After a presentation I did on business strategy at Lake Tahoe’s Resort at Squaw Creek (now called Everline Resort & Spa), in the early 90’s one of the delegates asked me if I had read Sam Walton’s autobiography titled Made in America: My Story. He said “it’s a remarkable story, you should read it. You’ll notice Sam intuitively understood what strategic thinking is all about, I think you’ll enjoy it.”
I immediately went out an bought a copy and added it to my library. And there it sat waiting to be read. Fast forward 28 years to 2023 I was hooning around the Victorian High Country with my off-road camping friends and for some reason I took Sam’s autobiography with me and absolutely devoured it.
Sam Walton was a master strategist but the most important thing I took away from the book was not his strategic thinking it was his intuitive understanding of what people want—team members, customers, and all the other stakeholders in the outcome of a business which include, shareholders, suppliers and close alliance partners, community and even rival firms.
Had I read this book when I was 25 I would have viewed it as an interesting story of how a country boy born in Kingfisher, a small town in Oklahoma, who drove a utility truck with hunting dogs in the back and created a multi-billion business from scratch. When I read it as a 75 year old with 50 years of doing, teaching, and advising on matters of business performance improvement I realize the book offers a MASTERCLASS in business strategy formulation and implementation.
Practically every page contains a lesson for the ages. For example when responding to the effect on its stock price following an unfavorable report by an analyst in which he questioned Walmart’s ability to maintain a 20% year on year growth rate Sam wrote:
“What’s really worried me over the years is not our stock price, but that some day we might fail to take care of our customers, or that our managers might fail to motivate and take care of our associates. I also was worried that we might lose the team concept or fail to keep the family concept viable and realistic as we grow.”
Sam believed if you take care of these things growth in long term profitability will follow. This type of focus is that “value” investors look for, just ask Warren Buffett. The managers of under-performing business and speculators impatiently focus on short term results. Interestingly, when you read the book you’ll discover Sam was impatient but not for profitability per se but for actively getting things done that will enhance customer and team member value. He viewed profit as need to fund investment in these things.
In this simple single paragraph Sam said: If you want to grow a great business you need to focus on your customers, and your team members and the more you grow the harder this gets. The question you could ask yourself after reading this is: “am I worrying about these things enough, are they more important than what I’m getting from the business?”
A theme that runs through the book is Sam’s curiosity which led to his appetite for learning. He spent a good deal of his time visiting his stores, talking to managers, associates, and customers and also his competitors. He read voraciously and tried things out and if the pilot experiments worked, they were implemented throughout the network.
Sam discovered the work of Deming who reinforced his understanding of the importance of velocity of inventory turn when operating on very low margins reflected by the company’s hub and spoke strategy of distribution centers dynamically supplying its local stores was crucial to Walmart’s success.
But Sam realized something even more important about Deming’s work – his thoughts on how the management of people was the critical element of managing processes – see Deming’s 14 Points for Management. For example, Sam talks about the fine balance between autonomy and control – this is stuff some people have spent a lifetime researching and writing books on; for Sam it was practically a throwaway line but something he was acutely aware of—he was a master at understanding apparent contradictions but was able, through this understanding, to find the common thread that would reconcile apparent conflicts such that it is possible to allow autonomy while also maintaining control. Someone once said, the measure of true genius is to be able to hold two competing ideas in your mind and still function. This is exactly how Southwest Airlines’ founder and CEO, Herb Kelleher, was able to defy the dogma of “strategic logic” that posits there is a trade-off between quality and cost: he proved that great businesses know out how to deliver superior or equivalent quality (defined in terms of targeted customers’ criteria) AT low cost. Sam did precisely the same thing.
Sam became a systems thinker before most people had even heard of the term. For example, after reading Deming he realized “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 adding another layer. What you should be doing is going to the source of the problem to fix it” (p 296)
The really big lesson I took away from this book is that building a business is really just applied common sense which reminds me of a companion book that will take you no longer than 1 hour to read if you’re a slow reader! It’s called Obvious Adams: The Story of a Successful Businessman by Robert Updegraff that we used to give away to boot camp attendees in the “old days.”
If you’re looking for a handbook on how to create and grow a great accounting business and help you do the same for your clients I would advise you to read Sam’s book with a notebook by your side and a highlighter in your hand. Savor it. My advice is to first read Obvious Adams then Sam Walton just 10 pages at a time. That will give you 12 months of invaluable training for the price of a book, a highlighter, a notebook, and an hour of your time. Think of it as being an MBA received in half the time at a small fraction of the cost.