CULTURAL PRINCIPLES

BENTONVILLE, Ark. -- It all started with Sam Walton, who took a core of beliefs and built them into the nation's largest retailer.

you love your work, you'll be out there every day trying to do the best you possibly can, and pretty soon everybody around will catch the passion from you, like a fever."

Share profits with all associates and treat them like partners. "Remain a corporation and retain control if you like, but behave as a servant leader in a partnership. Together, you will all perform beyond your wildest expectations."

Motivate your partners. "Constantly think of new and more interesting ways to motivate and challenge your partners. Set high goals, encourage competition and then keep score. If things get stale, cross-pollinate. Don't become predictable. Keep everybody guessing as to what your next trick is going to be."

Communicate everything you possibly can to your partners. "The more they know, the more they'll understand. The more they understand, the more they'll care. Once they care, there's no stopping them. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors."

Appreciate everything your associates do for the business. "All of us like to be told how much somebody appreciates what we do for them. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They're absolutely free, and worth a fortune."

Listen to everyone in your company and figure out ways to get them talking. "The folks on the front lines, the ones who actually talk to the customer, are the only ones who really know what's going on out there. You'd better find out what they know."

Exceed your customers' expectations. "Give them what they want, and a little more. Let them know you appreciate them. Make good on all mistakes, and don't make excuses. The two most important words I ever wrote were on that first Wal-Mart sign -- 'Satisfaction Guaranteed.' They're still up there, and they have made all the difference."

Control your expenses better than your competition. "You can make a lot of different mistakes and still recover if you run an efficient operation, or you can be brilliant and still go out of business if you're too inefficient."

Swim upstream. "Ignore the conventional wisdom and go the other way. If everybody else is doing it one way, there's a good chance you can find your niche by going in exactly the opposite direction."

Celebrate your successes, and find some humor in your failures. "Loosen up, and everybody around you will loosen up. Have fun. When all else fails, put on a costume and sing a silly song, then make everybody else sing with you."

One way Walton sought to loosen up associates was with the Wal-Mart cheer, in which Walton would lead the troops in a spell-out of the company name.

"While we're doing all this work, we like to have a good time -- sort of a 'whistle while you work' philosophy -- and we not only have a heck of a good time with it, but we also work better because of it."

Among other Walton principles that are still in force at Wal-Mart are the following:

The sundown rule, which says associates should resolve issues the same day they arise. "It means we strive to answer requests by sundown on the day we receive them. It's just one way we try to demonstrate to our customers that we care," the company said.

The 10-foot rule, based on Walton's request to store associates "to promise that whenever you come within 10 feet of a customer, you will look him in the eye, greet him and ask him if you can help him."

Aggressive hospitality. "Let's be the most friendly," Walton wrote. "Offer a smile of welcome and assistance to all who do us a favor by entering our stores. Exceed your customers' expectations. If you do, they'll come back over and over again."

According to his associates, Walton built the Wal-Mart business on three basic principles:

Respect for the individual. According to Don Soderquist, retired senior vice chairman of Wal-Mart Stores, "We are a group of dedicated, hardworking, ordinary people who have teamed together to accomplish extraordinary things. We have very different backgrounds, different colors and different beliefs, but we do believe every individual deserves to be treated with respect and dignity."

Service to customers. "We are nothing without our customers," Tom Coughlin, president and chief executive officer of the Wal-Mart Stores division, explained. "We want our customers to trust in our pricing philosophy and to always be able to find the lowest prices with the best possible service."

Striving for excellence -- a constant thing, according to Lee Scott, president and CEO of Wal-Mart Stores. "We try to find new and innovative ways to push our boundaries and constantly improve," he said. "Sam was never satisfied that prices were as low as they needed to be or that our product quality was as high as it deserved. He believed in the concept of striving for excellence, and it became a fashionable concept."