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What I learned from Sam Walton, the founder of Walmart

What I learned from Sam Walton, the founder of Walmart
By Founders Podcast • Issue #8 • View online
There is a lot you can learn by reading Sam Walton: Made In America. I want to share a few things I learned from reading the book with you today. All of these ideas are from the book. Direct quotes are in italics
1. The importance of setting goals. 
I’ve always believed in goals, so I set myself one: I wanted my little store to be the best, most profitable store in Arkansas within five years. I felt I had the talent to do it, that it could be done, and why not go for it? Set that as a goal and see if you can’t achieve it. If it doesn’t work, you’ve had fun trying. 
2. Combine continuous improvement with a complete disregard for always being right.
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 every known. And once he sees he’s wrong, he just shakes it off and heads in another direction. 
3. Use competition as strategy.
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. Spirited competition is good for business—not just customers, but the companies which have to compete with one another too. Our competitors have honed and sharpened us to an edge we wouldn’t have without them. We wouldn’t be nearly as good as we are today without Kmart, and I think they would admit we’ve made them a better retailer. One reason Sears fell so far off the pace is that they wouldn’t admit for the longest time that Walmart and Kmart were their real competition. They ignored both of us, and we both blew right by them. 
4. Bureaucracy is a by product of some empire builders ego. Avoid it. 
I guess one reason I feel so strongly about not letting egos get out of control around Walmart is that a lot of bureaucracy is really the byproduct of some empire builder’s 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 Walmart. If you are not serving the customer, or supporting the folks who do, we don’t need you. 
5. Do it right the first time.
A lot of this goes back to what Deming told the Japanese a long time ago: do it right the first time. The natural tendency when you’ve got a problem in a company is to come up with a solution to fix it. Too often, that solution is nothing more than adding another layer. What you should be doing is going to the source of the problem to fix it, and sometimes that requires shooting the culprit. 
I’ll give you an example. When merchandise came into the back of a store, it was supposed to be marked at the right price or marked correctly on the spot. But because it often wasn’t getting done properly, we created positions called test scanners, people who go around the stores with hand-held scanners, making sure everything is priced correctly. There’s another layer right there, and Sam didn’t ever visit a store without asking if we really needed these folks. 
Well, we still have some, but what we’ve done is overhaul our back-office procedures to make sure we get it right more often the first time, and, in the process, we eliminated one and a half people out of the office in every Walmart store in the company. That’s big bucks. 
If you want to learn more from Sam Walton I created a podcast about his life based on this book. You can listen to it here
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