1: It was the summer of 2012, and electronics retailer Best Buy was on the brink.
That year, the company would lose $1.7 billion.
Ouch
New CEO Hubert Joly was swimming with crocodiles: “Amazon and various technology companies were vertically integrating, service quality in stores had plummeted, trust in leadership was low, and the share price was dropping rapidly,” Carolyn Dewar, Scott Keller, and Vik Malhotra write in their book CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest.
Hubert understood that the company was in need of an immediate turnaround. He knew he needed to articulate a vision to reframe the company and inspire his beleaguered workforce.
This vision would be “at the intersection of four circles,” he recalls: what the world needs, what we are good at, what we are passionate about, And how we can make money.
Consumers were buying electronics at a dizzying pace to meet their entertainment needs.
Hubert’s insight?
“That Best Buy could play an important part in this world by helping customers navigate” this new world, the authors note.
“Choosing the right electronics is hard,” Carolyn, Scott, and Vik write. “Seeing the differences in picture quality between TVs or hearing the differences in speakers or headphones can’t be done online. And being able to talk with someone who’s knowledgeable can be extremely valuable, especially on large purchases. Once products are in homes, setting them up is often confusing.”
Hubert saw a vision for the company’s future: “Best Buy is here to enrich lives through technology,” he says. We’re not in the business of selling TVs or computers. And we’re not fundamentally a retailer. We’re in the business of enriching lives by addressing key human needs, whether it’s entertainment, health, productivity, or communication.”
2: This vision addressed the first three circles of market need, company capability, and passion.
The question was: Could money be made doing so?
He knew customers were going to Best Buy stores to learn about products. But, some would then purchase them online to save money.
Experts questioned Best Buy’s cost structure which could not compete with online retailers.
Hubert disagreed. “He felt if customers were provided superior value from the experience, they’d leave with more products,” the authors write.
“He also saw that consumer electronics companies looking to vertically integrate needed a physical presence,” they note. “Best Buy could provide this by offering these companies stores-within-a-store—a portion of the floor space allocated to the merchandise of just one vendor, often with dedicated sales support.”
He saw an opportunity to “provide a real service to Apple, LG, Microsoft, Samsung, Sony, and later to Amazon, Facebook, and Google.”
He recalls: “They needed to find a bricks-and-mortar presence, and we could give that to them overnight versus their building thousands of stores at great cost and risk.
“That way we were like the coliseum where the gladiators fight, we could collect tickets from everybody–from customers and from vendors. It was win-win-win.”
3: Yesterday, we looked at how the world’s best CEOs adopt a bold, direction-setting mindset.
“They embrace uncertainty,” the authors write, “with a view that fortune favors the bold.”
Hubert’s example with Best Buy highlights how the world’s best CEOs find and amplify the intersections between how various aspects of their business and the market intersect.
“Given Best Buy’s dire straits, few CEOs would have taken such an expansive view of the playing field,” Carolyn, Scott, and Vik write.
“Finding the right intersection indeed pays off,” they note. “By the time [Hubert] stepped down in June 2019, Best Buy’s shares had soared 330 percent from $20 to about $68 while the S&P 500 rose only 111 percent.”
More tomorrow.
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Reflection: How bold am I in setting the vision for my organization, my team, or my life?
Action: Journal about what a bigger, bolder vision would look like.
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