[This post is reprinted with permission by my friend Larry Gorkin, Managing Director of Stonebridge Consulting Group (stonebridgeconsulting.com).]
It’s hard to watch companies make mistakes. That was my reaction when the WSJ recently reported that Best Buy was testing a new high service store format modeled after Apple’s successful retail outlets. But, it won’t work; Best Buy doesn’t have the skills/culture to deliver service like Apple.
This story is a good reminder that strategies need to be aligned with a company’s skills and culture if they are going to work. It’s also a reminder not to test strategies you can’t expand. Both are universal truths and the subject of this month’s Winning Ways.
Aligning Strategy With Capabilities
Great strategies can only succeed if the organization can implement them. And strong test ideas are only valuable if they can scale and be expanded. That’s two important lessons from Best Buy’s test of a new high service store format meant to mimic Apple’s retail outlets.
Best Buy is the giant electronics retailer focused on reversing two years of declining sales and a sinking stock price. The company has been steadily losing customers to on-line retailers with lower costs and lower prices; some consumers shop Best Buy before buying elsewhere. The stores are notorious for poor service.
As reported, a key element of Best Buy’s new store format is a Solution Central help desk, meant to resemble the Genius Bar at Apple’s outlets. Best Buy hopes that consumers will come to the stores more regularly for advice and ideas.
The average customer only goes to Best Buy twice a year.
On the surface, Best Buy’s move seems smart. Most consumers want more and better help than you can get at Best Buy today. And Apple has already shown that a combination of smart store design and good service can drive business. Apple’s sales per square foot are among the highest of any retailer, and the stores enjoy tremendous customer loyalty.
So why be skeptical? Mostly because it is unlikely that Best Buy can ever execute the strategy. High touch customer service is simply not in the company’s skill set or culture; it never has been. Leaders can’t declare customer service; it requires genuine skills among each individual employee and must be ingrained in the culture.
Apple has been focused on customer service since opening its first store in 2001. The Apple culture and customer service business system has developed and been refined for over a decade. A company like Best Buy can’t replicate that overnight.
And that does not even address the issue of scale. Best Buy has over 1,000 stores versus 363 for Apple. It’s hard to create consistency at Best Buy’s scale, let alone to do it overnight. Even if Best Buy’s test is successful, it has a low potential for a fast chain-wide roll-out.
Of course, the point is bigger than Best Buy’s customer service capabilities. The real issue is that leaders must be sure their organization has the skills and culture to succeed with any given strategy. And leaders shouldn’t start a test they can’t expand. Here are some practical steps leaders can take to avoid a situation like Best Buy.
- Know your organization’s capabilities before developing the strategy. Determine the team’s strengths, weaknesses, and culture; make sure the analysis is at a discrete actionable level.
- Identify strategy options and determine their success requirements. Map the strategy options against your organization’s skills to determine alignments and gaps. Identify options that truly leverage the strengths.
- Select your strategy based on the overall potential for success. Make sure this evaluation weighs the ability to execute the plan equally versus its theoretical market impact. Plan how to fill any key gaps in skill dependencies.
- Consider if and how tests can be scaled before starting them. Identify the skills, resources, and timing needed to expand a test if it were successful. Determine if the path forward is realistic.
Question: How well is your strategy aligned with the organization’s capabilities? Would adjustments to one or the other improve results? How big of an impact could you create?