Simplicity – Lessons from Sam Walton’s Made In America
Keep it simple! Personal development takeaways on simplicity from Sam Walton, the founder of Walmart, in his book, Made in America, right after this…
Simplicity discussed in Tim Ferriss’s podcast interview of Leo Babauta
Hey everyone and welcome back to my YouTube channel. This is Yoel Farkas, so glad to have you. We are doing a lesson in simplicity that we can learn from Sam Walton, the founder of Walmart, the famed superstore, in his unbelievably fantastic book called Made in America. And the reason why I wanted to do this video on simplicity is because there are so many different points in Walton’s book where he discusses the idea. And interestingly enough, I was watching or listening to a podcast of Tim Ferriss. He was interviewing a fellow by the name of Leo Babauta who had a website Zen habits or has a website ZenHabits.com. And Ferriss asked him what his most popular blog posts were about. That’s blog posts getting an average of 2 million visits a day or a month. I don’t remember the exact numbers but he’s getting a lot of traffic to his website probably still is, and Babauta answered Ferriss to say that the number one interest that was generated from his blog posts was when he talked about the idea of simplicity. So I put two and two together, I heard that in the podcast, I saw the theme of simplicity coming up over and over again in Waltons book Made in America, and I thought, why not discuss it?
Why simplicity resonates
And by the way about Babauta answers why he thinks that simplicity resonates so much for people. It makes sense in today’s day and age, with our cell phones and computers, and you’ve got Facebook and Twitter and Instagram, and the phone is ringing and emails buzzing and WhatsApp and all sorts of things going all day, people want to get back to their roots, they want to keep things simple. They want more simple ways of applying personal development takeaways, or improving themselves in a simple way. So I thought it was very appropriate to discuss the idea of simplicity.
Walmart executive’s simple belief in Walton and Walmart made him a rich man
So let’s jump right into it. I may be referring to some notes, here and there. So if I look down from the screen, that’s what I’m doing. And I’m going to do that right now. So the first takeaway on simplicity that I got from Walton’s book is where there’s an interview of a Walmart executive. And what he says is that he simply believed in Walmart, and in Walton. And what’s interesting to that is that this executive, he could have looked at what Wall Street analysts were saying, especially throughout the 60s and the 70s. Walton talks a lot about the fact that a lot of naysayers within the investment world and by the way, he doesn’t begrudge them for it, he says a lot of what they said, made sense in a logical perspective. It goes to show you how much logic isn’t always the right answer. But from a logical standpoint, there were reasons to be doubtful of Walmart being successful. But the fact of the matter is that Walton had a vision for the company, which he was implementing, which had to do with customer satisfaction, lowest prices guaranteed. And this executive is quoted as saying that he believed in Walton, and he believed in what Walmart was doing. And that belief and that simple belief paid off because this executive was able to have a long lasting career with Walmart and to retire with very generous stock options that he was able to exercise. It doesn’t say in the book, but probably to make him a very wealthy man with the stock shares that he held of Walmart. Okay, so this executive himself uses the word simplicity and says it was very simple. I relied on Walton and I relied on Walmart. So sometimes we can get bogged down with over analyzing things are looking at outside opinions, that could be complicated based on all sorts of analysis or data and reports, etc. But really, when it boils down to it, if you take a simple approach to looking at what is your core belief, what is the core belief of the founder of a company is such as was the case in the case of Sam Walton and Walmart, that simplicity ended up paying off very handsomely for this executive.
Simple arithmetic spurs an IPO for Walmart (Initial Public Offering)
The next part of the book where simplicity makes an appearance is where Walton talks about the idea of going public. Okay, he said that he was very resistant to taking Walmart public in the beginning, especially because the Waltons are a very private family. And when you go public, you expose all your books and everything gets exposed to the public, everything is public information. Well, Walton said what did it for him was a very simple decision. He needed the money, period. Okay, now going public ended up being the best thing that ever happened to Walmart. Well, arguably the best thing that ever happened to Walmart, because the company jumped from a company that was worth whatever it was several million dollars to literally over a billion, seemingly overnight – may not have been literally overnight, but by going public, it ended up becoming a hugely, enormously successful company because they were able, they were able to take those public funds and start investing it over and over to the company to the point where they grew it to the largest, arguably the largest company or the largest discount store of its kind. And that all stemmed again, from what Walton describes as a very simple equation, we need money. Let’s go public. Okay, obviously, there are other considerations that went into it, other factors, etc., etc. And I’m not suggesting that it was a decision that happened overnight. But the point is, is that when Walton describes that he talks about the fact that it came down to a simple decision as to whether or not the company needed the funds, and how to best go about getting those funds, which was to go public. So that’s the second takeaway from simplicity that we have here in Sam Walton’s book Made in America.
Simple formula for expansion of Walmart
The next part of the book that discusses simplicity is where Walton is talking about their formula for expansion. Okay, so we have an idea of raising funds, which was in a simple way to go public, but then the idea of actually implementing expanding the company, and Walton says was very simple. Again, he uses the term simple, we knew we had the funds, we knew we could expand it all into all sorts of different parts of the world. And that was what we were going to do. And that is what we did. So again, the decision to expand was a simple one, implementing putting the processes into place, as I’m going to talk about later on, that involves some hard work and decision making. But again, getting down to the actual core value, what is it that we’re trying to achieve, i.e. expansion, Walton said, it was simple, that was something that we had to do in order to keep keep our market share and to keep expanding.
Keep it simple, and don’t overcomplicate the business, says Walmart C.E.O.
Moving along into simplicity, the CEO of Walmart, David Glass at the time, not sure if he still is the CEO, but the CEO at the time, David Glass, he actually talks specifically about the idea of not complicating businesses and keeping things simple. Because a lot of times people get into reports and data, as I talked about earlier, get into reports and data as my cat Rosey jumps across the screen. And they get into all that, and they overcomplicate things to the point where they get into “analysis paralysis”, and nothing gets done. Okay. But what David glass says is that in the case of Walmart, it actually was a very simple decision, which was what think like a customer, what is it that the customer wants to see? And what Walmart well, Walton, knew from the beginning, and what they determined was that they very simply wanted to see customer, the customers want to be satisfied, they want to know they can return a product if it’s not good, and they want to know they’re going to get the best prices, and that the store is going to have what they want in stock, okay, which Walmart talks a lot about how they establish their distribution systems, etc. Okay, but now it came down to very simple minded calculation of what is it that the customer wants, and by keeping to that simple, that simple goal and that simple view of what it is that the store is trying to accomplish, ie pleasing the customer, Walmart was able to become what it became.
Simple concept leads to the creation of Sam’s Club
Another point in the book that talks about simplicity is with the concept of Sam’s Club. So Sam’s Club is like a type of wholesaler, it wasn’t literally a wholesaler, but giving wholesale prices, sort of like the same idea as Price Club, which was a big competitor, and Costco, giving wholesale prices by buying in bulk. And again, Sam Walton refers to it as a very simple concept. Okay, the concept was simply, people are going to want to buy a lot of product, we can give it to them at a very low price, we can match and even do better than our competitors based on the leverage we have from how big Walmart is to begin with. Let’s start a competitor called Sam’s Club and it will be successful. And boy, were they right on that decision, Sam’s Club ended up being a huge boon for the company. So again, simplicity, showing up in the concept of exercising a simple idea. It’s a very successful enterprise that is Sam’s Club.
Sometimes it’s hard to be simple!
Next, Walton talks about how he built up Walmart, and he says that Walmart built up a very simple company. Okay, but he says that it came through very hard work to implement that, that simplicity. So I talked about before, when I say there’s simplicity, don’t mistake that for saying that it doesn’t take hard work. Of course, it takes hard work, it takes systems to put the simplicity into place. But the very, like I said, the very foundation of where everything is being built off of is a simple idea of what it is that the company wants to achieve. Okay, so simplicity, the point I’m making here is that simplicity does come at the price of doing things properly, putting in the hard work to make the simplicity, you know, to meet the vision of simplicity actualize. Okay, and that reminds me of a quote from Leonardo da Vinci, the famous quote, which is that simplicity is the ultimate sophistication. So just because something is simple, doesn’t mean it’s sophisticated. It’s very interesting as well, Apple, the genius Steve Jobs who started Apple, in his advertising campaign in the 70s, he actually adopted that famous expression of Leonardo Da Vinci who said simplicity is the purest form of sophistication. And Steve Jobs’ case, what he was doing, was making the iPhone as simple and user friendly as possible. What is it that a user would need in order to best operate the iPhone in the simplest way, and that was a very sophisticated way of doing it and building it out and they would do version after version after version. And then it became iPhone two and three and four and five, etc. etc. Okay, so just to make the point that simplicity is the very foundation, it’s the core. But building that out takes a lot of sophistication and a lot of hard work.
Simple but revolutionary ideas implemented by Walmart
The next point that is very interesting in terms of simplicity that Sam Walton talks about, is when they decided to give department heads the autonomy to determine what inventory a specific Walmart store would need and whether or not to restock that product at a certain time, when, how etc. He put autonomy in the hands of the department store heads. And that was a very revolutionary concept, because at the time, these decisions were being made only by upper executives within the chain of command within a store. But Walmart put those decisions within the hands of the actual store department. And again, Sam Walmart refers to that as being very simple. He calls it a store within a store, it was a very simple concept. Okay, so again, you see that you see Sam Walton as being very faithful to his concept of always keeping things simple, implementing it in the right way, in a sophisticated way. But the idea itself, a simple one, give the department head that autonomy, and you’re going see that department head really thrive. And here goes my cat, Rosie again, excuse me one second. Love her, but she’s getting in the way of the video.
Simple investment strategy – invest in Walmart!
Okay, moving along within Made in America, in terms of simplicity, Walton talks about the idea of investment strategies that Walmart used which were simple, which was when they, as the company continued to grow, he just reinvested it in the company never sold off stock or anything like that. Because it is very simplistic strategy to investment and to building up his company. So again, and I know this may sound repetitive, but if it is, I really want to get this ingrained in our subconscious. And the whole concept of simplicity. And well, Walton himself keeps using this idea over and over again, he himself repeats the idea of simplicity. Okay, so the point was that he took a very simplistic approach to investment, you know, he doesn’t have to diversify into real estate. I’m not saying that’s never the right idea, it really depends on the company. But for what Walmart was, which was a simple company, offering a simple solution. For customers, the investment strategy was simple to, and that paid off as well for Walmart.
Simple rules for business success
Finally, towards the end of the book, Walton said that if he was asked to give rules for how to succeed in business, he would drill them down to 10. And he goes through the different rules, and you should check out the book to see what what Walton has to say about that. And I’m going to do future videos, there’s so much to talk about in terms of personal development takeaways from what Walton teaches us in his book Made in America. But what he says as he sums up the 10 rules that he gives is that it’s simplistic. These are all rules that may sound intuitive, they may sound obvious. And indeed they are, these are simple rules. But the point is to implement them and implementing them in the way that Walmart did was anything but simple. But again, the core foundation of what Walmart was offering in terms of, you know, the takeaways that Walton teaches us for what he did to succeed in business and what he thinks that anybody who’s looking to succeed in business should do is very simple. Okay, ideas, such as making sure you get the lowest price for the customer, again, within the context of discounting, you know, that’s a whole other discussion, abundance mentality. I’m not suggesting that everybody in business should always look to give the cheapest, a lot of times you should not be doing that you should be doing things at a high ticket level, you should be offering things at a premium, it really depends on what you’re doing and the service you’re in and the business you’re in. But the point is for Walton, that was what he had to do. And all these sort of business rules that Walton talks about. He sums them up by saying, simple, they’re all simplistic.
So that’s a that’s a nice summary of the idea of simplicity that we can learn from Sam Walton in his unbelievable book Made in America. There’s a reason why it was a best seller. There’s a reason why Walton was what he was, I think at one point, he was actually the world’s richest man. And clearly what we can learn from that is that even if you can be the wealthiest person in the world and have the biggest store in the world, you got a store like Walmart, you can still do it based on very simple concepts, and sticking to your simple outlook of what it is that you’re trying to achieve. Thanks so much for joining, and we’ll see you in the next video.
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