• The First Information-Age CEO?

  • The tremendous growth of Wal-Mart can be attributed to more than store location and Moon Pies. In fact, a key part of the Wal-Mart story is how the company won the information technology race. Although he needed some convincing at first, Walton soon grasped the importance of harnessing information technology in order to cut costs [...]

  • A Key to Double-Digit Growth: Stay Product-Driven

  • While store location and low prices were part of Walton’s model, so too was the concept of merchandising. Deep down, Sam Walton thought of himself as a merchant first. "In Wal-Mart stores they don’t want many brands," explains Philip Kotler, confirming Walton’s strong instincts for merchandising. "Basically, Wal-Mart features only a few brands, where they [...]

  • Walton’s Small-Town Strategy

  • One of the critical ingredients in Wal-Mart’s success was Walton’s selection of store locations. Walton made the decision to place Wal-Marts in small-town America, even in places where the population appeared to be too small to support the store. Other large discounters, such as Kmart, believed that a trade territory of 50,000 people was the [...]

  • Faithful to the Vision: Lowest Prices

  • Walton received early confirmation that he had a winning formula: It soon became clear that customer loyalty to a given retailer was mostly fiction. Customers would shop almost anywhere if the prices were lower. An amusing episode at the time of the opening of the second Wal-Mart store confirmed the wisdom of Walton’s new approach. [...]

  • Innovate, Experiment, Create Anarchy

  • As stated earlier, Walton founded Wal-Mart not out of some grand vision of reinventing the retailing world, but to avoid being run over by a new breed of competitor. Although Walton had never operated a "pure" discount store before founding Wal-Mart, he had learned many lessons about how the game was played, including the paradoxical [...]

  • A Pioneer of the Learning Culture

  • Sam Walton got into retailing by accident. Upon graduating from college, he started as a J. C. Penney management trainee at $75 per month. Later, he borrowed the money he needed to open his first store: a Ben Franklin 5-and-10 franchise in Newport, Arkansas. One of his competitors there was Sterling, a store that was [...]

  • What Would Sam Walton Do?

  • There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else. —SAM WALTON Most everything I’ve done I’ve copied from someone else. —SAM WALTON What Would Sam Walton Do? In the seat of the CEO: You are the founder [...]

  • Kelleher’s Steps to a High-Performance Culture

  • When asked in 2002 what advice he would give to other companies attempting to instill the "Kelleher spirit" into their own organizations, the Southwest founder took the question very seriously. His response (sent in written form to this author) is nothing less than a culture-enhancing blueprint for other managers and organizations to emulate. It is [...]

  • Limit Structure to Four Management Layers

  • How does structure fit into Kelleher’s vision of a large company with a small-company spirit? Obviously, it isn’t enough just to hire the right people, give them profit sharing, and have them crack jokes or pop out of overhead bins. In order to make sure that decision making does not get bogged down, the Southwest [...]

  • Kelleher on Compensation: Pay Executives Less and Employees More

  • Southwest has achieved some extraordinary things in the area of employee relationships. Its pilots, for example, agreed to freeze their salaries for 5 years, taking their chances with stock options instead. When another employee group, which had effectively voted itself out of a union a few years earlier, began feeling vulnerable, Kelleher responded by issuing [...]

  • Kelleher on a Leadership Culture

  • Kelleher feels strongly about his two primary constituencies—employees and customers. In correspondence (at least with this author), Kelleher uses a capital C and a capital E when writing about Customers and Employees. This CEO is serious about putting these two groups in a class by themselves. To Kelleher, culture means taking care of the people [...]

  • Kelleher on Profit: "A By-Product of Customer Service"

  • Southwest is a company that is rich in paradox—a large company with a small-company spirit. What does that mean? While many companies take themselves very seriously, Kelleher is saying that it’s perfectly acceptable to lighten up, even when you’re working—no, Kelleher would say, especially when you’re working. Kelleher believes that CEOs need to spend more [...]

  • Hire for Culture

  • All of Southwest’s corporate policies and practices send a consistent message: "We are a serious airline and a formidable competitor, but we will have fun while earning a profit." From their very first interviews, prospective employees are immersed in the company’s off beat behavior. In some interviews, for example, groups of pilots are asked to [...]

  • Kelleher on Culture: An Irreplaceable Asset

  • thwest has defied the conventional wisdom on everything from its pricing structure to its no-assigned-seats policy. But this remarkable carrier—the only major airline that has never had a money-losing year—has garnered its greatest accolades for its unique corporate culture. Its employees are incredibly loyal, and they have described the atmosphere of Southwest as more akin [...]

  • What Would Herb Kelleher Do?

  • The rule at Southwest is, if somebody has an idea, you read it quickly and you respond instantaneously. You may say no, but you give a lot of reasons why you’re saying no, or you may say we’re going to experiment with it in the field, see if it works. —HERB KELLEHER, Founder and former [...]

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