Presentation on theme: "The Case of Best Buy Co. Inc.: An Innovator’s Journey"— Presentation transcript:
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 capabilityBarriers to innovationPlanting the innovation geneOrdinary to extraordinaryPlaying the whole keyboardManaging resource tensionsManaging, measuring, leading innovationHow 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 frameLeadersSizeCustomerProductBest Buy – industry, key playersTime frame – Feb 2002Leadership: committed to innovation, tolerance for failure, provided resourcesRichard Schulze, founder, Chairman, CEOBard 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, China2002 Revenue = $23 billion (2007 = $36 billion)90,000 employeesCustomer:techno entertainment enthusiast25-39 year oldAffluent, educatedProduct:Retail, speciality, consumer electronics, technology, entertainment
5 Culture of best buy Customer oriented Have fun, learn Tolerance for failureInnovation is important, especially innovative processes. For example,Demand forecasting systemsSupply chain managementAdvertising effectiveness systemsKnowledge management systemsStructural capitalCustomer oriented: good ideas start with the customerWhy 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, learnTolerance for failure
6 strategosWhat 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 InnovationVery expensiveCo-designed the process, guided the participants throughout, coaches more than consultants
7 I-Journey: “catch some fish and also teach people how to fish” TimelineParticipantsPhasesTimeline6 months beginningWhat happens after 6 months? Whirlpool’s learning journey took a year, with a 6-month Discovery Phase.Participants35 directors and senior managers from Strategy and Business Development100% time commitmentPhasesBoot CampFirst senior executivesThen 35 participantsSimulate 6 month I-JourneyWhat is the purpose of the Boot Camp?Build commitmentSend a message of importanceBreak away from other responsibilitiesTeam buildingDiscovery,Lens Groups create five domainsConsumer insightOrthodoxiesDiscontinuitiesIndustry MappingCore CompetenciesInnovation LabMaking the message clear and concise, 45 minutes for each1,000 ideas sorted into five domainsSynthesisDifferent groups – break vested interest in ideas, build in objectivitySynthesize and chooseAction lab, formal venture teams for business model elaboration supported by investigation and researchVenture Reviews with Senior Management – funded, project ended or further investigationRealizationLong tail of innovation, 1,000 ideas become six projectsExperimentation and venturingContinual review by Venture Review BoardIs being rejected considered a failure?
8 INNOVATION PROCESS & IDEATION (Davila et al, 2006: p.125) Bootcamp: developing mindsetDiscoveryInnovation Lab1000 ideas into 5 domainsSynthesisRealization6 projectsGeneration of IdeasRadicalInnovationIncrementalSelectionExecutionCreationOf ValueGenerationof IdeasProduct, 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)
12 Discovery (idea generation) V1 Brad Anderson, CEOFive lens groups: Consumer Insight, Orthodoxies, Discontinuities, Industry Mapping, Core CompetenciesFace-to-face interactionTeam interactionsCultural experiencesMeet Toby Nord of Consumer Insight teamTesting AssumptionsBrad Anderson, CEOLeadership sets the toneFive lens groups:Consumer insight – identify unmet needs and customer frustrationsOrthodoxies – executive level “limiting beliefs”Discontinuities – trend surfing, what will change the rulesIndustry 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 interactionExperiential learningStretch beyond the normQuestion why do consumers react positively (or negatively) to this?Team interactionsReflectionPersonal learning process“we do this” rather than “they told us to”Cultural experiencesCompare and contrast, extremesStep out of your comfort zoneMake no assumptions: Tv in every room but no central tv watching areaDifferent environemtns – where and how you buy it, where and how you use it.VideoDocumentationVisualsTesting 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 investigationDesigning the intersection of learningInternalizing insightsExperienceStep backGenerate conclusionsConnect with intuition and decision makingRecord KeepingDesigning intersection of learningIntegration of ideas, communicating, articulatingInternalizing insights,e.g. of American GirlConnecting across generationsNeed for community based on a demographicConnect to the pastNeed to be able to step back from the experience and develop an insight or concept that can be generalized to other situationsWhat 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 keepingPen and card in hand
14 Realization (diffusion) V3 Experimentation & VenturingFrom 1,000 business ideas to 6 projectsVenture BoardDecisionField ResearchField TestVenture Board – minute presentation after which an investment decision is made.The story, the experienceWhy? What? Who? How?Applicability – how can we use this idea?Implications – what will it take to make this work?Next steps, resources neededThis 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 communicationAbility 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 energyCan 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 ideasIndirect: 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 partnershipsNew products/servicesNew business processesIntangible: 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 participantsNew 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 ideasIndirect: 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 partnershipsNew products/servicesNew business processesIntangible: 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 participantsNew skills and competencies.Goodwill generated within the company as well as with customers.