4 Culture-Building Lessons From Sam Walton's Legal Pad Company culture isn't built in a boardroom.

By Zach Ferres

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

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Sam Walton may have once been the world's richest person, but he was always a man of the people. Following a World War II stint in the U.S. Army, Walton opened his first store, a Ben Franklin franchise in Newport, Arkansas. By the early 1960s, Sam and his brother, Bud, owned 15 franchises of the five-and-dime store.

Related: Sam Walton: Bargain Basement Billionaire

But when Walton approached Ben Franklin's Chicago executives in 1962, they snubbed his plan to open larger stores in rural areas. Walton had proposed selling products at small profit margins gleaned through operational efficiencies, but Ben Franklin's management didn't think operating costs could be cut the way Walton suggested.

So Walton left Ben Franklin that same year, and he didn't forget the executives' disregard. Upon opening his first Wal-Mart Discount City in Rogers, Arkansas, a small town in the Ozark foothills, he pledged to always listen to the little guy.

He used only a yellow legal pad.

Walton's store flourished, and by 1991, the chain had surpassed Sears, Roebuck and Company, to become the nation's largest retailer, with 1,735 stores in 42 states.

To manage his empire, Walton employed a yellow legal pad. That was it: He'd show up at random stores and ask questions. He'd talk to employees. He'd quiz customers. He even spoke to his competitors' customers. And he wrote down all he heard on that yellow legal pad.

Talk about a feedback loop. Walton never assumed he knew what was happening in his business -- he made it his mission to find out. What he learned through listening and avid note-taking helped him shape his business strategy and inform his leadership style.

He created a question-based culture.

Okay, maybe you want to skip the yellow legal pad. Go with a digital recorder, Evernote or whatever works for you. What's important is that you listen.

Back when Walmart started, companies such as Ben Franklin made decisions at the top and pushed them down to stores. Walton turned that model upside-down each time he dropped by for a chat with his yellow legal pad.

As Walton saw firsthand, ivory tower leadership blinds executives to opportunities and ideas apparent to customers and front-line employees. That bottom-up, listen-first view is essential to the culture of support and engagement every entrepreneur craves.

In many ways, Walton's leadership was like that of Chick-fil-A CEO Dan Cathy. Although Cathy skips the legal pad, he defines his role by saying, "I work in customer service." Just like Walton, Cathy exemplifies servant leadership, in which leaders put employees first and, in turn, employees put customers first.

As you work to establish your company's culture of service and engagement, take note of four lessons inspired by Walton:

1. Learn to interview.

There's no such thing as a dumb question. Okay, that's not true, but there's definitely such a thing as a great question.

Reading Good Leaders Ask Great Questions made me appreciate how important it is to ask questions of employees. The secret is getting straight to the point. A direct question, without a lot of preamble or qualifiers, shows interest in what the person you're asking has to say.

"Do you think store hours should be increased?"

"What recurring customer complaints do you hear?"

Whatever you say, don't mess up the critical part. After you've asked your succinct question, shut up and listen. Record the person's response, and think about it later. You've got more questions to ask, first.

2. Be a master gardener.

With employees hopping jobs on a whim, ours is no longer a top-down world. In his book, Team of Teams, General Stanley McChrystal made the point that today's leaders are more like gardeners than directors. Gardeners plant seeds, keep plants watered and remove weeds. But as all good gardeners know, plants must be given time to grow.

In case it's not obvious, employees are the plants in this analogy. Micromanaging makes employees defensive and actually decreases their performance. To create a thriving garden, either trust your plants to bloom or pull them from the plot.

3. Commit to communicate.

There's no denying that Walton created a loyal culture back in the day. Walton greeted employees like friends, shared doughnuts with warehouse workers and gave out his personal phone number. His approachability and genuine curiosity, reflected in the legal pad approach, formed the foundation of his success.

As your startup grows, you won't be a part of every conversation. So even if you can't chat with every employee and customer every day, you can become a more intentional listener. Start by figuring out your equivalent to drop-by note-taking.

Related: 5 Ways to Effectively Communicate With Employees

For example, URX CEO John Milinovich carves out time each Friday to get his team together for "contrarian office hours." The forum encourages employees to debate hot-button issues and even argue good-naturedly. To create a sense of mutual ownership, give people a space to be heard -- even, and especially, about hard-to-hear topics.

4. Get smart about not being the smartest.

Let's be honest. If you're the smartest person at your company, you're doing a poor job hiring. Hiring is not about letting go of your leadership, it's about recognizing that the company needs broader and deeper skill sets. Then, once you hire those smart people, you should be listening to them and giving up control.

Related: Why You Should Hire People Smarter Than You

If you look past the horribly out-of-date "good men" part, Teddy Roosevelt summed it up pretty well: "The best executive is the one who has sense enough to pick good men to do what he wants done and self-restraint enough to keep from meddling with them while they do it."

Company culture isn't built in a boardroom. Take a page from Walton's yellow legal pad, and you won't go wrong. Walton hungered for new ideas, and -- more importantly -- he knew where to look for them. You should follow his example.

Zach Ferres

Advisor, Board Member & Investor

Zach Ferres is a serial entrepreneur, speaker and technology executive passionate about developing entrepreneurial communities around the world. He built and sold his first tech company at 24 and was the CEO of Coplex for eight years, where he supported the creation of over 200 startup companies.

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