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Doug McMillon, Walmart’s CEO, yesterday published his annual letter to shareholders. While it got less attention in the media than the annual letter to shareholders written by Amazon founder-CEO Jeff Bezos, elements of it are instructive… and here are two passages that stood out to me:

• “Sam Walton showed us the way. He gave us a clear purpose and four timeless values. At Walmart, we save people money and help them live better — and we do it by serving others, striving for excellence, respecting everyone and acting with integrity.

“Clear and constant.

“You know what else is constant at Walmart? Change. As I visit with our associates all over the world and ask, ‘Other than our purpose and values, the only thing that's constant at Walmart is …' and they respond: ‘Change!’ It's a powerful mindset, and our people have it.”

• “Recently, I was visiting with a group of students, many of whom are joining our company, and one of them asked me what I had learned during my five years in this position. Surprises? Revelations?

“It's a good question, and I've been giving it some thought. These five lessons came to the top of the list.

1. Leadership — You can't push a rope, but you can pull it. In other words, sometimes you just can't lead from behind. You can't muscle or push things along. As a leader during transformation, you have to be out in front — show that you want to learn, be curious, introduce new ideas, ask questions. Our people are talented, competitive and have a sense of urgency. When they hear about a better way of doing things, they engage, learn and act.

2. Risk — There is no growth without change, and there is no meaningful change without risk. So, get comfortable with an intelligent level of risk. Otherwise, the law of diminishing returns sets in as always doing the same things the same way takes over. We invested substantially in wages, associate education, pricing and eCommerce. We acquired Flipkart, Jet and others, and we partnered with global technology companies in places like China and Japan. We don't know what Sam would have done in these moments, but we know he would have been adapting — and he would have been aggressive. We're drawing on that legacy today and tapping into that DNA.

3. Time Horizon — We're playing the long game. Our priority is to position our company for long-term success. History has shown us that companies that focused too much on the short term were doomed to fail. Managing our business on a daily basis is important, but our most important strategic decisions are made in light of what we want our company to become for the next generation.

4. Our Associates — People will surprise you. Several times a week I see or hear about something creative our associates have done. It's inspiring to see their ingenuity and pace. Around the world, Walmart associates feel more comfortable taking risk. They're launching minimum viable products to test and learn from. These have enough function to satisfy early adopters, whose feedback informs future design. Result: We go from Product 1.0 to Product 2.0 a lot faster. This is a powerful unlock. We've always said that our people make the difference. We're certainly seeing that today.

5. Trust — It's a challenge to have the broader world know the Walmart we know. As we strive to make our company better, we will also look for ways to build trust by communicating the good work our people are doing and its impact. Included is the work we are doing to strengthen our culture of integrity and improve our compliance talent, processes and systems. In our supply chain, we are eliminating waste, using more renewable energy, reducing carbon emissions and making our items and the packages they come in healthier and more sustainable. Of course we aren't perfect. We make mistakes. But, if the world could see all of the hard-working, well-intentioned people inside our company who are making things better in their communities and in the world, I'm convinced they would be moved by it all. I am.”
KC's View: