in one of his large ledgers. I was born too late to remember the days when the pharmacy had a soda fountain, but my older brother, Michael, assures me it once did. It also had a pay phone and a resident bookie who ran his business from the booth. The window displays enticed customers with colorful rows of lipsticks and elegant glass bottles. The ads that plastered the walls announced treatments for everything from everyday exhaustion to intractable hiccups to belligerent senior citizens. But as I look back now, I realize that it wasn’t any of those products or promises that kept the pharmacy filled with people—talking, laughing, socializing, in no hurry to resume the business of the day. They may have come for the items on their shopping lists—for pills, powders, or potions—but they stayed for the company.

A good company becomes a community. The word company means fellowship or companionship, and the best businesses treat their customers like honored guests (another fitting meaning of the term company). Many people look back nostalgically to businesses like my uncle Sam’s and bemoan the loss of those mom-and-pop shops and the sense of community they fostered. They blame the growth of market capitalism, the influx of big-box stores, and the shift to online retail for driving out small businesses and leaving neighborhoods without those hubs of connection, familiarity, and support. But I don’t think it has to be that way. My own path took me from helping out in the family pharmacy to cofounding the largest home improvement retailer on the planet, The Home Depot. By the time I left, in 2001, we employed more than 250,000 people (it’s now 400,000). And you know what? Every one of those stores felt as much like a community as that little pharmacy on the corner in Queens. It’s not size that makes the difference; it’s attitude. If customers feel as though they’re interacting with human beings who care, rather than with an institution, it doesn’t matter how big the company as a whole might be. Large does not have to mean impersonal. If a business truly sees itself as a community—both for its customers and for the people who work there—it will infuse its everyday activities with a spirit of hospitality.

It’s understandable that people might balk at hearing business described in such noble terms. We live in an era when confidence in institutions has plummeted, with close to half the population saying they distrust businesses, according to the annual Edelman Trust Barometer.¹ From the Enron collapse at the turn of the millennium, to the 2008 financial crisis, to today’s tech giant data scandals, corporate misconduct looms larger than ever in the public awareness. Many have come to the conclusion that the profit motive inherently corrupts and that capitalism itself is a flawed system based on greed and competition. Unfortunately, such sentiments find plenty of backup in the daily news cycle. If you want to find corporate bad actors, you don’t have to look far. The stories we hear less frequently are those in which businesses strive to succeed while also making a positive difference in the world.

Those stories do exist, however, and we need to hear more of them. Businesses can and should do great things. They can be part of the solution, not the problem. In fact, because corporations wield so much power and influence in our society, they have an unmatched opportunity to do good, for the people who work in them and for the communities in which they do business. I’m not just talking about adding a few benefits and engaging in a little philanthropy on the side; I’m suggesting that doing good becomes an integral part of business activities. When we leverage our business interests for the greater good of our people’s lives and our community’s well-being while at the same time increasing profit, business and philanthropy become inseparable.

I think of it as lifting both sides of the barbell. You can’t lift, squat, and overhead press a great weight from just one side, either from under the plates of capitalism or from under the plates of social responsibility. You have to get your entire body centered under that bar to propel it skyward, balancing the reality of the need for profitability with the challenges facing communities, our nation, and the world.

This is the essence of what I call “good capitalism,” which has also been called “conscious capitalism,” “conscious business,” or “the triple bottom line” (people, planet, profits). It’s an approach to business that elevates the interests of all stakeholders—from shareholders to vendors to customers to associates to community members to the local environment. Whatever name we give it, there’s no question in my mind that this approach to business represents a much-needed paradigm shift from conventional thinking. And it’s catching on. In the summer of 2019, Business Roundtable released a new Statement on the Purpose of a Corporation, which was signed by 181 CEOs, including the leaders of dozens of major national and international companies. The essence of their statement was that businesses are no longer primarily responsible to shareholders; they are responsible to all stakeholders, including customers, associates, communities, suppliers, and the environment as well. As my good friend Jamie Dimon, chairman of Business Roundtable and chairman and CEO of JPMorgan Chase & Co., puts it, “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”²

Change is not always welcomed, however. When I’ve made decisions that depart from business-as-usual, I’ve upset my competitors, been told by my friends that I’m crazy, and had many moments when I wondered if I’d been naïve or foolish. I’ve been viewed with suspicion and worse by people in the very communities I hoped to uplift. I’ve found myself at the center of media storms and highly contentious national debates. I’ve watched as decades of hard work were undone by those who didn’t share my values, and I’ve been forced to reflect on how fragile even the best company can be. But I’ve learned invaluable lessons from every one of these challenging moments, and again and again I’ve had successes and breakthroughs that inspire and motivate me to continue.

More and more companies are discovering the power of doing well by doing good, and I hope and expect to see many more follow suit in the decades to come—because it’s good citizenship and good business. It’s time we get beyond the idea that profit and purpose are at odds and embrace the more empowering truth that when a good company does well, it benefits everyone.

This truth was at the heart of The Home Depot’s approach and fueled its extraordinary accomplishments, from the opening of the first handful of stores in 1979 through the twenty-plus-year run of 40 percent annual growth led by cofounders Bernie Marcus and myself, to its continued success today. It’s that very same philosophy—the marriage of purpose and profit—that informs my “family of businesses” today, which includes two professional sports teams (the NFL’s Atlanta Falcons and MLS’s Atlanta United), a seventy-one-thousand-seat sports and entertainment venue (Mercedes-Benz Stadium), the largest golf specialty retail chain in the world (PGA TOUR Superstore), the Arthur M. Blank Family Foundation, and three Montana ranches (Mountain Sky Guest Ranch, West Creek Ranch, and Paradise Valley Ranch). Each of these very different enterprises is guided by the same principles and core values. And each of them, like my uncle’s pharmacy, is a Community.

Circles of Impact

Community, for a good company, does not just mean the people within its own walls or on its block. In fact, its influence ripples out like a series of concentric circles. The innermost circle includes the company’s associates (a term we use for everyone who works in our businesses), as well as the people they are serving—customers, fans, or guests. The middle circle is the local community in which the company is situated—the street, neighborhood, or city that it calls home. And the largest circle encompasses the entire industry within which the business is situated, and perhaps even broader sectors of society. Of course, these are not always separate, distinct constituencies. In reality, they overlap and build on one another, amplifying impact in the process. The beauty of these widening circles of impact is that there’s a constant interaction between them. For example, a company that hires from its local community turns neighbors into associates. Associates who get involved in initiatives in the local community and beyond find themselves making an impact that further inspires and engages them with their company. And companies that do well by doing right by their customers will sooner or later catch the attention of their competitors and begin to influence their industries. In the chapters ahead, you’ll find stories and examples that show how truly integrated all of these efforts to do good can be. But before we get there, let’s take a closer look at the opportunity for impact in each of these circles.

Associates and Customers: Creating Connection

What makes a good company, regardless of the industry in which it operates, is its ability to facilitate human connection. Now that I’m in my eighth decade of life, I am firmly convinced that the simple act of connecting to other human beings is the key to personal happiness and health as well as to a thriving business. But even though I couldn’t have named it at the time, it’s the exact thing I felt as a young boy, sitting at the counter in Oes Pharmacy, watching my father minister to the neighborhood. It’s what drew me to play and watch sports as a child, and to invest in the business of sports as an adult. It’s what I felt when I walked the floors of any Home Depot store, greeted by smiling associates and loyal customers. It’s what matters most to me in any of my business or philanthropic endeavors: the deepening and widening of our circles of human connection.

A good company has the opportunity to do something that is often overlooked in business plans or MBA programs: it can make people happier. Not just through providing goods or services that improve the quality of lives (although that’s important too) but in the very act of doing business. There’s a magic that can happen every single day in the interactions within its closest circle of community: the associates and the customers. A company can touch customers’ hearts, minds, and spirits with great service and, in the process, give associates the feeling that there’s a purpose to what they’re doing. They’re not just engaging in a transaction; they’re building a relationship, and relationships are the most important things in life, as both ancient wisdom and modern science tell us. For this reason, I’ve never really thought of myself as being in the business of home improvement, professional sports, stadium management, guest ranching, or sports retail. I’m in the business of human happiness. I consider it part of my purpose in life to increase the happiness of others, and all of my many business ventures are outlets for this purpose. Our associates know it too, and that’s why they love to work with us. And our customers, our guests, and our fans let us know that we’re doing a good job in the best way possible: they come back.

Initially, they may have come to us for something specific—the spectacular architecture and innovative technology of our stadium, the selection of products at our stores, the stunning scenery at our ranches, the entertaining talents of our sports teams. They may have come to see a great game and enjoy a beer and a hot dog; to buy a new set of golf clubs; to learn to ride a horse. But after a few visits, those things inevitably lose a little of their shine. What keeps people coming back is the experience they have and the connections they make as they interact with our associates. They stay for the company.

Local Community: Leading Change

When I left The Home Depot, I never intended to leave Atlanta. In fact, one of my overriding desires was to give back to the city that had launched our company and made it such a success. Whatever new endeavors lay ahead of me, they would be embedded in that community and dedicated to improving it in the best way I knew: by doing good business there.

Every company, large or small, has an opportunity and a responsibility to do good in its own neighborhood. That might mean a small town, a city block, or a rural community, or it might mean a whole city. In the most basic sense, simply setting up shop in a community is a chance to bring jobs, services, and other economic opportunities to the people who live there. A good company thinks about its location not just as something to exploit for profit or cost savings but as a strategic opportunity to serve. When I decided to build our new stadium downtown, just a stone’s throw from Atlanta’s historic Westside, I did so because I saw a chance to uplift that community as well as to infuse our teams and our sports with the energy of transformation that makes our city great. It wasn’t an easy choice, nor was it always a popular one, but it has benefited both our business and that community in countless ways and will for decades to come.

The same can be true at any scale when companies begin to look outside their own walls and fences and find ways to get involved in the neighborhood. It might mean sponsoring and getting involved in community projects; creating job-training programs and recruiting local residents; providing space for community events; spearheading local change efforts; or encouraging other businesses to move to the neighborhood.

Industry and Society: Modeling Potential

One of my core values is leading by example, and this applies both to people and to companies. A good company can set an example—for others in its industry, and perhaps even beyond, for society as a whole. When a company takes a risk to do the right thing and is rewarded by improvements in revenue and reputation, it can give others the courage to do the same. Many businesses are risk-averse, and they don’t necessarily want to go first, but if they have an example to model themselves after, they’re more likely to change. Sometimes this happens simply through comparison; other times the pressure to change comes from customers who notice the difference in one business and begin to demand the same from its competitors. When we dramatically reduced our pricing for food and drinks at Mercedes-Benz Stadium, some of our partners and most of our competitors weren’t happy. Now, they’re lining up to learn about our fan-friendly model, and many are implementing it themselves.

Just as a company can inspire change in its competitors, it can also put pressure on entire industries—improving environmental impact, work conditions, or quality standards down the supply chain. Whe...

Table of contents

• Cover
• Title Page
• Dedication
• Contents
• Foreword by President Jimmy Carter
• Introduction
• Chapter 1: Family Business
• Chapter 2: Everything Changes but the Values
• Chapter 3: You’re Only as Good as Your People
• Chapter 4: The Best Think Tank Any Company Could Ask For
• Chapter 5: Going the Extra Two Inches
• Chapter 6: Good Companies Make Good Neighbors
• Chapter 7: You Always Get More Than You Give
• Chapter 8: We Want the Wheels to Wobble (a Little)
• Chapter 9: Walk in Their Shoes
• Chapter 10: From Protest to Progress
• Epilogue: You Only Pass Through Once
• Acknowledgments
• Notes
• Index
• Photo Section
• Copyright
• About the Publisher