O.K., SO HE'S NOT SAM WALTON
As a director of Wal-Mart Stores Inc., the burden sometimes falls upon John E. Tate to grease the skids for the giant retailer in Washington. A former Wal-Mart general counsel, Tate knows plenty of the right people, and capital power brokers certainly know Wal-Mart. But when Tate introduces the company's chief executive, he's often greeted with blank stares. "This guy doesn't look like Sam Walton," their eyes seem to say.
Meet David D. Glass, arguably the most under-recognized CEO in America. Having taken over for Walton in 1988, Glass toils in the shadow of the legendary chairman--and doesn't mind at all. The people in Bentonville, Ark., Wal-Mart's hometown, know who he is. So do the company's 365,000 employees. As for his relative anonymity elsewhere, well, he'd be a fool to compete for attention with Walton, who's no fan of the limelight himself. Glass had to coax him to write an autobiography, which recently drew a $4 million advance.
But don't mistake Glass's humility and soft Missouri drawl for a lack of self-confidence--or power. Glass, 56, is firmly in control of the world's largest retailer. During his four years in the top spot, Wal-Mart has rocketed from $16 billion in sales to $44 billion, surpassing both Kmart Corp. and Sears, Roebuck & Co. in volume (chart). Meanwhile, earnings have grown at a 26% compound annual clip, to $1.6 billion, while Wal-Mart's value on the stock market has soared to $62 billion from $16.8 billion. If the public is unfamiliar with him, Glass isn't bothered: "I have the respect of the organization and am very visible inside."
Given his clout, questions about Glass's leadership are no idle matter, especially with 74-year-old Sam Walton battling an incurable form of bone cancer that has kept him away from management meetings in recent months. Walton, who was diagnosed with multiple myeloma in 1989, has been undergoing treatments at several facilities, including the Mayo Clinic. He was unavailable for comment.
ROOM TO GROW. But insiders, suppliers, and analysts close to Wal-Mart seem increasingly satisfied that the discounter is in no danger of fading without Walton's evangelistic zeal. In fact, most analysts think Walton's projection that Wal-Mart will top a remarkable $100 billion in sales by the end of the decade is within reach. Despite its tremendous growth, the retailer has left plenty of territory untouched in the U.S.--not to mention abroad. "You can't replace a Sam Walton," says Glass, "but he has prepared the company to run well whether he's there or not."
Still, Glass faces some huge challenges, many of which Walton never had to contend with. Wal-Mart is now one of America's corporate giants, with all the attendant complexity. Walton's bare-bones corporate culture should defend against the sort of corpulence that undid Sears. But rival discounters, such as Kmart and Dayton Hudson Corp.'s Target Stores, are hardly standing still. And Wal-Mart, with nearly 2,000 stores, is feeling some backlash against its size and clout (page 60). Glass's task is to keep Wal-Mart from developing big-company disease--an ailment that can attack even America's brightest stars. Just look at IBM.
So far, though, Glass has allayed most fears about life after Sam. He doesn't rally the troops with the same fervor, "but frankly, you probably remember more of what he said," says Tate. Like Walton, Glass delegates authority well and communicates with a disarming dose of humility. His stern gaze and thick, almost menacing eyebrows belie his considerable charm and dry humor.
Walton recognized Glass's abilities in 1984, when he engineered a job switch between Glass, the chief financial officer, and Jack Shewmaker, the president. While the company denied the two men were being pitted against each other, it was clear that only one would rise to the top. Sources say Shewmaker's trouble was a short fuse and a tendency toward top-heavy decision-making. Glass's collegial style eventually landed him the job.
Nevertheless, the move was a surprise given Shewmaker's charisma, merchandising talents, and close relationship with Walton. The two often hunted together or played tennis. Glass does neither. Although he speaks of Walton with affection and near awe, Glass doesn't socialize regularly with the boss.
But Glass does share Walton's rural, hardscrabble roots. The oldest of three sons, Glass grew up in tiny Mountain View, Mo., which now boasts a golf course and annual tournament named after him. His mother worked for 20 years as a supervisor in a uniform factory, while his father ran a feed mill. "He's still the same old kid he always was, and I'd just whop him if he weren't," says 77-year-old Myrtle Glass, who refers to her son as "Dayne," his middle name. Glass still does his parents' income taxes as well as his own. Until the family feed mill closed, he helped keep the books.
In high school, Glass was a bright, if indifferent, student who would skip school to play pool. After graduation, he joined the Army and landed in New Mexico, where he met 15-year-old Ruth Roberts at a drive-in restaurant. On a bet from his buddies, Glass approached her and got her phone number. When he called later for a date, though, she turned him down. "He called for about three weeks in a row. I weakened," says Ruth. Three months later, they married.
After his stint in the Army, Glass enrolled at Southwest Missouri State University to pursue a business degree. He worked nights as a dispatcher at a trucking company to support his young family and attended school during the day, sometimes nodding off in class.
With his business degree in hand, Glass landed a job in 1960 with a small drugstore chain, J. W. Crank Co. in Springfield, Mo. He helped Crank's open some of the first "super" drug stores and later began leasing counter space for the company in the discount stores that were just emerging. After Crank's, he moved to Austin, Tex., to build a Howard Johnson motel. But he missed retailing and soon returned to Missouri to join grocer Consumers Markets Inc.
While working at these Missouri chains, Glass became acquainted with Sam Walton. At the time, most business-people thought Walton was crazy for building his discount stores in towns that were deemed far too small to support them. With Walton urging him to join Wal-Mart, Glass attended the opening of Sam's second store in Harrison, Ark. On that hot July day in 1964, Walton had arranged for truckloads of watermelons to be stacked in front of the store, with donkey rides in the parking lot. When the watermelons popped in the heat and the donkeys did what donkeys do, the mess was tracked through the store. Glass gave Walton some advice he has long since lived to regret: "I suggested he get into a different line of work." Walton ignored the tip but didn't forget Glass. He hired him in 1976.
THINK SMALL. If Sam is the inspiration at Wal-Mart, it's Glass who provides the detailed execution. Most recently, he has led the charge into groceries and bigger stores. He has also shaped the high-tech inventory systems that drive down Wal-Mart's costs (table).
For all his focus on such lofty matters, Glass never loses sight of the mundane details of successful retailing. Like all senior Wal-Mart managers, he spends at least two days a week visiting the company's far-flung stores. The goal is not to supervise a store's employees, or "associates," as they're called at Wal-Mart, but to listen to their concerns.
Glass is adamant about trying to run Wal-Mart as he would a small company. At management meetings, "I force us to talk about individual stores. In the merchandise meetings, I force us to talk about how individual items are selling in individual stores," he says. It's not enough for a manager to know there's a Wal-Mart store in a particular town. He or she had better know what street it's on and what competitors are nearby.
Glass is equally exacting about costs. "He is one of the tightest men on the face of the earth," says Executive Vice-President Bill Fields. Glass rents subcompacts and shares hotel rooms with other Wal-Mart executives when he travels. At headquarters, he pays a dime for his cup of coffee, just like everyone else. His office in the sprawling red-brick building barely seats three. And there's no fancy executive washroom--though he once enjoyed such amenities for a day or two when his colleagues built an outhouse in his office as a joke.
That's not to say that Wal-Mart hasn't made Glass a very rich man. True, his $710,000 annual salary helped prompt the United Shareholders Assn. to dub him the nation's "most underpaid" CEO. But his 1.5 million Wal-Mart shares are worth $82 million and growing.
Glass hardly lives the life of a millionaire, but he has indulged a few of his favorite interests at home. His house in quiet Bentonville includes a swimming pool and a game room with five TV monitors for watching sports events. And after years of owning Ford station wagons, he now drives a white Lexus. The irony of driving a Japanese luxury car certainly isn't lost on Glass, whose company proudly espouses a "Buy American" philosophy. But he makes no apologies, either. The car was a gift from his family for Father's Day, he says, and that's all there is to it.
Since suffering a heart attack in 1983, Glass has been trying to limit his late nights. His life outside the office revolves mainly around family and sports. He's an avid basketball and baseball fan and attends the St. Louis Cardinals' spring training in Florida every year with his family, which now includes seven grandchildren. His wife, Ruth, a born-again Christian, often travels to speak to church and women's groups. His three children all run retail shops of their own: Dan is in jewelry, Don in sports memorabilia, and daughter Dayna sells children's clothing. The stores are owned by Glass Enterprises, the family's investment vehicle.
Keeping up with Wal-Mart, however, promises to become more demanding than ever. The company is growing at a breathtaking pace--with about 150 discount stores, 40 Sam's Wholesale Club warehouse-style outlets, and 15 supercenters to be added this year. Glass sees no end in sight for Wal-Mart's U.S. expansion, especially since it has just started moving into California and the East Coast. Wal-Mart is even testing the waters in foreign markets, with two stores owned in a joint venture in Mexico.
`NO SUPERSTARS.' Perhaps the greatest obstacle facing Wal-Mart now is its sheer size. Communicating with the company's "associates" will become increasingly difficult. And developing leaders to run the chain is another hurdle. "There are no superstars at Wal-Mart," Glass insists. "We're a company of ordinary people overachieving." But finding enough "overachievers" to handle Wal-Mart's growth will be the hard part.
Now that Wal-Mart isn't a retailing underdog anymore, it also risks resentment from consumers, suppliers, and others affected by its tactics. Critics have long accused Wal-Mart of destroying mom-and-pop retailers, the bedrock of small-town America. And Wal-Mart recently created a storm of protest among manufacturers' representatives when it notified suppliers that it wanted to talk to the companies directly. The reps claim Wal-Mart is illegally trying to grab their commissions. Wal-Mart insists it simply needs to work more closely with vendors to handle an insatiable appetite for merchandise.
Glass isn't backing down. "It's the right thing to do," he declares. "We're agents for our customers. We need to protect their interests. " Now, those words might have come from Sam Walton himself.HERE'S HOW GLASS AIMS TO KEEP WAL-MART IN THE FAST LANE
-- GROCERIES Build more `supercenters,' 50% larger than the biggest Wal-Mart,
that carry everything the regular stores do--plus food. Six of them are
currently up and running; 15 more to open this year
-- BIGGER STORES Make room for wider aisles, rest benches, and other
inexpensive customer amenities. Goal: To keep customers shopping longer and
drive up Wal-Mart's sales per square foot
-- TECHNOLOGY Lower costs through new inventory controls; has already invested
$600 million in five years. One system allows 2,000 vendors to see immediately
how their merchandise is selling
Wendy Zellner in Bentonville, Ark.