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Retail Management Institute Newsletter - Fall '04
RCME Presents - Big Change at Best Buy:
Working Through Hypergrowth to Sustained Excellence
by Debra Black
Co-authors Elizabeth Gibson and Andy Billings. "How do you shape and change human behavior? It's not easy, but it is doable."
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On May 26, Retail Consortium for Management Education members learned about the stunning cultural transformation of Best Buy that resulted in a stock price gain of 1000 percent in three years. Best Buy is now recognized as North America’s number one specialty retailer.
The story is really about changing human behavior, said co-authors Elizabeth Gibson and Andy Billings. “How do you shape and change human behavior? It’s not easy, but it is doable,” said Gibson, co-founder of KnoWorks, a new division of RHR International that specializes in large-scale organizational change.
“When companies grow rapidly, they often outgrow themselves. They outgrow their systems and often the people in leadership. They have to make radical changes to adjust—to transform their processes and their culture,” said Gibson. “We know that if companies don’t reinvent themselves fairly frequently or regularly, they die.”
At Best Buy, working harder and faster wasn’t translating into net operating profit. While the company was adding stores, growth was chaotic. While the leadership was entrepreneurial at heart, it needed discipline.
“You’re really asking people to change their habits at work. Have you ever tried to change a habit? You know how hard it is,” said Gibson. Transforming Best Buy was about changing the daily work habits of over 30,000 people.
Elizabeth Gibson, co-Founder of KnoWorks (RHR International) speaks to the RCME attendees.
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“A lot of what we did was really not driving change, it was more cultivating change. It meant working side by side with employees every step of the way to help them understand how they would benefit from the change and how they could contribute to it,” she said.
“Discipline comes from the inside out. We asked people to start looking at how much effort they were duplicating. Or where they could lighten their load, and work smarter, not just harder.”
Gibson and Billings used a framework that mapped changes involving the “head, heart and hands.” The head requires understanding why the change is needed and what needs to take place. The heart is about feeling, motivation, and self-interest. The hands are the exact behaviors: What is the store employee supposed to do? What is the store manager supposed to do? Change takes place in these three arenas.
Billings, vice president of human resources and organizational development for Electronic Arts, said there are three stages of change: Coming to grips with the change, working it through, and maintaining momentum.
Combining the head, heart and hand concept with the three stages of change results in a very powerful plan to change an organization over the course of time.
“While I’m coming to grips, what do I want people to be thinking about? How am I going to motivate people to come to grips with the change, and what are the behaviors associated with that? It’s useful to know where you are in the change process. What do you need to be doing next with your organization?” said Billings.
He relayed a quote by futurist Marilyn Ferguson about making the connection between motivation and behavior, the “gap” that seems difficult to bridge: “It’s not so much that we’re afraid of change, or so in love with the old ways. It’s the places in between that we fear. It’s like being between trapezes. It’s like Linus when his blanket is in the dryer.”
Gibson and Billings worked with Best Buy’s leadership to
Andy Billings, vice president of human resources and worldwide organization development at Electronic Arts, co-presented the RCME program on Big Change at Best Buy.
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develop “scorecards” of standard operating procedures (SOPs) to measure change. Unlike most measuring instruments, these scorecards changed over time. The scorecard evolved from an emphasis on understanding change, to how employees felt about it, to an emphasis on behavior.
They were able to quantify the relationship between scorecard results and net operating profitability. “Stores that had better implementation of the SOPs had better net operating profits. And why is that? Better customer experience, better morale among the employees, and lower turnover. When you multiply that by many stores across the country, it ended up a phenomenally more profitable organization,” said Billings.
The bottom line for Best Buy: the process netted big payoffs. The framework is still used, the scorecard is still in place. One Best Buy executive told Billings and Gibson, “The change has been in the tone of the company. And it’s moved from issues of power to issues of learning.”
“If you are in the midst of or contemplating an organizational change, remember what you’re looking at is changing people’s habits,” advised Gibson.
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