Learning from Walmart

Learning from Walmart

Summary: People generally don't understand how much function follows form - and organizational design is limited by organization technology - in IT. So when I read this article on Walmart by Charles Platt - sharing some of his insights seemed the natural thing to do.

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Systems, and thus systems management methods, co-evolve with both the technologies involved and the problems addressed - meaning that Wintel cost and complexities lead to the centralization of both processing and control as best practices, while the simplicity of the Unix smart display model puts no impediments in the way of combining the cost minimization of centralized processing with the flexibility and responsiveness of decentralized control.

Thus you run a large wintel shop by figuring out what tasks need to be done to keep things working, grouping those into job positions, slotting people into them, and keeping them focused on performing their tasks while there. But with a large Unix shop you do the opposite: you assume the system will work, cross train your people so anyone can handle anything, post them in user groups, and empower them to use the system to serve those users as best they can.

In the Wintel world, in other words, the technology defines a large number of highly predictable, highly repeatable, continuing tasks - most of which don't exist with a large Unix/Smart display system. In the Wintel world user service is therefore the extraordinary: bringing in something new or modifying something that exists are risky, boat rocking, behaviors and most of the things most of the people do on any given day are pretty much what they did the day before. With the decentralized Unix organization, however, that gets reversed: you mostly deal with the same people day after day, but what you actually do for them covers a much broader range and changes frequently.

Now I've said all this many times before - and the reason I bring it up today is that I was just reading a fascinating article in The New York Post by former Wired writer Charles Platt. It seems he went "undercover" as an entry level clerk at Walmart - and discovered that one major key to the chain's incredible success is an entire culture of distributed empowerment - two excerpts:

Some people, usually community activists, loath Wal-Mart. Others, like the family of four struggling to make ends meet, are in love with the chain. I, meanwhile, am in awe of it.

With more than 7,000 facilities worldwide, coordinating more than 2 million employees in its fanatical mission to maintain an inventory from more than 60,000 American suppliers, it has become a system containing more components than the Space Shuttle - yet it runs as reliably as a Timex watch.

...

[After going through a length job application process] I found myself in an elite group of 10 successful applicants convening for two (paid) days of training in the same claustrophobic, windowless room. As we introduced ourselves, I discovered that more than half had already worked at other Wal-Marts. Having relocated to this area, they were eager for more of the same.

Why? Gradually the answer became clear. Imagine that you are young and relatively unskilled, lacking academic qualifications. Which would you prefer: standing behind the register at a local gas station, or doing the same thing in the most aggressively successful retailer in the world, where ruthless expansion is a way of life, creating a constant demand for people to fill low-level managerial positions? A future at Wal-Mart may sound a less-than-stellar prospect, but it's a whole lot better than no future at all.

In addition, despite its huge size, the corporation turned out to have an eerie resemblance to a Silicon Valley startup. There was the same gung-ho spirit, same lack of dogma, same lax dress code, same informality - and same interest in owning a piece of the company. All of my coworkers accepted the offer to buy Wal-Mart stock by setting aside $2 of every paycheck.

They were less enthused about health benefits, which offered minimal coverage during our first six months. The full corporate plan would kick in after that, but seemed to require significant employee contributions. Still, my fellow trainees assured me that health plans at other retail chains were even worse, and since the federal government had raised the limits for Medicaid eligibility, that was an option for people with children. (In the time since my experience at Wal-Mart, the company has improved its health plans significantly.) The assistant manager who served as our trainer was still in her 20s, highly motivated, friendly, smart, and perceptive. Naturally she overflowed with Wal-Mart positivism. In fact she projected the feel-good sincerity of a Baptist running a bake sale.

Still, she wasn't afraid to tackle the topic of termination. During our initial six months on the job, we would be on probation on a "three strikes" basis. One major screw-up would trigger a session of "verbal coaching." (Since positivism is endemic in Wal-Mart, words such as "discipline" are seldom used. The goal is self-improvement.) A second offense would trigger some written coaching. On the third offense, the employee would be sent home to think long and hard about what happened, and would have to come back the next day with a good argument for not being fired. In effect, Wal-Mart would say, "You seem to be a hopeless case. Now tell us why we're wrong." We were given only a handful of outright prohibitions. No swearing in the store, for instance - not even the word "damn," because some people might be offended. No funny-colored hair or blatant skin piercings, because some people might be offended. In fact almost all the rules devolved to the sacred principle of never, ever offending a customer - or "guest," in Wal-Mart terminology.

The reason was clearly articulated. On average, anyone walking into Wal-Mart is likely to spend more than $200,000 at the store during the rest of his life. Therefore, any clueless employee who alienates that customer will cost the store around a quarter-million dollars. "If we don't remember that our customers are in charge," our trainer warned us, "we turn into Kmart." She made that sound like devolving into some lesser being - a toad, maybe, or an amoeba.

And so we came to the Wal-Mart Pledge. Solemnly, each of us raised one hand and intoned: "If a customer comes within 10 feet of me, I'm going to look him in the eye, smile and greet him." Having pledged ourselves, we encountered the aspect of Wal-Mart employment that impressed me most: The Telxon, pronounced "Telzon," a hand-held bar-code scanner with a wireless connection to the store's computer. When pointed at any product, the Telxon would reveal astonishing amounts of information: the quantity that should be on the shelf, the availability from the nearest warehouse, the retail price, and (most amazing of all) the markup.

All of us were given access to this information, because - in theory, at least - anyone in the store could order a couple extra pallets of anything, and could discount it heavily as a Volume Producing Item (known as a VPI), competing with other departments to rack up the most profitable sales each month. Floor clerks even had portable equipment to print their own price stickers. This was how Wal-Mart detected demand and responded to it: by distributing decision-making power to grass-roots level. It was as simple yet as radical as that.

We received an inspirational talk on this subject, from an employee who reacted after the store test-marketed tents that could protect cars for people who didn't have enough garage space. They sold out quickly, and several customers came in asking for more. Clearly this was a singular, exceptional case of word-of-mouth, so he ordered literally a truckload of tent-garages, "Which I shouldn't have done really without asking someone," he said with a shrug, "because I hadn't been working at the store for long." But the item was a huge success. His VPI was the biggest in store history - and that kind of thing doesn't go unnoticed in Arkansas.

He was invited to corporate HQ as a guest at a management conference. "It was totally different from what I expected," he told us. "I thought it would be these fatcats talking about money, but no one even mentioned money. All they cared about was finding new ways to satisfy customers. I met everyone including the chairman of the company."

So what's Walmart's formula for success here? the company's single minded focus on the customer drives employee empowerment - and employee empowerment drives success in serving that customer.

And the good news? you can do it too - With Unix.

Topics: Software, CXO, Operating Systems, IT Employment

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64 comments
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  • Telxon

    It's interesting that this technology still gets mentioned by name. We
    worked with Telxon units at a small IT software development company I
    worked at in the mid to late-1990s, developing client/server solutions
    for Fortune 500 companies. What we worked with was handheld
    computing form factors. We ran DOS, and later Windows 3.11 on them.
    Users would enter information into them using a stylus, "poking" at a
    software keyboard to enter characters, and hit buttons on the touch-
    sensitive GUI display. The Telxons often had built-in wi-fi capability.
    Sometimes they just had cradles the workmen would set them in at the
    end of their shift. Using either wi-fi or cradles, this was how the system
    would upload/download information from/to the workers. It was often
    pretty amazing how much technology they were able to pack into a small
    space, though like today's handhelds, memory constraints, and in some
    cases low processing power were a concern.

    I first heard about the use of Telxons at Wal-Mart when Frontline did a
    show on globalization several years ago. The ones they use looked less
    sophisticated than what we used. The units looked more like "ray guns",
    and seemed to be more single-purpose. What we worked with were
    really like PCs that were small enough that you could hold them in your
    hand, or strap to your forearm. The distinguishing characteristic seemed
    to be a barcode scanner. Some of the Telxons we worked with had this
    as well. On ours it was usually detachable.

    Nowadays the computers are small enough that the old Telxons we used
    would be considered large and clunky by comparison, and less powerful.
    They can easily fit in the palm of your hand now, and have phone
    functionality to boot. The only hinderance to using them for the kind of
    applications we developed might be that the screens are a lot smaller.
    We had 5" and 10" screens, ones that could fit a good amount of
    information and be viewed clearly. I doubt we could implement the kind
    of UIs we had on them on today's smartphone displays.
    Mark Miller
    • More Telxon

      I dealt with the Telxon devices, too, when we wrote an inventory control system for Denny's restaurants. Very nice, durable stuff... ours were regularly dropped without ill effect.

      Dead simple to use, too. We ran DOS on them, and used simple zmodem protocol to transfer data. To this day I really can't see a practical advantage for using a more complicated OS for our implementation.

      Telxon DEFINITELY earned their name recognition. Like Frigidaire, Hoover, and Palm, it's a noun.
      dave.leigh@...
      • Crazy not to

        "We ran DOS on them, and used simple zmodem protocol to transfer
        data. To this day I really can't see a practical advantage for using a more
        complicated OS for our implementation."

        Try complicated IP stacks, device support.

        Use a small embedded OS like linux + busybox. Up to date security
        patches and advanced IP stack (e.g. IP6), same memory footprint, better
        USB and peripheral support with full source (aids debugging) and no fee
        option (if you choose).
        Richard Flude
        • "For our implementation"

          [i]I used the phrase "for our implementation" advisedly.[/i] I can think of dozens of reasons to use a different OS for other purposes. But none of that was necessary for what we were doing.

          There's a modern tendency to overcomplicate things for the sake of overcomplicating them. It's often quite unnecessary.

          For example, this particular device ran DOS from flash memory. If you don't [i]require[/i] an advanced IP stack or wireless connectivity, then there is no advantage to providing it, Foregoing unecessary features leaves no vector whatsoever for malware. This makes up-to-date security patches moot. At least some of what you suggest is an antidote for having over-engineered the solution in the first place.

          It's like the old joke about NASA and the Fisher Space Pen... we spend million$ to provide our astronauts with a pen that could write in zero-G... the Russians solved the same problem by using pencils.
          dave.leigh@...
          • COBOL thinking

            If people did as you say, we would all be running COBOL (Hmm, ....). After an OS is dead and gone (in terms of support and training), it makes no sense to continue to use it. It may work fine in DOS - but try to hire someone (young) today that knows DOS. It certainly wouldn't be a great career choice for that young person to "do DOS".

            If you want to do real-time or embedded processing, why not try Ada (on Linux of course)? :)
            Roger Ramjet
          • PLEASE read what I wrote

            What I wrote was exactly and literally what I meant. It would save a lot of time if people didn't read their own meaning into it. For the record, I am NOT advocating continued use of DOS here.

            I said, [i]"To this day I really can't see a practical advantage for using a more complicated OS for our implementation."[/i]

            "A more complicated OS." That's not to say that today it wouldn't be a [i]different[/i] OS. If I started that project today I would certainly use a current OS (most likely embedded Linux) to do it. But it would be stripped to the bone. I wouldn't load it up with a bunch of modules I'm not going to use, and I wouldn't have a lot of interprocess communication going on for what is essentially a one-trick pony.

            Honestly, folks, I don't think it's arguable that an embedded system should implement the fewest number of features necessary to perform the task. Anything else is bloat, and may actually compromise security. For THAT task in THAT implementation, DOS did exactly that, and STILL would be adequate to that task. And it did have an advantage that it was easily coded on the desktop prior to transfer to the device. While my choice would be different today, it would not be more complicated. Whatever the details, I would have a dead simple OS, a single-purpose dead simple file transfer protocol.

            If anyone wants to argue the point, PLEASE include your reasons for thinking that bloat and wasted CPU cycles are desirable.

            I didn't even mention a language. I'm probably the most language agnostic person who posts here, and I write in fewer languges than I design for. I would go for any language that's light on resources and familiar to the people who will be maintaining the codebase. So if you were the maintainer, Roger, hell yeah, it would be Ada.
            dave.leigh@...
  • RE: Learning from Walmart

    Walmart is symbolic of a few things for me. I do agree with this story that they have perfected a way of brokering and distribution which has resulted in their becoming the US largest employer.

    At the same time, I am troubled by whether in the long run we Americans are benefited by being driven to their stores to find the lowest prices.

    It's troubling because I know how difficult it has become for Americans to make ends meet--namely finding good paying jobs.

    The bulk of goods sold through Walmart are imported into the US, the largest exporter being China.

    The 'Free Trade' treaties we have are designed to foster unimpeded trade, but to be effective for our Economy, there must be a balance of trade flows.

    The trade deficit with China is representative of the problem with Free Trade. We don't have equal entree to their markets and thus all goods sold at Walmart that are 'Made in China' send money 'out' of our economy. We are becoming cash poor and not self-sufficient.

    When will the jobs that got offshored by Corporate America return? Not until we 'level' the Free Trade playing field or abandon our treaties all together.

    Leveling the playing field means to me, phasing in (over several years) an employee penalty tax for each employee that an American Corporation hires overseas or who is H1-B.

    Phasing in a targeted Tariff (or Export License as Warren Buffet once put it) directed toward select industry products
    will enable manufacturing to return to America. Measuring and tracking trade imbalances and monitoring those countries who fail to meet our American need for Free trade in their markets should be prime targets for Tariff and Export License measures.

    If that makes me a 'protectionist', so be it. I see no other way to return jobs to America WHERE THEY BELONG.

    Employees of Walmart aren't allowed to be members of Unions.
    Change American Labor Law to give Employees the right to do so, unequivocally.

    I don't fault Walmart and marvel at how they operate every week I go there to shop at our super center. Yet I am troubled that I must go there.

    Buy 'Made in America' when and where you can.
    God Bless America.

    Thanks Murph.

    Dietrich T. Schmitz
    http://www.dtschmitz.com
    no_zd_user_name
    • There's a new Tariff in town

      There is only one true "fair" tax - a transaction tax. Basically you grab a tax on every transaction - at the source. Think of it like an ATM fee. Read this in more detail at http://thesolver.servebeer.com/FAIR_TAX_Plan.htm

      Tariffs, license fees, duties, etc. should be used ONLY to alter behavior - not (specifically) make money. i.e. You raise the DUTY (don't call it a tax) on cigarettes to persuade people to stop smoking (and not for generating money for XXX project).

      Why do it this way? Less bureaucracy, more efficient. Goodbye IRS! No more tax cheaters/criminals. There are just too many advantages to list so check out the link.

      The main advantage of a transaction tax on the source is that you can bring money INTO the US and not be taxed - but if you take it out of the country you DO get taxed. This by default, discourages offshoring. Goods OTOH are not taxed either coming into or out of the US. If some "imported good" is hurting the US because of unfair trade, you slap a tariff on it - to make it less attractive to consumers (and not to generate money - which is just a side-effect).

      The single transaction tax is a new paradigm for the future of this country. It's that important.
      Roger Ramjet
      • GST by another name

        From the description on the website it starts off sounding like what
        the UK calls a VAT (Value Added Tax) and Canada (and perhaps
        Australia) call GST (Goods and Services Tax). In Canada the GST is 5%.

        There are some fundamental differences, of course. I can see one
        glaring flaw in the logic though. A worker takes their paycheck cash,
        the bank deducts the 5% (estimated) "transaction tax". And then the
        cash never sees the bank again. Since the collection of taxes is done
        by the bank, if the cash never goes back to the bank - there is no
        more collection. So, person A pays cash for an item (no tax collected)
        to person B. Person B buys a service in cash from Person C (no bank,
        no tax collected), etc etc. People will get very creative in this cash
        society in order to avoid the banks, and paying the transaction tax.

        A small business could work entirely on a cash basis, though I suspect
        the security guard business would do a booming business.

        IRS will still need to exist to keep the banks honest.

        I can speak about the Canadian GST. It is added to virtually all sales
        transactions - for both goods and services provided. There are a few
        cases where the GST is "zero-rated". Things that are exempted are
        taxes a levied by other levels of government, and a couple of other
        basics of life. A small business gets to claim back from the
        government the GST it spends. In essence it only sends to the
        government the difference between tax collected and tax spent.

        Ironically, the GST used to be hidden, and at a higher rate. And
        nobody complained. Several years ago the government made it
        transparent and lowered the rate, and now everyone complains. Go
        Figure.

        Incidentally, we still have income tax, and provincial sales taxes. I
        believe they do as well in the UK and Australia
        snberk341
        • We don't want no stinkin GST

          This is the first tax that effectively taxes cash. This means there is no reason for people to PAY in cash. Credit is also not taxed (it just gets too complicated), so you can buy, buy, buy and you only pay tax when you transfer your money from the bank to the credit company.

          "Cash" business do work in cash, but they don't need $20/$50/$100 bills - they need the lower denominations to give change. So you end up accumulating these higher denomination bills. You COULD hold onto the cash and do everything with cash - but there would be anti-hoarding laws for that . . .

          The main point of the transaction tax would be that corporations would pay it every time they moved money - thus they would pay most of the tax.

          The big difference with this tax is there is NO BOOKKEEPING REQUIRED. All taxes are grabbed AT the bank account level, so merchants do not have any paperwork. This makes them more productive and leads to more businesses being opened (easier to do business).
          Roger Ramjet
          • Not a tax on cash

            But its not a tax on cash. Its a tax on cash that moves through a bank.
            Since it is a natural human tendency to avoid paying taxes, then
            humans will find ways to stay away from a bank with their cash.

            If I have a small business that provides a service I can accumulate a
            lot of cash with out spending it on raw inputs. I can buy a car with
            cash. The car dealership can then pay rent in cash. The landlord can
            then buy more property in cash. All of this tax free, since none of
            their cash has gone through a bank.

            You say "but there would be anti-hoarding laws for that . . ." Who
            would enforce that? What kind of paperwork would be required to
            track how much cash someone was supposed to have, or would the
            police be able to search people's homes for "excess" cash? And now,
            who would keep the cops honest with that much cash running
            around? I have great respect for the police, but it only takes one bad
            apple to make a mess of things. And cash can be huge motivator to
            visit the "dark side".


            h_lewis
          • Tangle and Cash

            [But its not a tax on cash. Its a tax on cash that moves through a bank.
            Since it is a natural human tendency to avoid paying taxes, then
            humans will find ways to stay away from a bank with their cash.]

            Avoiding interest and investing is the the cost of a cash economy. You can put your money in a mattress or walk around with it in your pocket - but the risks are large. With more people using cash, muggings will go up - thus forcing people to not carry cash

            [If I have a small business that provides a service I can accumulate a lot of cash with out spending it on raw inputs. I can buy a car with cash. The car dealership can then pay rent in cash. The landlord can then buy more property in cash. All of this tax free, since none of their cash has gone through a bank.]

            A car dealer would be required by law to report any transaction in cash over a certain amount (say 10 grand). The would not be able to accept that much cash - by law. This is almost the case today - since large cash transactions are suspected drug money and are noted.

            [You say "but there would be anti-hoarding laws for that . . ." Who
            would enforce that? What kind of paperwork would be required to
            track how much cash someone was supposed to have, or would the
            police be able to search people's homes for "excess" cash? And now,
            who would keep the cops honest with that much cash running
            around? I have great respect for the police, but it only takes one bad
            apple to make a mess of things. And cash can be huge motivator to
            visit the "dark side".]

            It's not how much cash you have, it's how much you transact. If all of your expenditures are under the limit (10 grand), then you can go ahead and knock yourself out. But you wouldn't be able to buy a $50,000 car or a $300,000 house with all cash.

            In the end it all doesn't matter. Most of the taxes will be paid by large bank transactions like corporate payrolls (accounts payable). Small fry businesses need to be encouraged - thus if they can do all their transactions in cash, good for them. large corporations do not have that luxury.
            Roger Ramjet
          • Still don't agree

            I still don't agree - The system will still need to have a bureaucracy....
            IRS or otherwise .... to monitor the transactions.

            If there is no auditing by somebody, then how does the $10K limit (to
            use your example) get enforced? If nobody is enforcing and auditing,
            then I *can* go to the car dealer and buy a $50K car with no tax. I
            may have to it over 6 days to keep the per transaction amount to less
            than $10K, but I would do that to keep $2500 in my pocket (using the
            hypothetical 5%). Since, in the original scenario there is no paperwork
            being kept (remember that was one of the compelling reasons for the
            transaction tax - no paperwork for the business) then if the there was
            a surprise audit.... no paper trail so no evidence that a transaction tax
            had been avoided.

            Payrolls have been, and sometimes still rarely, carried out in cash.
            This avoids another place to to capture the transaction tax. If the IRS
            or equivalent is not auditing, then how do you enforce transaction tax
            deductions at payroll source?
            h_lewis
          • Reprinted

            When you tax the transactions at the source, you just need a computer program to do it. All filings would be carried out by the banks (and they would be compensated somehow).

            When you tax transactions at the end-point, you need to document the transaction and collect the taxes RIGHT THEN. Then you have to send it in to the government, and it gets received by a bureaucracy to process it all. Each step of the way can lead to criminality - as Wesley Snipes found out.

            So, let the banks do everything (automated via software) or set up a bureaucracy, pass laws, and prosecute when needed. Do you like the IRS? Do you worry sometimes about making a mistake on your tax form (BTW no yearly filing with source transaction tax) and getting audited?

            This is a single flat tax - and there is no costly bureaucracy or criminality (Wesley Snipes would never have gone to prison). There is no yearly filing of forms and the government gets almost instantaneous statistics on the economy.

            Cash is one of the bugaboos - and I said that it doesn't matter because large corporations would not "revert" to using cash. Enforcement of "cash hoarding" laws would develop like everything else - by trial and error. But like I said, the big transactions would be filling the government coffers. Toyota WILL wire billions of dollars back to Japan (and be taxed). Do we worry about Joe the Plumber paying everyone in cash?

            Also: How many people are willing to pay an ATM fee to get their own money? This tax works exactly the same way.
            Roger Ramjet
    • On a personal basis, I agree

      We have a buy Canadian first, then American - and Chinese only if there are no sensible alternatives - policy.

      You'll be pleased to know, however, that Walmart agrees. They have a preferential buy American policy - and until about August/Sept when the polls showed the democrats winning, were driving a resurgence in American manufacturing.

      So go to Walmart .. look for the little American flags on things before buying, but don't blame the store (or the absense of unions) because China exports cheap stuff.
      murph_z
    • Missed the point!

      The purpose of Free Market Capitalism is to insure goods and services are available as efficiently (cheaply) as possible. It is not to guarantee anyone a job, or a profit. The rising tide of cheap goods and services makes everyone better off (richer) in the long run.

      The great paradox and danger is that the greatest enemy to Capitalism is successful Capitalists who quickly try to pervert the system to eliminate competition.

      --wally.
      wkulecz
  • What does SPECIFIC technology have to do with business culture?

    The point of your article is relating two things that simply aren't related. Why can the culture occur on using *Nix. It's like you're saying that the technology is driving the culture, not vice versa.

    People make these decisions and maybe *Nix can be conducive to these type of culture but people are very ingenious. They learn how to make the tools they have work the way they need.
    Heatlesssun
    • Murph's writing style

      Murph tends to add terse descriptions of ideas (models) that he has fully fleshed out in the past. If you read his blog every day, you would know what he means by centralized processing and decentralized control (my personal preference is distributed processing and decentralized control).
      Roger Ramjet
      • I had the same question

        Which means he should be referencing back to previous articles for newer readers of his column.

        I found the article very interesting, but would like to know the connection, also.
        coffeeshark
        • I had the same question

          Murph is a one trick pony that keeps barfing up the same nonsense in every article he writes. It is obvious that if he ever new anything about Windows at all, he has not kept pace.

          I used to think he wrote these types of articles to incite people and get reader feedback. I now think he is not smart enough for that, he can only repeat the same tired lines over and over and over....

          Hey Murph, you claim to be a 'Nix expert, what don't you stick to writing about that and maybe you wouldn't look like such a whiner baby??
          ShoreLeave