Monday, August 25, 2008

Lessons from the Life of Sam Walton, Founder of Wal-Mart

Joke of the Week - “A merry heart doeth good like a medicine.” -Proverbs 17:22
As the Rabbi finished the day’s lesson at the Hebrew School, a boy raised his hand and then asked, “Rabbi, there is something I need to know.” “What’s that my child?” answered the Rabbi. “Well according to the Scriptures, the Children of Israel crossed the Red Sea, and the Children of Israel fought the Philistines, and the Children of Israel built the Temple, and the Children of Israel were always doing something important, right?” “All that is correct,” agreed the Rabbi. “So what's your question?” “What I need to know is this,” demanded the boy, “What were all the adults doing?”

Quote of the Week - "He that walketh with wise men shall be wise." -Proverbs 13:20
“I [Jesus Christ] am come that they might have life, and that they might have it more abundantly.” –John 10:10, King James Version

Lessons from the Life of Sam Walton, Founder of Wal-Mart

The following are quotes from Sam Walton taken from his autobiography, Sam Walton: Made in American

“The more you share profits with your associates—whether it’s in salaries or incentives or bonuses or stock discounts—the more profit will accrue to the company.”

“We have always paid our executives less than industry standards, sometimes too much less. But we’ve always rewarded them with stock bonuses and other incentives related directly to the performance of the company. It’s no coincidence that the company has done really well, and so have they.”

Becoming Debt Free
“From the time I took out my first bank loan—the $1,800 to buy that ice cream machine for the Ben Franklin [store] . . . I was never really comfortable with debt. . . By 1970, we had . . . thirty-two different stores . . . Helen and I were also in debt up to our eyeballs—several million dollars’ worth . . . but I wanted out of that debt in the worst way.” Sam Walton decided to take the company public to pay off debts. He wrote of the day of selling his first public offering of stock saying, “I experienced one of the greatest feelings of my life, knowing that all our debts were paid off. The Walton family only owned 61 percent of Wal-Mart after that day, but we were able to pay off all those bankers, and from that day on we haven’t borrowed one dime personally to support Wal-Mart. The company had rolled along on its own and financed itself.”

Continually Improving
I have always [been] somebody who wants to make things work well, then better, then the best they possibly can. . . I was never in anything for the short haul; I always wanted to build as fine a retailing organization as I could.”

“Like most other overnight successes, it was about twenty years in the making.”

“After we got the first three stores up and running, I knew it would work.”

“I have always gone to church and Sunday school every Sunday; it [is] an important part of my life. . . I was a Sunday school teacher for a while too.”

“We accumulated funds in Enterprises rather than throwing it all over the place to live high.”

Hard Work
“[As a boy], I’d get up early in the morning and milk the cows . . . and I’d deliver it after football practice in the afternoons. . . I also started selling magazine subscriptions, probably as young as seven or eight years old, and I had paper routes from the seventh grade all the way through college. I raised and sold rabbits and pigeons too . . . I learned from a very early age that it was important for us kids to help provide for the home, to be contributors rather than just takers. In the process, of course, we learned how much hard work it took to get your hands on a dollar, and that when you did it was worth something.”

Sam Walton was able to hire people who had the characteristics needed to build and manage the growing company. He would ask potential new hires if they and their families went to church. He also evaluated their personal finances saying, “If a fellow could manage his own finances, he would be more successful managing one of our stores.” He sought to hire those who had developed work ethic in their youth saying, “I’ve always preferred to hire people who had to . . . work their way through school.”

“My role has been to pick good people and give them the maximum authority and responsibility.”

“Exercising your ego in public is definitely not the way to build an effective organization. On person seeking glory doesn’t accomplish much.”

Lower Margin, Higher Volume
“I bought an item for 80 cents. I found that by pricing it at $1.00 I could sell three times more of it than by pricing it at $1.20. I might make only half the profit per item, but because I was selling three times as many, the overall profit was much greater. Simple enough. But this is really the essence of discounting.”

“I have concentrated all along on building the finest retailing company that we possibly could. Period. Creating a huge personal fortune was never particularly a goal of mine. . . We are committed to using our personal resources for as much benefit as possible—in the areas we feel need the most help, employing the methods we think hold the most promise. . . Those companies out there who aren’t thinking about the customer and focusing on the customers’ interest are just going to get lost . . . Those who get greedy are going to be left in the dust. [We] must adopt a philosophy of servant leadership.

Perspective on Money
“Money never has meant that much to me, not even in the sense of keeping score. If we had groceries, and a nice place to live, plenty of room to keep and feed my bird dogs, a place to hunt, a place to play tennis, and the means to get the kids a good education—that’s rich. . . We don’t need to buy a yacht. And thank goodness we never thought we had to go out and buy anything like an island. . . We just don’t have those kinds of needs or ambitions, which wreck a lot of companies when they get along in years. . . I just don’t believe a big showy lifestyle is appropriate. . . I have done everything I can to discourage our folks from getting too extravagant with their homes and their automobiles and their lifestyles. . . folks who just can’t hold back will go ahead and leave the company. . . It goes back to what I said about learning to value a dollar as a kid. I don’t think that big mansions and flashy cars are what the Wal-Mart culture is suppose to be about.”

Before Sam Walton founded Wal-Mart, he lost his first store, a Ben Franklin variety store, after 5 years of hard work his landlord took his business as a result of clauses in the rental agreement. Sam Walton wrote of the experience, “It was the low point of my business life. I felt sick to my stomach. I couldn’t believe it was happening to me. It really was a nightmare. I had built the best variety store in the whole region and worked hard in the community—done everything right—and now I was being kicked out of town. It didn’t seem fair. . . I’ve always thought of problems as challenges, and this one wasn’t any different. . . The challenge at hand was simple enough to figure out: I had to pick myself up and get on with it, do it all over again, only even better this time. . . I had a chance for a brand-new start, and this time I knew what I was doing.”

“Nobody wanted to gamble on the first Wal-Mart. I had to put up 95 percent of the dollars. . . We pledged houses and property, everything we had.”

Sharing Information
“Sharing information and responsibility is a key to any partnership. In our individual stores, we show them their store profits, their store’s purchases, their store’s sales, and their store’s markdowns. . . and I’m not talking about just the managers . . . We share that information with every associate, every hourly, every part-time employee in the store. . . Communicate everything you possibly can to your partners. The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. If you don’t trust your associates to know what’s going on, they’ll know you don’t really consider them partners.”

Tuesday, August 12, 2008

Columbus’ Mighty Prayer

Christopher Columbus had an inspired dream of crossing the ocean. He petitioned many people to find somebody to invest in this inspired dream. Finally, after 20 years, Queen Isabella and King Ferdinand agreed to support his venture. Columbus wrote of his struggle, “Our Lord unlocked my mind, sent me upon the sea, and gave me fire for the deed. Those who heard of my [adventurous enterprise] called it foolish, mocked me, and laughed. But who can doubt but that the Holy Ghost inspired me?” (Jacob Wassermann, Columbus, Don Quixote of the Seas, (Boston: Little, Brown and Co., 1930) p. 19–20)

On the evening of August 3, 1492, Columbus left from Spain with three ships, the NiƱa, Pinta, and Santa Maria. On October 10, 1492, 68 days after leaving Spain, Columbus’ crew began to lose hope of ever reaching their destination. The crew expressed fear that the nearly continuous winds blowing from east to west might make it impossible to return home. Frightened that they would die at sea, his officers and crew demanded that they turn back and return to Spain. Columbus could only answer that God had given them the weather to take them this far, and He would give them proper weather to get back home. Unconvinced that the matter should be left entirely in God’s hands, Columbus’ crew threatened to kill him if he did not consent to their request. Columbus urged them to reconsider and proposed a compromise. Columbus suggested that if land was not found after two more days, they would turn back. The officers and crew accepted the compromise. That night in his cabin, Columbus, “prayed mightily to the Lord.” (Words written by Columbus in his ship log, October 11, 1492; Bill Halamandaris, The Heart of America: Ten Core Values That Make Our Country Great, Deerfield Beach, FL: Health Communications, Inc., 2004) p. 30)

On October 11, they spotted land birds and other signs of nearing land and at 2 a.m. “. . . on October 12th, with the Pinta sailing ahead, the weather cleared. In the moonlight one of the sailors on the Pinta, Juan Rodriquez Bermejo, saw a white sand beach and land beyond it. After his shout of ‘Land! Land!’ the Pinta’s crew raised a flag on its highest mast and fired a cannon.”(William D. Phillips, Jr. and Carla Rahn Phillips, The Worlds of Christopher Columbus, (New York: Cambridge University Press, 1992) p. 152–153) They had arrived at an island which Columbus called San Salvador (holy Savior), which today is an island in the Bahamas. Columbus wrote of naming the island, “I named the first of these islands San Salvador, thus bestowing upon it the name of our holy Saviour under whose protection I made the discovery.” Columbus had achieved his inspired dream of sailing the Atlantic and the world was changed forever because one man refused to quit. Columbus wrote of his journey, “God gave me the faith, and afterwards the courage so that I was quite willing to undertake the journey.” Columbus achieved a grand victory because he had the courage to press forward when all others had lost faith.