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Best Buy's CEO Brian Dunn Named Best Retail Executive

10/04/2010 12:01:00 AM Eastern

MINNEAPOLIS — Best Buy CEO Brian
Dunn has won TWICE Magazine’s inaugural
Best Retail Executive Award.

Fifteen months into his role as chief executive,
Dunn earned the honor for taking the
reins of the world’s largest CE chain during
a global economic crisis — and keeping the
enterprise on an even keel with his vision of a
connected world and a shirt-sleeve management
style that has endeared him to his tens
of thousands of employees.

As Dunn himself recounted in November
2008, just two months after the near-meltdown
of the world’s financial markets, business
dropped off so abruptly in late September
that Best Buy was unable respond
fast enough to the new marketplace realities.
The company “made a lot of adjustments but
couldn’t change fast enough,” he said, given
the three to four weeks it took the then $40
billion retail giant to alter course.

Dunn described the environment at the
time as the most challenging he’d seen in
his 23 years with Best Buy. “It’s difficult as a
retailer to plan,” he said, given the whipsaw
effects of the financial markets and the fact
that no one could predict the duration or the
severity of the downturn. “It’s a real tough nut
to crack.”

In hindsight, Best Buy’s new skipper was
well-prepared for the economic storm. As
chairman and founder Dick Schultze noted
when Dunn was first named to succeed CEO
Brad Anderson in January 2009, “Brian has
demonstrated a rare ability to connect with
people and inspire them to work together
to accomplish extraordinary things. Dunn is
a product of — and a steward of — a unique
culture at Best Buy that continues to drive
the company’s performance. We’re pleased
and excited that Brian has accepted this new
role and will be leading our company through
future challenges and toward new and exciting
opportunities ahead.”

Dunn’s humble beginnings at Best Buy
gave little hint to the crucial role he would
later play. He joined the company in 1985
as a sales associate at the suggestion of his
mom, who had started at the chain’s precursor,
Sound of Music, and would later launch
its co-op advertising department.

“My mom worked here for 18 years and
brought me in because this is a company
where ordinary people create extraordinary
things,” he told TWICE on the eve of his
ascension to CEO. “I saw my commitment to
that — although the paradox is that there are
no ordinary people.”

Dunn was later promoted to assistant store
manager, which meant during the days of
Best Buy’s commissioned sales force that “I
had to take a massive pay cut,” he recalled
during the Consumer Electronics Association
(CEA) CEO Summit in June. But by 1989 he
was managing his own store, and the next
year became a Minnesota district manager.

By 2000 Dunn was senior VP of Best
Buy’s East Coast operations, and was named
president of retail North America in 2004.
Two years later he succeeded Al Lenzmeier
as president/COO, and rose to CEO in June 2009.

As chief executive, Dunn said he would continue
to build the company upon the foundation set by
Schultze and his mentor Anderson, with whom he had
worked closely for a decade.

“The course Dick started and the customer-centricity
platform that Brad initiated is absolutely the right
direction,” he told analysts and investors last year.
“My job is to take that into the digital era, to get connected
with our customers and help them service up
their lives.”

Enter Dunn’s “connected world” strategy, which
leverages the growing interplay between the “three
screens” — TVs, computers and cellphones — and
the digital content and broadband and mobile connections
to drive them. As he noted during a secondquarter
earnings call last month, connectivity has
brought the CE industry to “a pivotal, transformational
inflection point,” on par with the
analog-to-digital transition that began
15 years ago.

“The customer wants to be connected
all the time,” he said, “and
we are a one-stop shop for all their
connectivity needs.”

To that end, Best Buy is revamping
the center of its stores by downsizing
its slow-turning CD and DVD sections in
favor of an expanded wireless department and
dedicated sections for nascent categories like e-book
readers and motion-sensor video gaming.

Under Dunn’s watch the chain has also expanded
its digital content delivery services beyond Napster
music downloads through a partnership with Sonic
Solutions. The deal allows Best Buy to sell, market
and promote that company’s Roxio CinemaNow
video-streaming services in packages with broadband
services and various connected devices.

Best Buy’s other key growth engine is its international
operations, which now span Europe, China and
North America. Aside from driving revenue for the now
$50 billion-plus retailer, the far-flung enterprise also
provides a global pool of operational and business
insights from which to draw.

“We’re going to recombine our DNA,” Dunn said,
citing the successful Best Buy Mobile joint venture
with Britain’s Carphone Warehouse as a prime example.
“We took [Carphone Warehouse’s] expertise
and vendor relationships and connected technologies
in ways that make sense. We’re going to do more of
that.”

At the same time, the deep economic downturn has
also tempered Dunn’s game plan for the company.
“We’ll re-sharpen our value message and remind
consumers that we have great prices and offer great
value, from the opening price point up to white-glove
treatment,” he told TWICE last year.

What hasn’t changed is a shirt-sleeve management
style born of his store-level background, which
has kept him plugged in at all operational levels. “I’ve
been an operator for a long time and context is very
important to me,” he said on the eve of his CEO assignment.
“I will talk to store personnel and walk the
factory floors of Asia. I’ll push the business and cajole
it, but I’ll step away from it too, to spend more time
with our vendors, with our folks in Washington, and
with all of our constituencies, to come up with new
solutions for our customers around the world.”

So how’s he doing 15 months into his tenure as
Best Buy’s chief executive? The numbers speak for
themselves. Profits for the company’s just-reported second fiscal quarter — an especially brutal period for
CE retailing — trounced analysts’ estimates by soaring
more than 60 percent to $254 million, thanks to better
inventory management, reduced capital spending,
a higher mix of high-margin connected products and
lower promotional costs.

In a statement, Dunn said he was impressed with
the company’s performance “in a quarter with
constrained consumer spending,” although
his assessments of his own performance
have been typically more
reserved. During a one-on-one
interview with CEA president/CEO
Gary Shapiro during the trade association’s
CEO Summit in June, Dunn
conceded that “I thought I was going
to be smarter ... when I took this job. As
CEO you want to have the intelligence and
vision,” although it is also important for executives to
“know what you don’t know and ask, ‘Explain that to
me.’”

Indeed, good communication is crucial for Dunn,
particularly in vendor relationships. “I need, crave,
open conversation,” he told Shapiro. “What’s working,
what isn’t and what we can partner on, and what we
can’t. If you have problems, air it out. I appreciate it,
even if our team doesn’t. I think feedback is a gift.”

Going forward, Best Buy watchers should expect
the unexpected, based on Dunn’s oft-stated embrace
of change. Despite being “quite change-resistant”
earlier in his career, when for example Best Buy
moved to a non-commissioned sales model, he now
understands that “Change breeds success ... and resistance
makes companies monuments in themselves.
In other words, you’re dead before you’re sick.”

The theme of change also infused Dunn’s first address as chief executive. Speaking
to shareholders at corporate headquarters
last year, he noted that Best
Buy has succeeded by breaking old
business models before they became
obsolete, and will continue to “embrace
challenge and change.”

Dunn described the company as
“restless,” and said it repeatedly
overcame critical challenges during
its history by making daring,
game-changing moves including the
switch to a non-commissioned sales
model in the 1980s, improving efficiencies
and margins by standardizing
operating procedures in the 1990s,
and embracing the consumer-focused
and employee-empowering customer
centricity model in the 2000s.

Best Buy’s restlessness is also fueled
by a healthy dose of paranoia,
given the competitive
threats presented
by Walmart and
Amazon.com. As
Dunn told Shapiro,
“We are proud what
we have done ... and
paranoid that it will be
taken away in two weeks.”

But underlying it all for
Dunn and Best Buy is an enthusiast’s
love of CE and an appreciation of the
consumers they serve. “Our industry
connects prices to services
consumers crave and
desire, connects to
people and the things
they love,” he said.
“Our core philosophy
is putting technology
at the service of our
customers.”

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