Sam Walton: Made In America

by Sam Walton

“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.

A good location, and what we have to pay for it, is so important to the success of a store.

was so obsessed with turning in a profit margin of 6 percent or higher that I ignored some of the basic needs of our people, and I feel bad about it.

Today, some of our company’s critics would like everybody to believe we started our profit-sharing program and other benefits merely as a way to stave off union organizing. The traditional version of what happened is that the Retail Clerks Union organized a strike against us when we opened store number 20 in Clinton, Missouri, and another one when we opened store number 25 in Mexico, Missouri, and that in response to those troubles we started all these programs to keep the unions out. That story is only partly true. We did have labor trouble in those two stores, and we did fight the unions—legally and aboveboard—and we won.

Profit sharing has pretty much been the carrot that’s kept Wal-Mart headed forward.

What I like about it is the kind of information we can pull out of it on a moment’s notice—all those numbers. For one thing, we keep a sixty-five-week rolling history of every single item we stock in Wal-Mart or Sam’s. That means I can pick anything, say a little combination TV/VCR like I use here in my office, and tell you exactly how many of them we’ve bought over the last year and a quarter, and exactly how many of them we’ve sold.

Now, I want you to raise your right hand—and remember what we say at Wal-Mart, that a promise we make is a promise we keep—and I want you to repeat after me: From this day forward, I solemnly promise and declare that every time a customer comes within ten feet of me, I will smile, look him in the eye, and greet him.

But we have always operated lean. We have operated with fewer people. We have had our people do more than in other companies. I think we came to work earlier and stayed later. It has been our heritage—our obsession—that we would be more productive and more efficient than our competition. And we’ve accomplished that goal.

“I believe that every right implies a responsibility; every opportunity an obligation; every possession a duty.” —JOHN D. ROCKEFELLER, JR.

We have never been inclined to give any undeserving stranger a free ride, and we will never change our minds about that. Nor do we believe that because we have money, we should be called upon to solve every personal problem that comes to our attention, every problem of the community, the state, or, for that matter, the country.

We want kids to learn about the tremendous potential of the free enterprise system and to see for themselves what all the advantages are of a stable, democratic government. Besides that, it will help some of these students, who wouldn’t have otherwise received any college education, to return to their countries and do something about their serious economic development problems.

One aspect of this whole philanthropy issue that has annoyed me considerably over the years is the criticism by some of our detractors that Wal-Mart doesn’t do its fair share of giving to charities. The criticism seems to come from folks who say we don’t meet the standard guidelines for corporations, guidelines which are set, I guess, by the people who run the charity business.

Wal-Mart, like every other American retailer, is a huge importer of merchandise from overseas. In some cases—too many in my opinion—importing is really our only alternative because a lot of American-made goods simply aren’t competitive, either in price, or quality, or both. We committed ourselves to seeing if we could do anything to improve the situation. The remedy we envisioned wasn’t some blind patriotic idea that preaches buying American at any cost. We, like any other retailer, will only buy American if those goods can be produced efficiently enough to offer good value. We’re not interested in charity here; we don’t believe in subsidizing substandard work or inefficiency.

Now, if we can get within 5 percent of the same price and quality, we take a smaller markup and go with the American product.

RULE 1: COMMIT to your business. Believe in it more than anybody else.

RULE 2: SHARE your profits with all your associates, and treat them as partners.

RULE 3: MOTIVATE your partners. Money and ownership alone aren’t enough. 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. Make bets with outrageous payoffs.

RULE 4: 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.

RULE 5: APPRECIATE everything your associates do for the business. A paycheck and a stock option will buy one kind of loyalty. But 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.

RULE 6: 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 to everyone in your company. And figure out ways to get them talking. The folks on the front lines—the ones who actually talk to the customer—are the only ones who really know what’s going on out there.

RULE 8: EXCEED your customers’ expectations. If you do, they’ll come back over and over. Give them what they want—and a little more.