
Lessons from Wal-Mart
There is little question that the greatest retailer of our lifetime has been Wal-Mart. Founded in 1962, the company has grown to be the largest, most profitable retailer in the world. It’s also now the largest private-sector employer in the United States.
Financial services companies can learn a lot from the Wal-Mart phenomenon. Unfortunately, I don’t believe many haveu00e2u20ac”particularly the larger institutions, though they should. Here are some key lessons to be learned from the company’s dizzying success:
Lesson #1: Visit your stores and listen to your employees. Sam Walton visited his stores constantly; so did the managers who reported to him. Since Walton’s death, this practice has continued, although the process has necessarily become more decentralized as the company has kept growing.
Visiting stores and talking to front-line employees enables senior management to better understand what is really happening in the local marketplace. It also forces senior management to “de-average” key aggregate measures such as sales and margins, in order to get a feel for the real numbers.
How often does your company’s senior management visit your stores and talk with the employees? I’m not talking about a quick drive-by, by the way, but rather a serious, extended visit.
Lesson #2: Think small. Sam Walton said, “The bigger Wal-Mart gets, the more essential it is that we think small.” How does a big company think small? Well, Sam had a list:
- Think one store at a time.
- Communicate, communicate, communicate!
- Keep your ear to the ground.
- Push responsibility and authority down.
- Force ideas to bubble up.
- Stay lean and fight bureaucracy.
In my opinion, the biggest mistakes large banks make today in retail banking is that they have overcentralized as they have grown and have forgotten how to think small. Ask yourself: How does our organization measure up against Sam Walton’s six steps to think small?
Lesson #3: Make shopping fun. Observers of Wal-Mart have actually coined a phrase for it: “Retail-tainment.” Wal-Mart works with its vendors, such as Disney, to provide unique displays, promotions, and events that help make the shopping experience at Wal-Mart fun.
This approach has not been used much by retail financial services providers. Admittedly, shopping for a financial services product is different from shopping for a sweateru00e2u20ac”but not totally. Some banks have found success, for instance, by developing an area for kids to be entertained in while their parents discuss complicated financial transactions. What is your organization doing to make the delivery of financial services fun for your customers?
Lesson #4: Shop the competition. “Sam never went by a K-Mart that he didn’t stop and look at,” said Sam’s wife, Helen Walton. He did so for two reasons: First, he wanted to know exactly what the competition was doing on a store-by-store basis. Second, he was never too proud to steal an idea from the competition, and improve upon it.
How often do you or your top managers shop your competition? What was the last good idea that your company has employed that had its genesis with a competitor?
Lesson #5: Swim upstream. Sam Walton said, “Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction. Be prepared for a lot of folks to wave you down and tell you you’re headed the wrong way.”
Historically, financial services executives have not followed this advice. When was the last time your company chose to swim upstream?
Lesson #6: Run your business, and avoid Wall Street. I think financial services executives spend too much time on the road telling their stories to large groups of investors, in hopes of raising their companies’ price/earnings multiples. A more targeted approach would be a much better use of management’s time.
Sam Walton once said, “I don’t think any amount of public relations experts or speeches in New York or Boston means a damn thing to the value of the stock over the long haul.”
Frankly, I agree. How much time is your management spending with nonowners or investors who are simply “renting” your stock for short periods of time?
For mid-size and large financial institutions, Wal-Mart is a great example from which to learn. Little knowledge has been transferred from retailing to date, but it’s not too late!

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