Book Review: "What I Learned from Sam Walton: How to Compete & Thrive in a Wal-Mart World"

by Nick Wreden “Brand Futurist” and author of Fushion Branding
http://fusionbrand.blogs.com/

The key to Wal-Mart’s success may be a 7:00 a.m. meeting each Saturday. While competitors are rubbing the sleep from their eyes, 500 top managers gather at headquarters in Bentonville, Arkansas. They discuss current performance and future goals in free-wheeling discussions that may even feature visits by GE or Disney executives or even country music stars like Garth Brooks.
Michael Bergdahl, author of What I Learned From Sam Walton: How to Compete and Thrive in a Wal-Mart World, points out the benefits of such meetings, where everyone has to pay for their own coffee and donuts at an honor bar. Every manager hears the same message in the same way. Ideas, successes and failures are shared. Strategic execution can begin while competitors are playing golf.

“I believe competitors who are losing the competitive battle against Wal-Mart (or who have already lost) probably don’t even understand the significance of the Saturday morning meetings to Wal-Mart’s competitive advantage. It’s as if the company leadership has a management retreat every Saturday of the year,” writes Bergdahl. “Unless competitors are willing to go to a six-day workweek and hold meetings with all their top executives each week to plot counter strategies, I don’t know how they can even think about competing directly.”

It’s hard to compete against Wal-Mart. Just ask Kmart as well as the myriad mom-and-pops who have gone under whenever a Wal-Mart opened nearby. How did Wal-Mart become the force of nature it is today? Bergdahl uses his experience as a director at the retail giant and at other retail chains to explain how Wal-Mart conquered common retailing and business issues through a relentless emphasis on cost-control and execution. Based on this experience, he outlines how companies can compete against Wal-Mart if it invades their town or competitive space. Each chapter concludes with a checklist of questions and actions that reflect either Wal-Mart’s best practices or a weakness ripe for potential exploitation. One example: “Run the pay week from Thursday to Wednesday so necessary labor cuts are made on the slowest retail days.” The advice is enlivened with anecdotes about Sam Walton, the firm’s founder and exceptional retailer, businessman and manager, who brought his beloved bird dogs to run around each Saturday morning’s meeting.

The book has no stunning strategic or other insights. But that is not the point. As Bergdahl explains at the beginning of his book, “Wal-Mart’s success strategies and tactics are easy to understand yet hard to duplicate.” In other words, Wal-Mart owes its success to in-the-trenches execution, based on the total-quality principles of continuous learning and continuous improvement. “By focusing constantly on trying to become more operationally efficient, Wal-Mart sets itself apart from its competitors,” writes Bergdahl. “Wal-Mart isn’t successful because of its strategies so much as because of its lockstep tactical execution of those strategies.”

These operational advantages include close vendor partnerships, an awesome distribution system that can get products from a California dock into customer hands in as little as 72 hours, and an advanced IT system so integrated that even the temperature of every Wal-Mart store is centrally controlled from the Arkansas headquarters.

If the organization is undeniably the brand, how do you communicate corporate values, provide consistent service and ensure “lockstep tactical execution,” especially in rapidly growing organizations? The challenge is even more daunting among retailers like Wal-Mart, which pay close to minimum wage, have turnover rates as high as 300% and face an insatiable demand for new employees to staff the one or more stores opening each week.

One Wal-Mart answer is the concept of “servant-leadership.” Essentially, that means all managers put the needs of their employees and colleagues first. Managers are required to respond to any request for help, even if it means delaying their own work. The concept stems from Sam Walton’s oft-stated belief that “if you take care of your people, your people will take care of the customer and the business will take care of itself.”

Another key tool is the corporate story. Sam was a natural storyteller, and his anecdotes illustrating key principles would be repeated from manager to employee to employee for years. In contrast to other large firms, Wal-Mart hires for attitude and then teaches the necessary skills. To overcome the natural human tendency not to hire someone who might outshine us, Wal-Mart requires managers two levels above the open position to interview and approve all new hires. Finally, managers spend more time in the field than they do at headquarters to both communicate corporate messages and obtain firsthand market intelligence.

Unlike too many other companies which focus on products or sales more than customers, Wal-Mart has an unremitting focus on customers. The Wal-Mart cheer, which reinforces the service culture every day, ends with the question, “Who is number one?” Every employee – or associate, in Wal-martspeak – shouts, “The customer…ALWAYS!”, sometimes even while standing on a chair. When complaints are received, associates ask, “What would you like us to do to fix the problem?” and are empowered to provide the requested solution.

How can anyone compete against Wal-Mart? As Bergdahl explains in an early chapter, price is not the answer. Because of Wal-Mart’s efficiencies and buying power, retailers can often buy products at Wal-Mart for less than they can get it from a distributor. The key to success involves finding a niche, and providing value-added service, based on intimate customer knowledge. Wal-Mart’s only Achilles heel is its inability to address specific customer requirements, although that weakness is masked by the “10-foot rule” and similar policies. Each associate is required to help, or at least smile at customers, if they are within a 10-foot radius.

The book has a few minor flaws. Bergdahl is clear about the stress and overwork, but only alludes to the well-publicized labor problems Wal-Mart now faces. Margins have remained at 4% for years, but what happens when advances into new areas can no longer fuel growth? Wal-Mart’s IT capabilities are a primary factor in its success, but they are only discussed in passing.
Although this book never mentions “positioning,” “brand vision” or any other of the immeasurable wastes of good ink, What I’ve Learned from Sam Walton is actually one of the best branding books I’ve read. It clearly spells out how companies can achieve operational excellence, upgrade their workforce and unify an organization around customer requirements, even in brutal competitive arenas. It reads well, with a nice balance between soft anecdotes and hard advice. If you believe brand success depends on “lockstep tactical execution” instead of pontification, get this book.