Sam Walton Made in America PDF Summary

PDF + Summary: Sam Walton, Made in America (Wal-Mart Founder)
by Allen Cheng - https://www.allencheng.com - Visit for more summaries like this one.
PDF + Summary: Sam Walton, Made in America (Wal-Mart

Founder)
by Allen Cheng
https://www.allencheng.com/sam-walton-made-in-america-pdf-summary/
Wal-Mart is the largest retailer on the planet. It had $500 billion in sales in 2017 - almost 3x the size of
Amazon - and runs 12,000 stores worldwide.
This retail titan began in 1945 with founder Sam Walton managing a single store in Newport, AR, a town
of 7,000 people. In this small town, Walton learned the retail and management strategies that
became the foundation of Wal-Mart’s staggering worldwide growth. (Amazing that Wal-Mart now
has more than one store for every person in the town in which it was founded).
Sam Walton wrote his autobiography Sam Walton: Made in America in the last year before he died, as he
struggled with cancer. Made in America is a candid, energetic retelling of the Wal-Mart story and the
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principles that led Walton and his partners to incredible success.
If you’ve ever read The Everything Store, a deep dive into Amazon, you’ll see Amazon’s core principles
reflected in Wal-Mart, half a century before Amazon and the popular internet even existed. No surprise -
Made in America is one of Jeff Bezos’s essential must-read books for his management team. If you
want to understand the clash of retail titans Amazon and Wal-Mart in the coming years, you have to read
these books.
In this Made in America summary, learn:
What Wal-Mart did in its early life that every major competitor ignored
How Wal-Mart borrowed its competitors’ best ideas - and did them better
Sam Walton’s favorite management tactics to motivate his team
Why Sam Walton always flew coach
This Sam Walton: Made in America PDF summary begins with a summary of Wal-Mart’s history. It then
compiles the major themes of Sam Walton’s approach to business and life.
Most of the below is written in present tense as true of 1992; contemporary corrections are written in
[brackets]
1-Page Sam Walton: Made in America Summary

Brief history
Sam Walton begins his retail career in 1945 by buying a variety store in Arkansas. This is
the crucible for his training, learning how to compete with other retailers - the advantage
of lower pricing to generate volume, merchandising, and running wacky promotions to get
traffic.
After 5 years, he sells the store (forced out of a lease) and begins again in another
Arkansas town. Over a decade, he builds up to 15 variety stores. But the discount store is a
looming threat, and he sees the discount retailing model as the future.
The first Wal-Mart discount store is opened in 1962. By 1968, they have 13 Wal-Marts
and add on more warehouses. They see an opportunity in small towns that larger retailers
don’t.
In 1970 Wal-Mart goes public to pay off its debts. Over the next decade, they double every
2 years, from 32 stores and $31 million in 1970 to 276 stores and $1.2 billion in 1980, and
even more growth up 1990. For most of the company’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
world.
The Wal-Mart strategy:
Set up stores in small towns. Wal-Mart works in towns under 5,000 people, while Kmart
chases cities above 50k.
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Establish a store as far as possible from a distribution center. Then fill in that territory,
town by town, state by state until saturation.
If customer experience is good (including cost, quality, selection), word of mouth will
drive more traffic. Towns will hunger for Wal-Mart to enter.
People simplify the Walmart 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 variety stores, the substitute options its customers had (to drive an hour away to a
better store), and the execution required to expand as successfully as they did.
The mission of Walmart is to reduce the price of living for its customers. Customer
satisfaction is their guiding principle - in merchandising, cost reduction, shopping experience, etc.
Sam has little sympathy for retailers who closed down after Wal-Mart
entered. Customers closed the shop, not Wal-Mart, by voting with their dollars. The
existing shops couldn’t compete by offering superior selection, pricing, or convenience
relative to Wal-Mart. They shouldn’t exist if they relatively worsen quality of life for their
customers.
Sam Walton’s essential management practices
Learn from the competition - visit their stores and pick up one good idea when you
leave. Borrow ideas liberally and improve on them. Competition makes every participant
better, and the customer is the final recipient of value.
Profit sharing - all employees receive profit sharing bonuses, usually in the form of equity.
Innovation - change is a constant, and adaptation must happen. Wal-Mart adopted
computer systems earlier than most. It encouraged store managers with autonomy to run
crazy promotions.
Empowering people with responsibility - financials are shared with employees.
Department managers at stores are treated like individual business owners. Representatives
are flown to HQ to share their experiences and ideas.
Have fun - don’t take things so seriously; don’t walk around scowling all day. Have a
“whistle while you work” philosophy. Celebrate successes, and be a bit goofy.
Frugality - “every time we spend one dollar foolishly, it comes right out of our customers’
pockets.”
Saturday morning management meetings - to share best practices, drill down on individual
store problems, teach new management strategy.
Servant leadership - management’s role is to serve the individual stores and help them do
their job.
Brief Biography of Sam Walton and Wal-Mart

Born in Oklahoma in 1918 and moved to Missouri.
He credits his dad for being a hard worker with high integrity and a great negotiator; his mother
for ambition and drive.
Sam notes that his parents argued a lot, and they split up after he grew up. “I felt like I
took a lot of the brunt of this domestic discord” - and possibly felt this motivated him to
stay busy all the time.
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He was competitive throughout his early life: “It never occurred to me that I might
lose...almost as if I had a right to win.” Thus leading high school football and basketball
championships, and being president of 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 and served limited duty domestically. Dejected,
he quit JC Penney and worked at Du Pont gunpowder plant. He met future wife Helen Robson in a
bowling alley at this time.
After 2 years of army duty, he wants to go into business for himself. Helen has two rules: no big
city (population under 10,000) and no partnerships. This prompts Sam to buy a Ben Franklin
variety store in Newport, AR in 1945.
This store is the crucible for training, laying the foundation of Wal-Mart. Here he learns the
advantage of lower pricing (volume compensates for lower prices); promotion (ice cream and
popcorn stands outside the shop); suppliers (finding offbeat sources for low-cost goods).
After 5 years, his Ben Franklin store has become the highest selling in 6 states. But his lease
expires, and his contract has no option to renew the lease. The landlord, knowing he’s in a bind,
buys out his store. Sam Walton has to restart.
With his $50,000 from his store sale (roughly $500k in 2018) Sam Walton moves family to
Bentonville, buys another struggling shop and turns it into another Ben Franklin franchise, this
time named “Walton’s Five and Dime.”
This time they try to get a 99-year lease.
Now armed with the experience and strategies of his last stores, he sets his eye on expanding,
setting up more stores in Arkansas and Kansas. He moves away from the Ben Franklin franchise,
naming the new stores “Walton’s Five and Dime.” He believes the large companies (eg
Woolworth) underestimate the opportunity available in small towns.
By 1960, he builds up to 15 stores with $1.4 million in sales, but this isn’t satisfying enough. He
sees two opportunities:
The rise of massive superstores (100k+ square feet).
The danger of rising discount stores - and rather than be disrupted by these low-cost
retailers, he creates his own.
In 1962, the first Wal-Mart discount store is established in Rogers, Arkansas, with 18k
square feet. It’s a moderate success at first ($1MM per year, compared to Sam’s benchmark
competitor at $2MM in sales), but clearly a lot more than their variety stores.
Walton actually intended to partner with his former franchise owner, Butler Brothers, but
they rejected his proposal to be their merchandiser. This puts a bit of a chip on Sam’s
shoulder.
One of Walton’s managers comes up with the 7-letter Wal-Mart name, where Sam
originally wanted titles with 3-4 words. This is motivated by spending less on lighting per
letter.
After two years, they expand to nearby towns. Competitors are starting to eye the discount store
trend, so they need to move fast. By 1968 they have 13 Wal-Marts; by 1969, 18.
They begin formalizing operations of the business, hiring managers to set up a warehouse
distribution center, accounting, company communications.
Walton has taken on a few million $ in personal debt to finance store growth. They start getting
turned down by banks for more loans. Sam Walton wants to pay off his debts by going public.
In 1970 they consolidate the separate store partnerships into a single company, go on a roadshow,
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and go public, raising ~$5MM.

$1 in shares in 1970 would be worth roughly $5312 in 2018.
Walmart continues its strategy of expansion: set up a store within a day’s drive of a
distribution center would allow, then fill in the surrounding areas until saturated. Then add
more distribution centers.
The big competitors (Kmart) still aren’t going into towns smaller than 50k, while Wal-
Mart knew they were working in towns smaller than 5k. While leapfrogging from big city
to big city, the big guys spread themselves out and become subject to city politics.
When competition does arrive, Wal-Mart knows its strategy: “keep our prices as low as
possible by keeping our costs as low as possible.”
To enable the expansion, Sam continues hiring people in operations and distribution to
handle things he tends to ignore.
From 1970 to 1980, they roughly double every 2 years:
Stores Sales Profits

1970 32 $31 million $1.2 million
1972 51 $78 million
1974 78 $168 million $6 million
1976 125 $340 million
1978 195 $678 million
In 1974, they face a schism in the company, with one EVP (Ferold Arend) representing the old
guard in merchandising and store management, and another EVP (Ron Mayer) representing the
new guard in finance, data, distribution.
Ron tells Sam Walton he wants to run his own company, and Sam fears losing him. Sam at
this time also considers taking a back seat to focus on his hobbies (eg quail hunting). He
promotes Ron to CEO.
But retirement isn’t suited for Sam Walton, and he isn’t hands-off on management,
especially since he worried about the company schism. He doesn’t approve of some of
Ron’s decisions.
30 months later, Sam returns as CEO, and Ron leaves with many of his loyal managers.
This is called the “Saturday night massacre” eventually leading to ? of senior management
leaving. Their stock value drops, and Sam admits he’s not sure if Wal-Mart will make it
out of this alive.
Gradually Sam Walton continues recruiting talent, including David Glass for distribution, who
eventually becomes CEO himself.
Competition heads up in the 1970s (especially Kmart), and Wal-Mart tackles them head-on in
their territories.
In Springfield, MO, Wal-Mart had 40 stores within 100 miles. When Kmart came in with 3
stores, they had a tough time competing.
Wal-Mart also acquires a few chains in areas where they have little presence, like Kuhn’s
big K 100 stores in the South. This geographical spread forces them to upgrade their
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communication and management practices.

In 1983, Wal-Mart starts Sam’s Club in response to sub-discounters like Price Club, who sell at
wholesale volumes at 6% markup rather than 22% in the discount business.
This is something like a second childhood for Sam, a chance to build a company all over
again.
Sam’s outlook at the end of his life is on international expansion (which Wal-Mart certainly have
done) and competition in discount retailing, where he confidently expresses that no competitor has
been able to operate on their volume as efficiently, nor service customers as well.
[Sam Walton passes away before Amazon rises to challenge for retail supremacy. It would
have been fascinating to see how Sam Walton viewed the Internet - whether he would have
envisioned it immediately as the next wave of the future.]
Stores Sales Profits

1960 9 $1.4 million $.1 million
1970 32 $31 million $1.2 million
1990 1528 $26000 million $1000 million
The #1 Principle of Walmart - Customer Focus

The company is in service of the customer. Their mission is to lower the cost of living for millions
of people around the world.
In retail, the customer wants everything: wide assortment of good quality merchandise, lowest
possible prices, guaranteed satisfaction, friendly knowlegeable service, convenient hours, free
parking, 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 has no sympathy for middlemen who feel entitled to a share but provide little
value, or retailers that have never faced competition before Wal-Mart entered.
“Nobody owes anybody else a living.”
Similarly, Sam doesn’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 sooner or later.
He suspects the ire around town shops disappearing comes from people who resist their
towns changing (even if they’ved moved away to suburbs). They just want the town to be
stuck in time. But this is the same sentiment from city-dwellers who bemoan the suburban
shift.
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If local businesses want to survive, they need to find a niche and a reason for customers to
shop there - be it more knowledgeable service staff, a broader selection in a narrower
industry (eg hardware, crafts), a personal touch.
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.”
Make sure the bid is your best possible, because if we go to your competitor and he offers
a lower price, he’ll get the business.
Be honest and fair, and you will be respected.
The principle extends downward to the lowest, most granular level. Wal-Mart needs to constantly
battle “big company” disease.
When walking around aisles, how will the customer see and buy items? How do they feel
on entering and leaving a store? How do they feel about getting help?
Each Wal-Mart needs to cater to its particular customers. A Wal-Mart servicing tourists
needs to have different merchandise from a general population Wal-Mart 5 miles away.
Regional managers and buyers need to visit stores to see firsthand how they’re doing and
even try to manage the store for a few days. It must be ingrained that their real job is to
support the merchants in the stores.
In turn, department and store managers need to visit HQ to communicate what they see in
their stores.
“A computer can tell you down to the time what you’ve sold. But it can never tell you
how much you could have sold.”
Exceed the customer’s expectations - they’ll come back over and over. Give them what they want
- and a little more.
[The emphasis on the customer being the mission, as well as Sam’s indifference about his own
wealth, enabled him to be super efficient, low margin, and long-term. Any greedier retailer that
wanted to preserve margins at the expense of price died. This is very much in line with Jeff
Bezos’s thinking.]
Sam Walton’s Competitiveness

“If I had to single out one element in my life...it would be a passion to compete...looking
ahead to the next store visit, or the next store opening.”
“He knew he was going to win. It’s just the makeup of the man.” - brother Bud Walton
Early childhood competitiveness
As a child he bet other Boy Scouts who would be first to reach Eagle (he won)
In high school he led the basketball teams and football teams to be undefeated state
champions
In college he became president of senior class, president of senior men’s honor society,
president of Burall Bible Class.
When starting his first Newport store: “I’ve always believed in goals, so I set myself one: I
wanted my little Newport store to be the best, most profitable variety store in Arkansas within five
years.”
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In Newport, John Dunham’s Sterling Store across the street is his competition. He studies his
competitor’s pricing and goods incessantly. When a large retail space opens up in town, he takes
it: “I didn’t have any idea what I was going to do with it, but I sure knew I didn’t want
Sterling to have it.”
Sam Walton constantly eyes the competition and borrows the best ideas from them.
If other stores offer sales, he wants his prices lower. He keeps watch for new trends, like
discount stores, and mega-size shopping centers, letting him be among the first in his area
to execute.
This became such a habit that on family vacations outside town, he would visit stores to
study their practices. Wife Helen: “Sam never went by a Kmart that he didn’t stop and
look at it.”
“Go in and check our competition. And don’t look for the bad. Look for the good. If you
get one good idea, that’s one more than you went into the store with, and we must try
to incorporate it into our company.”
Sam was brazen enough to go directly to his competitors’ management, say he had a small
company in AR, and ask strategic questions. They were too small to worry about in the
beginning.
Wal-Mart itself as a discount retailer was an idea taken from earlier discounters. Sam’s
Club, a warehouse sub-discounter, is taken from Price Club.
He picked up the idea of “associates,” morning calisthenics, company cheers from other
companies and cultures.
When the Butler Brothers reject his discount store idea: “I got a little angry, and maybe that
helped me decide to swim upstream on my own.”
Sam Walton forces all his vendors and suppliers to compete for Wal-Mart’s business, even if he
likes them personally and knows they’re good people.
Continued discontent - “if you ask Sam how’s business, he’s never satisfied. He says ‘Bernie,
things are really lousy. Our lines are too long...our people aren’t being helpful enough.’ “
In his hobbies quail hunting and tennis, Sam is competitive, never one to give up a point. He
prefers tennis instead of golf because of its head-to-head nature.
Competitors make each other better, and the customer gets the best value of all. Sam thanks Kmart
for its competition in keeping them on their toes.
He doesn’t buy the common assertion that Wal-Mart succeeded merely because no one
else was paying attention to small towns. They had to compete against variety stores. Also,
the rural customers weren’t stupid - if a store an hour away had better deals, they would
go there.
Later when Kmart attacked, they wouldn’t have survived if they weren’t amazing
executors.
Retail-specific Wal-Mart Strategy

Sam Walton believed that with lower prices, volume made up for lower profit per item.
The book repeats mention of bins of “ladies’ panties, three for $1.00 and four for $1.00”
Wal-Mart stores were functional, omitting frills: “highly promotional, truly ugly, heavy
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with merchandise—but for 20 percent less than the competition. We were trying to find out
if customers in a town of 6,000 people would come to our kind of a barn and buy the same
merchandise strictly because of price. The answer was yes.”
Some popular items like makeup and antifreeze are sold at cost, drawing in customers
who then buy marked-up (but still cheap) items.
A manager gets a deal on an item normally priced $1.98, buying it for 50 cents. He
proposes selling it for $1.25. Sam objects: “No. We paid 50 cents for it. Mark it up 30%,
and that’s it. If we get a great deal, pass it on to the customer.”
Walton considered merchandising critical to retail - both stocking unique goods as well as
promoting them.
He obsessed about finding unique goods that he could bring into his store and sell at a
discount - like thong sandals and mattress toppers. He partnered with a rival store to make
their own Hula Hoops when they couldn’t get the expensive genuine items.
Wal-Mart holds VPI (Volume Producing Item) contests between senior buyers to pick
specific items that will sell the best (eg a minnow bucket, a brand of apple juice). This
teaches store managers that some products can explode in sales, if the messaging and
presentation are correct.
“I really love to pick an item and then call attention to it. We used to say you could sell
anything if you hung it from the ceiling” - if they dramatized it.
A store manager ran ambitious promotions, buying 3500 giant boxes of detergent, running
a promotion at $1.99 rather than $3.97. While HQ demurred at the volume, it made the
news and sold within a week. Same thing happened with 200 riding lawnmowers, stacked
in rows in front of the store.
“You have to be merchandise driven, or you become like everybody else.” There are
two types of retailers - merchandize-driven or operations-driven. “The ones that are truly
merchandise driven can always work on improving operations. The ones that are
operations driven tend to level off.” - David Glass (CEO Wal-Mart)
Remote management of rural stores was critical for their expansion.
This required control of timely information on what was selling, what needed to get
ordered, how to control turnover. This led to early use of the computer.
The Wal-Mart Formula
Set up stores in small towns. Their discount formula works in towns under 5,000 people,
and big competitors like Kmart are only going into large cities above 50k.
Even when big stores tried discounting, they didn’t really commit to it. They
were too accustomed to their 45% markup, and it was hard to let that go. Classic
Christiansen disruption.
Establish a store a day’s drive from a distribution center. Then fill in that territory, town
by town, state by state until saturation.
They never planned to go into cities - rather they built stores in a ring around a city, and
“wait for the growth to come to us.”
In Springfield, MO, they had 40 stores within 100 miles. When Kmart came in
with 3 stores, they had a tough time competing.
Word of mouth worked well: from rural town to town; people who traveled South for
winter would clamor for stores up north. “We’re presold when we go into new areas.”
Re: real estate, get out in front of expansion, and let the population build out to them.
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Boldness/Optimism
“Knowing where you want to go and being willing to do what it takes to get there. It’s a story
about believing in your idea when maybe some other folks don’t and sticking to your guns.”
“Be prepared for a lot of folks to wave you down and tell you you’re headed down the wrong
way. In all my years, what I Heard more often than anything was: a town of less than 50,000
population cannot support a discount store for very long.”
“It never occurred to me that I might lose; to me, it was almost as if I had a right to win.
Thinking like that often seems to turn into sort of a self-fulfilling prophecy.”
After leaving the Army in 1945: “I knew I wanted to go into business for myself. My only
experience was the Penney job, but I had a lot of confidence that I could be successful on my
own.”
After losing his store in Newport, AR: “I’ve never been one to dwell on reverses...you can make a
positive out of most any negative if you work at it hard enough. I’ve always thought of problems
as challenges, and this one wasn’t any different.”
“He is less afraid of being wrong than anyone I’ve ever known. And once he sees he’s wrong, he
just shakes it off and heads in another direction.”
“Commit to your business. Believe in it more than anybody else….If you love your work,
you’ll be out there every day trying to do it the best you possibly can, and pretty soon everybody
around will catch the passion from you - like a fever.”
His one stated moment of weakness was in 1976 with the “Saturday night massacre” that led to
losing a third of senior management - “I wasn’t sure myself that we could just keep on going like
before.”
Frugality
Walton lived through the Great Depression and saw his father go between jobs. He also traveled
with his dad as a repossessor for a loan company.
“We learned how much hard work it took to get your hands on a dollar, and that when you did it
was worth something.”
He funded himself through college with a small paper routes business and waited tables.
Even when wealthy, they refused to spend lavishly.
“I just don’t believe a big showy lifestyle is appropriate for anywhere, least of all here in
Bentonville where folks work hard for their money and where we all know that everyone
puts on their trousers one leg at a time.”
On flying coach: if he flew in a different part of the plane as his associates, the resentment
would inevitably begin.
These principles extended to running Walmart, where they put off buying a jet and force
employees to sleep two to a room.
“We exist to provide value to our customers, which means that in addition to quality and
service, we have to save them money. Every time Wal-Mart spends one dollar foolishly, it
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comes right out of our customers’ pockets.”

“Sam never did anything in size or volume until he actually had to.”
In the 1960s early days, he habitually turned down spending unnecessary money, like huge
warehouses.
“It was important to me to make them think that maybe the technology wasn’t as good as
they thought it was, or that maybe it really wasn’t the end-all they promised it would be.”
Funny: if warehouse folks knew Sam was visiting and they had an extra tractor idling, they
would hide it so Sam wouldn’t know they had anything empty.
He decried press focus on their family’s wealth without being interested in Wal-Mart.
Control your expenses better than your competition. [Like Bezos says - your margin is my
opportunity.]
Knowing His Weaknesses

“I’m not the best negotiator in the world; I lack the ability to squeeze that last dollar.” He relies
instead on his brother Bud.
Sam Walton knew that early in Wal-Mart’s history, their back-office systems were terrible
(accounting, stocking, no computers). But they made up for it in lowest possible costs,
merchandise, and brand reputation.
Instead of LIFO/FIFO accounting, they used “ESP” accounting. Meaning if the books
didn’t line up, they added an entry for “Error Some Place.”
“I was really surrounding myself with guys who were good at all the things I tended to just sluff
off” - like systems, operations, distribution.
In preparation for competition with Kmart, they invite heads of regional discounters to visit Wal-
Mart and give their opinion. They rip them to shreds on pricing, merchandising, displays.
Humility
“Exercising your ego in public is definitely not the way to build an effective organization. One
person seeking glory doesn’t accomplish much; at Wal-Mart, everything we’ve done has been the
result of people pulling together to meet one common goal.”
“It was a real blessing for me to be so green and ignorant...you can learn from everybody. I didn’t
just learn from reading every retail publication I could get my hands on, I probably learned the
most from studying what John Dunham was doing across the street.”
On Saturday morning management meetings: “if all our folks out there in the stores have to work
on Saturday, I think those of us back here in the general office should show up on Saturday too.”
Sam Walton considers managers “servant leaders” - you have to view your employees as
important. “You can’t create a team spirit when the situation is so onesided, when management
gets so much.”
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Experimenting/Innovation
While running his Ben Franklin store in Newport, AR, the franchise owners wanted to do things
by the book. “It didn’t take me long to start experimenting - that’s just the way I am.” He
approached suppliers who would do direct sales to his store; he promoted his shop with an ice
cream machine; he priced his goods lower than standard.
They make their Bentonville store the third self-service variety store in the country, at a time
when this is a new concept.
In a time when each state was controlled by a major variety store (eg Oklahoma by TG&Y,
Kansas by Alco) who implicitly agreed not to cross state bounds, Sam wanted to break the
borders.
Discounting was a new idea in 1962, and often ridiculed by major retailers. That year, Kmart,
Target, Woolco, and Wal-Mart were created.
The first 3 are subsidiaries of giant retailer chains. They have an advantage in speed
(within 5 years Kmart has 250 stores and $800MM in sales to Wal-Mart’s 19 stores and
$9MM).
But Sam Walton considers their advantage to be scrappiness and innovation by
necessity. They uniquely explore small-town America, believing other retailers underestimate the
opportunity there. This requires special adaptations to manage remote towns.
Like being a relatively early adopter of computers to handle inventory and communication.
Innovation was encouraged by store managers, who had freedom to try crazy things since they had
a personal stake in the store’s success.
See the stories of mass quantities of 2500 detergent boxes and 200 lawnmowers above.
The same manager held a promotion for a TV sold at 22 cents, hidden somewhere in the
store. A mass of people showed up and tore the store apart - overall a net positive, but they
avoided this kind of chaos in the future.
Plenty of efforts failed.
Sam was excited by the European hyperstore concept, where grocery, general market,
bank, arcade were all in one store. This ultra-large-footprint store was disappointing, but
gave rise to the more successful Walmart Supercenter.
Discount Drug, home improvement Save Mor both failed.
They partnered with Procter & Gamble to share sales and inventory data, to make P&G more
efficient to lower costs, leading to lower prices for Wal-Mart customers.
Team participation
Profit sharing/stock ownership
Early on before going public, Sam Walton set up new stores as partnerships and allowed
early managers to invest a max of $1000 in new stores (for 2% stake in a $50k
investment). This profit participation attracted talent and made the managers naturally
worried about store performance.
For decades, they had a profit sharing program - equivalent to roughly a 6% bonus on
wages each year, which can be taken out as cash or stock when the employee leaves the
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company. This led 80% of associates to have equity ownership in the company. [This has
since been discontinued in favor of 401k matching.]
Why did so many discount retailers from the 1970s disappear? “It all boils down to not
taking care of their customers, not minding their stores, not having folks in their stores
with good attitudes, and that was because they never really even tried to take care of their
own people. If you want the people in the stores to take care of the customers, you
have to make sure you’re taking care of the people in the stores. That’s the most
important single ingredient of Wal-Mart’s success.”
A truck driver who worked for Wal-Mart for 20 years eventually earned $707k in profit
sharing. “When folks ask me how I like working for Wal-Mart, I tell them I drove for
another big company for 13 years and left with $700. Then I tell them about my profit
sharing and ask them, ‘How do you think I feel about Wal-Mart?”
Wal-Mart calls their employees “associates” to give a sense of partnership - inspired by a retail
company sign in England that listed all its associates. Sam calls them partners.
Wal-Mart resists unions by treating its associates better
Unions are purposely divisive, putting management on one side and employees on another
side, to justify their role in the middle. Their incentive is to create conflict to make their
work meaningful.
Treat employees with incentives to drive behavior.
Example: a store had a theft problem. If it reduces shrinkage below a target goal, every
associate could get a bonus as much as $200.
Sharing information and financials with associates
“It’s the only way they can possibly do their jobs to the best of their abilities - to know
what’s going on in their business.”
“If you don’t trust your associates to know what’s going on, they’ll know you don’t
really consider them partners.”
It makes people feel responsible and involved.” This is greater than the downside risk of
leaking info to the outside.
“Submerge your own ambitions and help whoever you can in the company. Work together as a
team.”
An associate from every Sam’s Club and Wal-Mart (alternating every year) are elected by each
store to attend the annual shareholders’ meeting.
The meeting is less about honoring shareholders than about recognizing the people
responsible for delivering on investments.
All associates are invited to Sam’s house for a lunch.
The elected associates tend to be leaders in their stores, who are then tasked with reporting
back to their store staff.
Formalize ways to get the best ideas to percolate upwards.
Fly in representatives from all stores to talk with management.
Showcase great ideas at Saturday meetings.
Volume Producing Item contest for department managers to compete to promote an item
and get highest volume.
Get regional managers to visit stores and leave with at least one good idea they saw.
The store greeter idea came from a Louisiana store that had to combat theft.
13 / 16
Management Style
“Pick good people and give them the maximum authority and responsibility”
Even when they seem too inexperienced to handle it - “give them six months with us, and
if they showed any real potential to merchandise a store and manage people, he’d give
them a chance.”
“If you take someone who lacks the experience and the know-how but has the real desire
and the willingness to work his tail off to get the job done, he’ll make up for what he
lacks.”
Store within a Store concept - departments within a store have a manager. They have their
own businesses to manage and are given financials - COGS, freight costs, margins -
ranked against all other stores in the company. Incentives to win.
Look for things that are going right, look for things to praise. Let folks know when they are
doing something outstanding, and let them know they are important to you. Let them know
how much you appreciate their performance.
“Nothing else can substitute for a few well-chosen, well-timed, sincere words of praise.
They’re absolutely free - and worth a fortune.”
When talking with employees, ask them how they feel and what’s on their mind. This leaves a
strong impression of a personal connection.
Keep your doors open to the most entry-level associate. Make them feel empowered to drive to
headquarters and meet with you. Even if most people never do this, the knowledge that it’s
acceptable makes everyone feel heard.
Saturday morning management meetings
Hundreds of senior executives would attend, celebrating successes, discussing company
strategy, and finding areas of improvement.
“If all our folks out there in the stores have to work on Saturday, I think those of us back
here in the general office should show up on Saturday too.”
They dove deep into individual stores, “zeroing in on the smallest operating units we
have.” They would talk about how it’s doing against a single competitor in its market,
how single items are selling, and what specific practices could be shared with other stores.
Sam Walton believed novelty in each meeting was critical to compensate for its
imposition.
Famous guests like Jack Welch would sometimes appear and be Q&A’d.
He sometimes asked specific execs to lead the meeting.
Sam might read from management articles [kind of like how sermons teach from
Biblical passages].
[This was reduced from weekly to monthly in 2008, then made optional in 2014.]
Have fun. Show enthusiasm. Don’t take things so seriously.
It was important to have fun, not to walk around scowling all day “pretending you’re
lost in thought over weighty problems.” A “whistle while you work” philosophy. Know
that you’re supposed to have a good time working.
Build spirit and excitement. Capture your team’s attention and keep them interested, make
them guess about what’s coming next.
Inherited from their small-town roots: a love of parades, cheers, songs, celebration.
Sam Walton bet the company in 1984 that if they made 8% earnings, he’d do a
14 / 16
hula on Wall St. They did, and he was embarrassed.

They have a Wal-Mart cheer inspired by the U of Arkansas cheer.
In the early days, this was a way to attract attention in small towns - make it so Wal-Mart
was the best entertainment you could get. The big shopping day for the family was
Saturday, and stores needed to attract customers to their stores above others.
Bands and circuses in parking lots
Moonlight Madness sales, with new bargains announced every few minutes
Shopping cart bingo - Carts with numbers that, if chosen, get a discount
Boxes of candy to customers who traveled the farthest
[Note that this has attracted some skepticism from mass society, as all group rituals do.
Some element of Crossing the Chasm from early adopter employees who are true believers
to the more skeptical mass market.]
Keep the store small.
Listen to individual employees.
Sam liked talking to the truck drivers - they see more stores per week than anyone
else, and they say what they really think.
Focus on how individual stores are doing on individual items. One store’s experience is
what is happening to the entire company, times 10000.
Recognize that culture is an inertial force and can make an org resistant to change.
They resisted hiring college graduates for a long time and even bullied them when hired.
They used to assume that store managers were willing to move on a moment’s notice,
until realizing this disadvantaged women and punished local roots (who might be best at
managing a local store)
Communication methods
Saturday morning meetings
Wal-Mart World periodicals
TV broadcasting in the break room (Sam announcing his campaign for saying hi to
customers)
Visits from local staff to HQ, and vice versa.
Touching base with all departments of the company.
Fight bureaucracy
Solve the root cause of the issue, rather than adding more layers.
They faced problems with incorrect merchandise pricing, which they fixed with
people holding scanners and verifying pricing. Sam disagreed with the necessity of
this. They eventually improved their back-office procedures to get it right the first
time.
Reduce the number of layers from chairman to the lowest level.
Find ways to motivate your partners.
Set high goals, encourage competition, keep score.
Make bets with outrageous pyaoffs.
Have managers switch jobs with one another to stay challenged.
Miscellaneous Sam Walton Principles
15 / 16
Other themes from Sam Walton: Made in America that are worth noting:
Salesmanship
The secret to campus leadership: “speak to people coming down the sidewalk before they speak to
you...before long, I probably knew more students than anybody in the university.”
“I guess Mr. Walton just had a personality that drew people in. He would yell at you from a block
away, you know. He would just yell at everybody he saw, and that’s the reason so many liked him
and did business in the store. It was like he brought in business by his being so friendly.”
Family relations
Family values: hard work, honesty, neighborliness, thrift.

His direct children worked in the stores and grew up not having much money (given that
Sam reinvested in expanding stores).
Despite his time away from family, Sam suspects his children didn’t resent him because they
were involved in the business from the beginning. Daughter Alice about visiting stores: “It wasn’t
that he wasn’t supportive or fair. It was just something he had to do, and we understood it.”
Sam Walton was accepting of his children, providing encouragement and opportunities but not
pressure. Son John: “I remember asking Dad for permission to climb a bluff...he said, ‘Do
anything you’re big enough to do.’ What an exhilirating challenge of judgment and confidence
booster.”
About selling stock: “Some families sell stock off a little at a time to live high, and then - boom -
somebody takes them over, and it all goes down the drain.” “I enjoyed doing what I was doing so
much and seeing the thing grown and develop...that I never could quit.”
“The best way to reduce paying estate taxes is to give your assets away before they appreciate.”
Flying someone on your plane is probably a great way to earn their trust and build a fast bond.
Look for people who have unorthodox ideas and keep them around.
On local people who didn’t think Wal-Mart would get anywhere: “I think it must be human
nature that when somebody homegrown gets on to something, the folks around them sometimes
are the last to recognize it.”
Carried a tape recorder on trips to record ideas in conversations.
The way to get invited back to a hunting area: “offer the owner a box of sweets from the store, or
a take of the game he shot.”
“The best executives have touched all the bases and have the best overall concept of the
corporation.”
Like this book summary? Visit www.allencheng.com for more.
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PDF + Summary: Sam Walton, Made in America (Wal-Mart Founder)

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principles that led Walton and his partners to incredible success.

In this Made in America summary, learn:

1-Page Sam Walton: Made in America Summary

Brief Biography of Sam Walton and Wal-Mart

and go public, raising ~$5MM.

Stores Sales Profits

communication and management practices.

Stores Sales Profits

The #1 Principle of Walmart - Customer Focus

Sam Walton’s Competitiveness

Retail-specific Wal-Mart Strategy

comes right out of our customers’ pockets.”

Knowing His Weaknesses

hula on Wall St. They did, and he was embarrassed.

Miscellaneous Sam Walton Principles

Family values: hard work, honesty, neighborliness, thrift.

Like this book summary? Visit www.allencheng.com for more.

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