Soderquist Sans Secrets

Some people who read Don Soderquist’s new book ask him if the Wal-Mart corporate lawyers got hold of it and whacked out all the secrets.

“It couldn’t be that simple,” they say after reading “The Wal-Mart Way.”

“That’s absolutely wrong,” said Soderquist, Wal-Mart’s former vice chairman and chief operating officer. It is a simple philosophy that still works today.

The philosophy is summed up in a quote by Colin Powell at the beginning of the book: “There are no secrets to success. It is the result of preparation, hard work, learning from failure.”

“Wal-Mart doesn’t do everything right,” Soderquist said. “They acknowledge they don’t do everything right …

“My attempt is to explain why we were successful and that we were a small company and how we were able to achieve what we achieved.”

The 208-page hardcover book was published in April by Thomas Nelson Publishers of Nashville, Tenn. It retails for $25 and is for sale in Wal-Mart Stores as well as bookstores nationwide.

Born Jan. 29, 1934, in Chicago, Soderquist worked for Ben Franklin Stores from 1964 to 1980, rising to the position of president and CEO. Then Sam Walton hired him away to work at Wal-Mart headquarters in Bentonville.

Soderquist retired in 2000 after 20 years with Wal-Mart, but he remains available to the company as an adviser.

Soderquist has established his own business, OnCourse LLC, to help business leaders stay on course from an ethical standpoint. He also serves as executive in residence at The Soderquist Center for Leadership and Ethics, which was founded in 1998 at John Brown University in Siloam Springs with funding from the Soderquist family, Wal-Mart and several other companies, including many Wal-Mart suppliers.

Affirming Culture

Soderquist, who has been dubbed Wal-Mart’s minister of culture, said the book wasn’t written as a response to the company’s critics.

“In the process of writing it, more and more of this negative publicity came out,” Soderquist said. “This was not written to answer that.”

Some of that negative publicity concerned the forced resignation of Thomas Coughlin, Wal-Mart’s former No. 2 executive. Soderquist said he couldn’t talk about specifics of the case but said it shows that ethics is still a major part of the Wal-Mart way, regardless of how high a person has climbed the corporate ladder.

“This is an affirmation of the Wal-Mart culture,” he said of Coughlin’s dismissal. “The banner over the door says ‘Do what is right,’ and if you don’t do what is right, you pay the consequences. There has to be integrity.”

Coughlin, a former vice chairman at Wal-Mart, resigned as a Wal-Mart director in March after an internal investigation indicated he may have abused his expense account and company credit cards by as much as $500,000.

The world’s largest retailer said it dismissed Coughlin retroactively to Jan. 22 for “gross misconduct,” including failing to disclose that he had “been engaged in a scheme to misappropriate corporate funds and property for his own personal use,” according to a filing with the Securities and Exchange Commission.

Although some people think mixing business ethics and Christian philosophy is like trying to mix oil and water, Soderquist said businesses operate better with an ethical foundation.

“You don’t have to cheat to win,” he said. “As a matter of fact, cheaters eventually get caught.”

Soderquist said a study by JBU professor John Copeland indicated ethical businesses are the most profitable.

“There is no such thing as situational ethics,” Soderquist said, meaning you can’t be ethical in some situations and not in others. “There are absolutes. It is wrong to lie, cheat and steal.”

From Dime to Dollar

Soderquist said Wal-Mart is good for small-town America, raising the standard of living with its everyday low prices for everyone who shops in one of the country’s 3,000 Wal-Mart stores.

And the world’s largest retailer is good for small towns because Wal-Mart stores keep people from driving to nearby cities to shop, he said.

“Businesses flourish when Wal-Mart comes into town because we keep people at home,” he said.

That flies in the smiley face of people who say Wal-Mart squashes mom-and-pop businesses. But Soderquist said other types of stores, such as national supermarket chains, were already displacing the mom-and-pop shops by the time Wal-Mart came along.

Retail has had to change over the years to stay successful. Since the 1960s, dime stores morphed into dollar stores, variety stores became Hobby Lobbys, and hardware stores changed into home improvement chains like Home Depot and Lowe’s.

The Wal-Mart execs had seen it coming. The tradition had been for stores to be located downtown and open only from about 9 a.m. to 5 p.m.

“Wal-Mart said, ‘Wait a minute: We’ve got two wage-earner families. They can’t shop during the day,'” remembers Soderquist.

So Wal-Mart built stores on the edge of town, where parking was free, and kept them open on nights and weekends. It was all based on the customer’s needs.

“You can have the best dime store in the world, but that’s not what people want,” Soderquist said.

Soderquist said he believes Wal-Mart is still on the ethical track established by its founder, Sam Walton, who died in 1992. But the company would have grown with or without Walton. (Wal-Mart had $43.9 billion in sales in fiscal 1992, compared to $285 billion in 2005.)

“If Sam were alive today, Wal-Mart would not be the same as it was in ’92,” Soderquist said. “Sam was a change agent … We can’t go back to ’92 and say it would be the same.”

Soderquist said Wal-Mart is under intense criticism now because of its sheer size. Unions, in particular, are attacking Wal-Mart because they have been unable to unionize the company’s U.S. stores.

“They haven”t learned that, if you treat people right, you don’t need someone else [unions],” he said.

Wall Street Pressure

Soderquist said the stock market pressures public companies into concentrating on short-term gains and not looking at long-term goals. Analysts are worried only about the current quarter.

Because Wal-Mart is the world’s largest retailer, analysts usually predict hefty earnings reports. When the earnings don’t match expectations, even though sales are at an all-time high, the stock price could drop.

“It’s such a short-term view that it’s absolutely ridiculous,” Soderquist said. “It’s absolute foolishness.”

It’s that kind of foolishness that has pressured companies like Enron into cooking the books to please shareholders, only to have the walls crash down on them later.

Soderquist is working on his second book, “Live, Learn & Lead,” which will be released by Nelson Publishers in February. Soderquist said it’s mostly vignettes.

“It’s more my philosophy,” he said. “It has a very definite Christian slant to it.”

Soderquist plans to write a third book on ethical leadership, but that will probably be his last.

“I’m not going to become an author,” he said. “That’s not my calling.”

The Wal-Mart Way

The principles of the Wal-Mart Way, according to Don Soderquist’s new book:

• Every successful venture begins with a dream that requires determination, passion and the willingness to grow if it is to be fulfilled.

• You must have a vision that allows you to see a bigger, better, stronger you in the future — while never taking your eyes off of who you are and what you are doing today.

• To build a great company, you must create a culture where everyone shares the same values, purposes and expectations of success.

• True success is achieved in direct proportion to the degree that an organization treats its people with respect and dignity — and believes in them enough to help them grow.

• You will succeed when you make a commitment to help your customers succeed first.

• Achieving excellence becomes a reality when you set high expectations, humbly face and correct your mistakes, stay optimistic and avoid the quicksand of complacency.

• Your success is in direct proportion to your ability to plan, monitor and ultimately execute all phases of your business.

• To build a great company, you must actively and continually seek out, evaluate and invest in the tools that best serve the people and aims of your organization.

• The most basic operations in your company represent tremendous opportunities for improvement, growth and savings. Don’t overlook the obvious.

• When you create win-win relationships with your business partnerships based on trust and open communications, you maximize your potential for growth.

• The ongoing success of your organization is in direct proportion to your ongoing commitment to grow.

• When you cultivate a spirit of charitable giving and civic involvement within your organization, you exponentially increase your tangible and intangible returns — including the personal character of your team.