Strategy should be simple, says Wal-Mart vice chairman

27 May 2009

BENTONVILLE, Arkansas: Too many companies and brands adopt strategies that are overly complex, and should instead simply look to their customers and employees for inspiration and insight, according to Wal-Mart's vice chairman, Eduardo Castro-Wright.

Wal-Mart, the world's biggest retailer, has been one of the few beneficiaries of the financial crisis, as American consumers have started to trade down to cheaper brands, and the company has also recently stated an intention to focus on "brand relevance".

According to Castro-Wright, executives have often "read far too many business books," and rely on consultants and complicated approaches, when making strategy can, and should, be more simple.

While he was "not saying there's no room for a vision statement," the head of Wal-Mart's US stores did argue that many companies spend "too much time on that and not enough on the more practical, down-to-earth requirements that drive business."

Such an approach tends to obscure the fact that retailing, like many other areas of business, "is not as complicated as we would like to make it."

Rather, it is actually "pretty logical and simple, if you think about the way that you yourself would act, or do act, as a customer."

Essentially, the major focus of any company's strategy needs to be based around "your customer and the people who work for you."

Using the example of Wal-Mart, Castro-Wright said the retail giant has "a very clear view of what we do for consumers around the world" and "can describe our complete strategy in ten words."

This process "makes it very easy to get everybody energised and aligned."

One of the best ways of generating these insights is to "approach customers and ask them if they have any recommendations," such as whether there are "things that we're not doing that we should be doing."

Talking to employees can play a similar role, as "almost always, you get enormous insight from those who spend their days taking care of customers."

Taking a more global perspective, Castro-Wright also suggested that "cultural differences, which are so often touted as the rationale for making decisions in business, are grossly overrated."

Having worked in Asia, he said there "were a lot more similarities to how customers behaved in Latin America, Europe and here in the US than the differences everybody stressed."

As such, he stated that "human behavior really doesn't have a language; it's pretty much the same everywhere," allowing for the formulation of a strategy that can tap into this common approach.

Data sourced from New York Times; additional content by WARC staff