Learn from Competitors, but Remain Faithful to the Vision
Contents
I.
Corporate background
II.
The effective corporate organization and its CEO’s Management and leadership
style
1. A Pioneer of the
Learning Culture
2. Innovate, Experiment, Create Anarchy
3. Leadership Style……….
4. How Sam Walton a Good Leadership
III.
What makes the selected corporation and its leader successful?
1.
Faithful to the Vision: Lowest Prices
2.
Walton’s Small -Town Strategy
3. A key to double-digit growth: Stay product-driven
IV.
What are the lessons learned from the case study?
1. The seven points choose from the lesson with some case
study
2. Recommendation for practice
V. Conclusion
I. Corporate background
Background of Sam Walton and
Wal-Mart Store
Sam Walton, in full Samuel Moore Walton, was born March
29, 1918, and his Kingfisher, Oklahoma, the United States died on April 5, 1992, Little Rock, Arkansas, American retail magnate who founded Walmart in 1962 and developed it, by 1990, into the largest
retail sales chain in the United States.
Walton graduated from the University of Missouri with a
degree in economics (1940) and entered a J.C. Penney Company management
training program in Des Moines, Iowa. Sam Walton kept visiting stores for the
rest of his life. When he got back from duty in 1945, he got started on his
retail adventure right away because he did have a wife and child to support.
Instead of starting a business with someone else, Walton lucked it out on his
own. But he did use $5,000 from his own pocket, as well as $20,000 borrowed
from his father-in-law. At 27 years old, Walton purchased a Ben Franklin
variety store in Newport (five-and-dime), Arkansas, and relocated the store to
Bentonville, Arkansas, five years later.
By the early 1960s he and his brother, James, operated a
regional chain of Ben Franklin stores, and, when that company’s executives
rejected his concept for a new discount store chain to be based in small towns,
Walton decided to set up such a chain on his own. He opened the first Walmart store,
Wal-Mart Discount City, in Rogers, Arkansas, in 1962, offering a wide variety
of merchandise at discount prices in a no-frills setting. In 2018 the company’s
name was changed to Walmart.
Large American discount store chains typically situated their stores in or near large cities, but Walton was convinced that even small towns could generate enough business to make such stores profitable. To operate in out-of-the-way locations, he situated a regional cluster of stores no farther than one day’s drive from a giant Wal-Mart warehouse that made large-volume purchases and distributed the goods to the stores using its own trucking services. Volume buying and a low-cost delivery system enabled Wal-Mart Stores to offer name-brand goods at discount prices in locations where there was little competition from other retail chains. As a result, the Wal-Mart chain experienced tremendous and sustained growth, with 190 stores by 1977 and 800 stores by 1985.
II.
The effective corporate organization and its CEO’s Management and leadership
style
1. A Pioneer of the
Learning Culture
Sam
Walton borrowed all most all of his best ideas from competitors:
-
Most everything I’ve done I’ve
copied from someone else…. I probably visited more headquarters offices of more
discounters than anybody else-ever…. I’d ask lots of questions about pricing
and distribution. Whatever. I learned a lot that way.
-
Walton said, “ In the whole Wal-Mart scheme of
things, the most important contact ever made is between the associate in the
store and the customer.”
Sam
Walton studied competitors’ prices, displays, merchandising techniques, and so
on, in order to improve his own stores. He was able to spot a diamond in the
rough, a rare skill that David Glass emphasizes: “ Most of the best ideas came
from our competitor’s stores. It is often said Walton spent more time in
competitors’ stores than they did. In a lot of cases, that's true. But I have
gone through stores with him many times, thousands of times where the
competitors’ stores… would look really bad… almost God awful find some good
ideas in there, and everybody, of course, picked up on that.”
Sam Walton Pioneer of the belief that those closest to the customers have the most to teach the company an idea that would not gain currency for many years. Recall Glass, “ He ( Walton) genuinely believed that all of the best ideas came from the bottom up, not from the top down, and particularly that all those people who interfaced with the customer knew more about the business and more about how to improve it than anyone else.
In addition, Walton said that “ In the whole Wal-Mark scheme of things, the most important contact ever made is between the associate in the store and the customer.”
Here are some ideas were taken from Walton playbook that you can incorporate into your own:
- Never stop learning- from
competitors, customers, and your own employee. That is how Walton refined
his strategy and improved his stores. He spent most of his time in stores,
learning from everyone around him.
- Assume that there is something
you can learn from even your “Worst” competitors. There is something
worthwhile that you can learn from every competitor. He was always looking
for at least one good idea to bring back to his own business. His managers
picked up on that and followed Walton’s lead.
- Consider weekend meetings with
managers to get a jump on the competition. Choosing Saturday mornings to
meet with managers to discuss strategy and incorporate what they had
learned in the business was one of Walton’s best competitive moves. Walton
said that it was in those meetings that the company first decided to try
things that seemed unattainable. Those meetings were pivotal because they
were the vehicle Walton used to make his “corrections” two days before the
competition had a chance to catch up.
2. Innovate, Experiment, Create
Anarchy
Sam Walton often experimented with different items and process and felt that his constant tinkering was a key success factor: “I could never leave well enough alone, and, in fact, I think my constant finding and meddling with the status quo may have been one of my biggest contributions … I have always been driven to buck the system, to innovate, to take things beyond where they have been … I have always been a maverick who enjoys shaking things up and creating a little anarchy.”
Sam Walton showed the lessons that are worth incorporating into your own business:
- Consider lowering your prices to
boost your volume. Think about experimenting with lower prices,
particularly during tough economic times. Of course, your ability to do
this will depend on the price elasticity of your industry and your product
niche. During economic downturns, buyers are more price-sensitive than
ever. The lower prices may very well increase sales enough to offset the
lower margins.
- Don’t be afraid to shake things up.
Walton said he liked to create “a little anarchy.” Try that at your own
organization. For example, consider giving some of your best people new
and unexpected assignments or challenges. Ask them to come up with a new
product idea, or an idea for making the organization more productive or
streamlined. Or, if your department or unit seems particularly complacent,
consider moving people around so that they have new challenges.
3. Leadership Style from Sam Walton
Sam Walton’s leadership style has various theories consists of the Skills Approach and the Transformational Leadership Theory, both of which can be argued to have been possessed by the late great Sam Walton. Transformational leadership is a theory of leadership where a leader works with teams to identify needed change, creating a vision to guide the change through inspiration and executing the change in tandem with committed members of a group; it is an integral part of the Full Range Leadership Model.
Sam Walton was known for his tremendous level of human skills in which strengthened his leadership abilities to turn his small rural store idea, into a billion-dollar retail brand.
the leadership theory that helps explains Sam Walton’s success is called the transformational leadership theory. Northouse defines this theory as, “a process that changes and transforms people…it is concerned with emotions, values, ethics, standards, and long-term goals” (p.161, 2016). There are four essential factors of the transformational leadership theory that include:
- Intellectual Stimulation:
Transformational leaders not only challenge the status quo; they also
encourage creativity among followers.
The leader encourages followers to explore new ways of doing things and
new opportunities to learn.
- Individualized Consideration:
Transformational leadership also involves offering support and
encouragement to individual followers. In order to foster supportive
relationships, transformational leaders keep lines of communication open
so that followers feel free to share ideas and so that leaders can offer
direct recognition of the unique contributions of each follower.
- Inspirational Motivation:
Transformational leaders have a clear vision that they are able to
articulate to followers. These leaders are also able to help followers
experience the same passion and motivation to fulfill these goals.
- Idealized Influence: The
transformational leader serves as a role model for followers. Because
followers trust and respect the leader, they emulate this individual and
internalize his or her ideals
Each of these
factors combined is thought to provide modern leaders with a model to help
connect leaders with their followers in a way that promotes teamwork,
motivation, ownership within an organization. Sam Walton understood these
points well before this theory was even in existence. Walton thrived on
building a brand that showed appreciation to his associates. He saw the
performance results, and the susceptibility of his associates was to new
changes, and he wanted to maintain that efficiency. Ultimately, Sam Walton’s
leadership legacy can still be seen today within his companies.
4. How Sam Walton a Good Leadership
Sam
Walton mentioned in his autobiography that “For my whole career in retail, I have stuck by one
guiding principle. The secret of successful retailing is to give your customers
what they want,”. An even better quote from him regarding the importance of
customers is this: “There is only one boss – the customer. And he can fire
everybody in the company from the chairman on down, simply by spending his
money somewhere else.”
And that
is essentially what Walton wants: to be truly dedicated to giving customers
what they want – from low prices to customer service. Here is a look at some of
Walton’s chosen rules on doing business.
1. Commit
to your business.
You have
to believe in your business more than anybody else. Walton cites this as the
reason he was able to overcome all of his personal shortcomings.
2. Share
your profits with your associates, and treat them as partners.
As a
result of this, they will treat you as a partner as well. And together, you can
perform in ways you never imagined.
3.
Motivate your partners.
Walton
believes that money and ownership aren’t enough. He believes in new and more
interesting ways to motivate and challenge partners through the setting of high
goals, encouraging competition, and keeping score. He even advocates
“cross-pollination” where managers swap roles to stay challenged.
4.
Communicate everything you possibly can to all your partners.
For
Walton, the more everyone knows, the better they will understand. And the more
they understand, the more they’ll care.
5.
Appreciate everything your associates do for the business.
Other
than a paycheck, Walmart employees also have stock options. But Walton doesn’t
just want to rely on that to get loyalty, he pushes for people to be
acknowledged. A word of praise goes a long way.
6.
Celebrate your success.
Walton is
an advocate for not taking everything too seriously. He even says finding humor
in failures is a good thing. If you loosen up, everyone around you loosens up.
7. Listen
to everyone in your company.
Everyone
has a voice, and they can be helpful in making a company better. In Walmart,
this is particularly true with those who work the front lines because they are
the ones talking to the customer, and hearing what they have to say is
encouraged.
8. Exceed
your customers’ expectations.
When this
happens, you can guarantee that they will come back over and over.
9.
Control your expenses better than your competition.
Walton
says that “You can make a lot of mistakes and still recover if you run an
efficient operation. Or you can be brilliant and still go out of business if you’re
too inefficient.”
10. Swim
upstream.
This
basically means, break all the rules. Walton suggests ignoring conventional
wisdom as you might find your niche when you go in the opposite direction
instead of with the pack.
III. What makes the selected
corporation and its leader successful?
1.
Faithful to the Vision: Lowest
Prices
❖
Wal-Mart Mission
Statement
Wal-Mart Inc.’s
mission statement is to “save people money so that they can work together”.
Walmart staff direct their team effort towards the reduction of costs of
everyday products so that their customers may have better lives. The mission
statement was created when Walmart was founded by Sam Walton and the company
still strives to achieve the same goal today. The simple and straightforward mission
statement is reflective of the organization’s goal which is to formulate high
performance and strategies using low prices to attract more customers and
retain the existing ones.
❖
Walmart Vision
Statement
Walmart
Inc.’s corporate dream is to “Be THE destination
for customers to save money, no matter how they want to shop.”. The vision was introduced in
2017 after the organization saw its Impact on community leadership. Initially,
the vision was “To be the best retailer
in the hearts and minds of consumers and employees.”.
Walton
has created the formula of selling at the lowest prices for all products in
Wal-Mart stores that in the great strategy for it soon became clear that
customer loyalty to a given retailer was mostly fiction. Besides the lowest price
strategy of Walton’s idea, he also well prepares every store in terms of
decoration, the selling product, store environment, and car parking space for
customers to get in and out after buying from the shop. For example, on an
opening day, the store makes the big events, kids get free playgrounds, and
patrons are offered free to customers so all of the services were provided to
the customer to create loyalty with his store. Walton’s obsession with low
prices helped fuel the company’s incredible growth and helped Wal-Mart to
leapfrog with the competitors.
❖
Once you have the
“formula” for your industry, work on improving it: Walton knew that having
the lowest prices was the key to winning the discounting game. Once he had
established that he set out to improve on that model with an increasingly sophisticated store
location strategy, better merchandising tactics, and ever-lower prices by
keeping communicating with the suppliers to
get every possible price break.
❖ Stay faithful to the vision: Walton knew that the key to the company’s
future was never to break with the company’s guiding principle of lowering
price selling production. Even if there isn’t another discount store around Wal-Mart also, they still stay true to the true
vision of maintaining the customer base at the lowest price.
2.
Walton’s Small -Town Strategy
Once, of the critical ingredients in Wal-Mart’s success was
Walton’s selection of store locations because he made the decision to place his
store not only focusing on the place that has a lot of population to appear at
that place but he thinks about growing more population at that place. Moreover,
his small-town strategy helps his store stay longer and people know more than
other stores that focus only on the crowded population place only.
❖
Don’t build where they
are, build where they are going to be: Walton’s strategy of building hi store where
there were no other stores made great sense. He builds his store to wait for the
population to grow out to him, meaning he builds the future for his business. He doesn’t look only at the present time but focuses on the future of successful
business.
❖ Be first to market: In the towns where he built his early stores,
Walton’s location strategy ensured that he was the first to market. In the
result, Wal-Mart that are the first to the market with new product and good
service often reap substantial rewards. So, the strategy of “first to market” plays an important role in Walton’s
strategy.
3.
A key to double-digit growth: Stay product-driven
The store location strategy and low prices strategy were
part of Walton’s modal which was the concept of successful merchandising. The
good cooperation between suppliers and Wal-Mart stores make product stays in
the stable so the digit of benefit also grows. Wal-Mart’s merchandising
strategy was formed early on and changed little over the years. Walton’s advice
is “If you are going to show the kind of double-digit comparable store sales
increases that we show every year, and grow a company that way we’ve grown
ours, you have to be merchandise driven. I can name you a lot of retailers who
were originally merchandise driven but somehow lost it over the years” Walton.
IV. What are the lessons learned
from the case study?
There are many lessons that we can learn from Sam Walton not
just one, but to many from the lesson. The success from the case studies we
learn from are:
1.
The seven points choose from the
lesson with some case study
1. Inspired by the early success of his dime
store and driven to bring even greater opportunity and value to his customers,
Sam Walton opened the first store in 1945, and Walmart in 1962 at the age of 44
in Rogers, Arkansas.
2. Make a clear vision statement, and that
it gets communicated throughout the company, “Be THE destination for customers to save
money, no matter how they want to shop.” and the previous vision
statement was “To be the best retailer in
the hearts and minds of consumers and employees.”
3. Never stop learning from the competitors
even they are weaker or stronger than Sam Walton's Walmart. In this case, we
can know that the weak competitors here refer to the shops that have low
standards of how they can keep their royalty customers or consumers come to buy
their product. Strong competitors refer to high standard shops of how they can
keep their customers come to buy products at the shop. In this case, we can
earn a strong value from the weak competitor and our weak value from the strong
competitors. Therefore, keeping always learn from competitors.
4. Always be the first not the second in
the mind of your customers. Just like when we want to drink a good coffee, we
always follow the coffee shop that we like, not the coffee shop near our home
or office, even the shop we like far from home or office. In this case, Walmart
chose the small town strategy in order to dominate the mind of the customers.
It is convenient to find Walmart everywhere.
5. Be a good partner with the supplier,
even we are the buyer, not really mean we are supplier really a customer.
Because consumers are supplier real customers, we are just their partners to
earn profit from the consumers. That’s what we call a supplier as a partner.
6. The
behind of the success from Walmart also included Information Technology for
which plays an important role to lead the corporation’s success. Imagine how
many thousand to million of goods deliver and distribute from the warehouse to
the retail stores. Walmart doesn’t believe in-store, they believe inflow. They
have a thing called “Cross stocking.” The faster we can get the information we
can earlier get success.
7. Be
Always fresh and new. Just like our appearance, we want to wear different cloth
every day in order to keep people not boring outside apparent. As the retail
shop must find a way to keep attracting customers come to buy our products.
2.
Recommendation for practice
The Wal-Mart business in the lesson
gives us many ideas to adapt in our real situation, as we are in the developing
country the first we can create new ideas we can win from the competitor. We
should always learn good ideas from people around us all the time.
V. Conclusion
Wal-Mart remains faithful to the clear vision from the
beginning. Sam Walton knows that the Low Prices are a company guiding principle,
store locations are successful strategies, information technologies because the
faster people got the information, the faster they would use it. Therefore,
remind yourself of a faithful vision. 
References
https://www.britannica.com/biography/Sam-Walton
http://www.josephchris.com/10-sam-walton-leadership-style-rules
Northouse, P. G. (2016) Leadership: Theory and practice (7th ed.)
Thousand Oaks, CA: SAGE.Sam Walton. (2016). Retrieved September 25, 2016, from
https://www.entrepreneur.com/article/197560
https://www.verywellmind.com/what-is-transformational-leadership-2795313