Monday, July 1, 2013

Sam Walton: Made In America

I'm not a big Walmart fan, though nor am I one of their more strident detractors.  It's just not my kind of place.

Sam Walton, however, tells a good story about the birth and growth of his company.  Immersed as I am in the tech world, where the most famous founding myths revolve around Microsoft and Apple, it was interesting to read about a business that is very different in nature, as well as founded in another era, and a place that is very different from the Silicon Valley of today.

Like many people in his position, it seems pretty clear that the accumulation of wealth was not a key factor in his approach to business or life, but a side effect of being extremely competitive and driven.  In some ways like Warren Buffet, Sam Walton comes across as someone who didn't really do all that much with his money, although he does seem more attached to it than Buffet.  Perhaps Sam Walton would have done so had he lived longer.

People criticize Walmart for a couple of things: "killing" small towns, and not treating their employees very well.

The former is an argument that I'm less sympathetic to in that change is a constant in the US.  There are plenty of places that rose and fell due to changes such as mining, railroads, or freeways.  While I can certainly understand the nostalgia for what once was, people and their habits change.  As Walton points out, suburban America was headed for malls and shopping centers before Walmart, and it it hadn't been Walmart, it would have been someone else putting in big stores with huge parking lots.  He also points out that while small town retailers can't compete with Walmart on price (not much of anyone besides Amazon can), they can certainly offer better service, being local and very directly connected to their customers.  So, if they're good, they'll find a niche where they can compete.  That makes sense to me: my favorite bike shops (Pauls' in Eugene: and Cicli Morello in Padova: ) are both small, local operations with knowledgeable people working at them.  I don't care if the stuff they carry costs a bit more than some chain, because the service and quality of their operations more than makes up for it.  Some business are probably purely cost driven, and there, Walmart is likely to win, but for many others, service, local knowledge, and higher quality are things that can be used to effectively compete.

In terms of how they treat their people, Sam Walton writes that he realized they needed to take better care of them in order to provide better service, but I'm not as convinced about this point - there seems to be an awful lot of noise about how they aren't treated or paid that well.  Naturally, they're a huge company, so there's bound to be some saying that whatever the facts are, but my impression is that Walmart's overarching mission to have the lowest prices possible, wins out when push comes to shove.

That mission shines through in the book as being the #1 goal of the store; what really drives them.  They walk the walk, too - they don't spend on offices, they don't spend any more than they have to on flights, or hotels, or much of anything else where they can save money by packing in more people, going second class, or whatever else does the trick.

In the end though, while I still remain ambivalent about Walmart - I support their right to do business, but wouldn't necessarily shop there - it's an interesting story, and given the size and weight of the company, interesting to know about its origins.

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