Sam Walton: Made In America

by Sam Walton

you’ve got to give folks responsibility, you’ve got to trust them, and then you’ve got to check on them.

Another important ingredient that has been in the Wal-Mart partnership from the very beginning has been our very unusual willingness to share most of the numbers of our business with all the associates. It’s

appreciation. All of us like praise. So what we try to practice in our company is to look for things to praise. Look for things that are going right. We want to let our folks know when they are doing something outstanding, and let them know they are important to us.

Now, really, how many chairmen of $50 billion companies do you know who are totally, 100 percent accessible to their hourly associates?

The other thing, of course, is that he has absolutely no tolerance for managers mistreating the associates in the stores. When he finds something like that going on, he gets on us about it instantly.”

1974

100 Wal-Marts open for business in eight states. We were doing nearly $170 million in sales, with more than $6 million in profits.

As we began to expand, and I flew around more, I would throw the dogs in the plane with me so I could hunt between store visits.

we’ve certainly borrowed every good idea we’ve come across.

Doing the hula was nothing compared to wrestling a bear, which is what Bob Schneider, once a warehouse manager in Palestine, Texas, had to do after he lost a bet with his crew that they couldn’t beat a production record.

More of our stores than you would believe hold ladies’ fashion shows using ugly old men from the stores as models.

I’ll never forget the chairman saying to me one time in front of everybody that I ought to stop and think sometimes before I talked. And I had it coming. I was being really derogatory in my remarks, really sticking it to another division of the company pretty hard, and it wasn’t the right place to do it. I was publicly counseled in that meeting and it stuck.

After the meeting, Helen and I invite all the associates who attend—about 2,500 of them—over to our house for a big picnic lunch catered by our own Wal-Mart cafeteria.

I think one of the greatest strengths of Wal-Mart’s ingrained culture is its ability to drop everything and turn on a dime.

hours that were realistic

Some people have tried to turn it into this big controversy, sort of a “Save the Small-Town Merchants” deal, like they were whales or whooping cranes or something that has the right to be protected.

some reason that they’re just

entitled to take a piece of the action, no matter how little they contribute to the transaction or what it means to the customer.

If the customers are the bosses, all you have to do is please them.”

We decided that instead of avoiding our competitors, or waiting for them to come to us, we would meet them head-on. It was one of the smartest strategic decisions we ever made.

ten years. Our fifty-plus Wal-Marts and eleven variety stores were doing about $80 million a year in sales compared to Kmart’s five hundred stores doing more than $3 billion a year.

until 1981, we had almost no stores east of the Mississippi.

“It was one of the few times we ever saw the chairman use his prerogative and say, ‘We are going to do this.’

try to play a “what-if” game with the numbers—but it’s generally my gut that makes the final decision. If it feels right, I tend to go for it, and if it doesn’t, I back off.

in the early eighties, for example, I traveled all over the world looking at global competition in retailing. I went to Germany, France, Italy, South Africa, Great Britain, Australia, and South America, and saw several concepts which interested

Suddenly, we noticed a whole new class of sub-discounter undercutting our prices,

We stock over 80,000 items in our stores, and our warehouses directly replenish almost 85 percent of their inventory, compared to only about 50

to 65 percent for our competition.

Not only do we stock more of our merchandise in our own distribution centers, we also rely on our own private truck fleet to a much greater degree than our competitors do. Our private fleet is one of the nation’s largest, maybe the largest.

Every week, nearly 40 million people shop in Wal-Mart.

Once a quarter, every buyer has to go out to a different store and act as manager for a couple of days in the department he or she buys merchandise for.

We share everything with them: the costs of their goods, the freight costs, the profit margins. We let them see how their store ranks with every other store in the company on a constant, running basis, and we give them incentives to want to win.

we invite hourly associates who have come up with money-saving ideas to attend our Saturday morning meeting. So far, we figure we’ve saved about $8 million a year off these ideas.

I just pulled it out of the air. In the early days, most companies charged 5 percent of their sales to run their offices. But we have always operated lean.

“If you don’t zero in on your bureaucracy every so often, you will naturally build in layers. You never set out to add bureaucracy. You just get it. Period. Without even knowing it. So you always have to be looking to eliminate it.

four layers from the chairman of the board to the lowest level in the company. That may have been one of the greatest single reasons why IBM was successful.

“Really it’s a pretty simple philosophy. What you have to do is just draw a line in the dirt, and force the bureaucracy back behind that line. And then know for sure that a year will go by and it will be back across that line, and you’ll have to do the same thing again.”

a lot of bureaucracy is really the product of some empire builders ego. Some folks have a tendency to build up big staffs around them to emphasize their own importance, and we don’t need any of that at Wal-Mart. If you’re not serving the customer, or supporting the folks who do, we don’t need you.

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.

With this approach, we estimate we have saved or created almost 100,000 American manufacturing jobs.

You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.

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.

am absolutely convinced that the only way we can improve one another’s quality of life, which is something very real to those of us who grew up in the Depression, is through what we call free enterprise—practiced correctly and morally.

there doesn’t appear to be anything else that can compare to a free society based on a market economy. Nothing can touch that system—not unless leadership and management get selfish or lazy.