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18

Wanting to Leave a Legacy

“With the possible exception of Henry Ford, Sam Walton is the entrepreneur of the century.”

—–TOM PETERS, co-author of In Search of Excellence

By now, it’s probably clear to you that I’ve devoted most of my life to Wal-Mart—starting it, growing it, and always refining the concept of this whole phenomenon. My life has been full and fun and challenging and rewarding beyond even my wildest expectations. I’ve pretty much gotten my own way for the whole run. While a lot of people were working away at jobs they might not have particularly enjoyed, I was having the time of my life. If I wasn’t in the stores trying to pump up our associates to do an even better job, or in the office looking over numbers to see where the next trouble spot was going to pop up, or leading cheers at a Saturday morning meeting, I was probably at the stick of my airplane, looking out over some part of this beautiful country of ours—and checking out the number of cars in those Kmart parking lots. Or maybe I was taking a few hours off to get in some tennis or to hunt with my dogs.

All that has wound down for me now. I’m really sick these days, and I guess when you get older, and illness catches up with you, you naturally turn just a little bit philosophical—especially late at night when you can’t sleep and your mind is turning everything over and over trying to take stock of where you’ve been and what you’ve done. The truth is that if I hadn’t gotten sick, I doubt I would have written this book, or taken the time to try to sort my life out. As you now know, temperamentally, I’m much too biased toward action to undertake such a sedentary project. But since I have, I’m going to go all the way and try to share with you how I feel about some things that seem important to me.

This will sound strange to people who know me well, but lately I’ve wondered if I should feel bad about having been so wholly committed to Wal-Mart. Was it really worth all the time I spent away from my family? Should I have driven my partners so hard all these years? Am I really leaving behind something on this earth that I can be proud of having accomplished, or does it somehow lack meaning to me now that I’m facing the ultimate challenge?

We could’ve gone a lot of different ways at several points. Many folks started out in retailing just like I did and built their companies up to a point, and then said, “I’ve had enough!” and sold out and bought an island. I could have kicked back and played with the grandchildren, or I could have devoted the latter years of my life to good works, I guess. I don’t know that anybody else has ever done it quite like me: started out as a pure neophyte, learned his trade, swept the floor, kept the books, trimmed the windows, weighed the candy, rung the cash register, installed the fixtures, remodeled the stores, built an organization of this size and quality, and kept on doing it right up to the end because they enjoyed it so much. No one that I know of has done it that way.

Here’s how I look at it: my life has been a tradeoff. If I wanted to reach the goals I set for myself, I had to get at it and stay at it every day. I had to think about it all the time. And I guess what David Glass said about me is true: I had to get up every day with my mind set on improving something. Charlie Baum was right too when he said I was driven by a desire to always be on the top of the heap. But in the larger sense—the life and death sense—did I make the right choices?

Having now thought about this a lot, I can honestly say that if I had the choices to make all over again, I would make just about the same ones. Preachers are put here to minister to our souls; doctors to heal our diseases; teachers to open up our minds; and so on. Everybody has their role to play. The thing is, I am absolutely convinced that the only way we can improve one another’s quality of life, which is something very real to those of us who grew up in the Depression, is through what we call free enterprise—practiced correctly and morally. And I really believe there haven’t been many companies that have done the things we’ve done at Wal-Mart. We’ve improved the standard of living of our customers, whom we’ve saved billions of dollars, and of our associates, who have been able to share profits. Many of both groups also have invested in our stock and profited all through the years.

When we started out, the whole idea was nothing but a pure profit motive: our business strategy was to bring the customers into the tent by selling the highest quality goods we could at the lowest possible prices. It worked, and those few of us who believed in it from early on and invested in the idea got rich off it.

Obviously, everybody who went to work in a Wal-Mart didn’t get rich. But there’ve been many stories over the years of associates who’ve made enough at least to buy their first car, or own their first home, and we’ve had several associates who’ve retired with over a million dollars in profit sharing. We’ve been able to help our associates to a greater degree than most companies because of what you’d have to call enlightened self-interest; we were selfish enough to see in the beginning the value to the company of letting them share the profits.

Also, I think those associates in our company who believe in our ideals and our goals and get with the program have felt some spiritual satisfaction—in the psychological rather than the religious sense—out of the whole experience. They learn to stand up tall and look people in the eye and speak to them, and they feel better about themselves, and once they start gaining confidence there’s no reason they can’t keep on improving themselves. Many of them decide they want to go to college, or to manage a store, or take what they’ve learned and start their own business, or do a good job and take pride in that. Wal-Mart has helped their pocketbooks and their self-esteem. There are certainly some union folks and some middlemen out there who wouldn’t agree with me, but I believe that millions of people are better off today than they would have been if Wal-Mart had never existed. So I am just awfully proud of the whole deal, and I feel good about how I chose to expend my energies in this life.

I know one thing for sure. We certainly changed the way retail works in this country. And when I say we, I don’t mean just Wal-Mart. Some of the fellows I told you about early in the book, like Sol Price and Harry Cunningham and John Geisse, deserve a lot of the credit too. The whole philosophy has changed in the retail business because of the quality discounters, of whom I believe we are the very best. Almost from the beginning, our objective has been to charge just as little as possible for our merchandise, and to try and use what muscle we’ve had to work out deals with our suppliers so we can offer the very best quality we can. Many people in this business are still trying to charge whatever the traffic will bear, and they’re simply on the wrong track. I’ll tell you this: those companies out there who aren’t thinking about the customer and focusing on the customers’ interests are just going to get lost in the shuffle—if they haven’t already. Those who get greedy are going to be left in the dust.

There are lessons in what’s happened at Wal-Mart that go beyond retail and apply to many other businesses. You start with a given: free enterprise is the engine of our society; communism is pretty much down the drain and proven so; and there doesn’t appear to be anything else that can compare to a free society based on a market economy. Nothing can touch that system —not unless leadership and management get selfish or lazy. In the future, free enterprise is going to have to be done well—which means it benefits the workers, the stockholders, the communities, and, of course, management, which must adopt a philosophy of servant leadership.

Recently, I don’t think there’s any doubt that a lot of American management has bent over too far toward taking care of itself first, and worrying about everybody else later. The Japanese are right on this point: you can’t create a team spirit when the situation is so onesided, when management gets so much and workers get so little of the pie. Some of these salaries I see out there are completely out of line, and everybody knows it. It’s obvious that most companies would be much better served by basing managers’ pay on the performance of the company or return on investment to the shareholders or some yardstick which clearly takes into account how well they’re doing their job. And the formula has to make sure that profits are divided fairly among workers, management, and stockholders, according to their contributions and risks. At Wal-Mart, we’ve always paid our executives less than industry standards, sometimes maybe too much less. But we’ve always rewarded them with stock bonuses and other incentives related directly to the performance of the company. It’s no coincidence that the company has done really well, and so have they.

I believe our way of looking at things is going to come into its own in this decade, and the next century. The way business is conducted worldwide is going to be different, and a lot of that difference is going to reflect what we egotistically think of as the Wal-Mart Way. In the global economy, successful business is going to do just what Wal-Mart is always trying to do: give more and more responsibility for making decisions to the people who are actually on the firing line, those who deal with the customers every day. Good management is going to start listening to the ideas of these line soldiers, pooling these ideas and disseminating them around their organizations so people can act on them. That’s the way the successful companies out there already are doing it: the 3M’s, the Hewlett-Packards, the G.E.s, the Wal-Marts. Great ideas come from everywhere if you just listen and look for them. You never know who’s going to have a great idea.

We can turn the whole world around just the way we’ve done it in retail. We can do it better than the Japanese because we’re more innovative, we’re more creative. We can compete with labor in Bangladesh or wherever because we have better technology, which can give us more efficient equipment. We can get beyond a lot of our old adversarial relationships and establish win-win partnerships with our suppliers and our workers, which will leave us with more energy and talent to focus on the important thing, meeting the needs of our customers. But all this requires overcoming one of the most powerful forces in human nature: the resistance to change. To succeed in this world, you have to change all the time.

When you look at what’s happened to the American auto industry, it’s tempting to want to treat the Japanese unfairly—the way they treat us with their protectionist laws. Our auto industry doesn’t play on level ground. But I don’t think we should counter with protectionism because it doesn’t address the real problem: the quality of our product doesn’t compete with that of the Japanese, whether we want to admit it or not. The challenge is a great one for management. What they have to do is build a partnership with their people.

I understand that this industry has all kinds of problems we haven’t seen in ours. I know that U.S. auto workers make $22 an hour versus $16 in Japan, and that Mexican auto workers earn much less. I’m not saying I could solve all these problems, but I’d love to have the fun of trying to take a unionized company today and sell its people on the idea of having to be competitive globally—whether it was in autos, or steel, or electronics. I’d love a chance at that, the pleasure of seeing if they could be motivated into a team that would share in all the company’s success—and still have a union. It would take a powerful lot of persuading to pull this off, but I guarantee it could be accomplished by somebody obsessed and persistent enough. But if American management is going to say to their workers that we’re all in this together, they’re going to have to stop this foolishness of paying themselves $3 million and $4 million bonuses every year and riding around everywhere in limos and corporate jets like they’re so much better than everybody else.

I’m not saying every company should necessarily be as chintzy as Wal-Mart. Everybody’s not in the discount business, consumed by trying to save every possible dollar for their customers. But I wonder if a lot of these companies wouldn’t do just as well if their executives lived a little more like real folks. A lot of people think it’s crazy of me to fly coach whenever I go on a commercial flight, and maybe I do overdo it a little bit. But I feel like it’s up to me as a leader to set an example. It’s not fair for me to ride one way and ask everybody else to ride another way. The minute you do that, you start building resentment and your whole team idea begins to strain at the seams.

But now it’s time for me to forget about all that’s past and think about what I really want the legacy of Wal-Mart to be in the future. I’d like to believe that as Wal-Mart continues to thrive and grow, it can come to live up to what someone once called us: the Lighthouse of the Ozarks. Only I hope we can spread the concept further than our home region here in the foothills because we’re really a national company now. For Wal-Mart to maintain its position in the hearts of our customers, we have to study more ways we can give something back to our communities. I’m tremendously proud of the things we’ve done that I’ve already mentioned. And we’re already studying ways we can go further to stay involved, to be more socially conscious all around. As I’ve said, our country desperately needs a revolution in education, and I hope Wal-Mart can contribute at some level, if for no other reason than selfish ones. Without a strong educational system, the very free enterprise system that allows a Wal-Mart or an IBM or a Procter & Gamble to appear on the scene and strengthen our nation’s economy simply won’t work. You may have trouble believing it, but every time we’ve tested the old saying, it has paid off for us in spades: the more you give, the more you get.

Finally, a lot of folks ask me two related questions all the time. The first one is could a Wal-Mart-type story still occur in this day and age? My answer is of course it could happen again. Somewhere out there right now there’s someone—probably hundreds of thousands of someones—with good enough ideas to go all the way. It will be done again, over and over, providing that someone wants it badly enough to do what it takes to get there. It’s all a matter of attitude and the capacity to constantly study and question the management of the business.

The second question is if I were a young man or woman starting out today with the same sorts of talents and energies and aspirations that I had fifty years ago, what would I do? The answer to that is a little harder to figure out. I don’t know exactly what I would do today, but I feel pretty sure I would be selling something, and I expect it would be at the retail level, where I could relate directly to customers off the street. I think I’d study the retail field today and go into the business that offered the most promise for the least amount of money. Probably some kind of specialty retail, something to do with computers maybe, or something like the Gap—even the Body Shop.

Anyway, the next time some overeager, slightly eccentric shopkeeper opens up a business in your neck of the woods, before you write him off too quickly, remember those two old codgers who gave me maybe sixty days to last in my dime store down in Fayetteville. Go check the new store out. See what they’ve got to offer, see how they treat you, and decide for yourself if you ever want to go back. Because this is what it’s really all about. In this free country of ours, that shopkeeper’s success is entirely up to you: the customer.