Made in America was published in 1992, the same year that Sam Walton died at the age of 74. In this autobiography, Walton covers his life and the history of Wal-Mart, as well as the key strategies and management principles that led them to overwhelming success.
Sam Walton began his retail career in 1945 by buying a variety store in Arkansas. The variety store (also known as a “five and dime” store) was a type of retail store that offered a wide range of inexpensive household goods. This was his training ground in retail, where he learned how to compete with nearby stores. Importantly, he learned these sales principles:
After 5 years, his lease expired, and he was forced to sell the store to the landlord. He chose to start over in Bentonville, another Arkansas town. Over a decade, he built up to 15 variety stores across three states.
At this point, Walton was already successful, but he sensed two threats (and potential opportunities):
Rather than be disrupted by both of these seismic trends, Walton chose to take advantage of them. Where he had previously built five-and-dime variety stores, Walton would now embark on the path that Wal-Mart is now known for today—large discount stores.
The first Wal-Mart discount store opened in 1962. By 1968, they had 13 Wal-Marts and added on more warehouses.
Critical to Wal-Mart’s success, Walton believed the large retail companies (such as Woolworth) underestimated the opportunity available in small towns. Competitors specialized in metropolitan areas, servicing large populations. Instead, Walton felt that there were thousands of small towns like Bentonville that were being ignored. If Walton’s stores could offer superior pricing and selection locally, he knew customers would prefer to shop there instead of driving into the city.
In 1970, Wal-Mart went public to pay off its debts. Over the next decade, they doubled every 2 years, from 32 stores and $31 million in sales in 1970, to 276 stores and $1.2 billion in 1980, and even more growth up to 1990. For most of Wal-Mart’s life, it has been a literal straight shot up and to the right, replicating its strategy over and over again in towns around the United States, and then the world.
Wal-Mart was judicious about where to open up stores, and it avoided direct competition with other major discount stores for years. Its early strategy:
People tend to simplify the Wal-Mart success story as “they did discount stores in small towns where big players didn’t want to win.” This ignores the heavy competition they faced from local variety stores, the substitute options its customers had (to drive an hour away to a store in the city), and the execution required to expand as successfully as they did.
The mission of Wal-Mart is to reduce the price of living for its customers. Customer satisfaction is their guiding principle—in merchandising, low prices, shopping experience, and more.
Sam Walton believed that lower prices brought in more customers, period. Even though a lower markup meant lowered profits, they could more than make up for it with higher volume. In pursuit of lower prices, Wal-Mart omitted frills and passed savings from vendors and efficient operations onto customers.
Sam Walton was relentless in his drive to improve Wal-Mart. Never satisfied with where the company was, he boldly experimented with new ideas to improve stores, even creating entirely new retail store concepts.
Innovation was purposefully encouraged by store managers, who had freedom to try crazy things since they had a personal stake in the store’s success. For instance, one store manager once ran a massive promotion, selling 2,500 detergent boxes stacked up in front of the store in an impressive visual display.
Walton considered the Wal-Mart team the most important ingredient in the company’s success. Walton instilled a culture of teamwork in a wide range of dimensions:
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(Shortform note: Published in 1992, Made in America covers the history of Wal-Mart, from a single store in Arkansas to a worldwide retail titan. The book is written chronologically as a narrative, with Walton reflecting on his management and life principles throughout.
To create a more useful summary, we’ve reorganized to group all the main themes together, with examples from the narrative. We’ll start here with a brief biography, then dive into the management techniques that made Wal-Mart the giant it is today.)
Sam Walton was born in Oklahoma in 1918 and moved to Missouri with his parents. He credited his dad for being a hard worker with high integrity and a great negotiator, and his mother for ambition and drive.
Sam notes that his parents argued a lot, and they split up after he grew up. He felt like he “took a lot of the brunt of this domestic discord,” and this possibly motivated him to stay busy all the time.
Walton was competitive throughout his early life: “It never occurred to me that I might lose...almost as if I had a right to win.” He led his high school football and basketball teams to championships, and he became president of his college senior class.
After supporting himself through college, he was tired and wanted a real job. He joined JC Penney in Des Moines, Iowa for 18 months.
In 1942, he was rejected for overseas combat duty for World War II and instead served limited duty domestically in the United States. Dejected, he quit JC Penney and worked at the Du Pont gunpowder plant. He met future wife Helen Robson in a bowling alley at this time, then entered military service.
In 1945, after 2 years of Army duty, Sam Walton wanted to go into business for himself. Helen gave him two rules: 1) no big city (population under 10,000) and 2) no partnerships (her family had seen business partnerships go sour, and she wanted him to work for himself).
This prompted Sam to buy a Ben Franklin variety store in Newport, Arkansas. He funded this with $20,000 as a loan from his...
Sam Walton believed that his company existed to serve the customer. Wal-Mart’s mission was to lower the cost of living for millions of people around the world.
In retail, “the customer wants everything”: wide variety, high-quality goods, the lowest possible prices, satisfaction guarantees, friendly and competent service, and a pleasant shopping experience.
Any retailer that doesn’t provide this is failing its customers. Any business that does this better is improving the customers’ lives.
Similarly, Sam didn’t sympathize with the idea that Wal-Mart hates small towns.
Sam Walton trained his buyers to argue for the customer, not for the company. This made them fearless. “Your customer deserves the best price you can get. Don’t ever feel sorry for a vendor. He knows what he can sell for, and we want his bottom price.”
In his autobiography, Sam Walton demonstrates the character traits that enabled him to build Wal-Mart into a titan. Here are the major themes:
Walton noted: “If I had to single out one element in my life that has made a difference, it would be a passion to compete.” His brother Bud Walton noted, “He knew he was going to win. It’s just the makeup of the man.”
Walton was competitive even in early childhood:
Competitiveness drove his start in retail. When starting his first Newport store, Walton set his 5-year goal: for his “little Newport store” to be the most profitable variety store in Arkansas.
His competition spurred him to keep doing better:
In Made in America, Walton shares the key strategies that made Wal-Mart successful in retail.
Wal-Mart was judicious about where to open up stores.
Wal-Mart’s customer obsession and popularity in small towns caused helpful word of mouth. Rural towns would share the gospel of Wal-Mart with one another, and other towns would welcome Wal-Mart’s arrival. Furthermore, people who traveled South for the winter and saw Wal-Mart would clamor for stores up north. As a result, Wal-Mart already had demand in an area before they ever established a store there.
Sam Walton believed that lower prices brought in more customers, period. Even though a lower markup meant lowered profits, they could more than make up for it with higher volume.
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See how you align with some of Wal-Mart’s most important values.
Sam Walton unfailingly worked in service of the customer. Imagine that in your work, you care only about the customer outcome and will fight on their behalf. When you’re doing something difficult, you are doing it for the customer. How would you behave differently if you took this to heart?
Walton managed people with a trusting, light-hearted attitude. Even when Wal-Mart had 5,000 stores, he wanted it to feel like when they had 5 stores.
Walton’s management can be summarized in one line: “Pick good people and give them maximum authority and responsibility.”
Walton preferred hiring ambitious, entrepreneurial people. Even if someone seemed too inexperienced or lacked knowledge right then, they were recognized for their potential if they had the desire to work hard.
Walton gave people autonomy. Wal-Mart locations operated as a “store within a store”—within a single store, each department had a manager who essentially operated her own business. They were given financials, such as cost of goods sold, margins, and expenses, and their performance was ranked against all other stores in the company. They were then given incentives to win.
Walton believed positive feedback was important. He actively looked for things to praise and let people know how important they were. People want to feel appreciated for their performance.
In addition to having financial incentives, Walton instilled his love of competition to his team:
Take up some of Sam Walton’s most important management techniques.
Walton had a “whistle while you work” philosophy, and he wanted people to have a good time working. Do you take yourself too seriously at work? How could you lighten up your perspective?