Tale of two discount retailers is case history in leadership

In the late 1950s a small retailer emerged with a dream, “bring discount retailing to rural and small town areas.” Its innovative leader created a team atmosphere among his employees.

His vision included creating dynamic information systems and establishing a performance driven culture where managers checked their weekly scorecards every Monday at 5 a.m. When the company opened a store in town, its small competitors shut down and the company even learned how to win over customers from its primary competitor, Kmart.

So who was the competitor? Ames Department Stores.

Ames Department Stores was created four years before Sam Walton opened his first Walmart. Over the first 20 years of their existence Ames and Walmart matched each other’s success, Walmart in the South and Ames in the Northeast.

Ames does not exist today, but why?

Walmart’s early success actually worried Walton. He wanted to ensure his team sustained a sense of purpose and humility, always focusing on improving the customer experience no matter how successful they became.

He also focused on hiring great people to build this culture, expanding into new areas such as groceries and electronics, but still adhering to Walmart’s core principles.

Ames did not stick to its core values but pursued growth in an undisciplined fashion. Instead of a more structured approach to growth, Ames bought fellow retailer Zayre Department Stores, doubling the size of the company in one year.

Zayre stores were in urban areas, not an area of expertise for Ames, and a rapid decline in company performance followed.

It is thought by many that the leading cause of company decline is complacency, failing to be innovative and ignite change.

The opposite is overreaching, initiating change just for the sake of change, not spending time to strategically plan and structure changes that need to be made.

Companies often become overconfident, thus making riskier decisions that don’t align with their missions, falling victim to their own success.

Organizational leaders play a key role in a company’s success by actions they take not only in challenging times but during good times. Louis Gerstner was the CEO of IBM during their growth in the 1990s and followed a basic philosophy of leadership shared by other successful CEOs.

The right leaders feel a sense of urgency in good times and bad, while facing a threat or an opportunity, no matter what. They’re obsessed, afflicted with creative compulsion and inner drive for progress that remains constant whether facing threat or not.

Great leaders dont relax and enjoy their success. They are always looking to improve their organization while still staying true to their core mission and values.

Perhaps the most critical component of organizational success lies in acquiring and/or retaining the right people to be part of your team. There is a key distinction between the “right” and “wrong” people to hire. Wrong people see themselves as “having a job,” while the right people see themselves as “having responsibilities.”

As a leader it is paramount you spend the time to find the right people for your team, not just one to fill the position.

Great organizations falter, but they never give up on the principles that define their cultures. Sam Walton hired the right people for his team, those that shared his values of humility and innovation. The mighty may fall but they define success as “falling down and getting up one more time, without end.”

Steve Patchin is director of Career Services for Michigan Technological University.