7 Lessons for Exponential Growth from Sam Walton’s Made in America
Sam Walton, founder of Wal-Mart, was perhaps the greatest entrepreneur in American history—without a doubt he was the greatest entrepreneur of his lifetime. He was also the richest man in America is his lifetime. Interestingly enough, his autobiography is Jeff Bezos’ (founder of Amazon) favorite book—according to Jeff’s autobiography, The Everything Store, he was known to carry the book around like a Bible. Jeff Bezos is currently the third wealthiest man in America according to Forbes, only after Bill Gates and Warren Buffet. Jeff’s success with Amazon has been widely attributed to internalizing the teachings of Walton so maybe you and I can learn a thing or two from his teachings as well.
1—Think small. When I first read this, I was shocked. We’re constantly told to “think big”, and by doing so, we’re missing a valuable piece to success. Sam Walton was once interviewed after being considered the “Success Story of the Year” by a local magazine for having built an empire of nine variety stores. He said that his company probably wouldn’t grow past nine stores because he believed in personally supervising them. His foundation to success in the early days was to shake hands with the customers and ring the cash register himself. So how did he continue to grow? He learned to delegate effectively.
2—Study the competition. Sam was infamous for studying what his competition was doing right so that he could implement these strengths in his own stores. In the early days, he would have store managers walk through other discount stores memorizing as many prices as they could, writing them down as soon as they walked out of the store. Some managers would even wait until stores closed at night and look through their trash bins to find out what they were pricing their products at. Sam didn’t stop at that—any vacation or family camping trip was an opportunity for Sam to look at stores. By doing so, he was able to accumulate the best practices of stores all around the world into one store.
3—Push responsibility down and force ideas to bubble up. Sam used a simple technique called a Store Within a Store. At the time, department heads were just hourly employees opening boxes and stacking items on shelves. Sam decided to take a different approach by providing his department heads the opportunity to become real merchants within their own stores. They felt the pride of ownership even if they had not been fortunate enough to go to college or receive formal training. Following this opportunity, many department heads actually worked their way through college and continued to move up in the company.
Wal-Mart also constantly looked for ways to encourage employees to push their ideas up through the system. One method was inviting associates with great ideas to the Saturday morning meeting, which was generally reserved for Managers. By providing them with recognition and even cash awards, Wal-Mart was able to pluck great ideas that both saved and made the company millions.
4—There is only one boss. The customer. Sam realized the lifetime value of a customer very early on. He said, “The two most important words I ever wrote were on that first Wal-Mart sign: ‘Satisfaction Guaranteed.’” He understood what customers want—they want it all—quality products, low prices, convenience—a pleasant shopping experience.
5—Control your expenses. One of Wal-Mart’s keys to success was its efficiency and ability to cut costs. Long before being known as the country’s largest retailer, Wal-Mart was known for having the lowest ratio of expenses to sales. When travelling out of town to meet with suppliers, as many as 4 to 8 executives would share one hotel room. Even after becoming a billionaire, Sam Walton flew coach, not first class. The way Sam saw it, by saving money, they were able to offer their customers lower prices and gain a competitive edge. Money they lost or overspent on business trips or poor negotiations meant money out of the customer’s pocket.
6—Treat your employees as your partners. Wal-Mart never labeled its employees as such. They were referred to as “associates”. Offering a profit sharing program was one of the greatest win-wins for Wal-Mart. This aided in creating strong loyalty and allowed many early Wal-Mart employees to retire as millionaires at an early age. Sam also decided to share as much information as possible with his associates as he believed the gain you get from empowering your associates more than offsets the risk of informing your competitors. He also believed that if you don’t trust your associates to know what’s going on, then you don’t really consider them to be your partners.
7—Swim upstream. Sam believed that if everyone is doing things one way, you’re likely to find your niche and success by moving in the opposite direction. Wal-Mart began by opening stores in small towns of 10,000-20,000 people while large chains like K-Mart wouldn’t go near a town with a population lower than 50,000—they believed these towns couldn’t support a discount store. By swimming upstream, Sam was able to build his empire in areas where there was no worry of competition from the big players.
Although these principles were utilized about a half a century ago, they still apply to business today and Amazon has proven it by creating a completely customer-centered business model. They still apply because like Sam said, “This is what it’s really all about. In this free country of ours, that shopkeeper’s success is entirely up to you: the customer.”
Navid Amin is Recruitment Consultant at RMSG in Toronto, Canada. Navid helps clients through designing and implementing hiring initiatives. He is passionate about sales, marketing and technology. Connect with him on LinkedIn at ca.linkedin.com/in/navidamin and follow him on Twitter at @Navid_Amin.