What Would Sam Walton Think of Today’s Wal-Mart? Part Two – Principles 6-10

There is no denying that Sam Walton was one heck of a businessman. And his rules for building a business clearly worked. But where is Wal-Mart today? And what would Sam think?

Original Walmart Sam Walton

What do you think Sam Walton would think of today’s Wal-Mart? (Tweet That)

His Ten Rules for Building a Business are found in his book, Sam Walton: Made In America. Yesterday, we covered rules 1-5 and where Wal-Mart stands today. Today, we’ll take a look at the last five.

Here are the remaining rules for building a business and what I think Sam would think today.

6. Celebrate your successes.

Throw a party. Dance. Give a high five. Shout. Send out an email in 30-point, bold, red font about a client you just picked up.

When you win, act like it. Celebrating properly is a great bonding tool and is something to look forward to next time.

I’m not sure where Wal-Mart stands on this. I believe, from what I’ve heard, that it drastically depends on the store manager.

7. Listen to everyone in your company, and figure out ways to get them talking.

This is real leadership communication.

For nearly all of history, leadership meant being the talker. It meant barking orders. Not anymore.

Get your team talking. Get your customers talking. Get your vendors talking.

Then listen carefully.

On many levels Wal-Mart excels at this. They listen to their customers in many regards. Each of their product offerings (such as more organic food) is a result of listening to their customers. And while I could argue that they could listen better and improve customer service, the reality is that most Wal-Mart customers are more interested in saving $20 a trip than improving service or quality of the shopping carts. Much like Southwest Airlines strives to be the low-cost airline, Wal-Mart’s goal is to be the low-cost store.

8. Exceed your customers’ expectations.

I think I’ve covered where Wal-Mart is today on this one.

Sam Walton Made in American Ten Rules for Building a Business

For Sam’s view on all ten rules, read his book. It’s definitely worth the read.

That being said, consider this question…”Can you go too far in customer service?” I’ll answer that in an upcoming post. If you haven’t already, make sure to subscribe to my RSS feed or get posts via email (and get my free book as a bonus) so you don’t miss it.

9. Control your expenses better than your competition.

Big win for Wal-Mart. Wal-Mart has been accused of nickel-and-diming their vendors. And they do…for good reason.

Their mission is low prices for their customers. To keep overall costs down and therefore prices, they will do everything they can to reduce the acquisition cost of the products.

I don’t believe, as some do, that they treat their vendors unfairly. Some of these vendors might sell 1,000,000 units or less each year. Maybe they make an average of $20 per unit profit. Wal-Mart will cut that in half, but sell ten times their average annual units. In other words, they’ll make five times more money. And even if they cut their profit per unit by a factor of four or five, they are still making twice as much money as before.

That is what we call a win-win.

10. Swim upstream.

There is more resistance swimming upstream, but it’s a lot less crowded.

You have two choices in business:

  • Follow the crowd
  • Go the opposite direction

The first one might be the easiest way to a small level of success but it is severely limiting. Perhaps you will get your small sliver of an already existing pie and live reasonably ever after. But the better way…the daring way…the fun way…is to make your own pie.

There is no arguing that Wal-Mart itself; the entire concept; was swimming upstream. And clearly it succeeded. Whether they continue to innovate and push further outside the mold remains to be seen.

So what would Sam Walton think today?

I began these posts seeking that answer myself and I’m not much closer to an answer. I believe he would find a company that has ran with his vision and excelled in many ways, while falling woefully short in others. That is often the case with companies after their founder and original cast members leave.

His principles were in many ways revolutionary for their time. He built an institution with them. Together, we shall see how closely they follow them in the years to come.

If Sam Walton were alive today, what do you think he would say to Wal-Mart?

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  • I’m not a fan of Walmart. They kill local and small manufacturing businesses. I’m not sure the company “exceeds their customer’s expectations.” Perhaps sometimes in price. But what about quality?

    • But at what point do we argue for free market capitalism? I’m a big fan of “buy local”–as long as local is the best product with best service. I wrote a post about that titled “Don’t Buy Local!”

      Just my evil capitalist coming out I guess :)

      • I’m a bit of a socialist at heart. :)

        • You know the saying…I think from Churchill but it’s been attributed to so many.

          If you’re under 30 and not a liberal, you have no heart. If you’re over 40 and not a conservative, you have no brain.

          I think many of us wish for a perfect world but unfortunately socialism itself would be run by imperfect people, so it’s just as broken as untamed capitalism.

          • I’ve heard the Churchill quote, but I’ve actually taken the exact opposite path. So I must have no heart or brain. LOL

      • We have a Halloween sign that says “Eat Locals” with a zombie.

    • I sort of agree with @marksieverkropp:disqus

      If people are willing to pay $5 for less quality vs. $8 for higher, it’s their choice. I’ve learned that with a lot of things it’s worth paying more. That doesn’t apply to Soy Milk for example or for Oatmeal perhaps, but it does to clothes and perishables.

      I don’t buy fruit at Wal-Mart. It’s not as good as other options. But I will buy Powerbars because they are the same quality as anywhere else and $1 cheaper.

      I have Polo shirts that were my dad’s and they are 20+ years old. I don’t think any Walmart shirts last that long.

      But, if you’re strapped for cash and need a nice white shirt to get through a few job interviews, Walmart gives you options.

      Just some examples of the positive value I do see in places like walmart.

      • I bought a dress shirt from Wal-Mart once in a pinch. I understand. I use an example of Wal-Mart vs. Filson in my classes. Wal-Mart coat = $50 and last a year or two. Filson coat = $300 and can last a lifetime. The higher quality actually becomes the better savings option, too.

    • I’m a big fan of shopping local as well but can see the value of having a Wal-Mart or similar type of store around.

      However, Wal-Mart was once a small business. They did what they needed to be done to be where they’re at today. They learned how to be competitive, offer wages people would accept, and grow.

      • Joe, I know Wal-Mart has strengths, too. And I have shopped there from time to time. But in general I prefer smaller businesses.

        • With you, see right above :-) disqus is acting up so I couldn’t mention you.

      • I think you’re right. People forget Sam was an entrepreneur. And he only started like 60 years ago.

        I agree with Dan Erickson too that personally I prefer small businesses. But I also ask the question, what is more American Dream…the small business who stays small and struggles or the one that changes the world?

  • I think Sam would be impressed with how many stores there are and being the number one employer in the US. I also think he would be ashamed at the lack of customer service and quality of the products they sell. But to see this–Sam would have to visit the stores as a customer, not a CEO. (Which is why the idea of Undercover Boss was so intriguing IMO.)

    • Great comment, Jim. I agree. It’s remarkable how Wal-Mart has dispersed itself across the country, but many of the stores I’ve gone into aren’t real great. I’d watch Sam Walton on Undercover Boss for sure.

    • I’ve heard stories of Sam just hopping on trucks and riding around with them and asking questions of the drivers and then the store employees when he got to a store. That’s a CEO that wouldn’t NEED to be on Undercover Boss. He already had his finger on the pulse of his company!

    • Dang it. Sam Walton: Undercover Boss would have made a much better title for these posts :)

  • Robert Eastman

    Matt… This is a real “Hot Button Issue” with me! Even though I’ve been a small businessman for decades, I continually sang the praises of Walmart loud and strong because I truly thought they deserved it. Obviously tens of millions of other folks believed the same, thrusting Walmart to the status of “largest retailer in the World!”

    Today I’m barely a fan and only shop there when I have to. WHY?
    I feel like they try to trick/rip-off their customers! Example: Grade A Large Eggs: 18 for $1.49; 30 for $4.08. Absolute Theft from their “Math-deficient patrons!” (Please don’t believe “I missed something” ie: different Brand/type/grade… I’m a seriously obsessive business researcher.)

    Another “Walmart trick” is… they will have an absolute “great value” bargain of an item, but only have shelf-space for 3-6 units of this “always out-of-stock deal,” forcing frustrated shoppers to buy the “high-priced” Name Brands.

    Most times their “Always Low Prices” are only a few cents lower than the competitors so it doesn’t come close to paying for the gas and time to go there!
    Walmart does motivate vendors and competition to keep market prices somewhat sane, but…
    The Spirit that drove Sam to Greatness IS Gone and “the magic” has been lost!

    There are two opposing business philosophies… 1. Give “The Client” the Most we can for the price we charge! 2. Give “the Muppets/ Marks/ Sheeple” the Least product/service… we have to, charging the Most we can get away with, but still keeping the idiots coming back for more.
    The decline of American business is the result of this “need for greed” perspective. The automobile industry IS/has been a prime example!

    To excel in business we must make our “Good Customers” into “Our Loyal Clients” and fully embrace “the Commitment” due them!.

    • Robert, while I agree that those tactics are annoying and questionable I have two thoughts regarding them. #1 as Matt said, people go to Walmart for low prices, that’s it. Most don’t really care about the other annoying things–at least not enough to change where they shop. If people quit shopping there because of these things, I’ll bet they’d quit doing it.
      #2 at some point personal responsibility has to kick in and we can’t blame the evil, greedy corporation for tricking us and start paying attention ourselves. And if we can’t, then no one is to blame but me.

      Just some good for thought :)

      • Robert Eastman

        Mark, we have an absolute right,. even an obligation to blame “Evil for being Evil” and to expose and shun the “Greedy for being Greedy”… It’s called Integrity!

        Society has plunged into a quagmire of corruption because we give the unethical an easy pass by not holding them accountable for their dishonest conduct. When we condone “ripping off the weak” because they’re stupid, we condemn ourselves to being the prey of all the predators that are “just a bit slicker than us.”

        We become an angry, violent culture when we refuse to live by “The Golden Rule” of doing good unto others! We must examine our spirits, hearts and motives and embrace Righteousness, if we really want “True Peace and Prosperity” in our lives!

        • Oh, don’t misunderstand what I’m saying as giving a pass to dishonesty. I’m totally with you, and I believe that we should all live with integrity. But I don’t think that means that individuals should get a pass on being personally responsible for themselves either.
          I really don’t think it’s expecting too much for people to look at prices when they’re shopping and determine whether that is a good deal or not.
          If we, as a society, believe that those tricks are unacceptable, then we shouldn’t go to walmart and it would go out of business (or change it’s tactics). If we don’t care enough to all demand they stop doing what they’re doing, then in a very real way, we’re condoning their tactics.
          I’m not a fan of quite a bit of what Walmart does, but I think they’re also a long way from being an evil corporation.
          I totally see what you’re saying, and I don’t think we’re as far apart as you might think. I just wanted to present a bit different perspective on it.
          Thanks for commenting and contributing to the discussion! I hope we’ll see you back again?

        • Robert, is it possible that our perception of right and wrong in terms of marketing has been distorted?

          I look at scarcity (only 10 TVs for $200, but once they run out, look at these $399 ones) as brilliant marketing. Yes, they get people all excited and then they buy a $399 one. But aren’t people supposed to be disciplined enough to not buy something they can’t afford (I know…it’s America and most people feel they are entitled).

          That’s just one example.

          So I wonder if we’ve strayed from principles because certain techniques are effective.

          Is the scarcity technique a black, white, or gray area? Obviously they didn’t lie. And everyone does it and most people probably don’t think they are doing anything wrong.

          Just wondering how you see it. What say you and @marksieverkropp:disqus?

          Thanks for the great discussion. A LOT to think about.

          • I completely agree Matt and that is kind of what I was getting at. Just because we allow ourselves to be “tricked” doesn’t mean the company is the spawn of Satan and completely manipulative. We need to be intelligent consumers. And I don’t think most people care enough to learn (and not fall for) marketing tactics when they can’t afford something. Personal responsibility. That’s my stance.

    • Robert, this is a great comment.

      I don’t think it would be a stretch to say that feelings like that are why they lost money for the first time last quarter, as one commenter pointed out yesterday.

  • I love this post–and yesterday’s. You provide a lot of food for thought.

    It’s easy to respond emotionally and say you hate Walmart because they nickel and some vendors, or run mom and pop stores out of business. But I think you’re right, in reality, Walmart is a HUGE American success story! Do they fall short in areas, sure. Every company does. But I think Sam would be awfully proud of it in many ways.
    Thanks for presenting the facts and posing intriguing questions!

  • Thanks for bringing out the core values of Wal-Mart, or at least what they once were. To answer the question, I think Sam would be a bit torn on the company. He’d probably love to see the success that was created from his business but sad to see they’ve strayed from many of the principles the company was founded on.

  • I’m torn about Walmart – it has provided inexpensive things for people, but it has also filled the world with many unnecessary plastic items. It provides jobs, but puts small businesses out of business.

    Honestly, I have only been to Walmart 3 times in the approximately 15 years it has been in my county. The first time because I was curious, the 2nd because my husband was curious and the 3rd because I was on a road trip about to cross the Utah desert and had a desperate knitting emergency. (I am not making this up – a knitting needle shattered and it was my friend’s day to do the driving. She gave me the choice of Walmart in Reno or a long day in the car without anything to do.)

    • Knitting emergency…that might be the first time those words were used the same sentence that didn’t involve a trip to the ER Jana :)

      But yes…that is a time when your feelings about a store go out the window.

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