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Chapter 17 Running a Successful Company: Ten Rules That Worked for Me
  "One thing you'll notice if you spend very much time talking with Sam about Wal-Mart's success. He'salways saying things like 'This was the key to the whole thing,' or That was our real secret.' He knows aswell as anyone that there wasn't any magic formula. A lot of different things made it work, and in oneday's time he may cite all of them as the 'key' or the 'secret.' What's amazing is that for almost fifty yearshe's managed to focus on all of them at onceall the time. That's his real secret."DAVID GLASSI think we've covered the story of how all my partners and associates and I over the years builtWal-Mart into what it is today. And in the telling, Ithink we've covered all the principles which resulted inthe company's amazing success. A whole lot has changed about the retailing business in the forty-sevenyears we've been in itincluding some of my theories. We've changed our minds about some significantthings along the way and adopted some new principlesparticularly about the concept of partnership in acorporation. But most of the values and the rules and the techniques we've relied on have stayed thesame the whole way. Some of them are such simple common-sense old favorites that they hardly seemworth mentioning.

This isn't the first time that I've been asked to come up with a list of rules for success, but itis the firsttime I've actually sat down and done it. I'm glad I did because it's been a revealing exercise for me. Thetruth is, David Glass is right. I do seem to have a couple of dozen things that I've singled out at one timeor another as the "key" to the whole thing. One I don't even have on my list is "work hard." If you don'tknow that already, or you're not willing to do it, you probably won't be going far enough to need my listanyway. And another I didn't include on the list is the idea of building a team. If you want to build anenterprise of any size at all, it almost goes without saying that you absolutely must create a team of peoplewho work together and give real meaning to that overused word "teamwork." To me, that's more thegoal of the whole thing, rather than some way to get there.

I believe in always having goals, and always setting them high. I can certainly tell you that the folks atWal-Mart have always had goals in front of them. In fact, we have sometimes built real scoreboards onthe stage at Saturday morning meetings.

One more thing. If you're really looking for my advice here, trying to get something serious out of thisexercise I put myself through, remember: these rules are not in any way intended to be the TenCommandments of Business. They are some rules that worked for me. But I always prided myself onbreaking everybody else's rules, and I always favored the mavericks who challenged my rules. I mayhave fought them all the way, but I respected them, and, in the end, I listened to them a lot more closelythan I did the pack who always agreed with everything I said. So pay special attention to Rule 10, and ifyou interpret it in the right spiritas it applies to youit could mean simply: Break All the Rules.

For what they're worth, here they are. Sam's Rules for Building a Business:

RULE 1: COMMIT to your business. Believe in it more than anybody else. I think I overcame everysingle one of my personal shortcomings by the sheer passion I brought to my work. I don't know if you'reborn with this kind of passion, or if you can learn it. But I do know you need it. If you love your work,you'll be out there every day trying to do it the best you possibly can, and pretty soon everybody aroundwill catch the passion from you like a fever.

RULE 2: SHARE your profits with all your associates, and treat them as partners. In turn, they will treatyou as a partner, and together you will all perform beyond your wildest expectations. Remain acorporation and retain control if you like, but behave as a servant leader in a partnership.

Encourage your associates to hold a stake in the company. Offer discounted stock, and grant themstock for their retirement. It's the single best thing we ever did.

RULE 3: MOTIVATE your partners. Money and ownership alone aren't enough. Constantly, day byday, think of new and more interesting ways to motivate and challenge your partners. Set high goals,encourage competition, and then keep score. Make bets with outrageous payoffs. If things get stale,cross-pollinate; have managers switch jobs with one another to stay challenged. Keep everybodyguessing as to what your next trick is going to be. Don't become too predictable.

RULE 4: COMMUNICATE everything you possibly can to your partners. The more they know, themore they'll understand. The more they understand, the more they'll care. Once they care, there's nostopping them. If you don't trust your associates to know what's going on, they'll know you don't reallyconsider them partners. Information is power, and the gain you get from empowering your associatesmore than offsets the risk of informing your competitors.

RULE 5: APPRECIATE everything your associates do for the business. A paycheck and a stock optionwill buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do forthem. We like to hear it often, and especially when we have done something we're really proud of.

Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They'reabsolutely freeand worth a fortune.

RULE 6: CELEBRATE your successes. Find some humor in your failures. Don't take yourself soseriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasmalways.

When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you.

Don't do a hula on Wall Street. It's been done. Think up your own stunt. All of this is more important,and more fun, than you think, and it really fools the competition. "Why should we take those cornballs atWal-Mart seriously"RULE 7: LISTEN to everyone in your company. And figure out ways to get them talking. The folks onthe front linesthe ones who actually talk to the customerare the only ones who really know what's goingon out there. You'd better find out what they know. This really is what total quality is all about. To pushresponsibility down in your organization, and to force good ideas to bubble up within it, youmust listen towhat your associates are trying to tell you.

RULE 8: EXCEED your customers' expectations. If you do, they'll come back over and over. Givethem what they wantand a little more. Let them know you appreciate them. Make good on all yourmistakes, and don't make excusesapologize. Stand behind everything you do. The two most importantwords I ever wrote were on that first Wal-Mart sign: "Satisfaction Guaranteed." They're still up there,and they have made all the difference.

RULE 9: CONTROL your expenses better than your competition. This is where you can always find thecompetitive advantage. For twenty-five years runninglong before Wal-Mart was known as the nation'slargest retailerwe ranked number one in our industry for the lowest ratio of expenses to sales. You canmake a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliantand still go out of business if you're too inefficient.

RULE 10: SWIM upstream. Go the other way. Ignore the conventional wisdom. If everybody else isdoing it one way, there's a good chance you can find your niche by going in exactly the oppositedirection. But be prepared for a lot of folks to wave you down and tell you you're headed the wrongway. I guess in all my years, what I heard more often than anything was: a town of less than 50,000population cannot support a discount store for very long.

Those are some pretty ordinary rules, some would say even simplistic. The hard part, the real challenge,is to constantly figure out ways to execute them. You can't just keep doing what works one time,because everything around you is always changing. To succeed, you have to stay out in front of thatchange.


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