Humility about his accomplishments; generosity in giving credit for those who have helped him “on his journey,” as he puts it; his passion for technology; his keen insights about the industry and his company; his honesty; and his sense of humor.
These qualities have helped Brad Anderson, Best Buy’s vice chairman/CEO, attain the legendary success he has had in this industry. They were clearly on display in this special TWICE interview, where Anderson discussed his three-decade career with Best Buy and his pending retirement in June.
As most of you know, Anderson joined Best Buy’s precursor, the Sound of Music, 36 years ago as a stereo salesman. While not the most successful person on the sales floor, founder and chairman Dick Schulze saw something in him he liked and the chain’s founder promoted Brad to store manager. The rest is CE retailing history. (For Schulze’s take on Anderson and his career, see p. 6A.)
So here are the views and opinions of a guy who loved audio products, who never set out to be a CEO or a corporate manager, but became one of the most successful and well-respected executives in the history of the consumer electronics industry.
In announcing your retirement, you commented, “This is the right time for my story as CEO to end naturally, and Brian’s to begin.” How long has this been in the works?
I started talking to the board about this about a year ago. I told the board initially I was going to serve as CEO for five years, now it was stretching into seven years. At six years I told the board, and I always have, that when someone was ready to do a better job than I did that I wanted to get out of the way. A year ago we started a more diligent look at the candidates and narrowed down a time frame for my departure. I let the board know that I would be ready to retire as soon as we were ready to select a successor.
What was Dick Schulze’s reaction to your decision?
Dick thought I would stay longer, but he knew the kind of timeline I was looking at. Dick was very supportive in the discussions we had in terms of transition. I think it was helpful ... and I didn’t have the impression that Dick didn’t wanted to kick me out as fast as possible! The primary concern of Dick was, is the next candidate ready?
How did you, Dick and the board decide on Brian Dunn as your replacement?
That was really over a year of discussion in the abstract as to whom the external candidates might be and many were people we knew and admired. We measured the plusses and minuses of having an internal candidate vs. an external candidate and looked deeply into Brian’s skill set.
And Brian has a similar background as you, and he knows the company culture.
For me that was an important part of the decision [on Brian] that the company culture would continue. Best Buy has thrived due to the culmination of the contributions and the stories that people inside Best Buy have been able to tell. A lot of people inside Best Buy have accomplished their dreams. That’s what we’ve built the foundation of the company on. One of the most important things in the succession process is that the next leader will enhance that culture as opposed to threaten it.
In your career, what’s your biggest career accomplishment?
I never had in my wildest dreams imagined that I’d have a business career or this type of opportunity. It was afforded to me by the happenstance of a company that I worked in and that company provided me the opportunity to tap what I could do.
And so when I run into the stories that you run into here on a daily basis of folks finding their voice, and making a contribution [to Best Buy], getting the recognition that they have as human beings, those are the powerhouse affirmations for me.
Who could imagine that you take a job as a clerk, and you wind up meeting the most interesting people in the world, and deal with some of the most challenging things, and all of that wound up to be my journey. And so we are trying to recreate those opportunities for our people. Those are the things I care the most about.
When I spoke to CE Hall of Famer Joe Clayton about you and Dick Schulze, he said people forget that there was a time when Best Buy had to face some challenges. What are some you remember?
Oh, Joe was around for that. I keep reminding people that this company took a long time to be even remotely successful. One of the stories I remember when we started to have some success in the mid-1980s and changed into Best Buy and started to click.
We’ve had three “near-death” experiences as a company in our 42 years. And we’ve really only been significantly profitable in the last 12. So it has been more struggle, frankly, than success.
But, then, I agree when some say when you overcome tough challenges is when you enjoy success even more. That’s been part of the succession process. We should not lose our sense of vulnerability, or lose our edge, even when things are going well.
What’s been your biggest disappointment?
I’m disappointed that we are not farther along on customer centricity. I hoped that in my span as CEO that we would have gotten more depth than we have developed so far.
That’s funny because Dick Schulze told me that’s your greatest accomplishment. But when you introduced the concept in 2004, yours truly thought it was too expensive to operate.
[Laughing] Customer centricity does costs more money to operate! It costs a lot more money!
Seriously, the real reason for customer centricity is that one of the core cultural advantages of a company is giving people an opportunity to really use their gifts. Unless you are meeting some real customer needs, you won’t get an economic return from that. So for me the dirty little secret about customer centricity, the primary reason to do it, is to sustain and deepen the culture which has been our competitive advantage. You had to have an economic outcome, because it is going to cost more money.
We needed more energy behind this project and we still do. Actually, part reason I feel that the time is right for succession is that Brian, as a fresh CEO, can bring this across the goal line in a way that I haven’t been able to do.
I feel great about customer centricity ... but there is an opportunity to [get] substantially deeper into it than we have realized.
I’m hoping that if we have a chance to talk in say, five years from now, you will have seen something that Brian delivers and the team delivers that will make it clear what I am talking about now.
Over the years at Best Buy you’ve been involved in a few gambles as CEO and when Dick was CEO. What was the biggest gamble?
The biggest structural gamble was when we switched to Concept 2. Dick was basically betting the company. If Concept 2 didn’t work, the company would have died.
If customer centricity hadn’t have worked, we could have gone back to being product-centric and survived in a different way.
With Concept 2, we had no other option. We had to make Concept 2 work. You couldn’t sustain the existing strategy.
Concept 2 had us going from commissioned sales to non-commissioned sales and going from the catalog showroom model, which the rest of the industry was using. You had a showroom with 175 TV sets, then you had a backroom. You had a commission salesperson between the product and the transaction, as well as a delivery system.
We switched to a discount system, grab-and-go model to a non-commission staff. That gave us a future. It almost killed us, but gave us a future. That’s probably what Joe [Clayton] is thinking of, when we got as close to the edge as we got.
CE Hall of Famer Harry Elias always mentioned your visits to Best Buy stores. How did the visits change your thinking and given you ideas?
I’ve tried to go to the stores all these years, but almost never on a formal visit. The process of having a show when you visit a store communicates the wrong message. I would rather wander in as a consumer and experience the store, as close as I can, to a customer experience. When I walk in a store, you can tell from the energy of the place whether this is a healthy environment or not.
And the key thing of interest, in a discussion with employees, why are they working here? Building a career? Is this a job that is helping them finish college? Do they enjoy the process of serving customers? How much of themselves are they bringing to the job?
I find that an endless learning experience ... after being here 36 years and being 59 years old it is still very fresh, because I’ve always taken on different things, with a different cast of folks.
What’s the best technology that has been introduced in your time in the industry that has been successful?
The best single device is the CD, and that is selfish because I am a music lover. That’s why I started in this business. The CD was like a dream product because it gave lifelike reproduction you can’t get anywhere. And it is the foundation of being able to digitize that information. That led to everything from flat panel to DVD to the miniaturization of all these products and communications devices.
I think we’re in the very beginning of how to really impact people’s lifestyles with that basic, simple technology, the core framing used to make the CD player.
That is a fundamental revolutionary change, one of the demarcations in human history.
What technology did you think was going to be a hit that wasn’t?
[Laughing] I’ve got a whole bunch of them at home! One of those products being the MiniDisc player, which was great in its time, and I still wonder why it wasn’t successful. There’s lots of stuff that I bought and loved and didn’t become a hit. Another is DVD Audio. If you go back and listen to classic recordings done in an excellent DVD Audio mix with a Sony system or other equipment, all were excellent, I’m deeply disappointed that DVD Audio didn’t work.
What will you miss about this job?
Primarily, it is the day-to-day immersion with the people here. This is the richest group, and it is an emotional roller coaster every given days. Our people bring much of their heart to Best Buy. Every day I get to swim in the oceans of disappointed dreams, and triumphs ... all these intersecting stories, a bottomless list of stories.
This year was my last CES show as CEO after 29 of them. My reaction is that it is just an incredibly fun business, it’s always under transition, it’s always under enormous stress, it always has a bigger impact on the world than it thinks it is, and it attracts characters.
What types of “characters” are you talking about?
Well we’ve talked about Dick [Schulze], Joe [Clayton] and Harry [Elias] — think about the range of those three personalities! You talk about characters and they all are. And none have lost any of their fire, and they all still love this business.