One Simple Competitive Advantage Walton Implemented
At the time that when Wal-Mart (WMT) had yet to be named, Bob Bogle, the first manager of Walton's Five and Dime suggested to Walton to name the store WalMart. The reason? At the time the main competitor for him was 'Ben Franklin,' which had 11 letters in the name.
Why was that important? When they put up neon letters, they could save a lot of money with only seven letters in the WalMart name and right up front have an advantage in costs.
At the time Walton said nothing to Bogle, but at a later time when Bogle visited the new store's building, the worker was putting up the letters on a ladder as he looked on.
This is a small, but significant example of gaining a competitive edge through cost cutting right up front. The point behind it is that the greatest managers in business fervently look at ways to cut costs across every element of the company. Many people would have missed this obvious step that Walton responded to.
Again, the key is knowing where to cut costs and where not to. This is one of those things that was definitely a cost cutter area. To think that the name Wal-Mart came from that decision is pretty interesting and insightful.
Is cutting costs really that important? We can never do it enough. Again, the thing we need to be careful with is trimming where it doens't need to be or shouldn't be trimmed. But in the vast majority of companies, there are far too many expenditures simply because the money is there.
I've always said and seen that the most important time for cutting costs is when things are going great. It develops discipline and a culture committed to it. To cut costs when things are slow are simply the result of having to; that's not discipline.
Just think of what this can do to the profitability of a company, and its competitive place, when sales are slower but they still thrive because of the discipline and wisdom of knowing how and where to cut costs.
Other Walton Sources:
The Most Underrated CEO Ever The legendary Sam Walton
Sam Walton: The Power of Persistence
Sam Walton Business Quotes for Ya
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