Start With Why

S. Robeson Walton, who succeeded his father as chairman of the company, gave a public statement. “No changes are expected in the corporate direction, control or policy,” he said. Sadly for Wal-Mart employees, customers and shareholders, that is not what happened.
    Sam Walton was the embodiment of the everyman. Though he was named the richest man in America by Forbes magazine in 1985, a title he held until he died, he never understood the importance others placed on money. Certainly, Walton was a competitor, and money was a good yardstick of success. But that’s not what gave Walton or those who worked at Wal-Mart the feeling of success. It was people Walton valued above all else. People.
    Look after people and people will look after you was his belief, and everything Walton and Wal-Mart did proved it. In the early days, for example, Walton insisted on showing up for work on Saturdays out of fairness to his store employees who had to work weekends. He remembered birthdays and anniversaries and even that a cashier’s mother had just undergone gallbladder surgery. He chastised his executives for driving expensive cars and resisted using a corporate jet for many years. If the average American didn’t have those things, then neither should those who are supposed to be their champions.
    Wal-Mart never went through a split under Walton’s command, because Walton never forgot where he came from. “I still can’t believe it was news that I get my hair cut at the barbershop. Where else would I get it cut?” he said. “Why do I drive a pickup truck? What am I supposed to haul my dogs around in, a Rolls-Royce?” Often seen wearing his signature tweed jacket and a trucker’s cap, Walton was the embodiment of those he aimed to serve—the average-Joe American.
    With a company so beloved by employees, customers and communities, Walton made only one major blunder. He didn’t put his cause into clear enough words so that others could continue to lead the cause after he died. It’s not entirely his fault. The part of the brain that controls the WHY doesn’t control language. So, like so many, the best Walton could articulate was HOW to bring his cause to life. He talked about making products cheap to make things more affordable to the average working American. He talked about building stores in rural communities so that the backbone of America’s workforce didn’t have to travel to the urban centers. It all made sense. All his decisions passed the Celery Test. It was the WHY upon which the company was built, however, that was left unsaid.
    Walton was involved in the company until just before his death, when his ailing health prevented him from participating any longer. Like all organizations with founder-leaders whose physical presence helps keep the WHY alive, his continued involvement in the company had reminded everyone WHY they came to work every day. He inspired everyone around him. Just as Apple ran on the fumes of Steve Jobs for a few years after he left the company before significant cracks started to show, so did Wal-Mart remember Sam Walton and his WHY for a short time after he died. But as the WHY started to get fuzzier and fuzzier, the company changed direction. From then on, there would be a new motivation at the company, and it was something that Walton himself cautioned against: chasing money.
    Costco was cofounded in 1983 by WHY-type Jim Sinegal and HOW-type Jeffrey Brotman. Sinegal learned about discount retailing from Sol Price, the same person from whom Sam Walton admitted to “borrowing” much of what he knew about the business. And, like Walton, Sinegal believes in people first. “We’re going to be a company that’s on a first-name basis with everyone,” he said in an interview on ABC’s newsmagazine show 20/20. Following the same formula as other inspiring leaders, Costco believes in looking after its employees first. Historically, they have paid their people about 40 percent more than those who work at Sam’s Club, the Wal-Mart–owned discount warehouse. And Costco offers above-average benefits, including health coverage for more than 90 percent of their employees. As a result, their turnover is consistently five times lower than Sam’s Club.
    Like all companies built around a cause, Costco has relied on their megaphone to help them grow. They don’t have a PR department and they don’t spend money on advertising. The Law of Diffusion is all that Costco needed to get the word out.