Book SummarySam Walton: Made in America, by Sam Walton

1-Page Summary1-Page Book Summary of Sam Walton: Made in America

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.

Brief History of Sam Walton and Wal-Mart

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:

• The advantage of lower pricing to generate sales volume
• Having a unique variety of high-quality merchandise
• Running wacky promotions to get foot traffic

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):

• The rise of massive superstores, with over 100,000 square feet of floor space, thus dwarfing typical stores and small variety stores like his.
• The rise of discount stores, which were disrupting traditional department stores.

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.

The Wal-Mart Strategy

Wal-Mart was judicious about where to open up stores, and it avoided direct competition with other major discount stores for years....

Sam Walton: Made in America Summary Brief Biography of Sam Walton and Wal-Mart

(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’s Early Life

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...

Sam Walton: Made in America Summary The #1 Principle of Wal-Mart: Customer Focus

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.

• Sam Walton had no sympathy for middlemen who feel entitled to a share but provide little value to customers. He also didn’t have sympathy for retailers that did a poor job with customers before Wal-Mart entered. “Nobody owes anybody else a living.”

Similarly, Sam didn’t sympathize with the idea that Wal-Mart hates small towns.

• Residents generally like when Wal-Mart enters a town, and Wal-Mart chooses locations where they will get a positive reception.
• If the local stores go out of business, the customers have killed them by voting with their dollars, not Wal-Mart. **Local stores that enjoyed huge markups, limited selection, and limited hours were doomed to fail...

Sam Walton: Made in America Summary Sam Walton's Personality Traits

In his autobiography, Sam Walton demonstrates the character traits that enabled him to build Wal-Mart into a titan. Here are the major themes:

• Competitiveness: Walton always had conviction that he would win. The idea of beating his competition fueled him.
• Boldness and Optimism: Many predicted that Walton’s strategy would fail. He stayed committed and optimistic that he would win, even in major setbacks.
• Frugality: Wal-Mart existed to save customers money. Using money needlessly meant taking money out of customers’ pockets.
• Knowing his Weaknesses: Walton openly admitted weaknesses in himself and his company, such as lack of formal operations.
• Humility: Walton never believed he was smarter than Wal-Mart employees. He eagerly learned from everyone he could, including store greeters.

Competitiveness

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:

• As a child he bet other Boy Scouts who would be first to...

Sam Walton: Made in America Summary Wal-Mart's Operating Strategies

In Made in America, Walton shares the key strategies that made Wal-Mart successful in retail.

Retail Locations

Wal-Mart was judicious about where to open up stores.

• They started by setting up stores in small towns. Their discount formula worked even in towns under 5,000 people, while big competitors like Kmart were only going into large cities above 50,000. As a result, for a long time Wal-Mart faced little national-quality competition in its small towns.
  • Even when big stores tried discounting, they didn’t really commit to it as a strategy. The incumbents were too accustomed to their 45% markup, and it was hard to let that go. Wal-Mart’s low prices disrupted them.
• As Wal-Mart expanded, they established stores with a radius of a day’s drive from a distribution center. They then filled in that territory, town by town, state by state until they saturated the area.
• They never planned to go into cities—they preferred to build stores in a ring around a city, then “wait for the growth to come to us.”
  • In Springfield, MO, Wal-Mart had 40 stores within 100 miles. When Kmart finally came in with 3 stores, they had a tough time competing.
• They...

Shortform Exercise: Adopt Wal-Mart’s Values

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?

Sam Walton: Made in America Summary Sam Walton's Management Style

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.

Trust People as Partners

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.

• “Nothing else can substitute for a few well-chosen, well-timed, sincere words of praise. **They’re...

Shortform Exercise: Adopt Walton’s Management Style

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?