Lessons learned: What the Market Basket protest offers leaders and managers

Execs, employees, professors talk Market Basket saga at Sept. 25 event

September 17, 2014

It was a unique labor revolt, one that contained a single specific demand: give us back our CEO. The month-long Market Basket protest that ground a 71-store supermarket chain to a standstill will be the focus of a free Sept. 25 MIT Sloan forum that aims to extract critical lessons for employers and leaders everywhere.

Market Basket workers walked off the job at the New England supermarket chain in mid-July following the June firing of CEO Arthur T. Demoulas and other executives at the company by the board of directors. Executives, store managers, cashiers, store stockers, drivers, and warehouse workers: many risked decades-long careers. Without staff, operations were crippled, leaving empty shelves. Employees held rallies at headquarters and stores, and emblazoned storefronts and product displays with protest messages. Customers joined with workers by boycotting stores, pledging support on social media networks, and taping receipts from other supermarkets to the windows of their local Market Basket.

   Professor Thomas KochanProfessor Thomas Kochan

Most fascinating to MIT Sloan professor Thomas Kochan and adjunct associate professor Zeynep Ton, both of whom study labor and employment, it was not about the usual labor issues of pay and benefits, though protest leaders said new leadership would roll back both. And Market Basket has no union. Instead, employees banded together to fight out of loyalty to Demoulas and for preservation of the company’s culture and business model.

On Thursday, Sept. 25, MIT Sloan and political and culture magazine Boston Review will co-host a forum at MIT’s Wong Auditorium called “Lessons from Market Basket,” featuring a panel of experts in leadership, corporate governance, finance, marketing, operations, and labor. Executives and employees of Market Basket—those at the center of this summer’s drama—are expected to provide first-hand perspective.

Moderated by WBUR reporter Curt Nickisch, panelists include Kochan and Ton, along with fellow MIT Sloan faculty members Deborah Ancona, Renee Gosline, and Andrew Lo, as well as MIT political science professor Andrea Campbell. Other panelists include: Harvard Business School professor Jay Lorsch; Harvard Kennedy School of Government professor Marshall Ganz; Ownership Associates CEO Christopher Mackin, an advisor on employee ownership; and American Federation of State, County, and Municipal Employees organizer Kris Rondeau.

“So many people related to the actions of these employees who stood up and fought to maintain a good employer,” said Kochan, co-director of the MIT Sloan Institute for Work and Employment Research. “Some who are in similar situations likely said, ‘I know what you’re fighting for.’ Others who are not treated well likely thought, ‘Good for you!’ There are so many people fed up with inequality and greed in economic affairs, and they’re happy to see a fight for a more positive alternative.”

The spark that ignited the employee revolt was the firing of Demoulas by a board dominated by his cousin, Arthur S. Demoulas, whose side of the family dominated the board following one of the longest, and most expensive, civil litigations in Massachusetts history. But to Kochan and Ton, the volatile family dynamics are less interesting than the business model that fostered such passionate employee reaction.

   Adjunct Associate Professor Zeynep TonAdjunct Associate Professor Zeynep Ton

“The whole nation was watching this,” said Ton, author of The Good Jobs Strategy. “I think one of the reasons is the current income inequality, where people have jobs but not good jobs. To hear about a supermarket chain—where the jobs are supposed to be bad jobs—to hear employees stand up for the integrity of the business model is refreshing.”

“It inspired others to say ‘We can create loyalty, and offer low prices—it is possible,’” she said. “There is a way to run a very profitable business that benefits shareholders, customers, and employees. And Market Basket demonstrates that.”

Kochan and Ton believe the Market Basket story carries lessons critical to current and future leaders in business.

“It can teach students and faculty that there are successful and sustainable business models and strategies that work for owners, employees, customers, and communities and that they should learn more about them,” said Kochan.

The Market Basket employees’ protest arose out of concern that the change in leadership would sacrifice the company’s business model and job quality in the name of short-term shareholder value. Market Basket, Ton said, is not alone in successfully balancing long-term shareholder value, good pay and benefits, and highly competitive prices. Costco, Trader Joe’s, and Tulsa, Okla.-based convenience store chain QuikTrip all have similar priorities, she said.

“We want to encourage more companies to operate this way,” she said. “We want to encourage our students, and even inspire our students, to either create businesses like this or be change agents in their organizations and inspire other leaders to run their businesses this way.”

The protest came to a close Aug. 27 with news of an accepted buyout offer between opposing factions of the board. Employees returned to work. Many shoppers were thanked at the door by smiling Market Basket employees, and handed a printed “thank you” message from returning CEO Arthur T. Demoulas. And planned new stores are back on track to open.

Some estimate the company lost as much as $10 million per day in the standoff, and there are new questions about the future of a company saddled with new debt to finance the buyout.

Kochan and Ton, meanwhile, are working on a case study of Market Basket and asking detailed questions about a business that beats competitors on price, employee pay, and benefits, and remains among the most profitable in its industry. Beginning with the “Lessons From Market Basket” event, MIT Sloan students will be challenged to consider the tale and its implications for their future organizations, the professors said.