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The best lessons you can't buy Featured

5:50am EDT July 19, 2002

Most owners would be satisfied to be the largest seller of PCs to consumers, the largest seller of music and electronics and the third largest seller of major appliances in the United States.

But Dick Schulze, CEO of Best Buy Co. Inc., is concerned.

With more than 350 stores in 39 states and 75,000 employees, Schulze can reach 66 percent of U.S. consumers. Best Buy has averaged 35 percent annual sales growth and 50 percent earnings growth for a decade.

Still, Schulze -- who was named the 1999 National Entrepreneur Of The Year by Ernst & Young LLP -- plans to reinvent his operation. Schulze has developed a company that has mastered the moving of merchandise. But to become a success, Best Buy must transform into an infomediary.

The formula for success is simple: Combine an internally prepared culture with externally focused action. An internally prepared culture means that every one of the 75,000 employees has a shared vision, shared values, an entrepreneurial atmosphere and flexibility.

Vision and values

Customers, says Schulze, want total solutions. The key, he says, is to deliver on that vision in the store, on the Web and in the home. The basics are easy -- honesty and integrity. But the company must also display unwavering ethics.

Discussing vision and values is only one step in the process. The message must filter down to the employees on the floor, as well. That means getting them to understand the entrepreneurial thought process.

"We need leaders that are flexible and ready to reinvent at the drop of the hat," he says.

As one example, the company has experimented with four different floor plans in the past 10 years.

Maintain innovation

It might seem that in the world of big box retail, price is the most important factor. But to maintain its advantage, Schulze argues the company needs to develop an "entrepreneurial operating environment."

To do so, management must remove barriers to action, which leads to building talent. From there, employees are able to look outside the box. This leads to a continuously innovative organization, which Schulze says provides a competitive advantage.

"Our company anticipates what it needs to do in order to win."

Anticipation led to Best Buy's Web site design.

"We intend to pioneer e-commerce, and we believe the Internet business we're launching today does just that," a note on the site says. "Up until now, e-commerce sites have lagged behind consumer demand. We believe BestBuy.com is the first to fully anticipate what the consumer will want. We wanted to ensure a seamless shopping experience at launch time by providing consumers with total interaction between channels.

"By delivering a fun, easy-to-use Internet business, we are able to exceed consumers' expectations."

Talking about execution is one thing. Getting it done, Schulze knows, is another. Best Buy will cope with the coming changes by building partnerships with suppliers and customers, becoming an infomediary instead of an intermediary, providing total solutions for customers and untethering the brand, he says. It's a union of devices, applications, content and connectivity.

Simply put, Schulze says the goal is to "meet customers at the intersection of technology and life." How to reach: Best Buy Co. Inc., www.bestbuy.com

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN Magazine.