SN'S POWER 50 2003-07-21 (4)

Christina Veiders / Stephanie Loughran / Micheal Garry

2) H. Lee Scott Jr.

President and CEO, Wal-Mart Stores

WHY: Oversees a retailing empire that has potential to dominate the world.

WHAT'S AHEAD: Global expansion.

Lee Scott reigns over the world's largest company.

That simple fact makes Scott, a Wal-Mart insider who rose through the ranks under the guidance of Sam Walton, a very powerful individual.

Scott, 53, was hired in 1979 in the transportation-trucking-logistics area where he spent 16 years. How did Scott go from working as an assistant director of transportation to being named president and chief executive officer in 2000 of the Bentonville, Ark.-based behemoth?

Jack Shewmaker, a Wal-Mart board member, consultant and one of its former top executives, said it was Scott's persistence and determination that got him there.

"Lee is from Baxter Springs, Kan., which is about 65 miles from Bentonville," Shewmaker said. "If you drew a triangle around where Sam Walton, David Glass [former president and CEO], Lee Scott and I all grew up, it's a very small area. It made the group particularly compatible. We all had this intense need to learn -- experience the unknown -- and we weren't threatened with new developments or new ideas. Lee is an exponential force in that equation."

Noted Nick White, a former Wal-Mart executive, now president and CEO of White & Associates, Rogers, Ark., "Lee has taken Wal-Mart's philosophy and incorporated it into his management skills, and as a result, by working through people, he is able to operate the world's largest company."

Although it might sound corny, said Deborah Weinswig, a New York analyst for Salomon Smith Barney, Scott "embodies what Mr. Sam wanted, and he is carrying it forward into this century."

In the last three fiscal years, Scott has grown Wal-Mart sales in double-digits, from $191.3 billion in sales in 2001 to $244.5 billion in 2003 during some difficult economic and political times. A top goal is for earnings to grow at a rate equal to or better than sales, Scott stated in Wal-Mart's 2003 annual report. Earnings increased by 21.5% per share for fiscal 2003.

Wal-Mart Stores is steamrolling with over 8,000 stores worldwide. The company has accelerated its supercenter expansion to 200 units a year for the next five years. This puts conventional supermarket chains on notice. Scott said food is an important growth strategy being so closely aligned with general merchandise. "In both food and general merchandise, we satisfy the customers with a consistent focus on price, assortment and quality," he said.

Going forward, it's Wal-Mart's sheer size and pace that can cause Scott sleepless nights, said observers. Scott is focused on global expansion and fulfilling one of Sam Walton's dreams -- to deliver quality and value to consumers worldwide. "If we can get the whole world to have the same ethical values of Wal-Mart," said Shewmaker, "we believe the whole world would be a better place."

Christina Veiders

3) Tom Coughlin

Executive VP and vice chairman, Wal-Mart Stores

WHY: Charged with making U.S. retail operational decisions at Wal-Mart Stores.

WHAT'S NEXT: Maintain double-digit growth by following Sam Walton's rules.

When Tom Coughlin speaks, people listen.

Why shouldn't they? As executive vice president and vice chairman of Wal-Mart Stores, Bentonville, Ark., Tom Coughlin is responsible for all decisions in the discount chain's colossal U.S. retail operations. He also heads up key support functions like logistics, real estate development and global procurement. "He's powerful for the same reason that the Pope is powerful, regardless what his name is," said Bob Aders, consultant and former president of the Food Marketing Institute, Washington. "He's heading up a very important enterprise that happens to have everyone's attention and respect. By virtue of the office itself, he's powerful."

Throughout his 25-year career with the company, Coughlin took an "unusual" career path to the top, sources said. He has served as vice president of loss prevention, vice president of human resources, executive vice president of Sam's Club operations, executive vice president of specialty groups, executive vice president and chief operating officer of Wal-Mart Store operations, and chief executive officer of Sam's Club USA.

Jack Shewmaker, a longtime member of Wal-Mart's board of directors and a retired Wal-Mart executive who held positions as president and chief operating officer, hired Coughlin as director of security and loss prevention in 1978.

"In the case of Coughlin and the other executives who work there, if you look at their track record with Wal-Mart and even before Wal-Mart, they're multi-faceted, multi-talented and multi-experienced, which is almost a requirement for running a company as large as Wal-Mart is today," Shewmaker said.

This was reflected in Coughlin's work as director of special divisions, which included jewelry, automotives, shoes and ophthalmology, among others, Shewmaker told SN. "All of these are very important ingredients in Wal-Mart's success today, and all of the [job positions] are important ingredients in one's development."

One lesson Sam Walton cultivated in his employees was that retailing is a people industry, Shewmaker said.

Said Chuck Cerankosky, analyst, McDonald & Co., Cleveland, "Coughlin motivates employees to keep focused on customer service, and motivates [them] to deliver that mission. He's adamant about supporting employees who deserve it and he helps develop their skills."

Coughlin's diverse resume gave him vast insight and experience with the company's message of strong customer service and low prices.

"We are nothing without our customers," Coughlin said previously. "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."

It looks like Coughlin's strong presence is leading the way to fulfilling that mission, said sources.

"If you were to poll all of the associates throughout the organization, they might say: Tom Coughlin? Yeah, when the man gets up to speak, everybody listens. He's tough, but he's fair. He's a good man and a good leader," Shewmaker said.

Stephanie Loughran

4) Linda Dillman

Senior VP and CIO, Wal-Mart Stores

WHY: Wal-Mart sets the technology agenda for retailing.

WHAT'S NEXT: A rollout of RFID technology for cases and pallets.

Whether she intended it or not, Linda Dillman was an unqualified hit at the Retail Systems conference in Chicago last month.

Before a packed conference room, Dillman, senior vice president and chief information officer for Wal-Mart Stores, Bentonville, Ark., since last August, gave the most highly anticipated and talked-about presentation of the conference: It detailed Wal-Mart's plans for implementing new-generation RFID technology incorporating the MIT-developed electronic product code. All subsequent discussions of RFID systems have made obligatory references to Dillman's presentation.

Dillman made it clear in her presentation that Wal-Mart expected its top 100 vendors to begin using EPC tags on pallets and cases by Jan 1, 2005, which had been rumored for a few months. "We are asking [them] to make sure they are ready to go live with us on that day," she said. It was the latest example of Wal-Mart's enormous influence on the development and adoption of standards-based technology in the retail industry.

And Dillman, as the chief technology officer of the company, is the person now setting the technology agenda for Wal-Mart and those who would do business with it. Dillman is the only CIO among SN's 50 Power Players.

Wal-Mart sent similar shock waves through the industry earlier this month when it announced it was pulling out of a store-level test of EPC tags so that it could focus on pallet and case applications.

Dillman, 47, may be one of the few senior officers at Wal-Mart who joined the company through an acquisition -- that of The Wholesale Club, Indianapolis, where she was employed in information systems when it was acquired by Wal-Mart in 1991.

Since then, she has worked her way up the IT department through a series of positions in applications development management involving in-store systems, Sam's Clubs, Wal-Mart specialty divisions, Retail Link and data warehousing. During this time, she helped Wal-Mart implement a perpetual inventory system in stores.

She became vice president of applications development in 1998 and led the systems conversion for Wal-Mart's ASDA acquisition in the United Kingdom, later becoming vice president of international systems before her appointment as CIO.

Today, Dillman is one of the top female executives at Wal-Mart; among the chain's 22 senior officers, she is one of two women. She is the first female CIO in the history of Wal-Mart, which places the highest importance on technology.

In the year since Dillman became CIO, Wal-Mart has issued directives to its suppliers to follow the chain in implementing Web-based EDI, electronic communication of item data (preferably through UCCnet), and now RFID.

Those directives emanate from the IT department, said Ron Ireland,a principal for Oliver Wight Americas, New London, N.H., who worked in that department from 1992 to 1997, in some cases alongside Dillman.

Dillman gets high grades for both technical and business acumen from people she worked with and for at Wal-Mart. "Linda knows the business issues well and can see how technology can be leveraged to help solve those issues," said Ireland. Similarly, her predecessor as CIO, Kevin Turner, now chief executive officer of Sam's Clubs, called her "a wonderful talent who has a great understanding of our businesses processes."

Randall Mott, CIO of Dell Computer, who was CIO of Wal-Mart prior to Turner, described Dillman as "a very well-rounded global talent who focuses on the development and growth of those around her, while maintaining an intense focus on understanding the business."

Micheal Garry