If you were to read these books on three of the world’s biggest retail pioneers, you’d have likely gained the knowledge equivalent to most retail executives today. If you were to read all three in close proximity, you might find it easy to identify the common threads and principles shared between these founder-CEOs and their success. A brief synopsis exhibits how great leaders: respond to a crisis, deploy innovation in team development, and commit relentlessly to a singular positioning of product quality and offering.
Responding to Crisis
These three founders are no strangers to a crisis. Each would ultimately face company DNA-defining opportunities that stemmed from major global events and/or the risk of losing the company.
For Jack Ma, the SARS outbreak presented a long-awaited opportunity. Chinese consumers previously distrusting and slow to use online retail were now, once quarantined, increasingly open to eCommerce. Ma’s venture into eCommerce began at a time when his target customers were only just getting acquainted with e-mail, so the lock-down and shift in consumer behavior as a result of the health crisis represented a significant pivot.
When faced with a freeze spanning most of Brazil and affecting agriculture production of all sorts, a shortage of coffee beans meant that many of Starbucks’ competitors would be scrambling for beans at a competitive price. Howard Schultz was unmoved and paid a premium for high-quality beans, because of the persistent dedication to authenticity instituted at Starbucks.
In 1976, Sam Walton returned from early retirement. The company split into two VP-led factions, many supporters of Sam departed, and the company stock fell dramatically. When unsure if he could salvage the company, Walton turned to an old friend, David Glass, who proved critical to Walmart’s bounce back and continued success, leading to almost immediate and record-breaking sales performance. This partnership with Glass catalyzed Walmart’s resilience amid the internal turmoil.
Investing in the Team
The importance of the team is, of course, not lost on successful CEOs. However, to his own admission, Sam Walton did not always value his employees and was notably stingy with wages. Until, in 1971, he encountered a store in England whose sign listed all of its staff as “associates” effectively elevating the posture of staff, and a terminology largely nonexistent in retail stores of the US. It was at this moment Walton adopted the same titling for his store employees as well as a different approach to engage them. As a customer-focused CEO, he understood how more likely a happy employee could translate into a happy customer. Walmart then provided more incentives, profit-sharing plans for example, and prescribed teamwork activities to boost morale.
A teamwork philosophy and certainly a small-business culture, even in its peak of growth, has persistently characterized Starbucks’ approach to staff management and the work environment. Schultz understood that cultivating buy-in from the team, for example through its robust stock options program, even for part-time employees, was key to maintaining a mutual growth mindset. This culture nurtured an environment of familiarity, even with the customer, contributing greatly to its impressive retention rate.
Alibaba also cultivated a team culture with generous incentive packages for its employees, such as interest-free loans to purchase mortgages, automobiles, and more. Jack Ma’s appreciation for silicon valley style company campuses likely influenced this approach to company growth. Similarly, Ma’s passion for the small business, his immediate customer, resembles how a founder-CEO might see his team, certainly partners. Affectionately referred to as “shrimp” (a nomenclature inspired by the Bubba Gump Shrimp Co featured in the popular Forest Gump 1994 film), Ma’s small business users have proved core to the (mutual) growth strategy.
Positioning the Product
A tenacity to maintain a specific value of one’s product projected to consumers is a foundation block to securing one’s market position. Schultz’s uncompromising commitment to quality meant that Starbucks could enter other verticals if it raised the bar for product and experience. In fact, it would do just that in the breakfast and lunch food space, seizing significant market share from traditional fast food restaurants like McDonald’s. The integrity of product and product marketing is not merely a marketing tool, it is feedback into the corporate culture and conclusively the store environment. This is evident, for example, in Starbucks’ decision to never buy cheaper furniture. The same integrity of product pervades the product experience.
Comparably, Walton decided his brand’s value would be defined by discounting. His strategy to buy low and sell with huge promotions forced the company to make up for low margins by moving vast amounts of inventory; an operational approach that has left lasting impacts on the retail industry at large. For the life of the company, Walmart has repeatedly squeezed as much value as possible from its supply chain because of Walton’s resolute objective to pass the savings on to consumers — his passion for serving as the ‘agent’ for consumers has changed retailing forever.
A differentiating factor in Alibaba’s product offering, specifically through Taobao’s initial play, has been the suite of free support services for which competitors typically charge. Not unlike Walton’s advocacy for the consumer, Ma’s obsession with the small business manifested from the ease (and low cost) they provided in establishing their business in the marketplace. Many of the barriers to entry were effectively lifted by these kinds of services. In the long run, this singular philosophy has evolved into an ecosystem of resources like no other operating in China. Literally, millions of SMBs can operate the entirety of their online business on a single platform. This is why being “stubborn on vision” can make a business truly great.
Above all, and through the opportunities and challenges highlighted here, most CEOs are under constant pressure to demonstrate growth. These three retail giants, even with large addressable markets, did not become slaves to trends, chasing customers indiscriminately at the expense of brand integrity, but rather stayed true to their core ideology — the original intent of the company founders. The values and goals that they promised to the customer were not compromised, which speaks as much to any new business opportunity (presented by crisis, the team, or positioning) as much as it does to the necessary brand leadership.