The Legacy of Sam Walton Continues

On February 20, 2018, Walmart will release their financial statements for the Fiscal 2018 year (February 1, 2017 – January 31, 2018).  Analysts predict Walmart will announce greater earnings per share (EPS) than last year.  As the Fortune #1, they were more than double in sales revenue than the next closest company in the U.S., Berkshire Hathaway.  The success of the company is still found in the roots of the company, Sam Walton

As Walton went through childhood, the beginnings of his leadership abilities became apparent.  His determination to be successful led him to many recognitions as a youth.  He became the youngest Eagle Scout in the state of Missouri.  In high school, he led his high school football team to the state championship as the starting quarterback.  He was also on the student council in which he served as the president.

This determination was an important leadership pillar of Walton’s.  He found a fascination in retail when he began working as an Assistant Manager for J.C. Penney in Des Moines, Iowa.  Except for a stint in the military, Walton remained in retail for the rest of his life.  He opened his first store in Newport, Arkansas; a franchise of Ben Franklin’s.  He built it into a thriving business until one day he found out his lease was not being renewed.  There were no other buildings in Newport to lease so Walton was out of business.  Despite this setback, he did not give up and he began building another retail venture again.  Ultimately, he opened his first Walmart in 1962 in Rogers, Arkansas.

Walton’s failures did not deter him.  Over the years, Walton would constantly learn and try new things with his retail business.  Some ideas worked and some failed.  Those that failed he walked away from and those that worked, he expanded quickly.  The leadership today still follows this pattern.  Walmart opened multiple Walmart Express stores.  These were small formats to be competitive to Dollar General and Family Dollar which were opening all throughout the country.  Eventually, Walmart decided the format was not right for their business model and closed them all.

Another leadership pillar Walton left behind was controlling costs.  Walton’s humble beginnings in Missouri is where he was taught the value of from his parents.  They had a simple mantra about their money; don’t spent it.  Before Walton died in 1992, Walmart had the lowest cost to sales ratio in the industry.  They led the industry for 25 straight years; even before they became the largest retailer in the country.

Recently, Walmart has been going through several structure changes.  This has resulted in several layoffs through the last year.  Current Walmart CEO, Doug McMillon, who worked with Walton before he passed away, sent a memo explaining why these changes were occurring.  The company needed to become leaner to compete better in the ever-changing retail industry.  It appears McMillon is pushing Walmart back to its roots of running a company with one of the lowest cost to sales ratios.

Another leadership pillar left behind was his trust in the associates (what Walmart calls their employees) in the stores.  Walton travelled to his stores to talk to everyone.  He would talk to the customers; he would talk to the leadership team in the store; he would talk to the hourly associates who were closest to the business.  Walton wanted to know and understand from anyone how he could improve the business.  As the business grew larger than Walton could travel, he hosted an annual picnic in his front yard and spent the time during the picnic listening to his Associates.

This practice continues today.  Just yesterday, gathered in the small airport terminal in Rogers, Arkansas, two company planes took off before the sun had risen.  On the plane were top leadership for the company heading to two different locations.  One of those planes landed in New Orleans, Louisiana.  Leadership spent the day talking to customers and associates learning how they can make the business better.  Those on the trip to New Orleans brought their notes back with them later that day.  On Monday, they will begin making plans to improve the company from those notes.

Walmart’s size in the industry is massive compared to other retailers.  However, it isn’t the size of the company which makes the difference.  Walton led a team where he taught them determination, control your costs better than everyone else, and to listen to the people.  The legacy of Walton today continues forward.  They have a determination to be the best retailer.  They continue looking for cost reductions when they see their expenses moving in the wrong direction.  Finally, Walton’s belief in his associates his alive today and is seen on every associates name badge; “Our People Make the Difference”.

References

Walton, Sam and Huey, John.  (1992).  Sam Walton in his Own Words.  Retrieved from http://archive.fortune.com/magazines/fortune/fortune_archive/1992/06/29/76578/index.htm

 

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