David Glass, owner of the World Series Champions Kansas City Royals, said his approach to building a winning baseball franchise is similar to the way he helped run Wal-Mart Stores during some of the company’s largest growth years.
Glass, who succeeded the legendary Sam Walton in 1988, was active in Wal-Mart’s growth from 123 stores in 1976 to its more than 4,000 nationally and internationally in 2005. He was one of several speakers at the 2016 Emerging Trends in Retail Conference held in Rogers on Tuesday (June 14). The conference is an annual event hosted by the Sam M. Walton College of Business at the University of Arkansas.
Glass shared a few stories of how Wal-Mart and his retail mentor Sam Walton succeeded despite their first meeting in Harrison, Ark., with the second Wal-Mart store opening amid busted watermelons and donkey poop in the hot summer sun. Glass said he admired what Walton was trying to do in bringing discount retail to small towns. He drove to Harrison and toured the store with Walton and then told him it was the worst retail store he had ever seen.
“I told him to find another line of work and he retold that story often through the years after I came to work for Walmart,” Glass said.
He said Wal-Mart execs studied K-mart operations, then the best U.S. retailer. He said Wal-Mart executives lived in K-mart stores and took the ideas they liked and then tried to improve upon them. Glass said the company did the same with Texas-based H-E-B when they expanded into grocery with the supercenter launch years later.
Glass said Wal-Mart had to build its own distribution networks to supply its stores in rural America because there were no wholesalers working in towns with population around 8,000. He said the company learned from one of its managers early on that businesses can predetermine their outcomes. He said they set a high sales growth rate and then looked at every aspect of the business to make it happen. Glass said they also knew early on how important it was to use technology to help them control the business. He said that’s exactly what the retailer did to control its growth which was important at a time when the company was doubling its sales every two years.
“Without some form of control we would have spent two-thirds of our time fixing problems leaving only one-third of the remaining time to get better,” Glass said. “We knew that if we can could spread the store traffic out over the entire week we could run a more efficient business. This was how EDLP, Everyday Low Price came to be. This required absolute discipline on the part of managers but it did help us spread the business out across the entire week because people knew they were going to get the same low price on Monday as they did on Saturday,” Glass said.
Glass said baseball has many similarities to the business world. He said just like in baseball it takes a team working together to win day in and day, the same is true in retail.
“We had no superstars in retail. We were a bunch of ordinary people operating in an environment that allows us to become overachievers,” Glass said.
He said the same is true in small markets for baseball. Glass said small markets are at a disadvantage against major market teams in terms of payroll and ability to draft superstars. Just like Walmart had no wholesalers to help them supply their stores in rural American, Glass said a successful small market baseball team must develop its own talent pool or supply network.
He said just like at Wal-Mart, it’s those players in the ranks who can make all the difference for the organization. Glass shared a story of who three players took it upon themselves to improve their hitting. He said they brought a $120,000 pitching machine to spring training. The machine pitched tennis balls at 100 miles per hour but then the players played red dots on some balls and blue dots on other balls so they could work of discerning pitch selections. They then added even and odd numbers to the balls and ramped up the speed to 120 miles per hour to further complicate the hitting.
Glass said one of three mastered the task. At the end of the season that player signed a $147 million deal with another team. The other two players were better hitters for the Royals.
“In small markets like Kansas City you have to have a plan, you must draft and develop your talent for the years to come at the expense of this year or the next. We had some bad years, we paid a price during the years when our talent was being developed and there was outside pressure for us to sign a superstar and trade away our young prospects,” Glass said. “We stuck to the plan and in 2014 that team made it to the World Series and lost. In 2015 that same team won the World Series title.”
Glass said this happens all the time in business. There is always pressure from shareholders or other stakeholders that can tempt management to abandon the game plan for short term gain, but that’s seldom the right move. Glass shared the following list of ideas he said were relevant in the business world today.
• Manifest your talents through others.
• Worry most when you’re doing your best.
• Predetermine results, then work as a team to get there.
• Read “Total Quality” by Edward Deming.
• Cultivate mavericks even though they can be harder to manage.
• Have low resistance to change.
• Don’t allow short term strategy to disrupt long term goals.
• Have a sense of urgency.
• Remember the customer is always right.
• Have absolute integrity and a willingness to fail (occasionally).