Sam Walton: Made in America by Sam Walton

(New York: Bantam, 1992), 368

I heard about this from the Founders Podcast (Founders 234 Sam Walton-Made In America) and it's on the Hopper reading list. After learning some about Amazon in Working Backwards, it is interesting to rewind the tape to what inspired Jeff Bezos.

Sam Walton has some incredible stories: becoming an Eagle Scout at 13, starting over from scratch after 5 years due to an issue in his lease, prying information out of competitors to learn what works best, flying his plane all around the country to scout store locations, visiting stores to always be learning, getting to the office at 3 am every Saturday to review the weekly numbers...

His business philosophy is simple and straightforward: take action, control your expenses, offer the best possible price to your customers.

Notes


Contents


Foreword

  • "If I had to single out one element in my life that has made a difference for me, it would be a passion to compete." (xiii)
  • "...there's absolutely no limit to what plain, ordinary working people can accomplish if they're given the opportunity and the encouragement and the incentive to do their best" (xiii)

Chapter 1: Learning to Value a Dollar

Summary: Make a family partnership, and save money for your customers.

  • "I learned from a very early age that it was important for us lids 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. One thing my mother and dad shared completely was their approach to money: they just didn't spend it." (6)
  • Listening to his father-in-law was an "education in itself", including how to include the kids in the partnership: "It's something that any family who has faith in its strength as a unit and in the growth potential of its business can do." (7-8)
  • "Money never has meant that much to me...We're not ashamed of having money, but I just don't believe a big showy lifestyle is appropriate for anywhere, least of all here in Bentonville." (10)
  • "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." (13)

Chapter 2: Starting on a Dime

Summary: Bias toward action, set high goals for yourself, learn the rules and then break the rules, discount to drive volume and profit, control expenses, make and correct mistakes quickly.

  • "I've always held the bar pretty high for myself: I've set extremely high personal goals"— Eagle Scout at age thirteen and saved a kid from drowning (15)
  • "I've always had a strong bias toward action." (16)
  • Football: "It taught me to expect to win, to go into tough challenges always planning to come out victorious...It was almost as if I had a right to win. Thinking like that often seems to turn into sort of a self-fulfilling prophecy." (18)
  • Student body president: Speak to people coming down the sidewalk before they speak to you. (19)
  • He put himself through college and by the end of it had a ~$100k paper delivery business
  • "I loved retail from the very beginning and I still love it today." (22)
  • One of his early bosses: "His secret was that he worked us from six-thirty in the morning until seven or eight o'clock at night." (23)
  • His wife: "I always say he fell in love as much with my family as he did with me." (25)
  • He got into retailing after being in the army: "I went to the library there and check out every book on retailing." (26) and "you can learn from everybody" (29)
  • 28
  • "I went along and ran my store by their book because I really didn't know any better. But it didn't take me long to start experimenting." (31)
  • Essence of discounting: "By cutting you price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume." (33)
  • "I never could leave well enough alone, and, in fact, I think my constant fiddling and meddling with the status quo may have been one of my biggest contributions to the later success of Wal-Mart." (34)
  • "Our money was made by controlling expenses." (36)
  • Ice cream machine: "We hadn't made any mistakes we couldn't correct quickly."
  • He lost his wildly successful first store because of a technicality in the lease: "It was the low point of my business life...The challenge at hand was simple enough to figure out: I had to pick myself up and get on with it, do it all over again, only even better this time." (38-39)

Chapter 3: Bouncing Back

Summary: Always be learning, from everyone; be friendly, success doesn't happen overnight, reinvest your profits.

  • Always be learning: He road the bus all night to Minnesota to see a store with registers at the front, an idea he appropriated (42)..."most everything I've done I've copied from somebody else" (47)
  • "Mr. Walton just had a personality that drew people in. It was like he brought in business by his being so friendly." (43)
  • "Folks have gotten the impression that Wal-Mart was something I dreamed up out of the blue as a middle-aged man, and that it was just this great idea that turned into an overnight success. It's true that I was forty-four when we opened our first Wal-Mart in 1962, but the store was totally an outgrowth of everything we'd been doing since Newport—another case of me being unable to leave well enough alone, another experiment. And like most other overnight successes, it was about twenty years in the making." (45)
  • "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." (50, David Glass)
  • Discounting is the future: "Buy it low, stack it high, sell it cheap" (54)
  • Opened the first Wal-Mart on July 2, 1962: everyone put money in and all those investments paid off handsomely

Chapter 4: Swimming Upstream

_Summary: _

  • "Once we opened that Wal-Mart in Springdale, I knew we were on to something. I knew in my bones it was going to work." (60)
  • "I'm a pretty conservative guy. But for some reason in business, I have always been driven to buck the system, to innovate, to take things beyond where they've been...after a lifetime of swimming upstream I am convinced that one of the real secrets to Wal-Mart's success has been that very tendency." (61-63)
  • "What we were obsessed with was keeping our prices below everybody else's. Our dedication to that idea was total. Everybody worked like crazy to keep expenses down." (64)
  • He entered the P&L numbers himself by pen to remember them better, and shared the full detail with the store manager (68)
  • "We all love merchandising" (72) and "It really is amazing how much merchandise you can move with just a little promotion." (76)
  • Saturday morning meetings: admit mistakes, talk about them and figure out how to correct them, then move on to the next day's work (80)
  • Spend as much time as you can checking out the competition: "We're not concerned with what they're doing wrong, we're concerned with what they're doing right." (80-81)
  • "We started out swimming upstream, and it's made us strong and lean and alert, and we've enjoyed the trip. We sure don't see any reason now to turn around and join the rest of the pack headed downstream." (85)

Chapter 5: Raising a Family

Summary: Raising kids, the value of hard work, involving them in the work of the family and the business, giving them autonomy.

  • His parents were quarrelsome so he was determined to have harmony in the home.
  • "The kids received your everyday heartland upbringing, based on the same old bedrock values: a belief in the importance of hard work, honesty, neighborliness, and thrift. Helen bore more than her share of raising the kids, and i worked long hours, at least six days a week." (89)
  • "I didn't have time to mow the lawn, and why should I anyway, with three strapping boys and a healthy girl available for chores." (89)
    • Alice: "I know Dad worked incredible hours, and I know he traveled a lot, but I never really felt like he was gone much. He went out of his way to spend time with us, and he was fun to be with." (91)
  • "Helen and I always involved them in the business and kept them informed right from the start." (93)
  • "One thing I never did—which I'm really proud of—was to push any of my kids too hard...They were welcome to come into our business, but they would have to work as hard as I did." (94)
  • "We as a family have bent over backward not to take advantage of Wal-Mart" (95)
  • Parenting: "I remember asking Dad for permission to climb a bluff overlooking the Buffalo River. He said, 'Do anything you're big enough to do. What an exhilarating challenge of judgment and confidence booster for a twelve-year-old. Later, when I was a young man trying to find my way in the world, he gave me an open invitation to join the Wal-Mart team, but never a hint of pressure. What a wonderful way to grow up." (96, John Walton)
  • "If you don't want to work weekends, you shouldn't be in retail." (97)

Chapter 6: Recruiting the Team

Summary: Be an operator, be in it for the long haul, learn from everyone, find the smart people to hire.

  • "I have always had the soul of an operator, somebody who wants to make things work well, then better, then the best they possibly can." (101)
  • "I was never in anything for the short haul." (102)
  • "...he proceeds to extract every piece of information in your possession. He always makes little notes. And he pushes on and on. After two and a half hours, he left, and I was totally drained. I wasn't sure what I had just met, but I was sure we would hear more from him." (15, Kurt Barnard)
  • He went to school, partially to learn, but partially to find the computer whizzes he would need to bring to his team (111)
  • Wal-Mart was forced to be ahead of its time in distribution and communication because of its rural stores, which helped it expand nationally later on (116)

Chapter 7: Taking the Company Public

Summary: They took the company public to retire debt, but didn't let it constrain their long-term thinking.

  • "I had bought a bank in Bentonville...it really helped me learn a lot about financing things." (119)
  • Going public: "I experienced one of the greatest feelings of my life, knowing that all our debts were paid off...Going public really turned the company loose to grow." (127)
  • Opposite of most public companies? "I think that the stock market pressure has driven us to plan further out so that there will be some consistency next year." (136)
  • The market and investors: "I feel like our time is better spent with our own people in the stores, rather than off selling the company to outsiders...I think you get what you're worth." (137)
  • "If we fail to live up to somebody's hypothetical projection for what we should be doing, I don't care. It may knock our stock back a little, but we're in it for the long run." (138)

Chapter 8: Rolling Out the Formula

Summary: Keep costs and prices low, work a lot, get the job done, lean into your strengths and hire to cover your weaknesses.

  • "In those days we all worked a minimum of sixteen hours a day." (139, Jack Shewmaker)
  • "We build our stores in a ring around a city—pretty far out—and wait for the growth to come to us." (141)
  • "We never believed in spending much money on advertising." (141)
  • "There's no question whatsoever that we could not have done what we did back then if I hadn't had my airplanes..." (143)
  • "Sam wanted a job done, and he was willing to accept creativity as long as the job got done...he was smart enough to know how hard we'd been working and that if he told the truth we would have just disintegrated." (146-147, Jack Shewmaker)
  • "My role has been to pick good people and give them the maximum authority and responsibility...I stick my fingers into everything I can to see how it's coming along." (147)
  • "I've played to my strengths and relied on others to make up for my weaknesses." (147)
    • "I was really surrounding myself with guys who were good at all the things I tended to just sluff off" (157)
  • "Being organized would really slow me down." (148)
  • "Except for reading my numbers on Saturday morning and going to our regular meetings, I don't have much of a routine for anything else. I always carry my little tape recorder on trips, to record ideas that come up in my conversations with the associates. I usually have my yellow legal pad with me, with a list of ten or fifteen things we need to be working on as a company1 . My list drives the executives around here crazy, but it's probably one of my more important contributions." (149)
    • "I come in every Saturday morning usually around two or three, and go through all the weekly numbers...it usually takes about three hours." (148)
    • "One way I've managed to keep up with everything on my plate is by coming in to the office really early, almost every day...Four-thirty wouldn't be that unusual...That early morning time is tremendously valuable: it's uninterrupted time when I think and plan and sort things out." (150)
  • He practices "management by wearing you down." (150, David Glass)
    • or "management by looking over your shoulder" (151, A. L. Johnson)
  • Strategy: "price as low as possible by keeping our costs as low as possible" (152)

Chapter 9: Building the Partnership

Summary: Share your profits with your associates, be a servant leader, trust and verify, be transparent with business metrics, show your appreciation.

  • "What has carried this company so far so fast is the relationship that we, the managers, have been able to enjoy with our associates." (162)
  • "The more you share profits with your associates, the more profit will accrue to the company. Why? Because the way management treats the associates is exactly how the associates will then treat the customers." (163-164)
    • Profit sharing plan is what he's proudest of (169)
  • Be a servant leader
  • "You've got to give folks responsibility, you've got to trust them, and then you've got to check on them...If you're good to people, and fair with them, and demanding of them, they will eventually decide you're on their side." (176)
  • Share numbers with the associates: "It's the only way they can possible do their jobs to the best of their abilities—to know what's going on in their business...Sharing information and responsibility is a key to any partnership." (177)
  • Merchandising: buying and selling something for a profit (178)
  • The best motivator is appreciation: "let our folks know when they are doing something outstanding, and let them know they are important to us." (179)

Chapter 10: Stepping Back

Summary: He tried to retire and failed, but played lots of tennis and hunted lots of birds. Be a generalist executive.

  • "I loved to play tennis around noon—when the sun was hottest—and I guess I was pretty aggressive." (184-185)
  • Tennis was his outlet for organized competitive sport and exercise, "but my real passion outside Wal-Mart has always been my bird hunting." (186)
    • "He hunted like Sherman marched through Georgia." (186, John Walton)
    • His hunting style was nor comfortable or luxurious: "All Things Not Trump" (189)
  • "I failed at retirement worse than just about anything else I've ever tried." (192)
  • He tried to step aside and let Ron Mayer take over, but it didn't work out and he ended up leaving along with a number of executives.
  • "All along, the history of Wal-Mart has been marked by having the right people in the right job when we needed them most. We had Whitaker to help us get started; Ferold Arend to get us organized; Ron Mayer to get our systems going; Jack Shewmaker to blow us out of ruts and push us into new ideas; and David Glass to get control of a company that became so big it was hard to comprehend." (197)
  • Generalism: "I think everyone needs as much exposure to as many areas of the company as they can get, and I think the best executives are those who have touched all the bases and have the best overall concept of the corporation." (198)
  • "Submerge your own ambitions and help whoever you can in the company. Work together as a team." (198)

Chapter 11: Creating a Culture

Summary: The Saturday morning meeting, whistle while you work, being open to change.

  • The 7:30 Saturday morning meeting is a hallmark of Wal-Mart culture. (199)
  • Work hard with a smile: "Whistle while you work philosophy" (201)
  • "When folks get together and do this sort of silly stuff it's really impossible to measure just how good it is for their morale." (208)
  • Reading industry and management literature (209)

Chapter 12: Making the Customer Number One

Summary: The customer is our boss.

  • "The secret of successful retailing is to give your customers what they want...As a customer, you want everything." (221)
  • On putting local businesses out of business:
    • "The truth is that a lot of these folks just weren't doing a very good job of taking care of their customers before we, or somebody else, came in and offered something new." (229)
    • "I don't care how many Wal-Marts come to town, there are always niches that we can't reach." (230)
    • "Nobody owes anybody else a living." (234)
  • "You're not negotiating for Wal-Mart, you're negotiating for your customer." (235)
  • P&G and Wal-Mart reset their relationship and shared sales data directly to drive manufacturing efficiencies (238)
  • Don't over-analyze: "If you simply think like a customer, you will do a better job of merchandise presentation and selection than any other way." (239)
  • "The customer is our boss." (240)

Chapter 13: Meeting the Competition

Summary: Meet the competition head on and let them hone your edge.

  • "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...Our competitors have honed and sharpened us to an edge we wouldn't have without them." (242)
  • "There may be nothing else he enjoys more than going into a competitor's store trying to learn something from it." (242, Bud Walton)
  • "It's generally my gut that makes the final decision. If it feels right, I tend to go for it, an dif it doesn't, I back off." (253)
  • The idea for Sam's Club was stolen from Sol Price (255)
  • "Ever since my peewee football days, I've believed almost any kind of competition is great. I expect our folks to compete with one another." (260)
  • Jeff Bezos read this: "There's always a challenger coming along. There may be one on the street right now formulating a plan to get to the top..." (260)

Chapter 14: Expanding the Circles

Summary: Use distribution to take care of the customer.

  • Our primary job is to take care of the customer. (268)
  • "Technology and distribution are every bit as important to Wal-Mart's ability to grow and maintain control as you have heard or read."

Chapter 15: Thinking Small

Summary: Think small and be lean; decide and then take action; listen to those on the ground level.

Metric 1960 1970 1980 1990
Sales $1.4M $31M $1.2B $26B
Profits $112K $1.2M $41M $1B
Profit Margin 8% 3.9% 3.4% 3.8%
Stores 9 32 276 1,528
  • "The bigger Wal-Mart gets, the more essential it is that we think small." (277)
  • Here are six ways we think small:
    • Think one store at a time - zero in on the smallest operating unit
    • Communicate, communicate, communicate
    • Keep your ear to the ground
    • Push responsibility—and authority—down
    • Force ideas to bubble up
    • Stay lean, fight bureaucracy
  • Action: "We never leave an item hanging. We will make a decision in that meeting even if it's wrong, and sometimes it is. But when the people come out of that room, you would be hard-pressed to tell which ones oppose it and which ones are for it. And once we've made that decision on Friday, we expect it to be acted on in all the stores on Saturday. What we guard against around here is people saying, 'Let's think about it.' We make a decision, then we act on it." (288)
  • "Visiting the stores and listening to our folks was one of the most valuable uses of my time as an executive. But really, our best ideas usually do come from the folks in the stores." (293)
    • -

Chapter 16: Giving Something Back

Summary: Focus on ethically building a business that creates real value for customers.

  • "I have concentrated on building the finest retailing company that we possibly could. Period." (298)
  • Emphasis on education in their philanthropy: "It is the single area which causes me the most worry about our country's future." (301) ^c5f9bd
    • "I'd like to see an all-out revolution in education." (302)
  • "I've always preferred to hire people who had to at least partly work their way through school." (303)
  • Major good comes from the savings they drive for customers: "The truth is that Wal-Mart has been a powerful force for improving the standard of living in our mostly rural trade areas, and our customers recognize it." (305)
  • "We feel strongly that Wal-Mart is not, and should not be, in the charity business." (306)

Chapter 17: Running a Successful Company: Ten Rules That Worked for Me

Summary: Work hard and build a good team.
- "Sam's Rules for Building a Business" include:
1. Commit: "I overcame every single one of my personal shortcomings by the sheer passion I brought to my work."
2. Share your profits with your associates and treat them as partners.
3. Motivate and challenge your partners.
4. Communicate everything you possibly can with your partners.
5. Appreciate everything your associates do for the business.
6. Celebrate your successes and find a sense of humor in your failures.
7. Listen to everyone in your company and push responsibility down in the organization.
8. Exceed your customer's expectations.
9. Control your expenses better than your competition.
10. Swim upstream ("break all the rules")

Chapter 18: Wanting to Leave a Legacy

Summary: Wal-Mart has improved millions of lives; free enterprise is how we benefit others.

  • "Was it really worth all the time I spent away from my family? Should I have driven my partners so hard all these years?" (319)
  • "My life has been a trade-ff. If I wanted to reach the goals I set for myself, I had to get at it and stay at it every day...If I had the choices to make all over again, I would make just about the same ones." (320)
  • "I am absolutely convinced that the only way we can improve one another's quality of life is through what we call free enterprise—practiced correctly and morally." (320)
  • "I believe that millions of people are better off today than they would have been if Wal-Mart had never existed. So I am just awfully proud of the whole deal, and I feel good about how I chose to expend my energies in this life." (321-322)
  • "There are lessons in what's happened at Wal-Mart that go beyond retail and apply to many other businesses." (322)
  • "Free enterprise is the engine of our society...Nothing can touch that system—not unless leadership and management get selfish or lazy." (322)
  • Amazon: "Could a Wal-Mart-type story still occur in this day and age? My answer is of course it could still happen again. Somewhere out there right now there's probably someone—probably hundreds of thousands of someones—with good enough ideas to go all the way." (326) ^1660bf

Postscript

Presidential Medal of Freedom Citation:

An American original, Sam Walton embodies the entrepreneurial spirit and epitomizes the American dream. Concern for his employees, a commitment to his community, and a desire to make a difference have been the hallmarks of his career. By sponsoring scholarships for Latin America, he has also worked to bring peoples closer together and to share with others the American ideals he so well represents. A devoted family man, business leader, and statesman for democracy, Sam Walton demonstrates the virtues of faith, hope and hard work. America honors this captain of commerce, as successful in life as in business.

Topic: Management

Source

Bibliography

file:(2023-07-04-Sam Walton)

Created: 2023-06-11-Sun
Updated: 2023-07-30-Sun

  1. Matt B Leadership Principles ↩