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Keywords:
Change management, Turnarounds
Introduction
Best Buy Stores in 1996 was an enormous, sprawling company trying to spread its nameplate across the entire USA in a quest to be the biggest and best electronics retailer. Consumer electronics - everything from the routine (VCRs, TVs, music CDs and washing machines) to the complex and sophisticated (cellular phones, PCs and digital cameras) - is a brutal business. To get to the top takes lots of cash, thousands of employees, and the nerve to survive on margins so thin that profits come from peripheral products and services rather than what the consumer thinks of as "core" products.
In the early to mid-1990s, Best Buy was growing aggressively throughout the USA and closing in on the leadership position, but the company started losing repeat customers, and was running out of cash. Best Buy was a "go for broke", brawling, entrepreneurial maverick, and it nearly derailed.
The Best Buy culture, with its confidence and swagger, had a dark side - its cockiness and its practice of letting each part of the company function as independently as possible from the others, with little cross-functional collaboration. Though high on energy and courage, Best Buy lacked the ability to consistently deliver a quality customer experience and the right amounts of merchandise in its hundreds of stores as it expanded at a frenetic pace. Store managers saw themselves as mavericks willing to do whatever it took to make things happen, and each did so in a different way without leveraging the strengths or practices of a seasoned, disciplined organization. Such seemingly simple things as how trucks were unloaded, stock distributed to the floor and how cashiers checked out customers' purchases were done differently in each location. Customer experience, profitability, and the momentum of expansion were stalling.
The company had grown too big to function effectively without moving on to the next stage where the disciplines and practices of a mature organization were valued over the brash energy of its youthful store management teams. Best Buy introduced a new set of retailing practices, known as the standard operating platform (SOP), to the stores in October 1996, together with another large marketing initiative, and just before the hectic holiday season. The SOP manual was as...