Book Summary: Sam Walton, made in America: My Story by Sam Walton with John Huey
The book entails an autobiographical account of Sam Walton’s rise to the pinnacle of the US retail business. It entails the personal reminiscences of Sam Walton combined with dozens of interviews conducted with his family as well as friends. The book tells a story about risk, entrepreneurship, and hard work. Walton emphasizes that to succeed one must clearly know where they want to go and be willing to do everything it takes to get there. It is also a story about believing in own ideas even when others may doubt, and staying the course.
The book narrates how Walton parlayed a single dime store in a small hardscrabble cotton town, Newport, Arkansas, and grew it to become the world’s largest corporation by revenue. Walton is the founder of Wal-Mart Stores Inc. Walton narrates his frustrating beginnings as an entrepreneur, how he bounced back, and what he did to keep thriving. Some of the topics Walton tackles in this book is how to transform a business from an entrepreneurship to a corporate organization.
Other topics discussed in the book include building partnerships, prioritizing customers, honing competitive edge, and corporate citizenship. Towards the end of the book, Walton shares ten rules that he believes can help entrepreneurs run successful companies. These rules combined with all the information shared in this book paints a clear picture of how Walton started Wal-Mart, how he grew it, and how he kept refining the concept to remain competitive. Indeed, the book narrates an extraordinary success story that is not built with smoke and mirrors but rather with excellent business and economic principles.
What did Sam Walton Do Wrong?
From reading the book, I identified two key things that Walton did wrong. Before delving into these wrongs, it is worth noting that they happened in the early stages of Wal-Mart. In the early days of Wal-Mart, it is evident that Walton did not emphasize quality. He was more concerned with selling the most products at a discounted price. Walton believed that customers make purchasing decisions based on price and not so much on the quality of the product sold (Walton & Huey, 1993). According to Mothersbaugh et al. (2020), a customer’s purchasing decision is influenced by various factors; quality is usually among the top on the list. The quality of a product determines whether a consumer will return to make repeat purchases.
The other thing that Walton did wrong in the initial stages of Wal-Mart is not properly valuing the customers. Walton was keen on making the customer the number one priority of Wal-Mart, which resulted in the company overlooking employees (Walton & Huey, 1993). This is the wrong approach because employees are the most valuable asset of any organization. Lorincová, et al. (2019) explain that an organization must treat employees as its first customer. Notably, if employees are unhappy they do not perform optimally and this translates to unsatisfied customers. Therefore, whereas companies must make customers number one, it is equally important that they value the employees the same way.
What did Sam Walton do Right
There are numerous things that Walton did right. Some of these things include creating an organizational culture. Walton created an organizational culture that gave Wal-Mart its identity (Walton & Huey, 1993). Besides identity, organizational culture affects all aspects of a company which determines how all the company’s resources of the organization function together to achieve the company’s mission and vision (Lubis & Hanum, 2020). Another thing that Walton did right using competition as a driving force. Rather than seeing competition as a threat, Walton leveraged it to remain creative and innovative. This significantly contributed to Wal-Mart’s success.
Another thing that Walton did right was the implementation of the “thinking small” concept. Ideally, the concept advocates for striving to be the best, not the biggest. By using this concept Walton strived to be the best retailer, not the biggest retailer (Walton & Huey, 1993). By being the best he created more demand for Wal-Mart, which eventually led to the organization growing to become the biggest retailer, worldwide. Also, his philosophy regarding making the customer number one was a great approach. Walton based Wal-Mart’s organizational culture around the customer whereby he strived to put the customers first and make sure they are happy (Walton & Huey, 1993). Ilias and Shamsudin, (2020) emphasize that businesses must understand customer needs, create distinctive value for the customers, and cultivate robust relationships with the customers for them to thrive.
How I would Have Done Things
There are two things that I would have done differently. Firstly, I would be keen on the quality of the products. One aspect of keeping customers first is providing them with high-quality products. According to Mothersbaugh et al. (2020), the quality of a product influences a customer to come back for return purchases. As a result, besides fulfilling customer needs, it also promotes customer loyalty. This guarantees the longevity of a company. Besides customer loyalty, it also generates increased leads that allow an organization to reach more customers. A satisfied customer spreads a word of mouth about the product to his/her family and friends hence allowing an organization to reach more customers (Mothersbaugh et al., 2020). Thus, emphasizing quality would have been significantly beneficial to Wal-Mart in its initial stages.
The next thing that I would have done differently is ensuring to treat customers as the most valuable asset of the organization. The way an organization treats its employees determines their engagement level and productivity (Jain, 2021). Lorincová, et al. (2019) elucidate that employees need constant motivation to perform optimally. To achieve this, I would have used both intrinsic and extrinsic motivators. Intrinsic motivators entail intangible things such as recognition, involvement in the decision-making process, promotion based on merit, et cetera. On the other hand, extrinsic motivators involve tangible things such as salary, bonuses, perks, et cetera (Jain, 2021). Notably, I would have made sure to strike a precise balance between the two to ensure long-term success.
What Economic Principles Were used in this Business?
An economic principle used by Walton in running Wal-Mart is competitive pricing. Competitive pricing refers to the process of selecting strategic price points to take the best advantage of a product or service relative to the competition. Notably, the principle is used mostly by businesses selling similar products (Besanko & Braeutigam, 2020). Wal-Mart used the principle in that it sold its products at a discounted price as a strategy to beat the competition. Wal-Mart’s goal was to sell the most products at a relatively smaller profit margin than its competitors. By selling more units than competitors, Wal-Mart was able to make more profits by them and attract more and more customers hence its success.
Another economic principle used by Wal-Mart is utility maximization. The principle states that individuals seek to achieve the highest level of satisfaction from their economic decisions. According to the rational choice theory, consumers try to maximize utility with every product or service they purchase. As such, consumer behavior is geared toward ensuring that one acquires the most affordable items but with the highest satisfaction level (Besanko & Braeutigam, 2020). Wal-Mart’s decision to sell its products at affordable prices aligned with the utility maximization principle hence its success.
Key Learnings from the Book Sam Walton: Made in America by Sam Walton and John Huey
There are several things that I have learned from reading the book. The first one is an entrepreneur must commit to his/her business. They need to believe in it more than everybody else. The second one is the importance of motivation. An entrepreneur must motivate their employees and treat them in a way that makes them feel they are valuable if they want their business to thrive. Motivation also entails setting high goals and motivating the team to achieve them in the most effective and efficient manner possible. The third lesson learned from the book is that a business must be built around customers’ needs. Businesses must keep their customers first and strive to keep them satisfied.
The book has also helped me understand the importance of swimming upstream. Rather than doing what others are doing, an entrepreneur should strive to remain creative and competitive to maintain a competitive edge in their respective markets. The most important lesson learned from the book is that building a successful organization is not a fluke. It takes hard work, commitment, and most importantly calculated strategies, which leverage business and economic principles. Nonetheless, if bone stays the course and does everything it takes, it is possible as demonstrated by Sam Walton’s story.