Thursday, July 14, 2011

Walmart (WMT): Part One - Simple, Unifying Themes

There is something to be said for the simple rallying cry, the unifying principle, the lowest common denominator upon which to rely when in doubt. The human mind, as we're told by cognitive psychologists, is not so good at juggling multiple ideas at the same time. It's quite bad at managing priorities when given unclear directions. And it's just plain terrible - paralyzed even - when asked to act on what it perceives to be conflicting ideas or directions.

F. Scott Fitzgerald noted the following in this 1936 article for Esquire magazine: 

"...the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function."
Though most of us consider ourselves first-rate lovers (especially the French), drivers (especially the Swedes), and investors (this bit of overconfidence is equal opportunity), in reality these skills - as well as possessing a first-rate intelligence - tend to distribute along a bell curve, meaning most of us (irrespective of our confidence) are going to be just plain average at each. So when we create systems in which our fellow humans must make decisions, we are increasing the odds of them making the correct decisions if we reduce their options, provide them clear priorities, or at a bare minimum provide them with a simple rule to use when in doubt.

Through much of my life I've had a fascination with politics, enjoying in particular - almost as a connoisseur - the finer elements of a well-run campaign. One of the best in terms of providing simple, unifying themes was the 1992 candidacy of Bill Clinton. The behind the scenes drama is captured in a spectacular documentary, The War Room

Now imagine a national campaign. You have so many constituencies that have conflicting and overlapping agendas - voters, interest groups, supporters, opponents, media, Congress, etc. A campaign can easily derail itself trying to patchwork a message to satisfy each. Those with the most success, however, jettison the complex and nuanced messages in favor of simple, overarching themes. For that 1992 campaign, political operative James Carville reduced all the complexity to three simple rules, displaying them prominently for all to see everyday: 1. Change vs. More of the Same; 2. The Economy, Stupid; and 3. Don't Forget Healthcare.


These three things, they believed, captured the fears and hopes of the electorate, highlighting the strengths of a challenger versus an incumbent, and kept the conversation away from Clinton's recurring personal foibles.  

It worked for two reasons: One, they picked the right themes. Voters were worried about the recession, and despite George H. W. Bush having historic approval levels coming out of a quick and decisive victory in Gulf War I, people were concerned about their jobs and quick to ask "what have you done for me lately?" The Clinton campaign was able to paint a picture of the incumbent as ineffective on economic issues.

This is a critical point. Not any theme will do. You can't just pick one, beat the drum often and loudly, and expect it will work every time. The message must have resonance. It must be the right message. If Carville and crew had selected the wrong one - if it rang hollow to campaign staff and/or voters - the in-the-trenches workers would have dropped it. (Note: Line workers can be brilliant at subversion when you haven't won their buy-in.) 

Second, communications staffers and the candidate pounded the messages home with unrelenting discipline. When media questioned them about any topic, their job was to always bring the conversation back to these three points. They were able to do it because the themes were simple, easy to remember, and (importantly) the staff allowed itself to be indoctrinated, truly believing that these were the right messages to share.  

Campaigns and businesses are worlds apart in many ways, but in this regard I believe them to be quite similar. They are both complex organizations attempting to influence diverse constituencies to achieve some goal. For companies, they need customers to recognize the benefits they offer. They need investors to buy-in to their model. And perhaps most importantly, they need to influence employees - who operate in that dense fog of commercial war - to make good decisions that reflect well on the firm and support its objectives.

Granted, nearly all companies recognize the power of unifying themes. They hire skilled executives for the sole purpose of internal communications, they create catch-phrases and missions statements, and they work hard at staying on message. But more often than not, their themes fall short of defining the business, unifying its constituents, and providing direction. They lack authenticity. They lack resonance. For employees at all levels, they lack the unifying and defining ability to provide...PURPOSE.


What businesses actually do this well? 

I believe Walmart is among the best. The direction was provided by Sam Walton, entombed in his autobiography (Sam Walton, Made in America), and imprinted constantly on his managers and employees. Provide customers with the goods they want at the best prices possible, and they will buy from you before they buy from the competitors. Everything stems from this premise.

In the next few posts we will examine the Walmart credos, accepting as a given that the message is simple and well-delivered, and thinking about whether it remains 1. an accurate premise; 2. in support of a viable business model; and 3. that it helps justify an investment in the business at current prices. 

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