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Power Sheet: Walmart’s Risky Bets Seem to Be Paying Off

True leadership is dangerous. If doing something isn’t risky, then anyone could do it and no leader is needed. Three examples from recent news:

David Phung saved a woman (and her dog) in Louisiana flooding when others wouldn’t. A convertible is sinking into the roiling brown floodwaters as a boat approaches with three men and a camera crew. The woman in the car says, with remarkable calm, “Oh my god, I’m drowning.” The men try to break a window but can’t. They do manage to tear open the car’s top. As the car disappears, David Phung jumps from the boat into the water, reaches beneath the surface, and pulls the woman out. She asks him to get her dog, but he says he can’t and the dog is gone. She says it better not be. So he takes a breath, dives down, and emerges with the dog.

That’s not just heroism; it’s leadership. At least two other people could have done what he did, and maybe they would have. But he did it first. Fortunately, that camera crew means we can watch the whole thing and be inspired.

Doug McMillon’s risk-taking at Walmart seems to be paying off. Risks are at many levels, and they all matter. Phung was risking his life, McMillon merely his career when early last year he decided to raise the pay of Walmart store employees and to spend more on store appearance and merchandising. He was betting that more satisfied workers and upgraded stores would attract more shoppers and increase sales. That outcome was uncertain, but the costs were not; the company said the wage boost alone would cost $2.7 billion over fiscal 2016 and 2017.

Yesterday the company reported that customer traffic and same-store sales were up last quarter, while Target, Macy’s, Kohl’s, and Nordstrom all reported same-store sales declines. Analysts credited the new investments in employees and stores. Walmart raised its revenue and profit guidance, and the stock surged. The company still faces major challenges, especially in e-commerce. But who says CEOs are afraid to manage for the longer term?

Senator Leila De Lima may be risking her career and her life by defying the Philippines’ president. She’s conducting a senate inquiry into the rash of “extrajudicial” killings of suspected criminals by police and self-styled vigilantes since President Rodrigo Duterte took office June 30. He responded by accusing her publicly of accepting money from drug dealers to buy a house for her driver, with whom, he said, she was having an affair. As usual with his many public accusations, Duterte provided no evidence.

Crossing Duterte is extremely dangerous. He has promised to pardon police and military who kill suspected criminals – no evidence or process required. He has threatened journalists with the same fate, and the man he appointed to head the national police force has said that suspects “have the right to remain silent – forever.” No one, including Senator De Lima, has any idea what’s ahead for her. But she has already established herself as a leader by taking a giant risk to do what others won’t.

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What We’re Reading Today

Viacom, Redstone agree to settlement 
The two sides have agreed to terms in the case pitting Viacom against its controlling shareholder, Sumner Redstone. Viacom CEO and Chairman Philippe Dauman will step down and receive about $72 million for doing so. COO Thomas Dooley will serve as interim CEO. The five board members proposed by National Amusements, the company through which Redstone controls Viacom, will join the board; it’s unclear when the directors to be replaced, including George Abrams, will leave. Dauman and Abrams will drop their case against Redstone for ousting them from the National Amusements board. Reuters

Judge overturns Uber settlement
A federal judge has refused to approve the $100-million settlement Travis Kalanick‘s company reached with drivers in California and Massachusetts. The drivers argued they should have been classified as full-time employees and should therefore have received mileage reimbursements and overtime. The case cuts to the heart of Uber’s contractor-based business model. The judge said the settlement  provided only 10% of what the drivers’ attorney said they could claim. Los Angeles Times

VW owners claim Robert Bosch was complicit…
…in a decade-long effort to cheat emissions testing in the U.S. and abroad. Lawyers representing VW diesel engine owners said in a court filing that according to documents handed over by Matthias Müller‘s Volkswagen, Volkmar Denner‘s auto supply company knew about the cheating and cooperated for a decade. Bosch hasn’t been charged with wrongdoing, but the accusation implies a VW coverup that included third parties. Fortune

U.S. to end the use of private prisons for federal penitentiaries
Deputy Attorney General Sally Yates directed officials to stop renewing or drastically reduce the scope of contracts with private operators. Federal officials ruled that facilities run by private prison companies were less safe than those operated by government. While the order is a significant rebuke of private prison operators, federal inmates account for only a small fraction of the U.S. prison population.  Washington Post

Building a Better Leader

Mark Zuckerberg: A CEO has to take risks…
…to keep the company fresh. But he added that “when you do stuff well, you shouldn’t have to do big, crazy things” often. Business Insider

Amazon to give part-time technical workers…
…full-time perks. The move is part of a pilot program as Amazon tries to improve its workplace reputation while it battles for top talent. Fortune

The reason Patagonia provides free, on-site child care…
…for employees at headquarters and its distribution center is because it’s the right thing to do, says CEO Rose Marcario. But the policy pays for itself in tax benefits and employee retention.  Fast Company

Election Notes

The Clinton Foundation will stop accepting …
…foreign and corporate donations if Hillary Clinton is elected president. Bill and Chelsea Clinton will hand over operations and fundraising to others. The move comes as the GOP and Donald Trump have attacked Hillary, saying foreign donors could have influenced her decisions as Secretary of State. Emails have shown a potential deeper connection between the foundation and her State Department aides. Fortune

Trump’s campaign chairman quits
Paul Manafort resignation was handed in this morning after allegations that he helped a pro-Russian political party in Ukraine run a covert effort to sway U.S. support. Manafort is the second campaign manager to resign from Trump‘s team. Fortune

Clinton to FBI: Colin Powell suggested a personal email account
In her interview with the FBI, Clinton said that at a dinner party, former Secretary of State Powell advised her to use private email for non-classified information. Powell said he does not remember the conversation but did send a memo to Clinton outlining how he used personal email while Secretary. USA Today

Republicans growing more concerned that a Trump loss…
…would sink more than just his ship. Leading GOP members fear that Trump‘s declining poll numbers could mean that more conservative voters will stay home on election day, ending Republicans’ majorities in Congress. Trump has tried to change his tone, acknowledging that he sometimes says “the wrong thing.” But some leading Republicans have urged the Republican National Committee to stop funding his campaign and focus on the Senate. NYT

Up or Out

United Continental named Andrew Levy its new CFO.  Chicago Tribune

Fortune Reads and Videos

Walmart gets big boost from its online business
Online sales rose nearly 12% as a larger assortment of offerings and its Walmart Pay app connected with shoppers. Fortune

Gawker creator says goodbye
With a deal to sell Gawker’s assets to Univision and the impending shuttering of Gawker.com, Nick Denton says he’s moving “out of the news and gossip business.” Fortune

Eddie Bauer suffers a data breach
Malware in its point-of-sale system may have been able to access customer credit card data. Fortune

A baby girl born in flight receives 1 million airline miles
The Philippine carrier Cebu Pacific said the girl was the first birth on one of its planes. Her mom went into labor between Dubai and Manila.  Fortune

Happy Birthday

Bill Clinton turns 70 today.  Biography

Microsoft CEO Satya Nadella turns 49 today.  Economic Times

Google co-founder Sergey Brin turns 43 on Sunday.  Biography

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@ryanderous
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