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Sam Walton Made in America
Jack Welch said, “Sam Walton understood people the way Thomas Edison understood innovation and Henry Ford, production. He brought out the very best in his employees, gave his very best to his customers, and taught something of value to everyone he touched.”
If you want to succeed in a business, read this book. Don’t think, “I’m just starting a small bookstore. Walton would be talking way over my head.” Think again. Walton started from scratch. What he learned along the way applies to everything from corporate giants to lemonade stands.
Sam Walton was passionate about retailing, and his passion leaps off the pages. I don’t get the feeling that he’s saying, “look at how great I am.” Rather, he’s just telling the story of building Wal-Mart through his eyes, warts and all. Bonus: he allows associates and family members give their two-cents worth in text boxes, even if their opinion is less than flattering.
It doesn’t take many pages to realize that Walton loved his work and pursued it with boundless energy. If he had been in it solely for the money, he’d have left Wal-Mart when he was worth his first billion. But he loved his work. During his final weeks on earth, dying of cancer, his family brought in a local Wal-Mart manager to chat with Walton about his store’s sales figures.
What gripped me the most about Walton – his relentless search for better ideas. He read everything he could get his hands on, learned from his competitors by spending time in their stores, asked endless questions of experienced retailers, listened to employees at all levels of Wal-Mart and invented creative ways to foster an idea-driven culture.
Sam Walton: A Passion to Learn
Wal-Mart is the largest retailer in the world and the second largest corporation in the world, with a 2005 income of over $11 billion. It’s the largest employer in both the United States and Mexico. (2)
It was started by a country boy who for his entire life loved calling his bird dogs into his old pick-up truck to go tramping through the woods quail hunting. The story of how he became the best merchant who ever walked the planet can tell us a lot about achieving our own success.
Work Around Your Weaknesses
Sam Walton wasn’t all strengths. Academically, he didn’t consider himself a gifted student in high school, but he worked hard and made good grades. (3) He also made it through college, although he wasn’t that great at accounting. (4)
According to Sam, he “never learned handwriting all that well.” Nobody could read it. Also, he’d screw up organizational details, like sales slips and cash register transactions. At Penney’s, his first full-time job out of college, the man over personnel told him,
“Walton, I’d fire you if you weren’t such a good salesman. Maybe you’re just not cut out for retail.” (5)
That guy didn’t have a strength in discernment. Walton would become the best retailer ever.
Walton was a terrible driver (6) and admitted to being hopelessly disorganized. (7) People would show up for scheduled appointments from out of town and Walton would be out of town visiting a store. His personal secretary finally refused to make appointments for him, knowing he might not show.
Build on Your Strengths
But Walton also had strengths, which he developed tirelessly. He was a great leader and team builder. (8)
He set extremely high personal goals (9), which he accomplished with his team through his competitive spirit and intense drive. His entire life, much of that drive was focused on learning.
Learn by Doing
He learned a lot about hard work and sales from doing it in his early years. At ages 7 or 8 he sold magazine subscriptions. Later, he raised and sold rabbits and pigeons. (10)From seventh grade through high school, (11) he ran paper routes.
In college, he added more routes and hired helpers, making some serious money (12). He needed it, since he was paying his own way. (13) He did whatever it took to make ends meet, waiting tables in exchange for meals (14) and life guarding on the side (15).
Besides learning hard work, he learned people skills. In college, he aspired to become the student body president. Here’s a trick he learned that he’d use the rest of his life:
I learned early on that one of the secrets to campus leadership was the simplest thing of all: speak to people coming down the sidewalk before they speak to you. I did that in college. I did it when I carried my papers. I would always look ahead and speak to the person coming toward me. If I knew them, I would call them by name, but even if I didn’t I would still speak to them. Before long, I probably knew more students than anybody in the university, and they recognized me and considered me their friend.” (16)
Get Formal Education
In his formal education, he majored in business at the University of Missouri. (17) Later in life he’d take formal classes as needed. But the most striking thing to me about Sam was that he never stopped learning. In fact, he became a learning machine.
Way before personal computers came along, he felt that Wal-Mart needed to move toward computerization.
“…I was curious. I made up my mind I was going to learn something about IBM computers. So I enrolled in an IBM school for retailers in New York.” (18)
He wasn’t your typical, passive student. He knew how to get the most out of the learning environment.
Abe Marks was one of the speakers. So Abe’s sitting there innocently reading a newspaper, when he gets this feeling that somebody’s standing over him. It was Walton, who introduced himself, saying that he came to the conference to talk with Abe. In Abe’s words,
So he opens up this attaché case, and, I swear, he had every article I had ever written and every speech I had ever given in there.” (19)
He goes on to pull out his accounting sheets and asks Abe to look them over.
He was about ten years ahead of the computer revolution. But because he caught the vision early, he was ready for it when it came. Walton
“became…the best utilizer of information to control absentee ownerships that there’s ever been. Which gave him the ability to open as many stores as he opens, and run them as well as he runs them, and to be as profitable as he makes them.” (20)
Learn From Mentors
Just out of college, he went to work for J.C. Penney, (21) finding a mentor in Duncan Majors, his very successful store manager. He’d learn from Duncan at the store six days a week, then go to Duncan’s house on Sundays with his associates to play ping-pong, cards, and talk about retailing.
Learn From Books and Publications
During a stint in the army, he was posted in Salt Lake City. He checked out every book on retailing in their library, and studied a nearby department store.
He would read every retail publication he could find, and would later refer to himself as an “avid student of management theory.” (22)
Learn from Company Training Classes
After the army, he bought a Ben Franklin variety store in Newport, Arkansas. (23) The company put him through a two week training class, which taught him the basics of running a store. He would use their accounting system well into his Wal-mart years. (24)
Learn from Your Competition
Once he started working at his first store, his unique spin on education came into play. He soon discovered that the store he’d just bought was “a real dog.” His competition across the street had an excellent manager and was doing twice the business in sales. According to Walton,
“…I learned a lesson which has stuck with me all through the years: you can learn from everybody. I didn’t just learn from reading every retail publication I could get my hands on, I probably learned the most from studying what John Dunham was doing across the street.” (25)
So Walton became a student of his competitor, always hanging out across the street, checking out Dunham’s prices, how he displayed his merchandise, learning everything about why he was successful.
According to associate Charlie Cate: “I remember him saying over and over again: go in and check our competition. Check everyone who is our competition. And don’t look for the bad. Look for the good. …everyone is doing something right.” (26)
He especially checked out Kmarts, which were far ahead of them in those early years. (27)
He was even so bold as to visit the headquarters of other retailers. He could get away with it, since they were small at the time and they didn’t consider him to be serious competition.
“I probably visited more headquarters offices of more discounters than anybody else – ever.” (28)
Get Outside Input
They once asked other discounters who weren’t in competition to come to their stores and critique them. Being outsiders, they had a different perspective from insiders. According to Walton,
“These guys…just ripped our stores apart, telling us how poorly we did everything.”
It shocked them. But Walton considered it “a turning point in our business.” It geared them up to compete w/ Kmart. (29)
Learn from Your Workers
Walton learned from everyone in his stores, regardless of status.
“Great ideas come from everywhere if you just listen and look for them. You never know who’s going to have a great idea.” (30)
He especially loved to talk to the truck drivers. According to Lee Scott,
“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.”
According to Sam,
“It’s amazing to me how many ideas they always have for fine-tuning the system.” (31)
He’d grill them, asking, ‘What are you seeing at the stores?’ ‘Have you been to that store lately?’ ‘How do the people act there?’ ‘Is it getting better?’
“…I’d still say that visiting the stores and listening to our folks was one of the most valuable uses of my time as an executive. But really, our best ideas usually do come from the folks in the stores. Period.” (32)
Learn From Associations
Walton joined the National Mass Retailer’s Institute and the discounters’ trade association, (33) where he could learn from others in his industry.
He’d ask questions of anyone in the know. One day, the executive vice president of the discounters’ trade association was minding his own business in his New York office, when Sam Walton arrived. Here’s how Walton worked him over:
“So in comes this short, wiry man with a deep tan and a tennis racket under his arm. He introduced himself as Sam Walton from Arkansas. I didn’t know what to think. When he meets you, he looks at you – head cocked to one side, forehead slightly creased – and he proceeds to extract every piece of information in your possession. He always makes little notes. And he pushes on and on. After two and a half hours, he left, and I was totally drained. I wasn’t sure what I had just met, but I was sure we would hear more from him.” (34)
Innovate, Swim Upstream; Constantly Experiment With New Ideas
Many people are good at learning, but have a hard time applying what they learn. After Walton learned something new, he’d experiment with the best ideas in his own store. (35)According to Walton,
“I think my constant fiddling and meddling with the status quo may have been one of my biggest contributions to the later success of Wal-Mart. ” (36)
A pattern emerges in Walton’s biography. First, grab ideas from anybody you can. Second, shake things up in your stores by innovating. Learn something else. Innovate. It became a lifelong obsession.
“He was notorious for looking at what everybody else does, taking the best of it, and then making it better.” (Sol Price, founder of Fed-Mart and Price Club) (37)
According to Walton,
“…after a lifetime of swimming upstream, I am convinced that one of the real secrets to Wal-mart’s phenomenal success has been that very tendency.” (38)
Learn from Your Mistakes
Not all of his ideas worked. The minnow buckets didn’t sell. People in Wisconsin didn’t go for his Moon Pies. (39)
But when he saw he was wrong, he admitted his mistake and went on to try something else. And he wanted his associates to be the same way. He’d get them together on Saturday mornings to share their success and admit their failures. That culture of candor produced a great environment to capture ideas.
It helped that he had “very little capacity for embarrassment.” (40)
Travel Far and Wide for Great Ideas
He’d travel the world to get an idea. In his early career, he read an article about how two stores in Minnesota had gone to self-service, which nobody else was doing. Customers picked out their own stuff and checked out at the cash registers at the front of the store. So he rode the bus all night to visit the stores, liked what they were doing, and changed his store to self service. (41)
He was always out looking for new merchandise. Once he came back from New York with some unique sandals which some called flip-flops, or thongs. The clerk said, “No way will those things sell. They’ll just blister your toes.” They sold like crazy. (42)
Before Walton, very few stores concentrated on buying low, selling cheap, and making their profit by selling such huge quantities. When Walton heard of a few discounters, he ran around the country from the East to California, studying the concept. Everywhere he went, he visited stores and scribbled ideas in his yellow legal pad. (43)
According to his brother Bud,
“There’s not an individual in these whole United States who has been in more retail stores…than Sam Walton. Make that all over the world. He’s been in stores in Australia and South America, Europe and Asia and South Africa. His mind is just so inquisitive when it comes to this business. And there may not be anything he enjoys more than going into a competitor’s store trying to learn something from it.” (44)
Capture Your Ideas
Wherever he found himself, he’d visit stores, look around, and ask questions. At first, he wrote down all his ideas on his yellow pad. Later, he used a little tape recorder. (45)
Develop an Idea-Driven Culture
Sam didn’t want to be the only idea-hunter. He wanted to get everyone in on the act. Once a week, he’d get together with his managers to critique each other, evaluating their failures and successes. (46) Each was supposed to report their Best Selling Item. (47)
To add the thrill of competition, they set up a contest for the best volume producing item. (48)
He’d also invite the hourly associates who came up with the best money saving ideas, presenting them with a cash award. He estimates that these ideas have saved them $8 million a year. (49)
These days, their 18 regional managers pile into airplanes every Monday morning to look at stores, with the charge to come back with some idea good enough to pay for the trip. Then they get with Senior management, who also should have been visiting stores, to report in their Friday morning merchandising meeting. (50)
Don’t Worry Who Gets the Credit
According to Walton,
“…most everything I’ve done I’ve copied from somebody else….”
To get the best ideas, you’ve got to be humble enough to give credit where credit’s due.
As Claude Harris says,
“He was always open to suggestions, and that’s one reason he’s been such a success. He’s still that way.” (51)
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