I’ve already gushed about Bill Marquard’s business strategy book, WAL-SMART. In the book, this former Wal-Mart executive explains because of Wal-Mart’s unbridled success, this mega-retailer has forever changed the game of business from sourcing to distribution to pricing to inventory methods to merchandising. It’s now up to companies today (and tomorrow) to deal with doing business in the world that Wal-Mart has created and redefined.
Since Marquard spent time at Wal-Mart in the late 90s responsible for developing the company’s strategic planning processes, he has a very unique understanding of the company’s DNA. In the book, Marquard shares five key cultural underpinnings that make Wal-Mart the company it is. (Good stuff!)
1. FOCUS
“No firm of Wal-Mart’s scale has ever applied the energies of so many people to so narrowly defined a project: discount merchandising. Unlike other large firms, Wal-Mart executes a single-business strategy and executes it across four store formats [Wal-Mart, Wal-Mart Supercenter, Sam’s Club, and Wal-Mart Neighborhood Market]. It doesn’t confuse people by launching many strategies for many businesses. Other companies hoping to succeed in the Wal-Mart economy need to develop the same genetic compulsion.” (WAL-SMART, pg. 91)
2. CORRECTION OF ERRORS
“Wal-Mart’s correction-of-errors philosophy stands in stark contrast to the habits of most corporate cultures. Correction of errors isn’t aimed at placing blame. Correction of errors focuses on the problem, not the person. Correction of errors is all about identifying ways to improve customer experiences, merchandise, processes, cost structure, and the company from within—before competitors beat Wal-Mart to it.” (pg. 92)
3. CONSTRUCTIVE PARANOIA
“This is an intentional attitude to avoid smugness and complacency. As remarkable as it seems in such a successful organization, the assumption by people at Wal-Mart is that the monster of defeat lurks just around the corner. They have good reason to make this assumption, or course. In the world today, the durability of competitive advantage is measured in months, not years. If no outside challenge shakes the complacency of Wal-Mart managers, DNA dictates that the company create its own constructive paranoia.” (pgs. 95-96)
4. THRIFT
“Frugality was one of the most enduring and unmistakable imprints Sam Walton left on Wal-Mart. The most important way that Wal-Mart perpetuates this gene is by modeling thrift from the top. In the home office, employees buy their own coffee and use both sides of sheets of paper. On the road, employees bunk two to a room. They stay in budget hotels with free breakfast buffets, not luxury accommodations. The company, not the employee, keeps frequent-flyer miles.” (pgs. 97-98)
5. A "WE CAN MAKE IT BETTER" ATTITUDE
“Whereas correction of errors focuses on Wal-Mart’s own internal performance improvement, ‘we can make it better’ focuses on other companies’ ideas—that is, imitating them and going one better. Like other companies, Wal-Mart has often succeeded through a fast-follower strategy. Believe it or not, Wal-Mart has never actually created a new store concept. It followed Kmart into discount stores, Price Club into warehouse club stores, Meijer and Carrefour into supercenters, and combo supermarket and drug stores everywhere into Neighborhood Markets. It did them all one better.
Sure, Wal-Mart innovates, too. But deep in its DNA are genetic instructions to borrow the best of everything elsewhere.” (pg. 100)
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