Information wants to be free, even at WalMart

Photo by El Neato

I was reading The Wal-Mart Effect when I came across a passage that summed up exactly how I want to change the world. Sara Lee had a business relationship with Wal-Mart, and as one of the negotiators recalls:

Senior officials were always coming down there [to Bentonville] for meetings, and they always had their sheets of paper bent up so the Wal-Mart person couldn't see them. The idea was, why didn't we just put the sheets of paper on the table?

So they opened up traditionally closed information, and immediately discovered ways of saving money that benefited both companies. Wal-Mart had empty trucks returning from Florida that could transport Sara Lee's stock after it was shipped from South America. Underwear cartons were too large, Wal-Mart wasted time and money splitting them to send the contents to different stores, so Sara Lee shrank the carton size. As the book puts it, all of these efforts eliminated pure waste, the equivalent of turning off a light in an empty room.

I spent years in a corporate environment where I saw hundreds of opportunities to save money and make the world better for everyone, if only people would talk and share information. I was surprised to see I had that in common with Wal-Mart, but it makes sense given their fanatical approach to efficiency. If you're really trying to be productive, it just doesn't pay to be secretive.

Are there downsides to this? One of the biggest hurdles is trust. Knowledge is power, so you're handing over power to people who's interests may not align with yours. Wal-Mart is the 800lb gorilla with a history of using its market power ruthlessly, and one of the strengths of the book is its detail on the negative side of their dominance. I'd argue that this trust argument is usually a cop-out, hiding worries about turf and control. In most cases it's clear that it's not in the other party's best interest to screw you over, and if it is, why are you dealing with them at all? The worst cases I saw were between departments within the same company, often we shared more information with competitors than the guys down the hall.

Once you're in a business relationship, there's a lot to be gained by putting all the sheets of paper on the table.

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