Sam Walton Made in America by Sam Walton
Fun book with a lot of insights for running a retail business. Sam’s 10 rules for running a successful company include general business, leadership and management principles relevant to most fields.
Related fact, Sam Walton’s three living children are currently ranked 16, 17 and 18 on Forbes World’s Billionaires List.
My Favorite Quotes
- Sam Walton gets up every day bound and determined to improve something.
- Many of Walmart’s early competitors stopped setting goals and being willing to pay the price to achieve them. That is why many of them went out of business.
- Always have goals and always set them high.
- The rules [of success] are simple. The hard part is to constantly figure out ways to execute them.
- Great ideas come from everywhere if you just listen and look for them. You never know who is going to have a great idea.
- One of the most powerful forces in human nature is resistance to change. You must be able to overcome this force. To succeed in this world you have to change all the time.
- If you were the customer, how would you buy this?
- If you were the customer, what other items would you be looking for to buy with this item?
Notes and Observations
Sam was a pioneer of the first self-service variety stores. His store was 3rd in nation to adopt the self-service method.
Pioneered metal shelving units. Early on he made shelving in his entire store all metal instead of wood.
Note that he borrowed these ideas from other retailers but was quick to adopt and implement them.
The first lease in his Ben Franklin store did not have a renewal clause. The owner of the land would not renew and forced him to sell the store so he could give it to his son. Sam counted this as one of his most valuable lessons when he lost this store.
Observation from a peer. Two things that distinguish Sam Walton
He gets up every day bound and determined to improve something.
He is less afraid of being wrong than anyone he has ever known.
Sam allowed store managers in the early days to invest $1000 into the stores and be part owner of their store. That would give them about 2% ownership because each store cost roughly $50,000 to open.
In 1962 several discount stores started including Target, K-Mart and Walmart.
The first big lesson they learned was there was much more business to be had in small-town America than any of them had ever dreamed of.
Sam said so much of what they did in the beginning was very poorly done. They only focused on keeping prices low and not on quality.
Saturday morning meetings. They wanted everyone to know what was going on and everyone to be aware of mistakes made.
When anyone made a bad mistake they talked about it, admitted it, tried to figure out how to correct it, then moved on.
Sam insisted on managers visiting the competition and look for things the competition are doing right.
Sam required store managers to send in weekly a sales report and the #1 seller for the week.
This forced the managers to be on the lookout for what was selling and what was not.
Sam’s family went to church and he was a Sunday school teacher for a time.
Several stories about various item promotions Walmart used to sell items. They called it “item promotion mania.”
In retail most businesses are either operations driven or merchandise driven.
Walmart’s focus was being merchandise driven and adding on the operations to support the merchandise. Typically done by hiring experts in specific operational areas.
On buying trips, Sam tried to limit travel expenses to 1% or less of the total inventory purchased.
Sam believed he had been in more Kmart stores than anyone else.
Sam said many of Walmart’s early competitors stopped setting goals and being willing to pay the price to achieve them. That is why many of them went out of business.
Sam says he was not very organized, being organized would slow him down too much.
When visiting stores Sam would carry a tape recorder to record ideas. He would also carry a yellow notepad with a list of 10 to 15 things the company should be working on improving.
Sam says one of his secrets to success is coming into the office very early, 4:30 AM is not uncommon, and get a lot of work done.
Encourage an atmosphere of fun in the stores.
Think like the customer.
Retail is detail.
If you were the customer, how would you buy this?
If you were the customer, what other items would you be looking for to buy with this item?
Spirited competition is good for business.
Sam believed in the necessity of constant change.
Sam has been delegating since his days having paper routes in college. He is always trying to hire the best possible people to manage their stores.
The bigger Walmart gets, the more important it is for them to think small.
How to Think Small
- Think one store at a time.
- Communicate, communicate, communicate. Friday merchandising meeting.
- Push responsibility and authority down. Store within a store program. Each department head is made a manager of his own business.
- Force ideas to bubble up.
- Stay lean, fight bureaucracy. Goal: keep general office expense at 2% or less of total sales.
Running a successful company, 10 rules that worked for me:
Work hard is not on this list, if you don’t have that already or you aren’t willing to do it, you probably won’t be going far enough to need this list anyway.
The idea of building a team is not on the list either. You absolutely must build a team of people if you want to build an enterprise of any size at all.
Always have goals and always set them high. Build real scoreboards.
Commit to your business. Believe in it more than anyone else.
Share your profits with all your associates and treat them as a partner. In turn they will treat you like a partner. Behave as a servant leader.
Motivate your partners. Constantly think of new and more interesting ways to motivate and challenge.
Communicate everything you possibly can to your partners. The more they know the more they will understand, the more they understand the more they will care. Knowledge is power and the more power you give them the better.
Appreciate everything your associates do for the business. All of us like to be told how much someone appreciates what we do for them. Nothing else can substitute for well timed praise.
Celebrate your successes and find humor in your failures.
Listen to everyone in your company, and figure out ways to get them talking.
Exceed your customer’s expectations.
Control your expenses better than your competition. You can make a lot of mistakes and still recover if you run an efficient operation.
The rules are simple. The hard part is to constantly figure out ways to execute them.
Book Reference: In Search of Excellence
Great ideas come from everywhere if you just listen and look for them. You never know who is going to have a great idea.
One of the most powerful forces in human nature is resistance to change. You must be able to overcome this force. To succeed in this world you have to change all the time.