Learning from Walmart

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.
Written by Paul Murphy, Contributor

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.

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