As Best Buy’s managers look for precedents through the lens of legacy assets, wholly new sources of inspiration will emerge. For instance, they might consider the High Line in Manhattan, where an unused elevated railroad track was reimagined and converted into a popular park. Or maybe IBM’s metamorphosis from a product-focused company to a service-oriented company will inspire new thinking. In making this transformation, Big Blue converted one of its core assets—an immense, highly educated product sales force—into a solutions-selling powerhouse. Or, closer to home, Best Buy might find revelation in Restoration Hardware’s move to repurpose its stores from product sales outlets to design galleries and showrooms.
Of course, not all precedents offer the promise of a breakthrough solution. It is unlikely that Best Buy will turn into the next High Line, but there are certainly pieces of these precedents that could hold parts of the overall answer.
To discover the breakthrough strategic innovation it requires, Best Buy must deconstruct its challenge into elemental pieces and then answer Questions Two, Three, and Four for each piece. Only then can executives tackle the last question: “What creative combination of which precedents would crack Best Buy’s challenge?” Is it some particular mix of insights from the approaches of High Line, Restoration Hardware, or IBM that could revitalize a wasting asset? Could Best Buy become the universal arbiter of digital products, in the way that the Common Application developed by U.S. universities has become the universal translator of college applications? Or could Best Buy become a customer’s lifelong electronics partner, learning from Dubai’s Mashreq Bank, which seeks to become its customers’ lifelong financial partner by tying their interest rates and perks to how many accounts they have with the bank? None of these precedents will provide the whole answer to Best Buy’s strategic challenge. But with a broad search across all the most important elements of its existential challenge, Best Buy will have enough precedents to produce the inspiration that leads to a truly innovative and complete solution.
The good news is that Best Buy has time. Dominant businesses don’t expire quickly, especially profitable ones that annually generate enormous cash flow. But time guarantees nothing. Best Buy will probably undertake incremental product, service, and category innovations; cost reduction drives; pricing and promotion campaigns; real estate deals; store retrenchments and remodels; store-within-a-store tie-ups (such as with Samsung); new formats; recapitalizations; and many other laudable initiatives to keep it moving forward. In the near term, many of these will “work” (meaning they will help slow or even halt the downward slide for a period), and at times that could make it seem as if Best Buy has turned the corner. But in the longer term, these strategies won’t yield the true strategic innovation that Best Buy needs to prove the market wrong—and thwart the Grim Reaper for good.
- Ken Favaro is a senior partner with Booz & Company and global head of the firm’s enterprise strategy practice. He is based in New York.