Sam Walton’s “Made in America”: Book Review, Notes + Analysis

Poor Ash’s Almanack > Book Reviews > Business / Finance >  Entrepreneurs

Overall Rating: ★★★★★★ (6/7) (standout for its category)

Per-Hour Learning Potential / Utility: ★★★★★★ (6/7)

Readability: ★★★★★★★ (7/7)

Challenge Level: 1/5 (None) | ~325 pages ex-notes (368 official)

Blurb/Description: the story of Wal-Mart, written by the one-of-a-kind retailer Sam Walton.

Summary: this is one that I wasn’t expecting to enjoy as much as I did, but you can’t help but love Sam’s no-nonsense, down-to-earth small-town folksiness, as he takes you through one of the truly great American business stories of all time.  The inset block quotes from other executives/friends/etc provide straight-from-the-source context on both Walton the man and Wal-Mart the empire. In many ways picking up where the Hartfords of A&P left off, Walton went through numerous transformations as a retailer, constantly evolving to incorporate the best of competitors’ models (as well as coming up with some innovations of his own in distribution and communication, though he’s too modest to play that up).

Highlights: as you’d expect from Sam Walton, not a wasted page.  Just the right amount of detail. Honest.

Lowlights: none, really; it would obviously have been super interesting to see Walton’s thoughts about retail in the age of Amazon and e-commerce, but that would unfortunately have been temporally impossible.

Mental Model / ART Thinking Points: multicausality, trait adaptivity, status quo biasincentives,saliencelocal vs. global optimizationempathy

You should buy a copy of Sam Walton: Made in America if: you want a comprehensive overview of the rise of one of America’s iconic businesses, that’s perhaps overlooked today as a mature has-been but was once veritably the Amazon-like category killer of its era.

Pairs Well With:

The Great A&P by Marc Levinson ( GAP review + notes) – a comprehensive picture of the rise and fall of arguably the most dominant retailer in history before Wal-Mart.

The Everything Store by Brad Stone ( TES review + notes) – a comprehensive primer of the rise of the most dominant retailer in history after and, perhaps, including Wal-Mart and the Great Atlantic & Pacific Tea Company.

Onward by Howard Schultz (O review + notes) – an uncommonly open and honest book about how a company can lose its way.

My essay Ten Commandments From 1.5 Centuries Of American Retail Dominance (And Failure), summing up what I learned from reading about the history of a dozen-odd major American retailers.

Reading Tips: none in particular.

Reread Value: 3/5 (Medium)

More Detailed Notes + Analysis (SPOILERS BELOW):

IMPORTANT: the below commentary DOES NOT SUBSTITUTE for READING THE BOOK.  Full stop. This commentary is NOT a comprehensive summary of the lessons of the book, or intended to be comprehensive.  It was primarily created for my own personal reference.

Much of the below will be utterly incomprehensible if you have not read the book, or if you do not have the book on hand to reference.  Even if it was comprehensive, you would be depriving yourself of the vast majority of the learning opportunity by only reading the “Cliff Notes.”  Do so at your own peril.

I provide these notes and analysis for five use cases.  First, they may help you decide which books you should put on your shelf, based on a quick review of some of the ideas discussed.  

Second, as I discuss in the memory mental model, time-delayed re-encoding strengthens memory, and notes can also serve as a “cue” to enhance recall.  However, taking notes is a time consuming process that many busy students and professionals opt out of, so hopefully these notes can serve as a starting point to which you can append your own thoughts, marginalia, insights, etc.

Third, perhaps most importantly of all, I contextualize authors’ points with points from other books that either serve to strengthen, or weaken, the arguments made.  I also point out how specific examples tie in to specific mental models, which you are encouraged to read, thereby enriching your understanding and accelerating your learning.  Combining two and three, I recommend that you read these notes while the book’s still fresh in your mind – after a few days, perhaps.

Fourth, they will hopefully serve as a “discovery mechanism” for further related reading.

Fifth and finally, they will hopefully serve as an index for you to return to at a future point in time, to identify sections of the book worth rereading to help you better address current challenges and opportunities in your life – or to reinterpret and reimagine elements of the book in a light you didn’t see previously because you weren’t familiar with all the other models or books discussed in the third use case.

Sam Walton came of age in the Great Depression, to which he credits his cost-conscious attitude and strong belief in the value of a dollar, although he believed his brother Bud was the better negotiator.

Walton was very competitive from a young age – he never lost a football game and expected to win (he believed this was a self-fulfilling prophecy) – and this attitude carried over to his retail career.  

He started off at J.C. Penney, which he described as the “Cadillac of the industry” (ironic, or perhaps informative, in two ways – as both Cadillac and JCP would eventually fall from grace), where he learned the basic tools of the trade.  

He eventually branched out on his own, and was going to buy a store with a friend in St. Louis, but his wife said no big cities and no partnerships, so he eventually bought a Ben Franklin variety store in Newtown, Arkansas and started experimenting.

He discovered the wonders of elasticity in women’s panties – drop the price for three from $1.20 to $1.00 and you gain in volume what you make up on margin.  

This was not an original concept per se (John Hartford had put it to good use for a long time before that), but Walton took it to its extreme. In a poignant quote, he also mirrored the strategy of evolution that kept earlier grocery discounting peer A&P competitive through so many transitions:  

As good as business was, I could never leave well enough alone, and, in fact, I think my constant fiddling and messing with the status quo may have been one of my biggest contributions to the later success of Wal-Mart. - Sam Walton Click To Tweet

On  status quo bias.  Howard Schultz makes similar observations in “ Pour Your Heart Into It ( PYH review + notes):


We’re seldom motivated to seek self-renewal…

even when life seems perfect, you have to take risks and jump to the next level, or you’ll spiral downhill into complacency without even realizing it.

(Also, Walton’s handwriting was terrible, so three cheers for us messy handwriters.)  

Moreover, he “had very little capacity for embarrassment,” paying “absolutely no attention to the way things were supposed to be done.”

Anyway, Walton had to give up the Ben Franklin because he didn’t have a renewal option on the lease, but he ended up moving to Bentonville and opening up a Walton’s Five & Dime.  He borrowed the self-service concept from other retailers that were starting to use it, as well as the concept of metal vs. wood shelving and fixtures, and traveled the country soaking up knowledge from different stores.  

There’s an A&P mention on page 48 (Wal-Mart co-located a store in the same development as them) but interestingly, other than that, Walton gives no real shoutout to A&P (he gives plenty of credit to Sol Price, though). 

There are a lot of great parallels if you read Marc Levinson’s The Great A&P (GAP review + notes).  To Walton’s earlier point about status quo biasThe Great A&P’s success was driven not by one strategy, but by a constantly-shifting strategy as disruptions like refrigeration and automobiles vastly changed what made a grocery store valuable to shoppers- an example of  trait adaptivity.  

It’s also worth noting, as I explore in Ten Commandments From 1.5 Centuries of American Retail Dominance (And Failure)  that having an entrepreneurial, founder-driven culture – as both Wal-Mart and A&P did – helped them a lot.  I do wonder whether Wal-Mart would have responded to Amazon more effectively if Walton had still been around…

Walton was described by many as a:

“master of taking the best out of everything and adapting it to his own needs.”

Walton tried to get into real estate development, but it didn’t work out and he shook it off (as he did with other mistakes – for example, learning that Midwesterners don’t like wine as much as Californians when trying to copy the warehouse club concept).  Another example of  trait adaptivity.

As he expanded, he incentivized store managers with 2% ownership in the store via a limited partnership; by 1960, they had $1.4MM in revenue in 15 stores, but he wanted something bigger – that led from the variety stores to Wal-Mart – which became a hit.

Many of the innovations were the product of necessity (ex. distribution for small towns, communication between stores) or lack of other options, and Walton believes they may not have done as well if they were sufficiently capitalized or part of a bigger company.

They focused on hiring managers with character and action bias, shunning college-educated types who they thought wouldn’t get down and dirty (product vs. packaging); there was a strong focus on merchandising.

Walton viewed himself as a P.T. Barnum style promoter (though his tricks were nothing compared to George Gilman’s) and thought it was amazing how much merchandise could be moved with the right promotion.  Walton clearly understood  salience.

They had a circus-style approach at first (complete with ice cream and donkey rides, sometimes) but moved away from it as they matured. (A&P comes to mind again.)

Despite working a ton, it’s clear that Walton was an involved father and husband, and it seems at some point the stress of being leveraged to the hilt was starting to get to him, so Wal-Mart decided to go public.  Amusingly, Wal-Mart thought it was a good idea to show big-city analysts the country life – camping by the river, etc – the annual meetings must have been a hoot…

Walton’s fondness for airplanes was useful in scouting stores, and although he grumbled about it, he did pony up for the distribution and IT needs of the business.  (In a somewhat Elon Musk-like fashion, he told a new hire to get something done in 60 days that the guy – aggressively – thought he could do in 90.)

He also took care of employees because he believed the more profit you shared with them, the more accrued to the bottom line; moreover, the more you trust, praise, and give responsibility, the better people will respond.

Wal-Mart did go through a bit of a rough patch when two EVPs essentially had a turf war; local vs. global optimization.  Walton (who had stepped away, formally, but not in practice) resumed the Chairman/CEO role, fixing the problem.

One of the problems with getting big, in Walton’s mind, was that there can be an attitude of let’s just stay the same… not on his watch, you won’t.  (Again, status quo bias.)  Walton “made it his personal mission” to ensure constant change was part of the Wal-Mart culture – sometimes, even just for change’s sake.

Walton also really listened to what was going on in the stores, making that a highlight of merchandising meetings and also talking to truck drivers to keep an ear to the ground.  This is, again, something you see a lot from successful retailers, ranging from Jeff Bezos at Amazon and Kip Tindell at The Container Store, as discussed in “The Everything Store” (TES review + notes) and “Uncontainable” (UCT review + notes) respectively.

Competition with K-Mart made them stronger, not weaker; they continued to be innovative and/or good copiers of the best other people had to offer.  In particular, they developed a competency in distribution: per EVP Joe Hardin:

“Distribution and transportation have been so successful at Wal-Mart because senior management views this part of the company as a competitive advantage, not as some afterthought or necessary evil.

And they support it with capital investment. A lot of companies don’t want to spend any money on distribution unless they have to.

Ours spends because we continually demonstrate that it lowers our costs. This is a very important strategic point in understanding Wal-Mart.”

Walton’s principles for management included: bottom-up thinking (one store at a time), effective communication (ranging from IT to greeters who both prevented theft and made customers feel good – empathy), responsibility, and lean operations.

First Read: 2015

Last Read: summer 2017

Number of Times Read: 2

Planning to Read Again?: maybe


Review Date: summer 2017

Notes Date: summer 2017