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Sam Walton’s Lasting Legacy

Posted by Bob Flynn on July 10, 2017
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What is Sam Walton’s legacy?  His autobiography Sam Walton Made in America tells the remarkable story of Walmart’s ascent to the largest retail discounter in the country.  Published in 1993, it was released a year after Mr. Walton passed away.

Ignoring the effects of dividends, Walmart’s stock is up ~833% between July 1993 and July 2017 vs. 528% for the S&P 500.  But if we measure its performance a decade after Mr. Walton’s passing, the performance is weaker.  Ignoring the effects of dividends, shares of Walmart are up 174% between July 2003 and July 2017 vs. 244% for the S&P 500.  Has the culture or the competitive position of the company eroded?
If Walmart’s best days are behind it as indicated by its stock price performance over the last 14 years, what is the lasting impact of Mr. Walton’s contributions?  Plenty.
It is full of practical lessons about leading by example and by not asking employees to do things that an executive is unwilling to do.  In fact, Sam Walton ran weekly Saturday morning meetings at 7:30am out of Walmart’s Bentonville headquarters.  The environment has been described as part evangelical revival, part Oscars, part Broadway show.  This meeting became central to Walmart’s culture.
It was a place where everything was up for discussion, where Walton would openly praise or criticize executives, where high performing associates from around the country would be flown in and praised.  It was also a decision making meeting where decisions about merchandising were made in the morning and implemented nationally by noon.  Finally, it was a place where those working out of the executive headquarters were reminded of the business they were in.  As Walton said, “(i)f you don’t want to work weekends, you shouldn’t be in retail.”  How can an executive ask Walmart associates to stock shelves on a Saturday morning while an executive golfs?
Of the many lasting lessons I’ve learned from Mr. Walton, the primacy of culture in a people business is number one.  But along with this primacy, Walmart’s performance over the last decade has taught me something about the fragility of culture.
In 2008 the Saturday morning meeting was reduced to once a month.  In 2014 CEO Doug McMillon made this now monthly meeting optional.  You see where this is going.  The frequency and importance of the Saturday morning meeting, and Walmart’s performance as measured by its stock price has eroded.  I can’t definitively tell you that the two are related, but let me ask you: do you think they are connected?
Bob Flynn, July 2017

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