Wal-Mart Know-How Doesn’t Travel Well

Apr 21, 2003

Those Wal-Mart executives who have jumped ship, lured by rivals hoping to make
use of their insider prowess in order to better compete with the world-dominating
retailer, have not met with success, overall.

“There is the expectation on the part of the new employer that these people are going to bring something to the table that is different and better than anything they can think of, which is usually not the case,” said Kurt Barnard, president and chief economist of Barnard’s Retail Consulting Group.

As explained by Anna Driver in her recent Reuters article, Wal-Mart’s rise to world’s largest retailer was not due to the efforts of it’s top executives, rather it is the result of team leadership and the retailer’s unique culture.

Wal-Mart’s culture is drilled into employees at every turn, from its stores to the headquarters, and particularly at the company’s monthly Saturday morning meetings at which company culture is discussed at great length.

“Wal-Mart is a retailer in a cultural cocoon,” consultant Kurt Barnard said. “It takes people and molds them and once they leave that culture, it’s almost as if they are stripped of their clothes and left naked.”

Cited as examples in the article are the poor performances of former Wal-Mart execs Mark Schwartz, who moved on to the president’s role at Kmart, and Mark Hansen, who became chief executive of Fleming. Schwartz and Hansen tried to mirror Wal-Mart’s successful low price strategies, and were widely blamed for beginning the slides into Chapter 11 bankruptcy at both companies. The two were both ousted by their companies’ boards.

However, at least one Wal-Mart alumni has met with critical success. It is said that her Wal-Mart experience with vendors and logistics were particularly helpful to Vanessa Castagna, now ceo of J.C. Penney Co. stores division, in successful efforts to revive Penney’s sagging department store sales.

Moderator’s Comment: Are skills learned at Wal-Mart
transferable to competing operations?

Another way of looking at this is that the best minds
simply decide to stay on at Wal-Mart. Executives don’t tend to flee if they
fail to get a promotion or move up the corporate ladder. That’s partly due to
the company culture that breeds loyalty, and partly a function of the rich stock
rewards executives receive. [Rick
Moss – Moderator


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