Playbooks

1. Expect to win

Sam Walton got used to winning as an undefeated high school football champion. He carried this through the rest of life and always set nearly unreachable goals... then did the impossible to reach them!

Sam: "I think Kmart or whatever competition we were facing just became Jeff City High School, the team we played for the state championship in 1935. It never occurred to me that I might lose. It was almost as if I had a right to win thinking like that often seems to turn into sort of a self-fulfilling prophecy."

2. Shop the competition

Sam Walton believes he spent more time in Kmart stores than Kmart management itself, exploring his enemy from within. He always had his yellow legal pad, taking notes on everything they were doing right. He had an intense focus on learning what the competition was doing and stealing the best ideas.

While often founders may deride and downplay their competition, focusing on what they’re doing wrong, Sam was ruthless in stealing and adopting everything they were doing right.

3. Surf the discounting wave

Sam Walton created the idea of the mass-market discount store, which is so ubiquitous today... we can't imagine life before it! His creation had two major components:

1. Selling items at extremely low margin and relying on volume to make up for it, and
2. Selling *some* items as zero or negative margin to entice people to come into the store, while making profit elsewhere.
   

It was a completely new concept in the 60's, and today "discounters" represents over 87% of all retail!

If there is a wave you see coming in a technology, industry, or customer behavior, grab a surf board :)

4. Don’t buy anyone else's inefficiency

Of the retail trifecta, "Price, selection, convenience", price really, really matters in retail. Especially in the rural US in the 1960s and 70s. And to win on price, a business must stay extremely close to its suppliers, relentlessly negotiating low prices, even if it means a contentious relationship with them. 

5. Sometimes (but rarely), your ambition is SO vast you need more in-house core competencies than you think

When Walmart started, they didn't imagine they'd need to build their own logistics and distribution network in house. This was something Sam's inner future Bezos believed they could outsource.

But ultimately Walmart’s logistics infrastructure turned out to be a key competitive differentiator that helped keep their prices "always low, always". They even went on to discover they needed to build their own $24m private satellite network! 🛰

Links

• Walmart’s 1972 Annual Report

Carve Outs

• Ted Weschler on the Nebraska Furniture Mart podcast!!!
• Mario Puzo’s The Godfather (the book)