Sam Walton, the merchant king of the late 20th century, shares his thoughts and decision-making process that took him from opening a small local store to dominating retail in the United States.
Favorite quotes from the book:
If I had to single out one element in my life that has made a difference for me, it would be a passion to compete.
I learned from a very early age that it was important for us kids to help provide for the home, to be contributors rather than just takers. In the process, of course, we learned how much hard work it took to get your hands on a dollar, and that when you did it was worth something. One thing my mother and dad shared completely was their approach to money: they just didn’t spend it.
‘How do you inspire a grandchild to go to work if they know they’ll never have a poor day in their life?’
Mother must have been a pretty special motivator, because I took her seriously when she told me I should always try to be the best I could at whatever I took on.
I wasn’t what you’d call a gifted student, but I worked really hard and made the honor roll.
It never occurred to me that I might lose; to me, it was almost as if I had a right to win. Thinking like that often seems to turn into sort of a self-fulfilling prophecy.
“Two things about Sam Walton distinguish him from almost everyone else I know. First, he gets up every day bound and determined to improve something. Second, he is less afraid of being wrong than anyone I’ve ever known. And once he sees he’s wrong, he just shakes it off and heads in another direction.”
We wanted everybody to know what was going on and everybody to be aware of the mistakes we made. When somebody made a bad mistake — whether it was myself or anybody else — we talked about it, admitted it, tried to figure out how to correct it, and then moved on to the next days work.
Another way we tried hard to make up for our lack of experience and sophistication was to spend as much time as we could checking out the competition.
If you want the people in the stores to take care of the customers, you have to make sure you’re taking care of the people in the stores. That’s the most important single ingredient of Wal-Mart’s success.
I always questioned everything. It was important to me to make them think that maybe the technology wasn’t as good as they thought it was, or that maybe it really wasn’t the end-all they promised it would be. It seems to me they try just a little harder and check into things a little bit closer if they think they might have a chance to prove me wrong.
If I were a stockholder of Wal-Mart, or considering becoming one, I’d go into ten Wal-Mart stores and ask the folks working there, “How do you feel? How’s the company treating you?” Their answers would tell me much of what I need to know.
What’s really worried me over the years is not our stock price, but that we might someday fail to take care of our customers, or that our managers might fail to motivate and take care of our associates. I also was worried that we might lose the team concept, or fail to keep the family concept viable and realistic and meaningful to our folks as we grow. Those challenges are more real than somebody’s theory that we’re headed down the wrong path.
If we fail to live up to somebody’s hypothetical projection for what we should be doing, I don’t care. It may knock our stock back a little, but we’re in it for the long run. We couldn’t care less about what is forecast or what the market says we ought to do. If we listened very seriously to that sort of stuff, we never would have gone into small-town discounting in the first place.
In that sense, I think my style as an executive has been pretty much dictated by my talents. I’ve played to my strengths and relied on others to make up for my weaknesses.
But if you asked me am I an organized person, I would have to say flat out no, not at all. Being organized would really slow me down. In fact, it would probably render me helpless. I try to keep track of what I’m supposed to do, and where I’m supposed to be, but it’s true I don’t keep much of a schedule.
If you take someone who lacks the experience and the know-how but has the real desire and the willingness to work his tail off to get the job done, he’ll make up for what he lacks.
…the more you share profits with your associates — whether it’s in salaries or incentives or bonuses or stock discounts — the more profit will accrue to the company. Why? Because the way management treats the associates is exactly how the associates will then treat the customers.
And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising.
Plenty of companies offer some kind of profit sharing but share absolutely no sense of partnership with their employees because they don’t really believe those employees are important, and they don’t work to lead them. These days, the real challenge for managers in a business like ours is to become what we call servant leaders. And when they do, the team — the manager and the associates — can accomplish anything.
If you’re good to people, and fair with them, and demanding of them, they will eventually decide you’re on their side.
Quite a few smaller stores have gone out of business during the time of Wal-Mart’s growth. Some people have tried to turn it into this big controversy, sort of a “Save the Small-Town Merchants” deal, like they were whales or whooping cranes or something that has the right to be protected.
Business is a competitive endeavor, and job security lasts only as long as the customer is satisfied. Nobody owes anybody else a living.
For a long, long time, Sam would show up regularly in the drivers’ break room at 4 A.M. with a bunch of doughnuts and just sit there for a couple of hours talking to them. “He grilled them. ‘What are you seeing at the stores?’ ‘Have you been to that store lately?’ ‘How do the people act there?’ ‘Is it getting better?’ It makes sense. The drivers see more stores every week than anybody else in this company. And I think what Sam likes about them is that they’re not like a lot of managers. They don’t care who you are. They’ll tell you what they really think.”
Here’s the point: the bigger Wal-Mart gets, the more essential it is that we think small. Because that’s exactly how we have become a huge corporation — by not acting like one.
The bigger we get as a company, the more important it becomes for us to shift responsibility and authority toward the front lines, toward that department manager who’s stocking the shelves and talking to the customer.
In those days, I tried to operate on a 2 percent general office expense structure. In other words, 2 percent of sales should have been enough to carry our buying office, our general office expense, my salary, Bud’s salary—and after we started adding district managers or any other officers—their salaries too.
I guess one reason I feel so strongly about not letting egos get out of control around Wal-Mart is that a lot of bureaucracy is really the product of some empire builders ego. Some folks have a tendency to build up big staffs around them to emphasize their own importance, and we don’t need any of that at Wal-Mart.
Here’s how I look at it: my life has been a tradeoff. If I wanted to reach the goals I set for myself, I had to get at it and stay at it every day. I had to think about it all the time.
To succeed in this world, you have to change all the time.
But I feel like it’s up to me as a leader to set an example. It’s not fair for me to ride one way and ask everybody else to ride another way.