Listen to everyone in your company

Listen to everyone in your company. And figure out ways to get them talking. The folks on the front lines - the ones who actually talk to the customer - are the only ones who really know what's going on out there. You'd better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.

Sam Walton

Sam Walton, Made in America by Sam Walton & John Huey. Bantam Books. 1992. p. 248

sometimes that requires shooting the culprit

If you don't zero in on your bureaucracy every so often, you will naturally build in layers. You never set out to add bureaucracy. You just get it. Period. Without even knowing it. So you always have to be looking to eliminate it. You know when Tom Watson, Sr. was running IBM, he decided they would never have more than four layers from the chairman of the board to the lowest level in the company. That may have been one of the greatest single reasons why IBM was successful. 

A lot of this goes back to what Deming told the Japanese a long time ago: do it right the first time. 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 nothing more than adding another layer. What you should be doing is going to the source of the problem to fix it, and sometimes that requires shooting the culprit.

I'll give you an example that just drove Sam crazy until we started doing something about it. When merchandise came into the back of a store, it was supposed to be marked at the right price or marked correctly on the spot. But because it often wasn't getting done properly, we created positions called test scanners, people who go around the stores with hand-held scanners, making sure everything is priced correctly. There's another layer right there, and Sam didn't ever visit a store without asking if we really needed these folks. 

Well, we still have some, but what we've done is over-haul our back-office procedures to make sure we get it right more often the first time, and, in the process, we eliminated one and a half people out of the office in every Wal-Mart store in the company. That's big bucks. 

Really it's a pretty simple philosophy. What you have to do is just draw a line in the dirt, and force the bureaucracy back behind that line. And then know for sure that a year will go by and it will be back across that line, and you'll have to do the same thing again. 

David Glass

Sam Walton, Made in America by Sam Walton & John Huey. Bantam Books. 1992. p. 232

force ideas to bubble up

This goes hand-in-hand with pushing responsibility down. We're always looking for new ways to encourage our associates out in the stores to push their ideas up through the system. We do a lot of this at Saturday morning meetings. We'll invite associates who have thought up something that's really worked well for their store - a particular item or a particular display - to come share those ideas with us.

The VPI (Volume Producing Item) contest is a perfect example of how we put this into practice. Everybody from the department manager level on up can choose an item of merchandise they want to promote - with big displays or whatever - and then we see whose item produces the highest volume. I've always thought of the VPI contest not just as a way to stimulate sales, but as a method of teaching our associates how to become better merchants, to show them what can be done by picking an item that's available and figuring out a creative way to sell it, or buy it, or both. It gives them the opportunity to act the way we need to in the early days. They can do crazy things, like pick an item and hang it all over a tree filled with stuffed monkeys in the middle of the store. Or drive a pickup truck into action alley and fill it with car-washing sponges.

We're not just looking for merchandising ideas from our associates. Our latest effort is a program called Yes We Can, Sam! - which, by the way, I did not name. Again, we invite hourly associates who have come up with money-saving ideas to attend our Saturday morning meeting. So far, we figure we've saved about $8 million a year off these ideas. And most of them are just common-sense kinds of things that nobody picks up on when we're all thinking about how big we are. They're the kinds of things that come from thinking small. One of my favorites came from an hourly associate in our traffic department who got to wondering why we were shipping all the fixtures we bought for our warehouses by common carrier when we own the largest private fleet of trucks in America. She figured out a program to backhaul those things on our own trucks and saved us over a half million dollars right there. So we brought her in, recognized her good thinking, and gave her a cash award. When you consider that there are 400,000 of us, it's obvious that there are more than a few good ideas out there waiting to be plucked.

Sam Walton

Sam Walton, Made in America by Sam Walton & John Huey. Bantam Books. 1992. p. 228, 229

thinking small: store within a store

I first began thinking about some of the very real ways that we could improve our teamwork and put more authority in the hands of our people in the stores.

Our most famous technique for doing this is a textbook example of thinking small. We call it Store Within a Store, and it's the simplest idea in the world. Again, in many big retail companies the department head is just an hourly employee going through the motions, somebody who punches a clock, then rips open boxes and stacks whatever's in them onto shelves. But we give our department heads the opportunity to become real merchants at a very early stage of the game. They can have the pride of proprietorship even if they weren't fortunate enough to go to college or be formally trained in business. They only have to want it bad enough, pay close attention, and work very hard at developing merchandising skills. We've had many cases where the experience has fired people up with ambition, and they've goin on to work their way through college and move on up in the company, and I hope we have many more cases like that.

Again, this only works because we decided a long time ago to share so much information about the company with our associates, rather than keep everything secretive. In Store Within a Store we make our department heads the managers of their own businesses, and in some cases these businesses are actually bigger in annual sales than a lot of our first Wal-Mart stores were. We share everything with them: the costs of their goods, the freight costs, the profit margins. We let them see how their store ranks with every other store in the company on a constant, running basis, and we give them incentives to want to win.

 

Sam Walton

Sam Walton, Made in America by Sam Walton & John Huey. Bantam Books. 1992. p. 227

we make a decision

Our Friday merchandising meeting is unique to retailing as far as I can tell. Here we have all these regional managers who have been out in the field all week long - they are the operations guys who direct the running of the stores. Then you have all your merchandising folks back in Bentonville - the people who buy for the stores. In retailing, there has always been a traditional, head-to-head confrontation between operations and merchandising. You know, the operations guys say, 'Why in the world would anybody buy this? It's a dog, and we'll never sell it.' Then the merchandising folks say, 'There's nothing wrong with that item. If you guys were smart enough to display it well and promote it properly, it would blow out the doors.' That's the way it is everywhere, including Wal-Mart. So we sit all these folks down together every Friday at the same table and just have at it.

We get into some of the doggonedest, knock-down drag-outs you have ever seen. But we have a rule. We never leave an item hanging. We will make a decision in that meeting even if it's wrong, and sometimes it is. But when the people come out of that room, you would be hard-pressed to tell which ones oppose it and which ones are for it. And once we've made that decision on Friday, we expect it to be acted on in all the stores on Saturday. What we guard against around here is people saying, 'Let's think about it.' We make a decision. Then we act on it."

David Glass

Sam Walton, Made in America by Sam Walton & John Huey. Bantam Books. 1992. p. 225, 226