On a trip to Arkansas last year, I had the pleasure of visiting the first* Walmart store in Bentonville Arkansas. It began as fulfilling my tourist obligations in the area but ended with much more. Visiting the now museum and quaint ice cream shop sparked my curiosity in Walmart's clearly humble beginnings. I’d never given much thought to the store, a now 400 billion dollar retail behemoth and arguably the most successful retail store ever. A business that has a storefront in every city, operating 24 hours a day, while carrying every product in the world (I actually confirmed they don’t carry every product in the world but they do carry 75 MILLION skus). Imagine that, not giving a company like that much thought - talk about first world problems. Anyway, it got me thinking about how a company like this had lasted and continued to thrive in an era dominated by e-commerce and delivery. What’s under the hood of this business brought such longstanding success?
Here’s a photo of the ice cream shop that sits at the storefront of the original Walmart!
My curiosity led me to purchase Sam Walton: Made In America, an autobiography by the founder, Sam Walton, about the events leading to the founding of Walmart. The book is written in an extremely informal, relatable voice (the southern drawl almost jumps off the pages). Sam recounts the dynamics of the changing retail industry in the 1940s and ’50s, documenting the rise of the “variety store”. These sounded trivial but coming from a time when each store had a single purpose (butcher, drug store, etc), this was revolutionary. Sam owned and operated many of these variety stories with varying degrees of success. As a man whose goal in life was to serve the customer, Sam believed he could do more to improve the customer experience. He realized that the variety of products was simply not enough; the customers also wanted products at reasonable or discount prices.
Throughout the book, you not only get a peek into the history of Walmart, but you also get to know Sam Walton incredibly well. It didn’t take long for me to realize why the company has been such a great success - the business is an extension of who he is as a person, someone with an unstoppable drive to serve people. This drive applied to these six concepts Sam highlights at the end of the book is what he credits the success of Walmart to - let’s take a look and see how we can learn from them.
Six Lessons and Application
Think One Store at a Time
The footprint of Walmart today is large, but it didn’t start that way. Sam details throughout the book how he personally scouted out new locations for Walmarts in his Piper Tri-Pacer plane that he piloted. He took an active interest in each store because every store had unique customers. Sam spent the time figuring out exactly what customers in that area needed and how to get that to them. Once the store was off and running, only then could he begin to think about what was next. He wasn’t building twenty locations at once because he knew the customer experience, which was his driving force, would be poor.
Lesson: Focus on the one MOST important thing at the time. One task to full completion is more powerful than many half finished.
Pictured here is Sam’s Piper Tri-Pacer plane.
Communicate Communicate Communicate
Throughout the book, Sam continuously credits the success of Walmart to communication. Communication is something that spans different levels. Communication between his leadership, communication to employees, communication to the customer. Communication is something that is hard to overdo - not many bad things come from overcommunication. If you’ve worked a job or had any form of relationship in your life you can probably test to what poor communication brings. By pushing constant communication, Sam created a feedback loop that was allowed for continuous checks to make sure that leadership, employees, and customers are all aligned.
Lesson: The goal of conversation is to have effective exchange, not get your point across. Listen first always, then process and respond. Apply to your relationships, coworkers, and employees.
Keep your ear to the ground
Even as CEO of a massive retail chain, Sam could be found on Saturday mornings shaking hands and talking with his customers. While he folded on several of his strong stances against technology, he didn’t rely solely on what the computers said to dictate the customer experience. Staying in touch with the people who kept him in business allowed him to identify trends and sentiment that couldn’t be portrayed in numbers. Customers are always more than eager to tell you what they need - listening to them is a free resource to find out what you can do better.
Lesson: Your customers are why you are in business. If you stop serving them, you won’t be in business.
A recreation of Sam Walton’s original office.
Push responsibility and authority down
Sam believed that Walmart couldn’t operate without the full commitment from its employees. Walmart gained this in two ways. The first is by offering transparency. Most large corporations are secretive about sales numbers, inventory, and metrics. Walmart provides every sales detail to its employees. While posing a small risk, Sam argued that the employees should know the goals they are collectively working to achieve. This creates a sense of teamwork and unity. The second way is through offering a generous stock ownership plan. When an employee is part owner of the business, the correlation between their hours worked and fate of the company are more closely tied. Employees bought into the mission and vision of the organization they work for show up for more than just a paycheck.
Lesson: Align the incentives of your team with the incentives of the business. If your people come to work just for the paycheck, you won’t succeed long term.
Force Ideas to bubble up
When you have a workforce that has incentives aligned with the business, there will be ideas and suggestions that are actively offered. Employees will run into problems or see an opportunity in the store and, because of their feeling of ownership in the business, will suggest improvement rather than ignoring it. Walmart recognized this and instituted programs to allow employees to come up with their own marketing strategies to drive sales. Some of the best ideas often come from those most connected with the bottom line. Why would marketers sitting in an office in New York City know a customer from the Midwest better than the local who has worked in the store for ten years? They wouldn’t!
To my knowledge, this program is ongoing within Walmart and offers lucrative rewards that incentivize employees in all positions to come up with ways to better the store.
Lesson: Ideas come in many different forms and places - be open to hear them especially when coming from those who interact with the bottom line.
Stay lean - fight bureaucracy
The reason many businesses struggle is bloat. When money is available and a new problem arises, it’s easy to hire a person to fix it. This happens before asking if the problem can be solved with the resources available. “If you’re not serving the customer or supporting the folks who do, we don’t need you” is a quote from Sam in the book. It sounds cutthroat but that’s how Walmart has managed to stay extremely lean. His dedication to providing value to the customer was exemplified by this - the fewer the people they had to hire to run Walmart, the more money they could save the customer. THAT is dedication.
Lesson: Do everything possible to solve your problems with the resources you have at your disposal.
In 1958, the average life-span of a company listed in the SP500 index was 61 years. Today that number is less than 18 years. The age of technology has given us the ability to start a business extremely quickly but hasn’t done much in the way of teaching how to keep a business alive. Access to information has never been easier; we just need to be learning from the right information. Walmart is an outstanding example of a business that has stood the test of time. Any person with the interest of starting a business or even improving their personal life would do well to apply these six concepts. The application of these has proved successful from the early days of discounting in the 1960s and will continue to bring business and personal success for many years to come.
The outside storefront of the original Walmart, or Five and Dime!
*The first named Walmart was actually in Rogers Arkansas. The concept arose from Sam Walton’s “Five and Dime” store which is located in Bentonville, a sort of unofficial beginning.
A Few Closing Thoughts
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