What do Wal-Mart and Apple do that you don’t? Featured

11:16am EDT February 18, 2011
Ravi Kathuria Ravi Kathuria

Wal-Mart and Apple operate in different industry segments with different business models, and yet the same management principles drive their long-term success. What is it they are doing that you need to do in your business?

Wal-Mart and Apple have absolute clarity about their core management philosophies, and they do not violate them. Core management philosophies define a company’s business approach and its fundamental choices. The combination of these choices creates a company’s unique position or business model in the marketplace. The strict adherence to these core philosophies often creates an unassailable advantage.

Wal-Mart ranked No. 1 on the Fortune 500 list in 2010 and reported profits of $14.3 billion. It has the money and resources to carry any merchandise it desires in its stores. Why is it, then, that you are not likely to find a $2,000 suit or dress in a Wal-Mart store? If you did, as a customer, what would go through your mind?

Wal-Mart’s core management philosophies include operational efficiency, lower prices and higher volume. Wal-Mart does not feature high-end merchandise in its stores. It would confuse its customers, employees and suppliers. The customer of a $2,000 dress has a very different set of expectations than that of a customer of a $30 dress. Selling a $2,000 dress requires a markedly different selling process than selling a $30 dress. Wal-Mart knows its business model and strictly adheres to it.

How well articulated are your core management philosophies? Is there ambiguity about your business model? Core philosophies are part of the DNA of your company. If there is confusion about the DNA, the company will not do well. Core philosophies affect everything the company does from its vision, goals and strategy to its capabilities, processes, roles and responsibilities, culture, performance measurement, and execution. Therefore, it is critical for you to identify your core management philosophies.

Business experts and consumers regard Apple as a highly innovative company. Many other companies also claim to be innovative, but Apple innovates in a special manner. It follows a core philosophy that permeates every single product it puts out in the marketplace. Apple constantly breaks new ground to make its products intuitive and easy to use. That is Apple’s No. 1 mantra, and it sets Apple’s products apart in the marketplace. Go out and search — you are unlikely to find an Apple product that is not easy to use.

Core philosophies are at a higher level than strategies. Strategies may change but core philosophies remain the same regardless of internal or external conditions. To identify its core philosophies, your company should consider if there are any unchangeable, non-negotiable aspects that define its business approach. Some questions for you to ask include: Does your company limit itself to certain industry verticals, market segments, account sizes, specific customer needs and specific product/service attributes?

Look around and identify successful businesses, whether they are Fortune 500 companies or the local bakery store. If you examine these successful businesses closely, you will find they all have a set of core management philosophies that they do not violate. It defines their business. It is their DNA.

It does not matter what core management philosophies you choose. Every answer is right. What is important is to have a clear answer that removes all ambiguity. You may select operational efficiency and low prices like Wal-Mart or you may choose superior products and premium pricing like Apple. Know what you are choosing and make sure all your stakeholders — employees, customers, suppliers, investors, board and management — understand those choices. It may very well be the difference between success and failure.

Ravi Kathuria is the president of Cohegic Corp., a management consulting and executive coaching firm. He is the author of the highly acclaimed book, “Coherent Strategy and Execution: An Eye-opening Parable about Transforming Leadership and Management Perspectives.”