Start with why

New York Times
Web
site on October 28, 2008, read. “Wal-Mart is still selling consumerism even as it
pledges to cut the social and environmental costs of making the stuff in its
stores.” Costco, on the other hand, was later than Wal-Mart to announce an
environmental policy, yet has received a disproportionate amount of attention.
The difference is that people 
believe
it when Costco does it. When people know
WHY you do WHAT you do, they are willing to give you credit for everything
that could serve as proof of WHY. When they are unclear about your WHY,
WHAT you do has no context. Even though the things you do or decisions you
make may be good, they won’t make sense to others without a clear
understanding of WHY.
And what of the results? Still running on the memory of Sam Walton, Wal-
Mart’s culture stayed intact at first, and the value of the two stocks was about
even for a few years after Walton died. But as Wal-Mart continued to run its
business in a post-Sam, post-split manner while Costco maintained clarity of
WHY, the difference in value changed dramatically. An investment in Wal-Mart
on the day Sam Walton died would have earned a shareholder a 300 percent gain
by the time this book was written. An investment made in Costco on the same

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day would have netted an 800 percent gain.
Costco’s advantage is that the embodiment of their WHY, Jim Sinegal, is still
there. The things he says and does help reinforce to all those around him what
the company stands for. Staying true to that WHY, Sinegal draws a $430,000
salary, a relatively small amount given the size and success of the company. At
Wal-Mart’s peak, Sam Walton never took a salary of more than $350,000 per
year, also consistent with what he believed. David Glass, the first man to take
over as CEO after Sam Walton, a man who had spent considerable time around
Walton, said, “A lot of what goes on these days with high-flying companies and
these overpaid CEOs, who’re really just looting from the top and aren’t watching
out for anybody but themselves, really upsets me. It’s one of the main things
wrong with American business today.”
Three more CEOs have attempted to carry the torch that Walton lit. And with
each succession that torch, that clear sense of purpose, cause and belief, has
grown dimmer and dimmer. The new hope lies in Michael T. Duke, who took
over as CEO in early 2009. Duke’s goal is to restore the luster and the clarity of
Wal-Mart’s WHY.
And to do it, he started by paying himself an annual salary of $5.43 million.

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