It was easily the strangest and most appealing labor-management dispute of the year. In the summer of 2014, hundreds of Market Basket employees went on strike, thousands walked daily picket lines, and millions of customers boycotted the company’s supermarkets…all in an ultimately successful attempt to force the board of directors to reverse its decision to fire beloved CEO Arthur T. Demoulas. Adding spice to the stew of labor-management-vendor-customer-community relations stirred up by the protests, it was Demoulas’ cousin, Arthur S., who led the charge to fire him, and who ultimately resolved the dispute by selling his side of the family’s controlling shares of the company to Arthur T.
Business school professor Daniel Korschun and veteran journalist Grant Welker combine their skills in We Are Market Basket: The Story Of The Unlikely Grassroots Movement That Saved A Beloved Business to produce a brisk, engaging, insightful and thought-provoking recounting of how the Demoulas family (beginning with grandparents Athanasios and Efrosine) built a multi-billion dollar company that occupied a unique position in the communities it served and built a “clear, unique, and adaptable” corporate culture that inspired and guided the actions of its managers and workers (“associates”) as they fought for control of the company to which many had devoted much of their lives. (p. 42)
Here are some of the things I want to remember from We Are Market Basket:
Clear, unique, and adaptable: “Business scholars find that the cultures that contribute most to performance share three characteristics: members agree on objectives, the culture is distinctive compared with those of other organizations, and the culture encourages adaptability in the face of challenges. In other words, the best cultures are clear, unique, and adaptable. (p. 42)
The “four fundamental pillars” of Market Basket’s corporate culture: “service to the community, a feeling of family, empowerment, and originality—that is, valuing innovation over imitation. What makes Market Basket’s culture powerful is not only that the pillars are clear, unique, and adaptable but that the pillars work together. The sense of community purpose motivates people to commit to the family, and the culture of empowerment encourages people to be resourceful in helping the Market Basket family. The pillars of the Market Basket culture are at the heart of why the 2014 protest took flight and how it became successful.” (p. 42)
Cutting out the heart: The Market Basket protest was led by nine senior managers, all of whom had been with the company for decades. The fact that Market Basket workers didn’t have a union actually gave them extra flexibility and power in this struggle. Under US labor laws, senior managers can’t be part of a union. In this case, senior managers, store directors, stockers, cashiers and baggers all saw their interests aligned with Arthur T. Demoulas and his management style; and they were able to act together as one.
One of the first and most important strategic decisions they made was that only the warehouse workers would go on strike. Market Basket’s central warehouse supplies roughly half the items its stores sell. Very few warehouse workers crossed the picket line and outsiders hired to break the strike didn’t know the company’s systems and culture. The result was stores started running out of essential items (produce, meat, store brand foods) almost immediately and had near-empty shelves for the duration of the six-week struggle. It also meant that store associates didn’t have to risk their jobs.
Enlisting the public: Market Basket used social media and large rallies to build public support, but their most powerful tool was the relationships they’d built with their customers over the years. They used those relationships to explain the protest and encourage customers to join the boycott of Market Basket for the duration of the struggle. For customers who had no other option (e.g., Market Basket’s three stores in Haverhill, MA are the only supermarkets in the working-class city of 60,000), associates continued to offer the excellent service the company has always prided itself on.
Customer support proved critical as roughly 2 million shoppers joined the boycott, crippling the company’s cash flow. (By one estimate, Market Basket was hemorrhaging $10 million/day.) Senior manager Steve Paulenka summed it up this way: “The customers are the locomotive pulling this whole thing right now. They have shut this company down and they are not coming back until we come back and we are not coming back until our boss comes back.” (p. 147)
Shareholders don’t own the company: The Market Basket campaign is proof that, at least sometimes, the “stakeholder” theory of corporations holds true. The “stakeholder” theory is that corporations exist for the benefit of multiple interests—their customers, their workers, the communities they serve, the products they produce…and their shareholders. The “shareholder” theory (most famously articulated by Milton Friedman) is that companies exist solely for the benefit of their shareholders. In the summer of 2014, Market Basket’s managers, workers, customers, vendors and communities fought the company’s shareholders for control of the company…and won.
Crossposted at: https:/masscommons.wordpress.com