“Wal-Mart Stores, Inc. is an American public corporation that runs a chain of large, discount department stores. It is the world's largest public corporation by revenue, according to the 2007 Fortune Global 500. It was founded by Sam Walton in 1962, incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest private employer in the world and the fourth largest utility or commercial employer, trailing the Chinese army, the British National Health Service, and the Indian Railways.”
The above extract from the Wikipedia, just gives and idea of how large an establishment the Organization - Wal-Mart Stores, Inc. is currently. This Wal-Mart store is the brain child of its founding father – Sam Walton. In this document we intend to capture the learning form the life of Sam Walton. These learning are primarily focused on the perspective of developing leadership abilities in us.
We start this document with a brief biography of the leader and then, dwell deeper into our understandings and take away from the same. The document is primarily based on the autobiography of Sam Walton – “Made in America” (so we have not made partial listing as references at all places) and other online reading material that we could find (reference to which we have give as footnotes). We have given references where ever we have quote some text as is from the source.
We are sure the life and learning form the will excite every one who reads this document.
SAM-WALTON – A BRIEF BIOGRAPHY
Born to Thomas Gibson Walton and Nancy Lee Walton at Kingfisher, Oklahoma on March 29, 1918, he lived with his parents on their farm until 1923. The family then moved from Oklahoma to Missouri, where they were involved in the profession of mortgage. There they moved from one small town to another for several years. While attending 8th grade in Shelbina, Sam became the youngest Eagle Scout in the state's history. In adult life, Walton became a recipient of the Distinguished Eagle Scout Award from the Boy Scouts of America. While at school Sam excelled exceptionally in sports. He always had the spirit of challenging himself to tougher goals and working towards them with full commitment and enthusiasm. While at Hickman, he also served as vice president of the student body in his junior year and as president in his senior year. He performed well enough academically to become an honors student.
Growing up during the Great Depression, Walton had numerous chores to help make financial ends meet for his family. He milked the family cow, bottled the surplus and drove it to customers. Afterwards, he would deliver newspapers on a paper route. Upon graduating, he was voted "Most Versatile Boy." After High School, Walton decided to attend college, hoping to find a better way to help support his family. He attended the University of Missouri and majored in economics and was an ROTC (Reserve Officers Training Corps) officer.
Walton joined JCPenney as a management trainee in Des Moines, Iowa three days after graduating from college. This position earned him $75 a month. He resigned in 1942 in anticipation of being inducted into the military for service in World War II. In the meantime, he worked at a DuPont munitions plant near Tulsa, Oklahoma. There he met his future wife, Helen Robson, in April 1942.
Robson was the valedictorian of her high school class and a graduate of the University of Oklahoma at Norman with a degree in business. She was the daughter of L.S. Robson, a prosperous banker and rancher. She and Sam were married February 14, 1943.
Soon afterwards, Walton joined the military in the US Army Intelligence Corps, supervising security at aircraft plants and prisoner of war camps. In this position he served in the continental United States. He eventually reached the rank of captain.
In 1945, after leaving the military, Walton decided he wanted to own a department store but would settle for a variety store. With some help from his father-in-law with a loan of $20,000, plus $5000 he had saved from his time in the Army, Walton purchased a Ben Franklin variety store in Newport, Arkansas. The store was a franchise of the Butler Brothers chain. It was here that Walton pioneered many concepts that would prove to be crucial to his success. Over time, Walton went on to open more Ben Franklin stores with the help of his brother, father-in-law, and brother-in-law.
In 1954, he opened a store with his brother in a shopping center in Ruskin Heights, a suburb of Kansas City. He opened another in Arkansas, but it failed to be as successful as his other stores. Walton decided to concentrate on retail business instead of the shopping centers and opened larger stores which were called "Walton's Family Center."
By 1962, Walton and his brother Bud owned sixteen variety stores in Arkansas, Missouri, and Kansas (fifteen Ben Franklin and the one independent Fayetteville store). The first true Wal-Mart opened in 1962 in Rogers, Arkansas. Wal-Mart eventually became the world's largest retailer. He committed himself to the growth of Wal-Mart right since and was associated with its administration and worked tirelessly to take deliver value to its stakeholders till late 1980’s.
Forbes ranked Sam Walton as the richest man in the United States from 1985 to 1988, ceding the top spot to John Kluge in 1989 when the editors began to credit Walton's fortune jointly to him and his four children. Wal-Mart Stores Incorporated also runs Sam's Club warehouse stores. Wal-Mart stores operate in The United States, Mexico, Canada, Argentina, Brazil, China, Puerto Rico and in the United Kingdom.
Walton supported various charitable causes, including those of his church, the Presbyterian Church (USA). The Sam and Helen R. Walton Award was created in 1991 when the Waltons made a gift of six million dollars which included an endowment in the amount of three million dollars to provide annual awards to new church developments that are working in creative ways to share the Christian faith in local communities.
In 1998, Walton was included in Time Magazine's list of 100 most influential people of the 20th Century. Walton was honored for all his pioneering efforts in retail in March 1992, when he received the Presidential Medal of Freedom from President George H. W. Bush. That year, the Jiangsu province of the People's Republic of China awarded him the Golden Star Foreigner's Award for "tireless assistance in the development of People's owned factories in the Suzhou area".
He left his ownership in Wal-Mart to his wife and their children: S. Robson "Rob" Walton, John T. Walton, Jim Walton, and Alice Walton. Rob Walton succeeded his father as the Chairman of the Board of Wal-Mart, and John was a director until his death in a 2005 plane crash. The others are not directly involved in the company (except through their voting power as shareholders). The Walton family held 5 spots in the top 10 richest people in the United States until 2005. Two daughters of Sam's brother Bud Walton, Ann Kroenke and Nancy Laurie, hold smaller shares in the company and are also billionaires in their own right.
Walton died Sunday April 5, 1992, of a type of multiple myeloma.
The Learnings
In this section we look at various facets of life of Sam Walton and try to gain insights from them related to personal relations, leadership etc.
The Value of a dollar
“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.”
Living in the period of great depression, Sam Walton and his brother had seen the difficulty of a financially tight situation first hand. Sam had to do all sorts of odd jobs to be a self created man that he was. This economic crisis let him to realize the value of a single dollar and he was determined to give the benefits which he perceived to the customers who would flock his stores later on in life.
This forms a basis of the personal leadership which he followed; he ensured that he communicated the message and importance of dollar to his kids as well. He would get them to work for his store and pay them for the work they did, it was very essential part of his interaction with them as it was this philosophy of valuing a dollar which would enable them to lead a customer oriented retailing store like the Wal-Mart.
His sprit of serving his customers and giving them the highest possible value for money is evident form his statement in his book quoted.
“But sometimes I'm asked why today, when Wal-Mart has been so successful, when we're a $50 billion-plus company, should we stay so cheap? That's simple: because we believe in the value of the dollar. We exist to provide value to our customers, which means that in addition to quality and service, we have to save them money. Every time Wal-Mart spends one dollar foolishly, it comes right out of our customers' pockets. Every time we save them a dollar, that puts us one more step ahead of the competition—which is where we always plan to be.”
Ambition
Though he was tremendously committed to giving the community a much better value for money, money in itself was not the driving force for Sam. Sam was tremendously competent and abundant with energy, which was contagious.
“I have always pursued everything I was interested in with a true passion—some would say obsession—to win. I've always held the bar pretty high for myself: I've set extremely high personal goals.”
By setting high goals for the things that he was interested in, Sam was able to raise him from just doing to doing with a purpose. His purpose gave him the energy and enthusiasm – call it the “obsession” to excel in all that he set himself on. He had a “strong bias towards action” which he claims has been very critical in making Wal-Mart what is currently.
Having enormous energy is one of the basics for a leader, the leaders energy comes form his passion, his drive to achieve what he is interested in. This obsession/passion gives him the energy to cross any barriers that are posed to him.
Valuing Team work
This is what Sam Walton had to say this about team work at Wal-Mart -
“One person seeking glory doesn't accomplish much; at Wal-Mart, everything we've done has been the result of people pulling together to meet one common goal—teamwork—something I also picked up at an early age.”
Team work has been the corner stone of Wal-Mart’s success. Though competition in encouraged amongst team members at stores, it is a combined effort off all the people involved that actually leads to success. The whole structure of Wal-Mart functions really well because everyone in the team are supportive - The distribution channel, the store manager, the associates … every one.
Though the leader might have the energy to pursue a lot of things with passion, it is really essential that he is able to work with people and get them to work as a team. This is quite essential – Sam says that his short comings where most of the time overcome by working with his team.
Experimenting
The success of a leader is qualified by his/her ability to take risk. Experimenting is an essential aspect of success in retail. We must not be moved to settle down once we are successful – this is one of the most dangerous mistakes any leader can commit.
Once we are the leader in any field, the challenge is upon us to keep up the lead. With leader’s position comes the threat of imitation and some else taking a lead, so it is very important to keep experimenting.
Wal-Mart has induced this in its culture – every store manager is allowed to set his own policies and choice of items so as to improve the store. This allowed each of the stores to experiment and adapt to the competition much quickly – ensuring that Wal-Mart had the edge all the time.
The effectiveness of this ability to experiment can be seen clearly in Sam’s words – “This was the beginning of our way of operating for a long while to come. We were innovating, experimenting, and expanding.”
The approach has always been to be able to experiment and try untried things, be different.
Dissipate learning
The learning obtained from experimentation has to be dissipated through out the organization and it helps propel the organization further. Ensuring that there is communication of such learning in a clear manner will help reduce the redundancy that may creep into the system. This has to be warded off and ensure that the working of the organization has to be based on these learning and stay ahead of competition.
Delegate responsibility – servant manager
“That's probably when I first began thinking about some of the very real ways that we could improve our teamwork and put more authority in the hands of our people in the stores.”
Sam Walton emphasized on the importance of being a servant manager. This might not be absolutely workable all the time but attains high importance when the associates with whom you are working are the people who are directly doing the core work of the organization. This is typically valid in the retail business. The logic is the store managers and associates will be more responsive to the customers depending on the way they are treated. The more happier the associate is with the managements way of operation the better care he would take of the customers.
Delegation of authority to the associates will increase their commitment through encouraging them to be more responsible and giving a sense of ownership in the work they do.
Ability to face failure and bounce back – Resilience
“I've never been one to dwell on reverses, and I didn't do so then. It's not just a corny saying that you can make a positive out of most any negative if you work at it hard enough. I've always thought of problems as challenges, and this one wasn't any different. I don't know if that experience changed me or not. “
Failure is an essential part of every story; it’s the phase where we learn the maximum. It is very essential to ensure that the failures don’t deter us from achieving what we actually intend to achieve. It is the ability to take failure in the stride and commit again that is the stepping stone to success… it is also a measure of the risk appetite that a leader needs to possess. The passion of an idea is tested when we fail in some thing that we really want – obsessed with.
Resilience is one of the personal characteristics of the manager which can motivate his followers and associates to perform better in what they do, take their chances again. Just to high light this point one of his associates in Wal-Mart had to say the following
"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."
Swimming upstream
“I can tell you this, though: 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. Many of our best opportunities were created out of necessity. The things that we were forced to learn and do, because we started out underfinanced and undercapitalized in these remote, small communities, contributed mightily to the way we've grown as a company.“
Not everyone believes I what they believe!!! Well by this statement what we mean is we are no completely confident of the route we choose when we are chasing our dreams. We tend to evaluate it through others perspective rather than looking at the actual scenario. It is in such a situation that the ability to – “swim upstream” comes in. when confronted with challenges and dismisses by onlookers it is at that time that we really have to act and move against the tide, with strict confidence in ourselves and let action do most of the talking.
Just to show how much of enthusiasm Sam had in his work and how much he was persuasive in what he did, we quote on of his customers – “You know, he's a very persuasive man; he could charm a bird out of a tree.”
Share the joy of achieving things – doing– hands on.
“But the truth is, some of my fondest memories are of plain old everyday items that we sold a ton of by presenting nicely on endcaps (displays at the end of aisles)—or on tables out in action alley”
When working with associates it actually motivates them when they see the leaders working with them. They open themselves up and try to give more to the leader than ever before. It is very important to be associated with the joys of the associate when we are doing a lot work relying on the associates.
When they see that the leader enjoys their success it energizes them further and enables them to work towards acting to lead the organization further.
Ability to see patterns detect change early
Simply restated we can put this as “Not doing different things but doing things differently.”
“But while the big guys were leapfrogging from large city to large city, they became so spread out and so involved in real estate and zoning laws and city politics that they left huge pockets of business out there for us. Our growth strategy was born out of necessity, but at least we recognized it as a strategy pretty early on.”
This aspect from the life of Sam is more relevant for an entrepreneur. He doesn’t have to find something that is totally out of the world to begin what he likes. He just has to be very observative and look at niches where he can fit in and work with all the enthusiasm and see his dream to success.
Wal-Mart was not something that came out of the blue; it was a slow evolution in the retailing business. Sam was instrumental in chasing the patterns and making the best applying his philosophy of working.
Plan for succession
” I agonized over all this. I rarely lose sleep over crises at the office, but this time I did. I didn't want to disappoint Ron, didn't want to lose him. But the company was headed in the wrong direction. So finally I called him in one Saturday in June of 1976, thirty months after I had given up the chairman's job, and just said simply, "Well, Ron, I thought I was ready to step out, but I see that really I wasn't. I've been so involved that in a way it has put you under a real handicap." I told him I wanted to come back in as chairman and CEO, and have him assume another job—vice chairman and chief financial officer, I believe.”
This extract shows how hard a decision Sam had to take when he realized that he had made a wrong plan for succession. It is very essential to carefully map the individual aspirations of the associates and look if they actually fit into the culture of the organization. The leader’s job is not complete till he ensures that the company can move on without his presence. If the company can’t, then it means his work is not complete.
Sam had to acquaint with the reality and learn that he had a lot of problems which he had ignored; such things must take priority when ensuring there is smooth transfer of power.
Stick to the basics
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.
Invest in people
“Sam would take people with hardly any retail experience, give them six months with us, and if he thought they showed any real potential to merchandise a store and manage people, he'd give them a chance.”
When people see that they are being empowered and people believed in their ability to do things, they tend to work harder and perform above expectation. Sam had developed a tradition of recruiting that is described in the quote above, when they people saw Sam get involved with them, they would get energized and give a better performance.
Appreciate of the efforts played a major role in what they did, a appreciation by whom they consider leader would enable them to work better and achieve higher things they next time – a source of motivation.
Partners in success
“Over the years, we've also had a variety of incentive and bonus plans to keep every associate involved in the business as partners”
Realizing that the floor employees are the people who matter the most, it is absolutely essential to get them associated with the success of the company. Profit sharing and similar incentive would help them get associated with the company in a much better manner and ensure that they are having the improvement of the organization as the focus. The employees are no more employees but are partners who work towards the success of the company.
Empathy
“It is just the proudest I get. Because if we, as managers, truly dedicate ourselves to instilling that thrill of merchandising—the thrill of buying and selling something at a profit—into every single one of our associate- partners, nothing can ever stop us”
When in the retailing business, the focus of all the people is on buying and selling; when the leader understands them really well and is able to see the joys and sorrows really well it gets to be even more motivating to work with such a team. Empathy is the source of all this motivation.
Be open and accept your mistakes
“But there was nobody around preaching that philosophy in those days, and I guess I was just too worried about my own debt, and in too big a hurry to get somewhere fast.”
It is very essential that we accept our mistakes and learn to correct ourselves quickly, some in the enthusiasm of chasing a dream we may not go on the wrong track. Accepting a mistake and working on it would send signals to the people about transparency and this would motivate the people further to act with commitment.
There are a few interesting things that Sam Walton suggest for being ahead of competition, we think these are very interesting and are essential to be a leader. We would not explain these in great detail.
Think One Step at a Time
Though the leader has to have a long term vision its essential he concentrates on achieving one task at a time, he has to be focused on his priorities and that is the quickest way to success.
Communicate, Communicate, Communicate
It is very essential that every person with whom you work is on the same page, they see the same thing and work towards the same goal. This can be achieved only through thorough communication.
Keep Your Ear to the Ground
Listen and find new opportunities. It is the patterns that we need to identify in order to ensure that we have a lead. We might be faltering or missing something if we are not on the watch out always.
Push Responsibility—and Authority—Down
The more the lower ranks of people are empowered the more they get involved in what they are doing. The feel the responsibility of their action and develop an ownership which helps them perform better in what they do.
Force Ideas to Bubble Up
The lower rank of people are the ones who are generally in touch with the actual core work of the organization, it is very essential that they are given a hearing. They come up with new ideas that may give a competitive edge, hence it is essential that we give the ideas a free flow.
Stay Lean, Fight Bureaucracy
The more of bureaucracy in the organization we build, the more there is resistance to change. So its essential to have a lean and flexible bureaucracy which will appreciate the action that is taken and encourage growth.
SUMMARY
To summarize the whole learning we think it would be apt to use the main points from the chapter of this autobiography - Running a Successful Company: Ten Rules That Worked for Me
He again states 10 principles which are just extensions of his life and are valuable for any company to be successful. These are a combination of leadership and strategic aspects involved.
RULE 1: COMMIT
Commit to your business. Believe in it more than anybody else. Sam overcame every single one of my personal shortcomings by the sheer passion he brought to my work. This passion is what is most needed. If you love your work, you'll be out there every day trying to do it the best you possibly can, and pretty soon everybody around will catch the passion from you —like a fever.
RULE 2: SHARE
Share your profits with all your associates, and treat them as partners. In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations. Remain a corporation and retain control if you like, but behave as a servant leader in a partnership.
RULE 3: MOTIVATE
MOTIVATE your partners, Constantly, day by day, think of new and more interesting ways to motivate and challenge your partners. Set high goals, encourage competition, and then keep score.
RULE 4: COMMUNICATE
COMMUNICATE everything you possibly can to your partners. The more they know, the more they'll understand. The more they understand, the more they'll care. Once they care, there's no stopping them. If you don't trust your associates to know what's going on, they'll know you don't really consider them partners. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.
RULE 5: APPRECIATE
APPRECIATE everything your associates do for the business. All of us like to be told how much somebody appreciates what we do for them. We like to hear it often, and especially when we have done something we're really proud of. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They're absolutely free—and worth a fortune.
RULE 6: CELEBRATE
CELEBRATE your successes. Find some humor in your failures. Don't take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm—always.
RULE 7: LISTEN
LISTEN to everyone in your company. And figure out ways to get them talking. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.
RULE 8: EXCEED
EXCEED your customers' expectations. If you do, they'll come back over and over. Give them what they want—and a little more. Let them know you appreciate them. Make good on all your mistakes, and don't make excuses—apologize. Stand behind everything you do.
RULE 9: CONTROL
CONTROL your expenses better than your competition. This is where you can always find the competitive advantage.
RULE 10: SWIM
SWIM upstream. Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there's a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you're headed the wrong way.
The most important factor which has lead Wal-Mart reach the current stage is its current adaptation to changing paradigms in the retailing segment. Once Wal-Mart and in particular Sam, who would be constantly lookout on improving by comparing himself with his competitors, would notice a trend change, he/they would be amongst the first to latch on to it an make theirs.
Sam himself says that its change that is constant and they need to work constantly to adapt to change and be the best. The organization which has been a leader has to constantly guard itself against the inertia and be ready for a change – this alone ensures success… and the role of a leader in such a change management/creation can never be undermined.
