While the strategies below are pointedly Best Buy’s it would be wise to strategically assert these strategies to your firm. Best Buy badly needs a good dose of strategic innovation. Over the years I have noticed dominant companies continue to take a “too big to fail approach to their business. Peter Drucker said, there was nothing written that said a business had to endure.
Is Best Buy up to the task? Are you? No seriously, are you? Companies, particularly long-dominant ones such as Best Buy, find it almost impossible to change course to the extent demanded by a truly innovative strategy. The same traits that helped them grow and succeed at ever-larger scale—including dominant assets, repeatable processes, clear roles, and practiced expertise in key functional areas—make them heavy, inflexible, and too complex to act decisively when the winds shift. Even in the best of times, such firms struggle to adopt innovations that might upset their finely honed management systems and business models.
An important barrier to Best Buy’s profits “is the sadly ubiquitous practice of “brainstorming.” Employing brainstorming in the context of strategic innovation has a fatal flaw: It relies on leveraging what people in the room already know to try to solve a problem that is different in kind—not just degree—from anything they’ve seen before. It is extremely unlikely they have a solution ready to be shared.
Third, there is the typical strategic planning process. Despite its supposed focus on strategy, this annual corporate ritual is actually another obstacle on the path to strategic innovation. Normally beginning a few months ahead of budgeting, its primary purpose is to gain early alignment on financial outlooks and investment. Most strategic planning is concerned with running the business, not disrupting it, so it’s really no surprise that innovative strategy development is rarely an objective. You can bet that Coca-Cola’s “anchor bottlers” innovation, Google’s discovery of how to monetize search, or Nucor’s mini-mill disruption of the integrated steel industry did not originate from an annual off-site meeting. Best Buy has to run the business it has, and its strategic planning process is apt to be consumed by the challenges of doing that.
Finally, there is a less tangible but equally powerful barrier at most companies. Corporate behaviors interfere with how the individual mind generates ideas. If you’ve ever worked in a large company, you’ve likely seen people categorized as either right-brained (those creative and intuitive types) or left-brained (those members of our logical and analytical subspecies). However, recent neuroscience shows us that analysis, reasoning, and intuition work together as a single mode of thought that employs the whole brain. Companies want you to believe that “thinking outside the box” means conjuring up something completely new from your imagination—presumably from the right (creative) side of your brain. Yet neuroscience tells us that “thinking outside the box” actually means looking in other boxes (ideally as far afield as possible), a process that’s as analytical as it is creative.
In the normal course of business, there is nothing fundamentally wrong with any of these practices, but they can become formidable barriers to tackling strategic challenges that demand true innovation—and a reliance on them could be fatal for Best Buy.
So how can Best Buy produce the strategic innovation it needs to prove the markets wrong? By answering these five questions:
- What issues must be solved in order to overcome Best Buy’s strategic challenge?
- How can we design an unconstrained search for each element of Best Buy’s strategic challenge?
- Has anyone, anywhere, at any time solved any piece of the puzzle?
- Which precedents offer the most promise for a breakthrough solution?
- What creative combination of which precedents would crack Best Buy’s challenge?
Looking at Question One, we see several elements to Best Buy’s strategic challenge, including:
A massive investment in supersized and now undifferentiated retail spaces that have lost their appeal to many consumers
The ability of consumers to compare prices of consumer electronics through the Internet
The emergence of new, more compelling retail propositions—cheaper, more convenient, or “way cooler”—from the likes of Walmart, Amazon, and Apple
This combination of elements did not exist when Best Buy was trading at 17 times its earnings. And since no one has successfully faced this particular challenge before, Best Buy won’t find solutions from benchmarking, best practices, consumer research, competitor analysis, or freewheeling brainstorm sessions.
Best Buy needs to look elsewhere to find inspiration. It must begin by answering the second question above: How can we design an unconstrained search for each element of Best Buy’s strategic challenge? Leaders must disassociate each element of Best Buy’s strategic challenge from its specific industry and situational context. As an example, the first element could be reframed as “a massive, aging legacy asset that is core to the business.” For this piece of the puzzle, Question Three becomes: “Who has successfully repurposed or optimized an aging asset that was core to their business?”
Adapted from Can Best Buy Thwart the Grim Reaper?.