Building a great company takes patience
“Consider…the evolution of Wal-Mart. Most people think that Sam Walton just exploded onto the scene with his visionary idea for rural discount retailing, hitting breakthrough almost as a start-up company. But nothing could be further from the truth.
Sam Walton began in 1945 with a single dime store. He didn’t open his second store until seven years later…It took Walton a quarter of a century to grow from that single dime store to a chain of 38 Wal-Marts. Then, from 1970 to 2000, Wal-Mart hit breakthrough momentum and exploded to over 3,000 stores with over $150 billion (yes billion) in revenues.”
Jim Collins, Good to Great
Jim Collins was troubled by the question: what makes companies truly great? He set out to answer it by assembling a 5-year research project to isolate those companies that seem to defy gravity, and learn lessons from them that we can all apply. The result was Good to Great, his 2001 bestseller which has passed the 2 million sales mark.
One of the things that separates greatness from mediocrity is patience. What was Sam Walton doing in his single dime store for seven years? This was not a man lacking in ambition: he went on to head the world’s greatest retail firm and became the richest man on the planet. So why did he take so long to get going with a second store?
The answer is simple: he was learning the business. He was serving and observing customers, and studying their needs and behaviour patterns. He was understanding supply logistics. He was watching how his cash flow behaved at different times of month. In short, he was taking his time to get it right.
The patient accumulation of rich business knowledge is something that seems to be a forgotten discipline today. We want overnight success; we want to assimilate knowledge quickly; we want to read whatever we need to know rather than experience it: we want to buy expensive training to project us to the next level.
Patient Sam Walton did it the old-fashioned way. He is quoted in Good to Great: “Somehow over the years people have gotten the impression that Wal-Mart was…just this great idea that turned into an overnight success. But…it was an outgrowth of everything we’d been doing since (1945)…And like most overnight successes, it was about twenty years in the making.”
Good-to-great transformations do not happen in one fell swoop; they require a culture of discipline. Collins confirms that there is no single defining action, no grand programme, no one killer innovation, no solitary lucky break, no miracle moment. It is simply a question of getting a basic business philosophy right, and then letting the momentum build up.
Sam Walton was playing a very long game, one that carried on beyond his own lifespan. It is a game we need to learn in Kenya, where modest initial success is immediately followed by diversification (time to buy that coffee farm and that insurance company), and relaxation (the Mercedes fleet and the palatial home).
That is not the stuff of greatness. Enduring success requires a patient build-up and first-hand experience. Sam’s ‘dime store’ now clocks US$300 billion in sales; but it took a while to get there.