Bertrand Russell’s Ten Commandments of Honest Thought and Discourse

The celebrated British mathematician, logician, and political activist Bertrand Russell (1872–1970) is one of the most widely read philosophers of the 20th century.

As a lifelong patron of lost causes, Russell published an essay titled “The best answer to fanaticism: Liberalism” in the 16-December-1951 issue of The New York Times. In this essay, he supported liberalism—the political philosophy founded on the importance of human individuality and equality, and a restraint of the stern grip of law and authority.

A tireless champion of morality and reason that he was, Russell wrote in this essay, “the essence of the liberal outlook is a belief that men should be free to question anything if they can support their questioning by solid arguments.”

Bertrand Russell's Ten Commandments of Honest Thought and Discourse

Bertrand Russell’s Decalogue of Critical Thinking

Beyond political philosophy and classical liberalism, this essay is famous for Russell’s vision for honest thought and discourse. Here is that thought-provoking list in full form—worth reading and practicing.

Perhaps the essence of the Liberal outlook could be summed up in a new decalogue, not intended to replace the old one but only to supplement it. The Ten Commandments that, as a teacher, I should wish to promulgate, might be set forth as follows:

  1. Do not feel absolutely certain of anything.
  2. Do not think it worthwhile to produce belief by concealing evidence, for the evidence is sure to come to light.
  3. Never try to discourage thinking, for you are sure to succeed.
  4. When you meet with opposition, even if it should be from your husband or your children, endeavor to overcome it by argument and not by authority, for a victory dependent upon authority is unreal and illusory.
  5. Have no respect for the authority of others, for there are always contrary authorities to be found.
  6. Do not use power to suppress opinions you think pernicious, for if you do the opinions will suppress you.
  7. Do not fear to be eccentric in opinion, for every opinion now accepted was once eccentric.
  8. Find more pleasure in intelligent dissent than in passive agreement, for, if you value intelligence as you should, the former implies a deeper agreement than the latter.
  9. Be scrupulously truthful, even when truth is inconvenient, for it is more inconvenient when you try to conceal it.
  10. Do not feel envious of the happiness of those who live in a fool’s paradise, for only a fool will think that it is happiness.

Competition Can Push You to Achieve Greater Results

“A Great Rival is Like a Mirror”

The competition between American tennis stars Pete Sampras and Andre Agassi became the dominant rivalry in tennis during the ’90s. With their remarkably different styles and temperaments, the two produced a great number of remarkable games. Between 1989 and 2002, Sampras won 20 of their 34 head-to-head matches, of which Sampras won four of the five Grand Slam finals they played. Sampras also held the world No. 1 spot for a record 286 weeks whereas Agassi held it for 101 weeks.

'Open: An Autobiography' by Andre Agassi (ISBN 0307388409) Asked how his rivalries helped and hurt him in the October 2015 issue of Harvard Business Review, Agassi (who is married to tennis legend Steffi Graf) recollected:

A great rival is like a mirror. You have to look at yourself, acknowledge where you fall short, make adjustments, and nurture the areas where you overachieve. There were times my rivals brought out the best in me; there were times they brought out the worst. They probably helped me win things I never would have otherwise; they also cost me titles. I don’t know how you quantify what it would have been like without a rival like Pete Sampras. I would have won more. But I think I would have been worse without him.

Idea for Impact: The risk of being outdone by a closely matched rival can push you further

A certain amount of competition can be helpful when it motivates you and doesn’t result in stress or hurt your personal relationships.

Push yourself past the familiarity and safety of your comfort zone by pursuing some healthy competition. Leaving your comfort zone helps you grow, transform, and feel stronger from the experience.

Lessons from Charlie Munger: Destroy Your Previous Ideas & Reexamine Your Convictions

Warren Buffett and Charlie Munger at Berkshire Hathaway's 2016 Annual Meeting (Screenshot from Yahoo! Finance webcast)

Reexamine your deep-rooted ideas

Here is one of the many nuggets of wisdom from the 2016 Berkshire Hathaway Annual Meeting. At the 4:39:39 mark in the meeting’s webcast by Yahoo! Finance, Warren Buffett and Charlie Munger discuss an effective strategy for persuasion and argumentation:

Charlie Munger: We try and avoid the worst anchoring effect which is always your previous conclusion. We really try and destroy our previous ideas.

Warren Buffett: Charlie says that if you disagree with somebody, you want to be able to state their case better than they can.

Charlie Munger: Absolutely.

Warren Buffett: And at that point you’ve earned the right to disagree with them.

Charlie Munger: Otherwise you should keep quiet. It would do wonders for our politics if everybody followed my system.

Actively seek counterarguments to consolidate your arguments

Munger’s advice comports with the following wisdom on using critique for reasoned judgments and critical thinking:

  • 'A Rulebook for Arguments' by Anthony Weston (ISBN 0872209547) Professor Anthony Weston, a contemporary exponent of critical thinking, wrote in his Rulebook for Arguments, “If you can’t imagine how anyone could hold the view you are attacking, you just don’t understand it yet.”
  • The great Roman philosopher and orator Cicero wrote in his influential work De Oratore (55 BCE, Eng. trans. On the Orator,) “The man who can hold forth on every matter under debate in two contradictory ways of pleading, or can argue for and against every proposition that can be laid down—such a man is the true, the complete, and the only orator.” [See my previous article on how to argue like the Wright brothers.]
  • Advocating observable evidence and rational investigation, the great English natural philosopher Francis Bacon wrote in his Novum Organum (1620,) “The human understanding when it has once adopted an opinion draws all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it either neglects and despises, or else-by some distinction sets aside and rejects, in order that by this great and pernicious predetermination the authority of its former conclusion may remain inviolate.”

You cannot effectively argue for your side if you don’t comprehend the arguments of the other

'Poor Charlie's Almanack' by Charlie Munger (ISBN 1578645018) Once a belief is added to your collection of viewpoints, you indulge in “intellectual censorship”—you instinctively and unconsciously protect and defend it. You cling to your beliefs instead of objectively reassessing and questioning them. Moreover, owing to confirmation bias, you seek narratives that convey to you what you want to hear, substantiate your beliefs, and entitle you to continue to feel as you already do.

An important constituent of critical thinking is taking your beliefs and opinions apart methodically, analyzing each part, assessing it for soundness by means of arguments and counterarguments, and then improving it.

When you stop arguing against an opposite perspective and try arguing for it, that is to say when you can switch your point of view briefly, you will witness a profound shift in your thinking. Your own convictions may look different when seen from the opposite perspective. Justifying the counterarguments can help you reinforce your own beliefs and attitudes.

Idea for Impact: Only when your deep-rooted convictions and viewpoints are challenged by contradictory evidence, will your beliefs actually get stronger.

Silicon Valley’s Founding Fathers & Their ‘HP Way’ [Book Review & Summary]

Bill Hewlett and David Packard: Silicon Valley's Founding Fathers

'The HP Way' by David Packard (ISBN 0060845791) David Packard’s The HP Way recalls how he and Bill Hewlett started one of the world’s most successful corporations in 1937 with just $538 (today’s $8,850 when adjusted for inflation) and a rented one-car garage in Palo Alto, California. That garage is recognized today as the birthplace not only of Silicon Valley, but also of a new management approach.

Bill and David first met as electrical engineering students at Stanford University. Despite their different dispositions, they shared a passion for the outdoors and, with a professor’s encouragement, started Hewlett-Packard (HP) to commercialize the latest “radio engineering” theories. Over the decades, HP invented many groundbreaking electrical gadgets that were crucial to the development of radars, instrumentation devices, computers, and other technological revolutions.

In addition to their technical innovations, Bill and David established many progressive management practices that prevail even today. Starting in the initial days at the garage, the culture that Bill and David engendered at HP was unlike the hierarchical and egalitarian management practices that existed at other corporations of their day.

HP Garage: Birthplace Silicon Valley & New Management Style The essence of the “HP Way” was openness and respect for the individual. (Bill Hewlett once sawed a lock off a tool-room cabinet and left a note, “HP trusts its employees.”)

Management by objectives, managing by wandering about, nursing-mother facilities, flextime, decentralization, intrapreneurship, catastrophic medical insurance, profit sharing, employee stock ownership, tuition assistance, and many other management principles that dominate human resources practices today were all pioneered—if not invented—at HP.

Recommendation: Read. The HP Way tells the story how Bill and David built a company based on a framework of principles and the simplicity of their management methods. Good to Great author Jim Collins once wrote in commending David Packard’s The HP Way, “The greatest lesson to be divined from this book isn’t so much how to create a similar company but how creating a company based on a strong and clear set of values can lead to outstanding success.”

Postscript: Notes from ‘The HP Way’

  • Like Sam Walton, the other illustrious entrepreneur of their generation, Bill and David grew up witnessing Americans’ hardships during the Great Depression. This made them risk-averse; they vowed never to incur long-term debt to expand their fledgling company.
  • On the day Hewlett-Packard went public in 1961, David Packard took a subway instead of a taxi to Wall Street, lost his way, and reached the New York Stock Exchange late.
  • The foundations that Bill Hewlett and David Packard established individually with 95% of their stakes in HP are today two of the most prominent philanthropies in America.

Problem Reversal: How to Solve a Problem By “Standing It on Its Head”

Problem Reversal

Fixed Mental Set or Fixation

Psychologists use the terms ‘fixation’ and ‘fixed mental set’ to describe a person’s inability to see his/her problem from a fresh perspective. Fixation impedes problem-solvers from approaching problems from a different angle and from finding novel solutions.

Fixation is a persistent impasse in problem-solving in which predispositions towards a previously-reliable process, unwarranted postulations, unjustifiable assumptions, conventional thinking in identifiable contexts (called Einstellung Effect,) or recent experiences block awareness of possible solutions that may exist within other contexts. A period of rest, entertainment, or exposure to an alternative environment frequently can dissipate fixation.

Problem Reversal in Problem-Solving

If you’re stuck on a problem and can’t solve it because you’re fixated on a reliable process, try reversing the problem to reframe your thinking and consider alternate perspectives.

Solve a Problem By

As the following three case studies illustrate, reversing a problem simply involves taking a problem and turning it on its head.

  • A top-level executive at a large American corporation loved his job, his company, his employees, and his salary. However, he despised his boss. The executive and his boss were both long tenured; neither was likely to move out of their jobs anytime soon. The executive decided to find a new job at a different company. A headhunter assured the executive that a new job could be easily arranged. While speaking to his wife in the evening, the executive realized that he could easily reverse the problem. So he returned to the headhunter the next day and provided the boss’s name. Within days, the headhunter found an appealing new job for the unwary boss, who accepted. The executive then got his boss’s job and was even more content with his career.
  • A herd of sheep was moving slowly along a narrow country lane that was surrounded by high banks. An ambulance in a great hurry came up behind the herd and requested the shepherd to move his sheep to the side so that the ambulance could drive through. The shepherd declined because getting the ambulance past the sheep would be slow and he wasn’t sure of keeping all his sheep out of the way of the ambulance on a narrow lane. Instead, he reversed the problem: he got the sheep past the ambulance. He asked the ambulance to halt and then gently turned the herd round and guided it back past the stationary ambulance.
  • An ethical used-car salesman loathed his job because he felt compelled to sell cars with problematic features to unsuspecting buyers. He was eager for a career change, but the only thing he knew was cars. Therefore, he reversed his problem: he started a new business of locating, inspecting, and recommending used cars to prospective buyers. For a reasonable fee, he helped car buyers by scrutinizing used cars, listing current and prospective problems, and offering an estimate for repairs. His business boomed and he was much happier than he was as a used-car salesman.

Idea for Impact: Solve Problems by Reversing Them

When you’re stuck and can’t see how to solve the problem at hand, try reversing it or “standing the problem on its head.” Reversal as a problem-solving technique can free you from old ways of looking at problems.

Finding Potential Problems & Risk Analysis: A Case Study on ‘The Three Faces of Eve’

The Three Faces of Eve (1957)

Risk Analysis is a Forerunner to Risk Reduction

My previous article stressed the importance of problem finding as an intellectual skill and as a definitive forerunner to any creative process. In this article, I will draw attention to another facet of problem finding: thinking through potential problems.

Sometimes people are unaware of the harmful, unintended side effects of their actions. They fail to realize that a current state of affairs may lead to problems later on. Their actions and decisions could result in outcomes that are different from those planned. Risk analysis reduces the chance of non-optimal results.

The Three Contracts of Eve

'The 3 Faces of Eve' by Corbett H. Thigpen and Hervey M. Cleckley (ISBN 0445081376) A particularly instructive example of finding potential problems and mitigating risk concerns the Hollywood classic The Three Faces of Eve (1957). This psychological drama features the true story of Chris Sizemore who suffered from dissociative identity disorder (also called multiple personality disorder.) Based on The Three Faces of Eve by her psychiatrists Corbett Thigpen and Hervey Cleckley, the movie portrays Sizemore’s three personalities, which manifest in three characters: Eve White, Eve Black, and Jane.

Before filming started on The Three Faces of Eve, the legal department of the 20th Century Fox studio insisted that Sizemore sign three separate contracts—one for each of her personalities—to cover the studio from any possible legal action. For that reason, Sizemore was asked to evoke “Eve White,” “Eve Black,” and “Jane,” and then sign an agreement while manifesting each of these respective personalities. According to Aubrey Solomon’s The Films of 20th Century-Fox and her commentary on the movie’s DVD, the three signatures on the three contracts were all different because they were a product of three distinct personalities that Sizemore had invoked because of her multiple personality disorder.

Idea for Impact: Risk analysis and risk reduction should be one of the primary goals of any intellectual process.

Postscript Notes

  • I recommend the movie The Three Faces of Eve for its captivating glimpse into the mind of a person afflicted with dissociative identity disorder. Actress Joanne Woodward won the 1958 Academy Award (Oscar) for best actress for her portrayal of the three Eves.
  • The automotive, aerospace, and other engineering disciplines use a formal risk analysis procedure called “failure mode and effects analysis” (FEMA.) FEMA examines the key risk factors that may fail a project, system, design, or process, the potential effects of those failures, and the seriousness of these effects.

You Can’t Develop Solutions Unless You Realize You Got Problems: Problem Finding is an Undervalued Skill

Problem Finding is an Undervalued Skill

Problem finding plays an important role in creative thinking

Problem finding is one of the most significant parts of problem solving. However, it tends to be an underappreciated skill. Many managers naively consider it strange to encourage employees to look for problems at work: “Why look for new problems when we’ve got no resources to work on ones we’ve already identified?”

Many courses and books on problem solving and creativity overlook problem finding. Many educational resources tend to assume that problem solving really begins only after problems have been identified.

Problem-identification lead to the invention of the ballpoint pen

Invention of the Ballpoint Pen by Biro Brothers The story of the invention of the ballpoint pen demonstrates the importance of problem finding. Had the inventors not recognized a problem with the existing writing instruments of their day, they would not have developed their invention.

In the 1920s, Hungarian journalist Laszlo Biro spent much time proofreading and checking for errors in others’ writings. To communicate these errors to the authors, Laszlo could not use pencils because their impressions fade quickly. He tried using a fountain pen, but the ink from the fountain pen dried slowly and often left smudges on paper.

Laszlo observed that the ink used in newspaper printing dried quickly and left the paper smudge-free. When he tried using that ink in his fountain pen, however, the ink was too viscous to flow into the tip of the fountain pen.

Laszlo then collaborated with his chemist-brother Gyorgy Biro to invent a new pen tip consisting of a ball that was enclosed within a socket. As the ball rolled inside the socket, the ball could pick up ink from a reservoir or cartridge and then continue to roll to deposit the ink on the paper. The Biro brothers thus invented the ballpoint pen. The company they created is now part of the BIC Company. The ballpoint pen continues to be called a ‘Biro’ in some countries.

Often, creativity is the outcome of discovered problem solving

Greek Philosopher Plato famously wrote in The Republic, “Let us begin and create in idea a State; and yet a true creator is necessity, which is the mother of our invention.”

One reason we fail to identify problems is that we do not stop to think about improving various situations that we encounter. Very often, these problems are directly in front of us; we need to consciously identify them and convert them into opportunities for problem solving. Instead, we tend to take inconveniences and unpleasant situations for granted and assume they are merely “facts of life.”

  • The grain mill was not invented until somebody in antiquity identified the ineffectiveness of two hours of pounding grain to make a cup of flour.
  • The world’s first traffic lights were installed around the British Houses of Parliament in London only after somebody thought of the problem of traffic congestion. In other words, up until the problems from congestion were identified in the 1860s, no one attempted to systematically consider how the problem might be solved.

James Watt invented his seminal separate-condenser steam engine

  • James Watt invented his seminal separate-condenser steam engine after discovering an interesting problem with the Newcomen steam engine. In 1763, when Watt was working as an instrument maker at the University of Glasgow, he was assigned to repair a model of a Newcomen engine for a lecture-demonstration. Watt initially had difficulty getting the Newcomen engine to work because its parts were poorly constructed. When he finally had it running, he was surprised at its efficiency. Watt observed that the engine was constantly running out of coal because the constant heating and cooling of the cylinder resulted in a large waste of energy. Watt then devised a system whereby the cylinder and the condenser were separate. This led to his invention of the “steam engine” (or, more precisely, the separate-condenser steam engine.)
  • As I mentioned in a previous article on the opportunities in customers’ pain points, crispy potato chips were invented only when Chef George Crum of New York’s Saratoga Springs attempted to appease a cranky customer who frequently sent Crum’s fried potatoes back to the kitchen complaining that they were mushy and not crunchy enough. Decades later, Laura Scudder invented airtight packaging for potato chips only after becoming conscious of customers’ complaints that chips packaged in metal containers quickly go stale and crumble during handling.

Finding and defining a creative problem

If problems are not identified, solutions are unlikely to be proposed

It pays to keep your eyes open and look at inconveniences, difficulties, and troubles as creative problems to be solved. Don’t ignore these merely as facts of life.

Curiosity, intrigue, and motivation influence problem finding (and problem solving.) One of the easiest ways to develop your skills in problem finding is to ponder at anything around you and wonder why those gadgets and contraptions were ever invented. Analyze carefully and you’ll learn that the first step taken by the inventors of these objects was the identification of the problems the objects were designed to solve.

When you look around various objects in your life, think about what life was before these objects were invented. What problems could these inventions have solved? Why was the zipper invented? What problems motivated Bjarne Stroustrup to create C++? What was internet search like before Google? How did commerce transpire before the advent of coins and bills and money?

Some people make a career out of problem finding. Managers who want to know if their organizations are running efficiently frequently hire consultants to look for problems that managers do not know exist in their businesses.

And finally, if you want to become an inventor or an entrepreneur, try to start with problems you already have in your work or in your life. Ideally, identify problems shared by a large number of people to increase the probability that your inventions will be put in widespread use.

Idea for Impact: A creative solution to a problem often depends on first finding and defining a creative problem. Very often, the solution to a problem becomes obvious when the problem has been properly identified, defined, and represented.

Stimulate Group Creativity Using Edward de Bono’s ‘Six Thinking Hats’ [Book Review & Summary]

Stimulate Group Creativity Using Edward de Bono's 'Six Thinking Hats'

In his bestselling book Six Thinking Hats, Edward de Bono describes a powerful problem-solving approach that enriches mental flexibility by encouraging individuals and groups to attack an issue from six independent but complementary perspectives.

Edward de Bono is a leading authority in creative thinking. He is widely regarded as the father of lateral thinking. De Bono has written over 70 books on thinking and creativity.

Using the ‘Six Thinking Hats’ for Structured Brainstorming

Edward de Bono, leading authority in creative thinking and lateral thinking De Bono created the ‘six thinking hats’ method after identifying six distinct lines of human thought in problem solving. De Bono calls each approach a “hat” and assigns them different colors.

At the heart of the ‘six thinking hats’ method are six different colored hats that participants put on—literally or metaphorically—to represent the type of thinking they should concentrate on while wearing each.

  1. White is neutral, objective, and fact-based. A white hat is concerned with objective data: “What information do we have? What information do we need? What information are we missing? How can get the information we need? What objective questions should be asked?”
  2. Red denotes passion, anger, intuition, and emotions. A red hat considers the emotional side of problem solving, which is often neglected or masked in meetings: “What are our gut reactions to the matter at hand?”
  3. Black is somber, serious, and cautious. A black hat is vigilant, plays devil’s advocate, and encourages derogatory and judgmental behavior: “what are the weaknesses of these ideas? What are the risks? What could go wrong?”
  4. Yellow represents positive thinking, hope, and optimism to counteract the black hat’s power. A yellow hat plays “the angel’s advocate” and is cheerful and confident: “What are the best-case scenarios? What are the best aspects of this? What are the advantages? Who can benefit from this?”
  5. Green signifies abundance, growth, richness, and fertility. A green hat is the hat of creativity; it rejects established rules and norms, and invents new approaches: “What are some new ideas on this subject? What is interesting about this idea? What are the variances in these ideas?”
  6. Blue represents the sky and therefore provides the overarching perspective. A blue hat performs “meta thinking” and is concerned with the organization of the thinking process and the use of other hats. The blue hat synthesizes and reconciles different viewpoints. At the start of a brainstorming session, the blue hat sets the stage for where the discussion may go. The blue hat guides and sustains the discussion, often restating its purposes: “What are we thinking about? What is the goal? What should we do next? What have we achieved so far? What should we do to achieve more?” At the conclusion of the brainstorming session, the blue hat appraises the discussion, and proposes a plan of action.

Use De Bono’s Six Thinking Hats Model for Critical Thinking and Problem Solving

'Six Thinking Hats' by Edward de Bono (ISBN 0316178314) An individual working alone may use the approach to consider broader, distinct lines of thought. By changing hats, the individual can switch viewpoints and ensure that he/she is not stuck in specific thinking patterns.

However, the approach is best suited to group discussions (when chaired by a skilled facilitator) in which conflicting ideas may never otherwise be fully synthesized into plans of action. By persuading each participant to think constructively alongside other participants, the ‘six thinking hats’ method taps into group members’diverse perspectives and uses their collective knowledge without destructive conflict.

Using these hats nurtures creativity by letting participants step beyond their typical roles and contribute to developing, organizing, and progressing ideas. Participants can also identify how their cognitive state at any one time shapes how they approach problems.

Recommendation: Read. Edward de Bono’s Six Thinking Hats presents a very effective technique for stimulating group creativity. The method can remove mental blocks, organize ideas and information, foster cross-fertilization, and help conduct thinking sessions more productively than do other brainstorming methods.

Complement with Dan Ciampa’s Taking Advice for an excellent framework on the kind of advice network you need on strategic, operational, political, and personal elements of your work and life. Read my summary in this article.

Ten Rules of Management Success from Sam Walton

Sam Walton (1918–1992,) the iconic founder of Walmart and Sam’s Club, was arguably the most successful entrepreneur of his generation. He was passionate about retailing, loved his work, and built and ran Walmart with boundless energy.

'Sam Walton: Made In America' by Sam Walton (ISBN 0553562835) “Made in America” is Walton’s very educational, insightful, and stimulating autobiography. It’s teeming with Walton’s relentless search for better ideas, learning from competitors, managing costs and prices to gain competitive advantage, asking incessant questions of day-to-day operations, listening to employees at all levels of Walmart, and inventing creative ways to foster an idea-driven culture. “Made in America” is also filled with anecdotes from Walton’s associates and family members—in fact, some of their opinions are less than flattering.

Former CEO of General Electric Jack Welch once said, “Walton understood people the way Thomas Edison understood innovation and Henry Ford, production. He brought out the very best in his employees, gave his very best to his customers, and taught something of value to everyone he touched.”

Here are ten insightful management ideas from “Made in America” with the relevant anecdotes from Walton or his associates.

  1. When hiring employees, look for passion and desire to grow. Having the right skills and qualifications is no doubt essential in a potential employee, but a better predictor of long-term success and career advancement is his/her passion for learning new things, commitment to a task, and a drive to get things done. A former Walmart executive recalls, “Sam would take people with hardly any retail experience, give them six months with us, and if he thought they showed any real potential to merchandise a store and manage people, he’d give them a chance. He’d make them an assistant manager. They were the ones who would go around and open all the new stores and they would be next in line to manage their own store. In my opinion, most of them weren’t anywhere near ready to run stores, but Sam proved me wrong there. He finally convinced me. If you take someone who lacks the experience and the know-how but has the real desire and the willingness to work his tail off to get the job done, he’ll make up for what he lacks.”
  2. Delegate and follow up. Delegation is indispensable; yet it remains one of the most underutilized and underdeveloped managerial skills. One element of effective delegation is consistent follow-up. Far too often, managers will delegate a task and then fail to follow up to see how things are going. Such failure to follow-up is tantamount to abdication of accountability for results, which still lies with the manager. Former Walmart CEO David Glass recalls, “As famous as Sam is for being a great motivator … he is equally good at checking on the people he has motivated. You might call his style: management by looking over your shoulder.”

Management Ideas from Sam Walton

  1. Persist and rally people to the cause. Passionate managers demonstrate the energy and drive needed to rally their teams around a shared vision. They engage their employees with the same messages over and over, escalate their sense of urgency, and get their vision implemented quickly. Former Walmart CEO David Glass recalls, “When Sam feels a certain way, he is relentless. He will just wear you out. He will bring up an idea, we’ll all discuss it and then decide maybe that it’s not something we should be doing right now—or ever. Fine. Case closed. But as long as he is convinced that it is the right thing, it just keeps coming up—week after week after week—until finally everybody capitulates and says, well, it’s easier to do it than to keep fighting this fight. I guess it could be called management by wearing you down.”
  2. Mentor, critique, and inspire employees. Mentoring employees is an effective way to improve employee performance and build trust and loyalty. Effective mentoring is not merely telling employees what to do. It is helping them broaden and deepen their thinking by clarifying their goals and asking the right questions. Effective mentoring is also about supporting employees as they learn and practice new skills and habits. Walton writes, “I’ve been asked if I was a hands-on manager or an arm’s-length type. I think really I’m more of a manager by walking and flying around, and in the process I stick my fingers into everything I can to see how it’s coming along. I’ve let our executives make their decisions—and their mistakes—but I’ve critiqued and advised them.”
  3. Invest in frontline employees for better customer relationships. Much of customers’ opinions about a business come from the myriad interactions they have with customer-interfacing frontline employees, who are the face of any business. If a business doesn’t get these customer experiences right, nothing else matters. Walton writes, “The way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising. Satisfied, loyal, repeat customers … are loyal to us because our associates treat them better than salespeople in other stores do. So, in the whole Wal-Mart scheme of things, the most important contact ever made is between the associate in the store and the customer.”
  4. Treat employees like business partners and empower them by sharing information. Effective managers foster open communication by treating employees as co-owners of the business and sharing operational data regularly. Managers empower employees by helping them understand how their contribution makes a difference, discussing opportunities and challenges, and encouraging them to contribute to solutions. Walton writes, “Our very unusual willingness to share most of the numbers of our business with all the associates … It’s the only way they can possibly do their jobs to the best of their abilities—to know what’s going on in their business. … Sharing information and responsibility is a key to any partnership. It makes people feel responsible and involved …. In our individual stores, we show them their store’s profits, their store’s purchases, their store’s sales, and their store’s markdowns.
  5. Never be satisfied. There’s always room for improvement. Effective managers never rest on their laurels and are persistently dissatisfied with the status quo. They possess a pervasive obsession for discovering problems and improving products, services, and people. Home Depot founder Bernard Marcus recalls, “If you ask Sam how’s business, he’s never satisfied. He says, ‘Bernie, things are really lousy. Our lines are too long at the cash registers. Our people aren’t being helpful enough. I don’t know what we’re gonna do to get them motivated.’ Then you ask some of these CEOs from other retail organizations who you know are on the verge of going out of business, and they brag and tell you how great everything is. Really putting on airs. Not Sam. He is down to earth and knows who he is.”

Insightful Management Ideas from Sam Walton

  1. Appreciate employees and give honest feedback. A key determinant of employee engagement is whether employees feel their managers genuinely care. Do the managers provide regular, direct feedback, both appreciative and corrective? Do they coach employees in their learning and career growth? Walton writes, “Keeping so many people motivated to do the best job possible involves … appreciation. All of us like praise. So what we try to practice in our company is to look for things to praise. … We want to let our folks know when they are doing something outstanding, and let them know they are important to us. You can’t praise something that’s not done well. You can’t be insincere. You have to follow up on things that aren’t done well. There is no substitute for being honest with someone and letting them know they didn’t do a good job. All of us profit from being corrected—if we’re corrected in a positive way.”
  2. Listening to employee’s complaints and concerns could be a positive force for change. Effective managers provide their employees the opportunity to not only contribute their ideas, but also air concerns and complaints. By fostering an environment of open communication, managers who handle employee opinions effectively not only boost employee motivation, performance, and morale, but also benefit from learning directly about problems with teams, organizations, and businesses. Walton writes, “Executives who hold themselves aloof from their associates, who won’t listen to their associates when they have a problem, can never be true partners with them. … Folks who stand on their feet all day stocking shelves or pushing carts of merchandise out of the back room get exhausted and frustrated too, and occasionally they dwell on problems that they just can’t let go of until they’ve shared it with somebody who they feel is in a position to find a solution. … We have really tried to maintain an open-door policy at Wal-Mart. … If the associate happens to be right, it’s important to overrule their manager, or whoever they’re having the problem … . The associates would know pretty soon that it was just something we paid lip service to, but didn’t really believe.”
  3. Learn from the competition. Effective managers understand that keeping tabs on competitors, copying their innovations as much as possible, and reaching out to customers the way competitors do is a great strategy for growing business. Sam Walton’s brother Bud recalls, “There may not be anything (Walton) enjoys more than going into a competitor’s store trying to learn something from it.” A former K-Mart board member recalls, “(Walton) had adopted almost all of the original Kmart ideas. I always had great admiration for the way he implemented—and later enlarged those ideas. Much later on, when I was retired still a K-Mart board member, I tried to advise (K-Mart) management of just what a serious threat I thought he was. But it wasn’t until recently that they took him seriously.”

Lessons from Sam Walton: Cost and Price as a Competitive Advantage

I recently finished reading “Made in America”, the bestseller autobiography of Sam Walton (1918–1992.) The book is very educational, insightful, and stimulating.

Walton, the iconic founder of Walmart and Sam’s Club, was arguably the most successful entrepreneur of his generation. From 1985 until his death, he was the richest man in the world. On the 2015 list of the world’s richest individuals, his descendants ranked at #8, #9, #11, and #12.

Despite his immense fortune, Walton lived a humble life right up until his death. He as an enthusiastic outdoorsman and lived in a modest home in Bentonville, Arkansas, for 33 years. On quail hunting trips, he slept in smelly, old beat-up trailers and ate peanut butter sandwiches for breakfast, lunch, and dinner. He even drove a red 1985 Ford pickup and famously said, “What am I supposed to haul my dogs around in, a Rolls-Royce?”

Sam Walton's Red 1985 Ford Pickup Truck

Cost and Price Control

One of the book’s key takeaways is to “control your expenses better than your competition.” Walton says that this focus on cost-efficiency contributed more to Walmart’s enormous success than did any other aspect of his business model:

This is where you can always find the competitive advantage. For twenty-five years running—long before Wal-Mart was known as the nation’s largest retailer—we’ve ranked No. 1 in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.

A Child of the Great Depression Takes to Retail

Walton was a child of the Great Depression. The poverty he experienced while growing up in a rural Missouri farming community taught him the value of money, hard work, and perseverance.

Walton learned the value of a dollar early from his parents, who financially struggled to raise their family. The two squabbled constantly, except on one topic. “One thing my mom and dad shared completely was their approach to money: they just didn’t spend it.”

Walton was just plain cheap. His devotion to bargain became Walmart’s underpinning. He lived by a simple formula: pile it high, sell it cheap. “Say I bought an item for 80 cents. I found that by pricing it at $1.00, I could sell three times more of it than by pricing it at $1.20.” He refused to increase profit margins at the expense of price: “I might make only half the profit per item, but because I was selling three times as many, the overall profit was much greater. Simple enough.”

The Lasting Impact of Sam Walton

'Sam Walton: Made In America' by Sam Walton (ISBN 0553562835) In 1962, Walton decided that the future of retailing lay in discounting. He studied his competitors and borrowed liberally. His strategy was to buy low, sell at a discount, and make up for low margins by moving vast amounts of inventory. Over the decades, Walmart has relentlessly squeezed as much value as possible from its supply chain and passed those savings on to consumers.

Walton’s passion to serve as the “agent” for consumers has changed retailing forever. It’s hard not to overestimate Walmart’s influence on local communities and economics. Walmart’s obsessive focus on low prices changed the way Americans shop. Its bargaining power, superlative size, and logistical efficiency not only dampened inflation, but also brought about productivity gains throughout retailing and manufacturing. Its dominance has attracted backlash from labor unions, anti-sweatshop campaigners, and anti-sprawl activists. Critics also blamed Walmart for contributing to the movement toward overseas production jobs, and for destroying small-town merchants.

However, Walmart’s business model has struggled overseas, especially with profitability in countries where it operates three fourths of its international stores.

Sam Walton’s Influence on Entrepreneurs

Walton inspired legions of other entrepreneurs who thrive on managing costs and prices to gain competitive advantage. Prominently,

  • Dell’s Michael Dell kept costs low by using direct sales as his primary sales channel and orchestrating Dell’s supply chain with that of its suppliers.
  • Ryanair’s Michael O’Leary used absurdly low fares to generate demand from fare-conscious travelers who would have otherwise used alternative means of transportation or would have not traveled at all. O’Leary’s operating costs (aircraft, equipment, personnel, customer service, airport access, and handling) are one of the lowest in the airline industry.
  • Amazon’s Jeff Bezos used innovative sales-discounting methods and a strong emphasis on customer service to grab market share from traditional retailers. Without the burden of operating physical stores, Amazon’s efficiency has played a key role in the structural shift away from brick-and-mortar retail.

The “wheel of retailing” theory in corporate strategy posits that a lower-cost innovator eventually undercuts every dominant merchant. To combat the risk of cost-leadership from Amazon and other online retailers, Walmart has made major investments in e-commerce, even at the risk of cannibalizing its in-store sales.