- The Process
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- The Retail Mogul
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Now, onto Issue 35.
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The Retail Mogul
Sam Walton is a single-store merchant.
It’s the 1950s in rural Arkansas.
His grand vision is nine variety stores.
That’s all he figures he’ll have time for.
He loves working inside his stores.
Greeting customers
Scooping ice cream
Ringing the cash register
Laying out the merchandise
Sweeping floors and scrubbing windows
He finds joy in the process of being a merchant.
So, how did THAT Sam Walton build Walmart into the world’s biggest retailer?
There are a few lessons we can learn:
Lesson 1: Be obsessively curious
Walton was obsessed with the art and business of retail.
He’d go to any retail store he could find, with a yellow legal pad under his arm, and take notes.
He’d exhaust store managers with questions.
He wanted to know everything so he could make his stores better.
No matter how successful Walmart became, he was obsessively curious.
Insatiable curiosity is a superpower.
Lesson 2: Relentlessly seek advantages
Walton traveled America scouring for ideas.
He’d fly over portions of the country to give him a bird’s eye view of the land, looking for the best real estate for stores.
He’d then drop into different towns and go see retailers.
He wasn’t looking for what his competitors did wrong.
He was looking for one thing they did exceptionally well.
He’d then take that idea and compete to do it better.
Once he had exhausted America, he started traveling around the world doing the same.
Walton used to say he “borrowed” every smart thing he did from someone else.
Obsessive curiosity (#1) paired with a relentless drive to find competitive advantages is a lethal combo.
Lesson 3: Be hungry to improve
Those who worked closely with Walton said he woke up each day with a burning desire to make stores better.
He was consumed by it.
So, he kept testing, tweaking, building.
More stores went up, more customers were served.
While he didn’t set out to build one of the world’s great business empires, he never found a logical place to stop.
He was never too good to get better.
Above all, Walton cared more.
He fearlessly evolved, ditching the variety store model for discount retailing when he realized this was a better idea.
He loved his customers
He loved his associates
He loved the process of building stores
Walmart is a much different company today.
When Walton died in 1992, Walmart had about 400,000 employees and did $50 billion in revenue.
Today, Walmart has 2.3 million employees and does more than $600 billion in annual revenue.
They have a reputation of grinding down partners and being ruthless to work with.
Certainly, with over 2 million employees, not all of them feel loved and cared for.
But the bedrock principles Sam Walton established still remain in Walmart’s DNA.
I want to expand a bit more on the second lesson.
Every organization — in business, sports or other domains — must continuously seek competitive advantages if it wants to sustain high performance.
So, what does it take to do this?
I believe it starts with four ingredients:
(1) A culture of growth
World-renowned psychologist Carol Dweck participated in a study that analyzed the cultural mindset of Fortune 500 organizations (see No. 5 in this issue).
Two of the study’s findings:
Organizations with a fixed mindset build a “culture of genius” — talent rules
Organizations with a growth mindset build a “culture of development” — growth rules
When growth is celebrated in an organization, it encourages curiosity and collaborative behavior.
People become excited to share what they learn.
Now imagine you run an organization with 50, 100, 1,000, 100,000, 1 million people.
If all of them are encouraged to seek growth and are excited to share what they learn, what are the odds your organization will be better at finding advantages than your competitors?
I believe it’s essentially guaranteed.
(2) Questions > answers
Shane Parrish — the fantastic writer and founder of Farnam Street — writes about the power of asking questions.
“The quality of the answers we get are directly correlated with the quality of the questions we ask.”
Too many people (and organizations) are focused on answers.
They want to show how much they know.
But the wisest people understand it’s more powerful to ask questions.
“When you ask a dumb question, you get a smart answer,” as Aristotle put it.
When Walton visited all those retail stores across the world, he didn’t go in to tell them what HE did.
He went in to ask what THEY did.
It’s no secret why he became the most powerful retailer in the world.
(3) Intentional systems
While discovering advantages begins with culture, it doesn’t end there.
That culture must be operationalized at scale.
Process and systems must be built to consistently gather these insights and implement them.
This will look very different from organization to organization.
A helpful question to guide you:
What do we need to put in place to discover and build advantages repeatedly, not randomly?
(4) Small bets
In Issue 33, I recommended the book Small Bets.
The book is about how breakthrough ideas don’t usually come from grand visions.
They most often come from a series of small discoveries (”small bets”).
Most competitive advantages will not seem like advantages at the beginning.
They’ll start as an unproven idea.
A hypotheses needing testing.
The “small bets” approach is a great method for efficiently testing these ideas and finding what holds up as a true advantage.
Summary
Ok, let’s recap.
The three lessons from Sam Walton:
Be obsessively curious
Be hungry to improve
Relentlessly seek advantages
How do you relentlessly seek advantages?
I believe it begins with these four traits:
Build a culture of growth
Encourage questions > answers
Be intentional with processes and systems
Utilize the Small Bets approach to test ideas
Most of us won’t build something like Walmart.
And that’s perfectly fine.
But we all can find our obsession and care about it more than anyone else in the world.
In fact, we owe it to ourselves to do so.
Teddy’s Recommendations
There’s a wonderful book by Marshall Goldsmith called, What Got You Here Won’t Get You There.
It’s directly applicable to the theme we’ve discussed in this issue of continually seeking advantages and improvement.
If you have too many unread books on your shelves already, here’s a summary of the book from James Clear that will give you the highlights.
I’d love to hear from you
What’s your biggest takeaway from this issue?
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Thanks for reading.
See you next Sunday.