I can hear one of my grandkids asking their grandfather while attending business school in a few years, “Papa, did businesses set goals when you were growing up as a kid?”
As silly as that question might sound, I’ve always been curious about the goals and objectives that founders and CEOs set in the generation before I started my career in the late 1980s. Why? Because the number of management books and coaching gurus did not exist back then as they do today.
Accordingly, when I see an article from the past, especially from a legendary CEO icon, I take notice. Simple, clear, and jargon-free. That describes the objectives of Sam Walton to his employees in 1974.
From the beginning of our history as a Company we’ve always set our goals high, and generally have never been satisfied with anything less than number one.Sam Walton. 1974 letter to employees
Only Two Objectives for a Growing Business
I live in a world of extremes. If I ask an executive about her objectives for the upcoming year, I’ll occasionally get a blank look. After talking for a few minutes about what their business is doing currently, I might hear a goal or two.
On the other hand, I might hear as many as five, six, or seven big objectives. Feast or famine. There’s no in-between.
And then there is Sam Walton and his 1974 goals. Let’s set the stage first. His company went public three years earlier. In 1974, they would knock on the door of a quarter of a billion in sales, up 34% from a year earlier.
There is no slowing down in sight. And that’s why I admire the simplicity of Sam’s objectives. He lists two, but I’m going to break them into three objectives:
- Improved turnover in merchandise. He includes getting sales up while reducing the dollar investment.
- Increase sales per square foot.
- Control expenses.
He finishes by addressing a 10% increase in each department of each store. Business students know their business model was about ELP, everyday low prices. Sam reiterates that by stating, “Our best course … is to maintain these low, low prices that are Wal-Mart’s trademark and continue to undersell our competitors on comparable merchandise …”
The Store’s 1974 Gradecard
The results are finally in; you will not need to wait and come back later. Here’s what happened:
- Both sales and earnings were up 34% on a top line of $168 million
- 20 stores were opened
- Their distribution throughput increased by 66%
- Inventory turnover was 3.5 vs. 4.0 two years earlier (I do not have access to 1973 data)
While the financial optics on inventory are suspect, I’m dealing with year-end numbers, so my turn numbers are questionable. Otherwise, not too bad.
Consider the following questions in light of the 1974 letter above:
- Are your objectives for your company clear and simple to understand?
- Does every employee know those objectives?
- If so, will they be provided with the means and methods to accomplish those objectives?
- What will be your role in this process and those of your direct reports?
- Do you have a cadence for monitoring progress?
Near the end of Sam’s letter to shareholders in 1974, he wrote:
We feel we have an unbeatable product mix that will enable us to continue to be the dominant retailer in the Mid-South for years to come.
Here’s hoping that you’ll be able to communicate something similarly tailored toward your business.
Title Image Source: Walmart Museum