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BAB697
DECEMBER 2011

Best Buy:

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Merging Lean Six Sigma with Innovation

Culture of Innovation at Best Buy

Best Buy Co. Inc., based in Richfield, Minnesota, was a specialty retailer of consumer electronics and appliances, with 19% US market share and international operations in Mexico, Canada, China, Turkey and the United Kingdom. Including its subsidiaries, the company operated more than 4,000 retail stores and automated shops in airports and malls. Sales for fiscal year 2010 hit nearly $50 billion with net income of more than $1.3 billion (Table 1).

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Table 1: Selected Financials

2009

2008

2007

2006

Revenues ($ millions)

49,694

45,015

40,023

35,934

30,848

Net Earnings ($ millions)

1,317

1,003

1,407

1,377

1,140

Assets ($ millions)

18,302

15,826

12,758

13,570

11,864

Number of Stores

4,027

3,942

1,314

1,177

941

No

2010

Source: Best Buy, FY11 10-K Report. Richfield, MN: Best Buy, 2010. http://www.sec.gov/Archives/edgar/data/764478/000104746911004045/a2203505z10 -k.htm, accessed 2011.

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This case was prepared by Sam Perkins under the direction of Jay Rao, Professor of Technology Operations and Information Management at Babson College, based on published sources. It is intended for the sole purpose of aiding instructors in the use of “Best Buy: Merging Lean Six Sigma with Innovation.” It provides analysis and questions that are intended ot present alternative approaches and suggestions to deepening students‟ learning of business issues and energizing classroom discussion rather than to illustrate effective or ineffective handling of an administrative situation. It is not intended to serve as an endorsement, source of primary data or illustration of effective or ineffective management. Copyright © 2012 Babson College and licensed for publication to Harvard Business Publishing (HBP). All rights reserved. No part of this publication can be reproduced, stored or transmitted in any form or by any means without prior written permission of Babson College.

This document is authorized for use only by Mani K Madala at NITIE until April 2013. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860.

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rP
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BAB697
DECEMBER 2011
Best Buy:Merging Lean Six Sigma with Innovation

Best Buy‟s governing philosophy was to foster a culture of innovation that allowed employees to rethink how they performed jobs, to redesign processes, and to launch business initiatives. The entrepreneurial approach embraced experimentation and celebrated the learning that both success and failure provided. Several elements of the leadership and organizational strategy helped to foster and imbed innovation in the DNA of the organization. Middle-out: Senior leadership viewed its primary role as creating and cultivating a corporate culture in which management (the middle) was given substantial latitude to experiment with innovative ventures and activities and “prove out” new concepts. The “C” Suite acted as a “permission filter,” supporting projects that merited implementation.

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Broad engagement: Related to the middle-out philosophy was the foundational tenet that innovation was not the province of a defined group. The corporate mantra was: “everyone is responsible for innovation.”

Strengths-based organization: To leverage individual and group performance Best Buy identified and emphasized individuals‟ strengths, and encouraged people to emphasize their strengths in setting stretch performance goals. Employees with complementary strengths were often put together to form synergistic project teams – combining, for example, an “idea generator” with a “pragmatic doer” and a “relationship expert.” Best Buy used tools to conduct individual assessments (Gallup) and to discern how a person was wired for team dynamics (BELBIN). The strengths-based approach was a...
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