Best Buy didn’t ‘Disaster Proof’ its Corporate Algorithms
Best Buy is getting hammered online. Here’s what happened:
- Best Buy sells bottled water by the bottle at $1.79 a bottle (or $2.50 for smartwater). They don’t sell them by the pack, but the pack price, if you did buy them at that price is $42.96 and $29.98 respectively.
- Hurricane Harvey hit Houston. This led to a shortage of clean drinking water. As a result, Houston Best Buy customers were buying bottled water by the pack. To make this easier for customers, an employee made a sign advertising the available (and the price) for a pack of water.
- Someone took a photo of the high price pack and posted it as an example of Hurricane price gouging at Best Buy. The photo went viral and was picked up by major media outlets. Best Buy was condemned for price gouging Hurricane victims, from coast to coast.
Making things worse
What did Best Buy do? It did what most companies do. It pushed the PR panic button and spun it. Worse, it blamed (likely underpaid) employees for the error and implied that the employee was fired (it won’t happen again!):
“Not as an excuse but as an explanation, we don’t typically sell cases of water. The mistake was made when employees priced a case of water using the single-bottle price for each bottle in the case.. As a company we are focused on helping, not hurting affected people. We’re sorry and it won’t happen again…” ”
Disaster proofing Corporate Algorithms
Best Buy could have done better. Much better. Here’s how:
- The first step: recognize the role algorithms play in your business. These algorithms are making thousands of dynamic decisions about your business every day. In this specific case, they determine what the price for a bottle of water is (potentially by region or store), when it should be restocked, and where in the store they it be placed.
- The second step: disaster proof your algorithms. Disasters are a good way for companies to demonstrate positive corporate behaviors, and these behaviors can be built into corporate algorithms. In this case, the price and availability of water (and other disaster related goods) should have changed in response to the disaster. For example, selling water at cost and/or increasing the amount of water delivered to areas stores.
- The third step: don’t blame low level employees for errors created by poorly crafted algorithms, empower them. In this case, customers were trying to buy water by the pack, a behavior not anticipated by corporate algorithms. This likely resulted in an occasional shock and complaint at the cash register as customers realized how expensive the per pack pricing was. In order to avoid that problem, employees improvised with a sign advertising the per pack price. A better approach? Give employees the algorithmic flexibility and the training needed to respond to situational needs. Also, provide them with ‘helicopter’ support from online response teams to help them solve complex problems. Empower them and reap the benefits, not the headaches.