RESOLVED: 13 Resolutions for LIFE
Posted by Orrin Woodward on August 21, 2011
Here is a snippet from the new RESOLVED: 13 Resolutions for LIFE book coming out November 1. Sam Walton is one of my favorite all-time business men because he endured so many setbacks and criticisms on his way to massive success. Enjoy. Orrin Woodward
Walton, after a decade of being the Butler Brothers top performer, began to chafe under their rigid bureaucracy and mismanagement. The Butler Brothers, who at the time made huge profits with their business model, seemed incapable of recognizing the impending, competitive threat from discounting stores to their variety store chain. But Walton, not suffering from the myopia, recognized before others that the variety stores chains must adapt or die. The billionaire Butler Brothers, in a hubris induced coma, preferred to play it safe. They may have secured higher margins temporarily, but ultimately, they destroyed their business by not responding to the “creative destruction” inherent in the free enterprise system.
Walton anticipated the future, realizing the days of high margins were following the dinosaur into extinction becoming a fatality of the discount store’s more competitively priced business model. Walton flew up to the Butler Brothers’ office in Chicago, proposing a partnership with them to launch a discount model. He wasn’t far into his presentation when he mentioned the margins would have to be cut from the typical 25% plus to around 12.5% or less of the sale’s price. This terminated the meeting. Walton recalled, “They blew up,” not willing to risk their easy profits; choosing instead, to ride out the variety store model into business oblivion. Exasperated, Walton explained that the profits would be made up on volume; that the high margins were going away regardless, but the Butler Brothers, blinded by the past, rejected the new reality along with Walton.
Not easily dismayed, Walton flew to Texas, hoping to become a franchiser of Herb Gibson, the highly successful discounter at the time. Gibson however, rejected Walton outright, seeing Walton, “as a bush-league variety-store merchant who possessed neither the finances nor the experience necessary to succeed in the Gibson chain.” Not surprisingly, it’s the revolutionary leaders with the largest of visions who must endure endless criticism from those who profit from the past, who stand to lose the most if the leader’s vision is fulfilled. Walton, with every avenue possible rejected, did what all revolutionary leaders do in this situation – he did it anyway. In fact, 95% of the money for the original Walmart came from Walton himself; simply because no one else believed enough in his vision to invest.