1. The Case of Best Buy Co. Inc.: An Innovator’s Journey
CULTURE OF INNOVATION

2. What is corporate culture?
The shared values, beliefs and norms of behavior that exist within an organization.
These are defined by the history, performance, leadership and industry of the organization.
There are subcultures within the dominant culture.
What is corporate culture? The shared values, beliefs and norms of behavior that exist within an organization. These are defined by the history, performance, leadership and industry of the organization. There are subcultures within the dominant culture.

3. MANAGEMENT CHALLENGES
Innovation as a systemic capability
Barriers to innovation
Planting the innovation gene
Ordinary to extraordinary
Playing the whole keyboard
Managing resource tensions
Managing, measuring, leading innovation
How does one actually start in making innovation a systemic capability?
How does one sequence the capability-building process?
What are the things you have to get right first, if later efforts are going to pay off?
How do you identify and neutralize the deadly, and often hidden, toxins that destroy innovation?
How do you firmly implant the innovation gene in a company that has spent a decade focused on efficiency and short-term operational performance?
How do you turn “ordinary” employees into extraordinary innovators?
How do you enlarge the scope of innovation so that it encompasses entire business models as well as individual products and services?
How do you manage the tension between the need to “let a thousand flowers bloom” and the need to focus scarce resources?
How do you create slack and freedom that are essential for innovation, without folks going off the rails?
How do you pursue game-changing ideas without taking outsize risks?
How, as an executive, do you manage, measure, and lead innovation?
From Gary Hamel, Introduction to Innovation to the Core by Peter Skarzynski and Rowan Gibson, 2008.

4. Best buy co. inc.: the context
Time frame
Leaders
Size
Customer
Product
Best Buy – industry, key players
Time frame – Feb 2002
Leadership: committed to innovation, tolerance for failure, provided resources
Richard Schulze, founder, Chairman, CEO
Bard Anderson, CEO as of 6/30/02 (had been store manager)
Kal Patel, hired May 2003 as Vice President of Strategic Planning to replace Mark Fries, previously the “Innovation Steward”
Size:
1,900 retail stores in US, Canada, China
2002 Revenue = $23 billion (2007 = $36 billion)
90,000 employees
Customer:
techno entertainment enthusiast
25-39 year old
Affluent, educated
Product:
Retail, speciality, consumer electronics, technology, entertainment

5. Culture of best buy Customer oriented Have fun, learn
Tolerance for failure
Innovation is important, especially innovative processes. For example,
Demand forecasting systems
Supply chain management
Advertising effectiveness systems
Knowledge management systems
Structural capital
Customer oriented: good ideas start with the customer
Why is this important in retail? What are the competitive factors in this industry? Low margin, cost, quality, availability, leading edge products. The customer is in control.
Have fun, learn
Tolerance for failure

6. strategos
What mindset does Gary Hamel, CEO of Strategos, bring to Best Buy?
“Help companies develop and embed strategy and innovation into the core of an organization”
10 Principles of Innovation
Very expensive
Co-designed the process, guided the participants throughout, coaches more than consultants

7. I-Journey: “catch some fish and also teach people how to fish”
Timeline
Participants
Phases
Timeline
6 months beginning
What happens after 6 months? Whirlpool’s learning journey took a year, with a 6-month Discovery Phase.
Participants
35 directors and senior managers from Strategy and Business Development
100% time commitment
Phases
Boot Camp
First senior executives
Then 35 participants
Simulate 6 month I-Journey
What is the purpose of the Boot Camp?
Build commitment
Send a message of importance
Break away from other responsibilities
Team building
Discovery,
Lens Groups create five domains
Consumer insight
Orthodoxies
Discontinuities
Industry Mapping
Core Competencies
Innovation Lab
Making the message clear and concise, 45 minutes for each
1,000 ideas sorted into five domains
Synthesis
Different groups – break vested interest in ideas, build in objectivity
Synthesize and choose
Action lab, formal venture teams for business model elaboration supported by investigation and research
Venture Reviews with Senior Management – funded, project ended or further investigation
Realization
Long tail of innovation, 1,000 ideas become six projects
Experimentation and venturing
Continual review by Venture Review Board
Is being rejected considered a failure?

8. INNOVATION PROCESS & IDEATION (Davila et al, 2006: p.125)
Bootcamp: developing mindset
Discovery
Innovation Lab
1000 ideas into 5 domains
Synthesis
Realization
6 projects
Generation of Ideas
Radical
Innovation
Incremental
Selection
Execution
Creation
Of Value
Generation
of Ideas
Product, Service and/or Process Innovation

9. Three tasks of innovative work behavior: Scott, S. U. & R. A. Bruce
Three tasks of innovative work behavior: Scott, S.U. & R.A. Bruce Determinants of Innovative Behavior: A Path Model of Individual Innovation in the Workplace. Academy of Management Journal, 37:
Idea generation: formulation of new ideas of any sort, which are benefical to organizational conduct (Woodman, Sawyer and Griffin, 1993)
Idea promotion: capitalizing on ideas generated by finding sponsors and allies with the necessary influence and authority (Kanter, 1983, 1988)
Idea realization: the production of a prototype or model of innovation…that can be touched or experienced, that can now be diffused, mass-produced, turned to productive use, or institutionalized (Kanter, 1988, p.191)

10. HOW DID THIS WORK AT BEST BUY?

11. BOOT CAMP Leadership boot camp: 2 days, senior executives
I-Journey Participants: 3 days, 35 from Strategy & Business Development
Purpose?
Build commitment
Set expectations
Introduce everyone

12. Discovery (idea generation) V1
Brad Anderson, CEO
Five lens groups: Consumer Insight, Orthodoxies, Discontinuities, Industry Mapping, Core Competencies
Face-to-face interaction
Team interactions
Cultural experiences
Meet Toby Nord of Consumer Insight team
Testing Assumptions
Brad Anderson, CEO
Leadership sets the tone
Five lens groups:
Consumer insight – identify unmet needs and customer frustrations
Orthodoxies – executive level “limiting beliefs”
Discontinuities – trend surfing, what will change the rules
Industry Mapping – what are the competitors doing? Where are the white spaces?
Core Competencies – what are we good at? Where are we lacking?
Face-to-face interaction
Experiential learning
Stretch beyond the norm
Question why do consumers react positively (or negatively) to this?
Team interactions
Reflection
Personal learning process
“we do this” rather than “they told us to”
Cultural experiences
Compare and contrast, extremes
Step out of your comfort zone
Make no assumptions: Tv in every room but no central tv watching area
Different environemtns – where and how you buy it, where and how you use it.
Video
Documentation
Visuals
Testing Assumptions:
How do people buy things?
How do people pay for things?
How do people use things?
What infrastructure is needed?

13. Synthesis (conversion) V2
Reorganizing teams around specific business ventures for further investigation
Designing the intersection of learning
Internalizing insights
Experience
Step back
Generate conclusions
Connect with intuition and decision making
Record Keeping
Designing intersection of learning
Integration of ideas, communicating, articulating
Internalizing insights,
e.g. of American Girl
Connecting across generations
Need for community based on a demographic
Connect to the past
Need to be able to step back from the experience and develop an insight or concept that can be generalized to other situations
What kinds of communities do people participate in? How do you connect those different communities?
Generate conclusions:
Comfort level in history, knowing the way things used to be/
Connect experience with intuition and decision making.
Record keeping
Pen and card in hand

14. Realization (diffusion) V3
Experimentation & Venturing
From 1,000 business ideas to 6 projects
Venture Board
Decision
Field Research
Field Test
Venture Board – minute presentation after which an investment decision is made.
The story, the experience
Why? What? Who? How?
Applicability – how can we use this idea?
Implications – what will it take to make this work?
Next steps, resources needed
This is real – they vote that day on your team’s idea. If they fund your idea you get to move forward. $5 million for Bong idea.
Field research – some things will work, others not. Analysis – why does this work in Korea?
Field test – try it in your environment with your customers. What happened that you didn’t expect (socializing). What infrastructure is needed? Test assumptions.

15. Transferrable? Key Success Factors? Issues? Recommendations?
What Happened?
Studio D Store: A new technology and electronics boutique that helps shoppers discover the possibilities of digital technology and the many ways it can enhance their lives.
Escape: a high-energy entertainment and retail environment featuring various game stations and products for guys who want the absolute latest in gaming, gadgets and electronics.
Key Success Factors:
Connecting senior executives with front line managers, direct communication
Ability to take one experience and turn it into a generalizable concept, e.g. cutting slack for some employees based on their work history becomes a company wide policy for flexible work hours.
Issues:
Cost in terms of time, money, psychic energy
Can the next group learn this without the 6 month I-Journey and/or without strategos?
What would you recommend to Patel as a solution to his dilemma of diffusing innovation throughout the company?
How do you recreate this across 90,000 employees? Do you have to?
Can Best Buy do this without Strategos?

16. Institutionalizing innovation (V)
How does the I-Journey lead to a permanent pervasive innovation capability throughout the organization?
How do you get people throughout the organization to understand the consumer value proposition? What value are/can we providing to the current and potential consumer?
How do you balance innovation with delivering business results?

17. Return on innovation ROInn™ Cost (for example..)
Benefit (for example..)
Direct: financial costs and revenues directly attributable to the I-Journey.
I-Journey costs, salaries of participants, consultant,
Sales from new ideas
Indirect: financial costs and revenues indirectly attributable to the I-Journey.
Cost of covering for participants during I-Journey,
Future revenues generated from additional ideas.
Tangible: Physical, measurable, discernable results; now and in the future.
Failure of projects due to lack of attention during I-Journey.
New partnerships
New products/services
New business processes
Intangible: Non-measurable, subtle, indefinable results; now and in the future.
Negative effect on non-participants or participants whose ideas were not supported. Negative effect on families of participants
New skills and competencies.
Goodwill generated within the company as well as with customers.

18. Return on innovation ROInn™ Cost (for example..)
Benefit (for example..)
Direct: financial costs and revenues directly attributable to the I-Journey.
I-Journey costs, salaries of participants, consultant,
Sales from new ideas
Indirect: financial costs and revenues indirectly attributable to the I-Journey.
Cost of covering for participants during I-Journey,
Future revenues generated from additional ideas.
Tangible: Physical, measurable, discernable results; now and in the future.
Failure of projects due to lack of attention during I-Journey.
New partnerships
New products/services
New business processes
Intangible: Non-measurable, subtle, indefinable results; now and in the future.
Negative effect on non-participants or participants whose ideas were not supported. Negative effect on families of participants
New skills and competencies.
Goodwill generated within the company as well as with customers.