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How Jeff Bezos is Like Sam Walton

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How Jeff Bezos is Like Sam Walton

Walmart founder Sam Walton’s brilliant autobiography, Made in America (my summary,) was published a few weeks before his death in 1992. The penultimate page reads,

Could a Wal-Mart-type story still occur in this day and age? My answer is of course it could happen again. Somewhere out there right now there’s someone—probably hundreds of thousands of someones—with good enough ideas to go all the way. It will be done again—over and over, providing that someone wants it badly enough to do what it takes to get there. It’s all a matter of attitude and the capacity to constantly study and question the management of the business.

Jeff Bezos started Amazon just two years later. After eight years on Wall Street, Bezos dreamt up Amazon during a drive from New York to Seattle in 1994. His wife (now ex-wife) MacKenzie drove, and Jeff “tapped out a business plan on his computer along the way.”

'Sam Walton: Made In America' by Sam Walton (ISBN 0553562835) Amazon began as a loss-making book e-tailer at the dawn of the commercial Internet and as the dot-com poster child in the late ’90s. It has since evolved into one of the world’s most valuable companies. Amazon has come a long way from its genesis as the curse of bricks-and-mortar booksellers and has diversified broadly into just about every adjacent business it could get its hands on.

Bezos’s and Amazon’s dominant leadership values echo those of Sam Walton and Wal-Mart: frugality, a bias for action, long-term focus, motivating staff to think like owners, and customer obsession.

The Everything Store (2013,) Brad Stone’s excellent chronicle of the rise of Amazon, notes, “In his autobiography, Walmart’s founder expounds on the principles of discount retailing and discusses his core values of frugality and a bias for action—a willingness to try a lot of things and make many mistakes. Bezos included both in Amazon’s corporate values.” On an earnings call, Bezos famously declared, “there are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure how to charge less, and we are going to be in the second, full-stop.”

All along, Bezos has made big bet-decisions that hurt it in the short term but created value in the long term. Amazon’s market capitalization has rocketed up from $4.55 billion in 2001 to $1.08 trillion before the Coronavirus/COVID-19 infected the stock markets. Amazon’s secret, in Bezos’s words, is,

We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different.

Amazon has not been consistently profitable over the years, and that is a deliberate upshot of how Bezos approaches business. Amazon cycles through periods of substantial investments that beget future revenue growth (with low profits) and periods of increasing profits as its investments ebb.

'The Everything Store' by Brad Stone (ISBN 0316219266) Bezos has maneuvered Wall Street into believing that he is just getting started—his “Day 1” philosophy has become something of a legend. “A big piece of the story we tell ourselves about who we are is that we are willing to invent … and very importantly, we are willing to be misunderstood for long periods of time,” Bezos asserted at Amazon’s 2011 annual shareholders meeting.

Not all of Bezos’s bets have succeeded. However, investors have come to acknowledge that his long-term initiatives will produce rich results several years down the road. Little wonder, then, that Amazon’s stock has defied short-termism by continually progressing upward even during quarters of little or no earnings.

Postscript: Bezos has been, until recently, the world’s wealthiest person since about 2018. Walton was the richest man from 1985 until his death in 1992. His inheritors, the Walton family, are collectively more affluent than Bezos!

Lessons from Sam Walton: Learning from Failure

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Sam Walton (1918–1992) experienced failures and setbacks. And, like all successful people, the iconic founder of Walmart and Sam’s Club prided himself on learning from those experiences.

Lessons from Sam Walton's Autobiography: Learning from Failure

Walton’s Initial Success … and Then, in a Heartbeat, Failure

By 1950, a 32-year-old Sam Walton had established himself as a successful retailer in Newport, Arkansas. In 1945, Walton had purchased a Ben Franklin variety store and set up a five-year personal goal to make it the most profitable variety store in the region. By 1950, Walton had a record $250,000 in sales and $30,000 to $40,000 in profit (some $2.5 million in sales and $300,000 to $400,000 in profits in today’s dollars.) His success had attracted a lot of attention.

Not only that, the young Walton family—Sam, his wife Helen, and four young children—had firmly established itself in Newport. Sam and Helen were very active in the community and had taken up prominent civic and church duties.

An innocuous legal oversight cost him this success. When he had signed the lease on the property rental for his Ben Franklin variety store in 1945, thanks to inexperience and excitement at becoming a merchant, Walton had agreed to give back the landlord 5% of sales. He later discovered this was the highest any retailer had paid for rental.

More significantly, Walton had also neglected to add a clause in his lease that would give him the option to renew the lease after five years. Therefore, in 1950, when the lease on Walton’s Ben Franklin store expired, his sneaky landlord knew there was nowhere else in town for Walton to relocate his store. The landlord refused to renew Walton’s lease at any price! The landlord bought Walton’s well-established store along with its fixtures and inventory and transferred the store to his son. Walton was devastated; he had no choice but to give up his successful store. In his best-selling autobiography Made in America, Walton recalled this as the lowest point of his business life:

I felt sick to my stomach. I couldn’t believe it was happening to me. It really was like a nightmare. I had built the best variety store in the whole region and worked hard in the community, done everything right, and now I was being kicked out of town. It didn’t seem fair. I blamed myself for ever getting suckered into such an awful lease, and I was furious at the landlord. Helen, just settling in with a brand-new family of four, was heartsick at the prospect of leaving Newport. But that’s what we were going to do.

Walton family: Sam Walton, his wife Helen Walton, and four young children

Sam Walton Was Not One to Dwell on Disasters

All the hard work he had put in to build a successful store and the earning power he had established over five years had become worthless because of an innocuous mistake. Nevertheless, Walton didn’t let this disaster get him down.

I’ve never been one to dwell on reverses, and I didn’t do so then. It’s just a corny saying that you can make a positive out of most any negative if you work at it hard enough. I’ve always thought of problems as challenges, and this one wasn’t any different. I don’t know if that experience changed me or not. I know I read my leases a lot more carefully after that, and may be I because a little wary of just how tough the world can be. Also, it may have been about then that I began encouraging our eldest boy—six-year-old Bob—to become a lawyer. But I didn’t dwell on my disappointment. The challenge at hand was simple enough to figure out. I had to pick myself up and get on with it, do it all over again, only even better this time.

This Newport experience turned out to be a blessing in disguise for Walton. His family relocated to the relatively obscure Bentonville, Arkansas, for a brand-new start. Walton started over and established himself as a retailer again—only in even bigger and better ways. In 1962, Walton decided that the future of retailing lay in discounting. His strategy of buying low, selling at a discount, and making up for low margins by moving vast amounts of inventory, made Walmart the most successful retailer ever. From 1985 until his death in 1992, he was the richest man in the world.

Successful People Learn from Failure and Get On

'Sam Walton: Made In America' by Sam Walton (ISBN 0553562835) Walton’s was a typical entrepreneurial response to failure—successful people take risks, fail sometimes, but pick themselves up, ask what they can learn from the experience, and try again, even harder the next time.

On a related note, Bill Gates, the most successful entrepreneur of his generation, once said, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”

Complement this lesson on failure with J.K. Rowling’s reflections on the benefits of failure in her famous 2008 commencement address at Harvard: “Failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me…The knowledge that you have emerged wiser and stronger from setbacks means that you are, ever after, secure in your ability to survive.”

Ten Rules of Management Success from Sam Walton

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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

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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.

Want to be more likeable? Improve your customer service? Adopt Sam Walton’s “Ten-Foot Rule”

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Walton Ten-Foot Rule

Sam Walton, Founder of Wal-Mart Stores Sam Walton, Walmart’s iconic founder and perhaps the most successful entrepreneur of his generation, demonstrated considerable charisma, ambition, and drive from a very young age.

Sam was a committed student leader when he attended the University of Missouri, Columbia. One of the secrets to his reputation in college was that he would greet and speak to everybody he came across on campus. If he knew them, he was sure to address them by their name. In a short time, he had made many friends and was well-liked. Small wonder, then, that Sam triumphed in nearly all the student elections he entered.

From his bestselling autobiography, “Made in America”:

'Sam Walton: Made In America' by Sam Walton (ISBN 0553562835) I had decided I wanted to be president of the university student body. I learned early on that one of the secrets to campus leadership was the simplest thing of all: speak to people coming down the sidewalk before they speak to you. I did that in college. I did it when I carried my papers. I would always look ahead and speak to the person coming toward me. If I knew them, I would call them by name, but even if I didn’t I would still speak to them. Before long, I probably knew more students than anybody in the university, and they recognized me and considered me their friend. I ran for every office that came along. l was elected president of the senior men’s honor society, QEBH, an officer in my fraternity, and president of the senior class. I was captain and president of Scabbard and Blade, the elite military organization of ROTC.

When Walmart became sizeable enough, Sam realized that it could not offer prices lower than those of other retail giants—yet. As part of his customer service strategy, he institutionalized the very trait that had made him popular when he was a student. He insisted on the “Walton Ten-Foot Rule.” According to the rule, when Walmart associates (as Walmart calls its employees) came within ten feet of customers, they were to smile, make eye contact, greet the customer, and offer assistance. As Walmart grew, Sam added greeters who would greet customers at the door (and control “shrinkage” / shoplifting.) Even today, the Ten-Foot Rule is a part of the Walmart culture.

Likeability: A Predictor of Success

Likeability for success in life Likeability is an important predictor to success in life. Some people seem naturally endowed with appealing personalities. They tend to complement their talents by being personable and graceful, presenting themselves well, and by possessing the appropriate social skills for every occasion. They often win others over effortlessly. At school and in college, they are their teachers’ favorites and are chosen by their peers to represent their classes. They are invited to the right kind of parties and gatherings, and infuse them with life. At work, they are persuasive; they get noticed and quickly climb the corporate ladder.

From my observations of the traits of the talented and successful, I offer you a few reminders to help you become more personable, develop rapport, and thus maximize your chance of success:

Why Amazon Banned PowerPoint

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One of the distinctive features of the Amazon management system is its use of the long-form to facilitate decision-making. Jeff Bezos has claimed that banning PowerPoint presentations—more specifically disallowing bullet points for sharing ideas—as Amazon’s “probably the smartest thing we ever did.”

Since June 2004, Bezos has forbidden bullet points and PowerPoint at a senior leadership level. Instead of presentations, teams are expected to iterate an approach to sharing information that involves writing memos of running copy, usually a “six-page, narratively-structured memo.” Meetings typically begin in silence as all participants sit and read the memo for up to half an hour before discussing the subject matter.

'Amazon Management System' by Ram Charan, Julia Yang (ISBN 1646870042) Ram Charan and Julia Yang’s The Amazon Management System (2019) reproduces the original email from Bezos explaining this dictum:

Well-structured, narrative text is what we’re after, rather than just text. If someone builds a list of bullet points in Word, that would be just as bad as PowerPoint.

The reason writing a good four-page memo is harder than ‘writing’ a 20-page PowerPoint is because the narrative structure of a good memo forces better thought and better understanding of what’s more important than what, and how things are related.

PowerPoint-style presentations somehow give permission to gloss over ideas, flatten out any sense of relative importance, and ignore the interconnectedness of ideas.

Using memos may seem counterintuitive in an age when communication is increasingly visual. However, long-form has a way of forcing rigor to think through ideas properly, reconcile viewpoints pro and con, iron out logical inconsistencies, and consider second-order consequences.

Bezos’s approach is brilliant not just because sentences and paragraphs enable a certain clarity in thought and exchange of ideas. It also inhibits some of the usual shortcomings of brainstorming meetings, viz., interruptions, biases that initiate groupthink, and the tendency to reward rhetorical ability over substance. Forcing all meeting attendees to read the memo in real-time prevents them from pretending to have read it before a meeting and then bluffing their way through the meeting.

Idea for Impact: Think complex, speak simple, decide better.

Bullet points and “decks” are often the least effective way of sharing ideas. Having a narrative structure allows you to clarify your thinking and provide a logical, sequenced argument to support your ideas.

Book Summary of Verne Harnish’s ‘The Greatest Business Decisions of All Time’

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'The Greatest Business Decisions' by Verne Harnish (ISBN 1603209786) The Greatest Business Decisions of All Time (2012) is a flatfooted anthology of 18 engaging—and oversimplified—business stories that influenced the course of business. Edited by management consultant Verne Harnish, this tome contains long articles by nine Fortune magazine journalists.

  1. Apple and the Return of Steve Jobs. The 1996 decision by Apple’s board of directors to bring back Jobs revived the company, transformed the consumer electronics industry, and made Apple one of the most valuable companies in the world.
  2. Zappos and Free Shipping. Zappos’s decision to offer free shipping and 365-day free returns lured more mainstream buyers onto the internet. Other retailers had no choice but to provide free shipping (albeit with some restrictions) and absorb the costs.
  3. Samsung and Global Immersion. In the early 1990s, Chairman Lee Kun-Hee instituted a policy to send his brightest young employees on international sabbaticals that exposed them to the local cultures and build business networks. This program later fuelled Samsung’s global ambitions.
  4. Johnson & Johnson and the Tylenol Comeback. Consistent with the company’s “patients come before profit” credo, CEO James E. Burke set the benchmark for crisis management when he decided to pull Tylenol off the shelves nationwide and create a tamper-proof bottle at the cost of $100 million. Johnson & Johnson cemented its reputation for responsible management.
  5. 3M’s 15% Free Time Rule and Innovation. 3M Company CEO William McKnight’s extraordinary idea of giving employees free time for “experimental doodling” yielded such innovative products as Post-It notes. 3M quickly diversified its portfolio and entered many consumer- and industrial-businesses. 3M inspired Google’s 20% rule.
  6. The “Intel Inside” Marketing Campaign. To forestall the commoditization of the computer chip, CEO Andy Grove shifted Intel’s image from that of a microprocessor company to that of a producer of a coveted, brand-name product that stood for performance. Intel became a household name that consumers sought when they purchased a computer.
  7. General Electric’s Jack Welch and Crotonville. Welch transformed GE’s sprawling management-training institute in Crotonville, New York, into a focal point of learning for the company.
  8. Bill Gates and His “Think Weeks.” The Microsoft founder’s twice-yearly retreat in rural isolation allowed him to read, reflect, and map out ideas—away from the distractions and the noise of business life.
  9. Softsoap and Impeding Competition. A small Minnesota company called Minnetonka Corp. developed liquid hand soap in the early 1980s. When Softsoap started flying off the shelves, deep-pocked behemoths like Procter & Gamble began to prototype their own variants. Minnetonka’s CEO Robert Taylor developed a smart strategy to block his giant competitors and keep his company’s market share. He purchased the entire U.S. supply of plastic pumps used in the liquid soap bottles for one year—that’s 100 million units from the only supplier. By the time his competitors had access to the plastic pumps, Taylor’s Softsoap’s brand was well established.
  10. Toyota and the Quality Revolution. Toyota’s institutional obsession with waste-reduction, zero defects, and process improvement has transformed manufacturing and inspired excellence in every service industry—including hospitals.
  11. Nordstrom and Customer Service Excellence. Nordstrom built its brand on “above-and-beyond” customer service and problem-solving. The entirety of the Nordstrom Employee Handbook fits on a 5×8 card and contains precisely one rule, “Use the best judgment in all situations. There will be no additional rules.”
  12. Tata Steel and Labor Relations. During a turbulent period of India’s leading steelmaker, Managing Director Jamshed J Irani confronted a bloated cost structure by reducing his 78,000-strong workforce to 40,000 by 2005. In keeping with the Tata Group’s rich philanthropic legacy, Irani offered decent pension plans and invested in labor welfare.
  13. Boeing 707 and the Jet Age. Boeing’s decision to develop the Boeing 707 at the cost of $185 million (more than the company’s market capitalization) “remade a company, an industry, and the very culture of its time.” The 707 was the first transatlantic commercial jetliner in an era of prop planes. It kicked off the Jet Age, revolutionized air travel, and established Boeing as a dominant airliner manufacturer.
  14. IBM and the Customer-Centric Makeover. In 1993, Lou Gerstner became CEO and embarked on an “Operation Bear Hug” to launch new communication pipelines between top executives and IBM’s customers. This helped transform IBM from an inwardly focused bureaucracy to a customer-centric market-driven innovator.
  15. Sam Walton and Walmart’s Saturday Morning Meeting. Walton’s energetic 6:00 A.M. meeting was a pep rally, merchandising workshop, and financial update—all rolled into one. He brainstormed with his store managers on how to improve things week after week and helped metamorphose Walmart from a single, small-town variety store in 1962 into the world’s largest retailer.
  16. Eli Whitney and the Dawn of American Technology. Whitney’s invention of the “saw gin” that worked well with short-staple cotton helped transform Southern agriculture (and sustain the institution of African slavery!) Whitney then popularized the use of interchangeable parts in making firearms.
  17. Bill Hewlett and David Packard and the “HP Way.” The essence of Hewlett-Packard’s management philosophy was an openness and respect for the employees. With a framework of principles and the simplicity of their management methods, they established many progressive management practices that prevail even today.
  18. Henry Ford and the Factory- and Wage-Revolution. When Ford introduced the moving assembly line, his fledging factory was confronting a dispirited workforce, declining workmanship and quality, absenteeism, and annual labor turnover of 370 percent. Then Ford decided to raise wages from $2.50 to $5 a day. The following week, Ford Motors had more than 26,000 job applicants. Ford increased production rates and slashed the per-unit cost of the Model T. Annual labor turnover fell to 16 percent, and Ford’s profits doubled within two years. Every time Ford increased the productivity of car production, he continued to raise wages. His well-paid workers had more to spend—and could afford the very cars they built.

Recommended: Quick read. The Greatest Business Decisions of All Time is a concise and entertaining read, especially if you like getting into heads, the thoughts, and the motivations of well-known business luminaries. The 18 case studies lack rigor and are beset with recency biases, narrative fallacies, and a misplaced sense of causes and effects. Some stories, e.g., the Softsoap one, aren’t well known.

Daniel Gross’s Forbes Greatest Business Stories of All Time (1997) is significantly more engrossing and instructional.

How to Develop Customer Service Skills // Summary of Lee Cockerell’s ‘The Customer Rules’

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Becoming great at customer service doesn’t require you to excel at a zillion things. You’ll just need to identify the core principles and get the basics right.

“At the end of the day, everything a business leader does is in the service of customer service … the customer always rules, and there are Rules for winning customers, keeping customers, and turning loyal customers into advocates and emissaries for your business,” writes Lee Cockerell in his prescriptive manual on The Customer Rules: The 39 Essential Rules for Delivering Sensational Service (2013.)

'The Customer Rules' by Lee Cockerell (ISBN B01N8Y8ZU8) Cockerell is a veteran of the hospitality industry and an eminent corporate trailer. He spent eight years with Hilton, 17 years with Marriott, and 16 years with the Walt Disney. Before retirement, he was the executive vice president of operations at Walt Disney World in Florida and oversaw the resort’s 40,000 employees at 20 hotels, four theme parks, and two water parks.

Non-obvious Customer Service Insights

Cockerell structures his guidebook along 39 tips to serve customers with consistency, efficiency, creativity, and sincerity. He glosses over everything—hiring right, communicating a clear and relevant customer promise, fostering a customer-oriented culture, and creating a superior employee experience. Those employees can deliver a great customer experience, respond to complaints, and practice verbal skills to express empathy.

  • Make customer service every employee’s responsibility. Everything every employee does can have tremendous repercussions on the service your customers receive, and therefore your bottom line. “Pay close attention to every decision you make, every policy you announce, every procedure you introduce, every person you hire, every promotion you award, every e-mail you send, every conversation you have, every hand you shake, and every back you slap.”
  • You win customers one at a time and lose them a thousand at a time. Satisfied customers will spread the word only if they’re truly blown away their experience. Angry customers are “far more motivated to shout about their feelings, and furious exposes get a lot more attention than glowing testimonials. Humans are wired to pay more attention to the negative than the positive.”
  • Anticipate your customers’ needs. Discover what customers aren’t getting from your competitors and give it to them. Customers’ problems are a good source of business innovations. “Great businesses stand out by being different from the rest in the right way: by finding customer needs that are going unmet and figuring out a way to meet them.”
  • Keep an eye on your competitors. Be a copycat. Look outside your industry for great ideas and tweak them for their own purposes. “Don’t just imitate; pay attention to everything around you, spot the best ideas, and then find a better way to apply them.”
  • Treat customers the way you’d treat your loved ones. “First and last impressions have a tremendous influence on a customer’s lasting impression. A cheery hello and a sincere good-bye can leave a customer with a memory of a positive experience, regardless of what happens in between.”
  • Treat every customer like a regular. Familiarity breeds repeat business. “Do whatever you can to make regular customers feel like family and new customers feel like regulars. Remember the theme song from the TV series Cheers? Don’t you want to go “where everybody knows your name, and they’re always glad you came”? Make all your customers feel that you’re really glad they came.”
  • Prioritize WIN, “what’s important now,” your customers’ immediate needs, desires, and concerns. “Even a nod, a gesture, some brief eye contact, a pleasant “I’ll be right with you. Please make yourself comfortable”—that’s all it takes. People want to be acknowledged.”
  • Surprise your customers with a little extra when they least expect it. Neuroscientists have confirmed that the human brain “craves the excitement of surprise. The region of the brain called the nucleus accumbens, aka the pleasure center, experiences more activation when a pleasurable stimulus comes unexpectedly than it does when the same pleasure is predictable. “So if you get a present for your birthday, that’s nice. But you’ll like it a lot more if you get a present and it’s not your birthday.””
  • Don’t try too hard. “Being excessively solicitous and eager to please is annoying.” It makes you seem phony. “Think how annoying it is when a server at a restaurant stops by your table every five minutes to ask if everything’s okay with your meal.” No one likes to be pestered constantly. “If your customers have to stifle the urge to scream, “Go away!” or, “Leave us alone!” you’re trying too hard.”

Recommendation: Read Lee Cockerell’s The Customer Rules. With plenty of anecdotes, experiences, and very short no-nonsense chapters, this book is an enjoyable summary of the many simple—but often overlooked—first principles of building a customer-oriented culture and delivering great customer service.

Inspirational Quotations #776

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Some believe all that parents, tutors, and kindred believe.—They take their principles by inheritance, and defend them as they would their estates, because they are born heirs to them.
—Isaac Watts (English Hymn writer)

The man who puts $10,000 additional capital into an established business is pretty certain of increased returns; and in the same way, the man who puts additional capital into his brains—information, well directed thought and study of possibilities—will as surely—yes, more surely—get increased returns. There is no capital and no increase in capital safer than that.
—Marshall Field (American Entrepreneur)

When a man teaches something he does not know to somebody else who has no aptitude for it, and gives him a certificate of proficiency, the latter has completed the education of a gentleman.
—George Bernard Shaw (Irish Playwright)

There’s only one boss: the customer. He can fire everybody from the chairman on down simply by spending his money elsewhere.
—Sam Walton (American Entrepreneur)

There’s no use running if you’re on the wrong road.
—Warren Buffett (American Investor)

A language is something infinitely greater than grammar and philology. It is the poetic testament of the genius of a race and a culture, and the living embodiment of the thoughts and fancies that have moulded them.
—Jawaharlal Nehru (Indian Head of State)

Innocence can be redefined and called stupidity. Honesty can be called gullibility. Candor becomes lack of common sense. Interest in your work can be called cowardice. Generosity can be called soft-headedness, and observe: the former is disturbing.
—Abraham Maslow (American Psychologist)

We have every reason to look forward into the future with hope and excitement. Fear nothing and no one. Work honestly. Be good, be happy. And remember that each of you is unique, your soul your own, irreplaceable, and individual in the miracle of your mortal frame.
—Pearl S. Buck (American Novelist)

Everywhere I go I’m asked if I think the university stifles writers. My opinion is that they don’t stifle enough of them. There’s many a bestseller that could have been prevented by a good teacher.
—Flannery O’Connor (American Novelist)

Another kind of love and compassion is not based on something appearing beautiful or nice, but based on the fact that the other person, just like oneself, wants happiness and does not want suffering and indeed has every right to be happy and to overcome suffering. On such a basis, we feel a sense of responsibility, a sense of closeness toward that being. That is true compassion. This is because the compassion is based on reason, not just on emotional feeling. As a consequence, it does not matter what the other’s attitude is, whether negative, or positive. What matters is that it is a human being, a sentient being that has the experience of pain and pleasure. There is no reason not to feel compassion so long as it is a sentient being.
—The 14th Dalai Lama (Tibetan Buddhist Religious Leader)

Our 10 Most Popular Articles of 2018

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Top Blog Articles of 2018 Here are our most popular exclusive features of 2018. Pass this on to your friends; if they like these, they can sign up to receive our RSS feeds or email updates.

  • Power corrupts, and power attracts the corruptible. Let’s subject our elites (and the sycophantic supporters who are disposed to collude in self-interest) to as many restrictions, supervisions, and checks and balances as possible.
  • When stress is good. According to the Yerkes-Dodson Law, too much anxiety and stress impairs performance, but so does too little. The right level of stress can be a positive force for driving people forward.
  • Beware of key-person dependency risk. There’s a risk posed by an organization or a team’s over-reliance on one or a few individuals. A well-managed company is never dependent upon the performance of one or a few individuals.
  • What your messy desk says about you. A messy office or a cluttered desk can not only impede your space and cramp your style, but also affect how your peers and superiors perceive you.
  • Ideas to use when delegating. A manager’s principal task is to get things done through other people. Delegate every task that can be performed just as well by someone who is paid less than you are.
  • No boss likes a surprise—good or bad. If there is only one thing worse than delivering bad news, it’s not delivering bad news as soon as you know that some trouble is brewing. The surest way to delight your boss is by setting and adjusting the right expectations.
  • Writing clearly and concisely. It is far more important to write well than most folks realize. Writing not only communicates ideas, it also generates them—in the minds of both the author and the reader.
  • How to organize your inbox & reduce email stress. The recipe for staying on top of your email is to be ruthless about what you send and receive, and to focus on how you process your inbox. Don’t let an overflowing inbox be a big distraction (see Zeigarnik Effect.)
  • Quit what you suck at. Don’t do—or continue to do—something just because it’s been a tradition, custom, or habit. Align your efforts with your mission, your values, and the results you want to achieve.
  • That burning “what if” question. Don’t lament the life not lived when you can dive into the life you’re actually in and do so much good now.

And here are articles of yesteryear that continue to be popular: