Heroes Or Bums
By Steve Smith -- TWICE, 5/17/2004
Remember the old definition of pioneers? "They're the ones dead on the trail, with arrows in their backs." Well pioneers and leaders in any field take chances. The result is either extreme success or failure.
This occurred to me during my road tour of Best Buy's new company philosophy, Consumer Centricity. In all the years I've covered retail — in electronics and other industries — I've never seen such a large company try to dramatically change its philosophy and company culture, without being forced to by a bankruptcy court.
Best Buy isn't in trouble, not by a long shot. It is still one of the most popular, profitable and innovative retailers of any type around today. Which makes Consumer Centricity even more surprising.
If Best Buy can successfully roll out this Consumer Centricity program, CEO Brad Anderson, president Allen Lenzmeier and the rest of their team will be heroes. Business guru professor Larry Selden will be considered a visionary. If it fails and hurts Best Buy's bottom line, guess what: all those same Best Buy execs will be considered bums, not only by Wall Street but the industry at large. And Selden? He'll be branded as Best Buy's Rasputin … or worse.
Of course the devil is in the details, and the initial reaction of Wall Street analysts has been positive, for what that's worth. What's the industry reaction been? Well, I was lucky enough to go right from visiting Best Buy to attending the PRO Group meeting in Scottsdale. It was a real topic of conversation and curiosity.
The PRO Group members and suppliers I spoke to in Scottsdale questioned whether or not Best Buy could pull it off. They say the key to success for Best Buy is going to be this: Can they afford to pay their sales help? If Consumer Centricity rolls out in all Best Buy stores, the old non-commission $10 or so an hour sales associate pay is not going to cut it. I agree.
Gary McCormick, president of Ovation and the PRO Group, commented, "I think they will have to pay their sales associates a lot more annually, a big leap for them. Now they are paying them a small percentage of their sales [volume]."
But given Best Buy's history of innovation and overall success, no one said Consumer Centricity wouldn't make it. In fact, both suppliers and its competitors in the PRO Group are giving Best Buy management credit for trying to talk to consumers about something other than price.
McCormick's view was rather typical of industry executives I spoke to. "I would never underestimate Best Buy, based on all they have done in the past. But it will be a tough road. The culture [of this type of store] is totally different."
But he thinks, and other industry execs do too, that if Best Buy is successful it might help PRO-type stores. "If Best Buy could preach that improved audio is the way to go, that will help all of us."
The last word on Consumer Centricity is far from being written, but in the end Best Buy management will be considered heroes or bums. For pioneers, for those who take a risk and grab at leadership, there is no middle ground and no other approach.
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