Sam Walton built the world’s largest retail store in the world: Walmart. In his autobiography, Sam Walton: Made in America, he detailed some of the keys that helped him build Walmart into an enduring company that has held the number one spot on the Fortune 500 for almost two decades.
Walton developed 10 basic rules for all business. They also apply to insurance agencies. Customize the rules for the firm’s specific business and then share with key people in the agency. When consistently followed by management, the rules will then be incorporated by all employees.
Here are the 10 points from Sam with some thoughts on how to apply the rules to the agency.
Rule 1: Commit to the business. Believe in it more than anybody else. Sam felt anyone could overcome their personal shortcomings by sheer passion. An owner may not be born with passion, and it might be hard to learn, but they will need it. If an owner loves their work, they should do the best they can every day, and soon everybody around them will catch this passion like a fever.
Rule 2: Share profits with all associates and treat them as partners. In turn, they will treat the owner as a partner and together all will perform beyond their wildest expectations. Run the agency and retain control, but owners should still behave as a servant leader in a partnership fashion with key employees.
Encourage key employees to hold a stake in the company. Offer discounted stock and grant them stock for their retirement. It’s the single best thing Sam ever did.
Rule 3: Motivate your partners. Money and ownership alone aren’t enough. Think of new and more interesting ways to motivate and challenge partners and department heads. Owners and managers must set high goals, encourage competition, and then keep score. He encouraged managers to make bets with outrageous payoffs. If things get stale, cross-pollinate. Walton often had managers switch jobs with one another to stay challenged. This could be done with department heads in an agency.
Rule 4: Communicate everything to key employees and managers. The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once agency managers and key employees care, there’s no stopping them. If the owner doesn’t trust their associates to know what’s going on, they’ll know the owner doesn’t really consider them partners. Information is power, and the gain from empowering associates more than offsets the risk of informing competitors.
Rule 5: Appreciate everything associates do for the business. A paycheck for a stock option will buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do for them. We like to hear it often, and especially when we have done something we’re really proud of. Nothing else can substitute for a few well chosen, well timed, sincere words of praise. They’re absolutely free, and worth a fortune.
Rule 6: Celebrate successes. Find some humor in failures. Don’t take oneself so seriously. Loosen up, and everybody around the owner will loosen up. Have fun. Show enthusiasm always. When all else fails, do something outrageous, like put on a costume or sing a song. Then make everybody else sing with the owner. Don’t do a hula on Wall Street. It’s been done. (Sam did this when Walmart crossed a major milestone). Think up original stunts. All of this is fun, and it really fools the competition.
Rule 7: Listen to everybody in the company. And figure out ways to get them talking. The folks on the front lines, the ones who talk to the customer, are the only ones who really know what’s going on out there. The customers know you. This really is what total quality is all about. To push responsibility down in the organization, and to force good ideas to bubble up within it, the owner must listen to what associates and department heads are saying.
Rule 8: Exceed customers’ expectations. If the firm does this, they’ll come back over and over again. Give them what they want and a little more. Let them know their business is appreciated. Make good on mistakes, don’t make excuses, and apologize instead. Stand behind everything that is done. The two most important words Sam ever wrote on the first Walmart sign were: “Satisfaction guaranteed.” They’re still up there, and they’ve made all of the difference. The agency’s customer service needs to be guaranteed.
Rule 9: Control expenses better than the competition. This is where the firm can always find its competitive advantage. For 25 years running, long before Walmart was known as the nation’s largest retailer, it ranked number one in its industry for the lowest ratio of expenses to sales. An owner can make a lot of different mistakes and still recover if an efficient operation is run.
Rule 10: Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance the firm can find its niche by going in exactly the opposite direction. But be prepared for others to say that the firm is headed the wrong way. Be the best agency in the city and know what makes competitors shine and emulate those things.
From Sam Walton: “These are some pretty ordinary rules. The hard part, the real challenge, is to constantly figure out ways to execute them. The firm can’t just keep doing what works one time, because everything around them is always changing. To succeed, one has to stay out in front of that change.” One more thing: “Create your own list and only take mine as a guide.”
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