When Wal-Mart started growing, they did not have much of a distribution system, especially when compared to their competitors. Out of necessity, the company made the decision to only add stores within a day’s drive of a distribution center. While the competitors were haphazardly adding stores across the nation, Wal-Mart was growing from a central point, saturating the market as they expanded outward. This strategy had many unexpected benefits, such as lower advertising costs due to market saturation. But the most important thing about how Wal-Mart had to grow was management’s recognition of the advantages. In The Obstacle is the Way, Ryan Holiday wrote, “Great individuals, like great companies, find a way to transform weakness into strength.” For Wal-Mart, their weakness was a poor distribution system. But instead of internally blaming each other for their situation, management found a way to grow and developed their way into a winning strategy.
Sam Walton established Wal-Mart with two principles, low prices and satisfaction guaranteed. And he never wavered in his dedication to these principles. In fact, he was a fanatic when it came to having the lowest prices anywhere. Much of Wal-Mart’s early success resulted from this absolute dedication to low prices, not from doing everything right. Actually, there were many, many things that Wal-Mart was not good at in the beginning. But they stuck to their core principles. So, when people shopped at Wal-Mart, they expected low prices. And that is exactly what they received. All too often, businesses fail to understand the one or two core factors that have the greatest potential to drive their success. If you own a small business, what are your core values? What do your customers expect to receive from your company? If you do not know, it is time to start figuring it out.
I am not sure what the next great technological advance will be. Nor am I sure of how long into the future that this advance will occur. But I am certain when it does happen, new companies will rise, rushing to be the first ones to get to market. And they will fall. Because ultimately, these companies are built with the wrong people. And that includes the founders. Because these founders are not trying to build something great. They are just trying to build their personal fortunes. When you have the right people working for your company, you can count on them to carefully consider new technology instead of jumping on bandwagons. You can be sure that any technology adopted will fit within the company’s long-term strategy. The great companies, let by the right people, will adapt. And they will continue to be great.