Don’t Fall in Love with How You Do Business Today — Corie Barry, CEO Best Buy
The Industrialist’s Dilemma — January 14, 2021
We began the sixth year of teaching The Industrialist’s Dilemma by revisiting two companies who have had their businesses radically impacted by the pandemic — strangely, in a positive way. Our first session was with Julia Cheek, CEO of Everlywell, whose company’s solution of supplying tests for home healthcare has been booming since Cheek’s last visit to our class 11 months ago. Everlywell has grown at a highly accelerated rate as individuals have been forced to stay home and still need a variety of home healthcare testing, both for Covid and also other health issues.
Our second class this year was with a new leader representing a company we last looked at two years ago. Corie Barry became the CEO of Best Buy in June 2019, nine months before the global pandemic caused both the closing of the company’s stores, and also a spike in demand for many of the products they sell. Our discussion this year surrounded Barry’s insights on staying focused on customers, the continued evolution of the company’s business model, and an unappreciated benefit they gained when the company faced an existential crisis in 2012.
Staying Focused on the Future Customer
When Clay Christensen first described disruption, he explained how incumbents would “over shoot” with their solutions in addressing customer needs. Incumbents continue to add features to their products beyond the point of what customers want, thus creating opportunities for disruptors to enter markets and deliver solutions that meet customer goals at lower cost and price points than existing solutions. Christensen highlighted that the way not to fall prey to this trap was to stay focused on the customer first and not to think about one’s product roadmaps as starting from a company’s existing solutions.
Best Buy saw transformed itself over the last eight years by providing high quality in-store shopping experiences in combination with services that reduce the complexity of today’s connected digital products. Instead of going the way of much of their competition over the last decade, Best Buy reinvented their organization by matching the next generation of computer and consumer electronic products with high quality services that went beyond simply being “a big box retailer.” The company became the place consumers could go to purchase most, if not all, of their digital products, and also get great service to ensure that these new devices work well together.
Barry spent a good portion of our class session talking about how the continued combination of connected products will require Best Buy to focus increasingly on having higher quality certified specialists in the future, as well ensuring that new and existing employees understand user experiences in the products that they sell. When we wondered if her business might look more like Accenture’s in the future (acting as a consultative IT organization), Barry highlighted that Best Buy is already working with Accenture to advance its technology, delivery, and operations activities, including working in areas as varied as data science, product development, and user experience design.
As Barry highlighted, “You can’t fall in love with how you do business today.” Barry spent a fair amount of time talking about the skillsets they will need to add going forward to serve their customers well. This statement struck us as a very clear future-focused view of where her industry is headed, and the position that Best Buy is seeking to occupy in this industry over the next decade. While the last nine years have been a good run, Barry seemed very clearly looking at how the company can stay relevant in its domain.
Being an Underdog Can Be Liberating
One of the unexpected nuggets that Barry shared was how the company’s struggles in 2012 created an opportunity for the organization to completely change how it operated. At a time when her family and friends were questioning why she would stay with what looked like a sinking ship, she pointed out that no one expected Best Buy to survive given the changing nature of electronics products, the CEO being unceremoniously forced out of the company, and the onslaught of Amazon and eCommerce.
Barry then pointed out the benefits of being in such a difficult situation: The people who remained or who joined knew that the only way to succeed would be to do things completely differently than in the past. I remember when I joined Intel in 1994 we were taught the saying of one of Intel’s founders, Bob Noyce, “Don’t be encumbered by history. Go off and do something wonderful.”
We often talk about the importance of running towards disruption if you are a business leader, and Barry’s comment reinforced the importance of leaders attacking the hard problems and not being constrained by the past — especially in difficult times.
Having the Right “Say/Do Ratio”
When discussing personnel at Best Buy, and in giving advice to the students, Barry repeated a mantra that was like gospel when I was with GE in the 2000’s — the need for people to have the right “Say/Do” ratio. Barry stressed the importance of working with leaders who have a Say/Do ratio of 1 — where people say what they are going to do and then they go out and do it.
One of the benefits of teaching at Stanford is that we see a wide variety of leaders, many of whom have grand strategies and visions. But the ones who stand out are those that actually do what they say they will do — who get their organizations aligned towards a vision and who take their companies on that path with top-notch execution. Barry has had an amazing start in her new position; the company’s value has more than doubled in the last 10 months. The key for her and the team at Best Buy will be to live up to her adage for the next decade of continuing to deliver on those things that they have promised to customers and to each other.
This reminder was great advice for our students, and a simple though not simplistic statement of how leaders can hold themselves and others accountable for their actions.
