March 26, 2013
What Will Return of Founder Mean for Best Buy?
The new boss may not be the same as the old boss, but there will be plenty of old and familiar faces on Best Buy’s board soon. The consumer electronics retailer announced that the chain’s founder, Richard Schulze, is returning to the company as its chairman emeritus. Joining Mr. Schulze on the board are former Best Buy CEO Brad Anderson and former COO Al Lenzmeier.
Mr. Schulze resigned from Best Buy’s board last June and then attempted to put together a takeover of the company that didn’t pan out.
Hubert Joly, Best Buy CEO, said he was pleased to have Messrs. Schulze, Anderson and Lenzmeier return to company.
"His [Mr. Schulze’s] passion, wisdom and insight are legendary, and I know I speak for all my colleagues when I say it was wonderful to see him come to our headquarters recently and engage with employees as he and I walked the halls," said Mr. Joly in a statement.
According to the Minneapolis Star Tribune, Mr. Joly "worked hard to court" Mr. Schulze even as he was seeking to retake the company.
"Over the past several months I have come to know and respect Hubert and have a high regard for the work he and his executive team are doing to revitalize Best Buy for the benefit of all shareholders," said Mr. Schulze in a statement. "My dedication to the company that I founded and love is unwavering and, together with Hubert and the Board, I determined that the best way to support Best Buy would be to return in support of the initiatives underway."
Analysts were split on what the return of Mr. Schulze would mean for Best Buy.
Frank Lombardi, a portfolio manager at Cubic Asset Management, told Reuters, "I don’t think it’s useful. Hopefully it’s not detrimental to the business. But I think they will sort of stay somewhat passive for now and allow the business to be run by Joly."
Alan Rifkin, an analyst at Barclays, told Reuters he thought it would be a "huge morale boost" considering how popular Mr. Schulze was with Best Buy employees.
Morningstar analyst R.J. Hottovy told The Associated Press that he expected the new members to support Mr. Joly’s "Renew Blue" initiative for turning Best Buy around. The five-point plan includes:
1. Reinvigorating the customer experience;
2. Attracting and promoting "transformational leaders;"
3. Working with vendors to drive innovation and value;
4. Increasing return on capital investments while cutting unproductive costs;
5. Promoting sustainability and providing access to technology for teenagers.
- Founder Richard Schulze Returns to Best Buy as Chairman Emeritus in Support of the Company’s Renew Blue Transformation Efforts – Best Buy
- Founder Richard Schulze rejoins Best Buy as chairman emeritus – Star Tribune
- Best Buy founder Schulze rejoins as chairman emeritus – Reuters/Chicago Tribune
- Ex-chairman Schulze returns to Best Buy – The Associated Press/USA Today
- Best Buy CEO Joly outlines turnaround plans for struggling retailer – Minneapolis/St. Paul Business Journal
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Discussion Questions
What will the return of Richard Schulze, Brad Anderson and Al Lenzmeier mean for Best Buy? Are you encouraged or discouraged by Best Buy’s progress under the leadership of Hubert Joly?
Poll
Any time you use the words “back” and “return” it rarely portends great things, with one notable exception—the return of Jobs to Apple. As they say, “That was then, this is now.”
BB is under extreme pressure to look forward. It needs focus and, in a shiny object world, BB needs to be able to connect to human beings. If Schulze can make that happen, I applaud him.
There is great opportunity for Best Buy to make the transformation necessary to remain relevant in the market. Such a transformation will be much easier if enabled and motivated by passion that Mr. Schulze et al could bring to the business. This is not a new phenomenon, reminding me of the multiple turnarounds executed by other retailers where passionate prior leaders or founders came back and were able to galvanize both employees and customers.
One possible pitfall to watch for would be if there are any hard feelings at board level created by the activities of the last 12 months….
Maybe Mr. Schulze returning to the board will help take Best Buy back to their roots and become who they were again. But somehow I can’t help but see Best Buy and RadioShack as two companies not sure of what the future will bring. The only way Mr. Schulze’s return will be successful is if he and Joly are really on the same page.
Nine months ago, founder Dick Schultz was ousted at Best Buy. Hubert Joly was recruited from Carson Companies as the new CEO. So far Joly has been doing restructuring and reinventing a new BB.
Schultz tried to take over BB recently, but failed. That raises a clue. Now Schultz and his 2 close executive friends from the “old days” are back on the board. Can they go with the current flow and be content with Joly leading “their” company? Doubts arise. What once was is not ordained to be what will be. Let Joly run the re-making of Best Buy.
Very odd. Why would you bring the good ‘ol boys club back after they missed the Amazon meteor that hit them? Are they the best team to create a vision for their future … or their past?
BBY needs fresh thinking and ‘clear the table’ types of action to continue to exist. This move is not along those lines IMO. Bet: they focus on price vs innovation. When in doubt, those without innovative ideas always revert to price.
Sounds like to me if you can’t beat them from the outside, try to overtake them on the inside.
I hope that’s not the case. I love the history of Best Buy from a single store to becoming a powerhouse retailer. Mr. Schulze and Mr. Anderson are still quite popular with the BB employees, and if they can truly support Mr. Joly, it will be a win/win.
Only time will tell which one it is.
It is great to see Schulze and other players back at the “Buy.” With a pro like CEO Joly we have a chance at seeing the Buy come back. Joly did a piece in the Star Trib that I caught (I used to live in the MN/WI area). Take a read and see why mixing these people, Schulze, Joly, Brad A, and more will change the game at the BUY!
Best Buy’s recent move to match Amazon.com’s prices reflects a dramatic change in company strategy. The age of brick and mortar are beginning to come to an end. Innovation will further lead to increased efficiency in delivery companies. Additionally, consumerization will push prices down to a level which brickosaurs will not be able to sustain.
Shulze, Anderson, and Lenzmeier indicate Best Buy reflecting upon its glory days, which are far from gone. Best buy needs to learn to adapt and quickly to continue to survive and thrive.
As well put by other posters here, the morale boost of these actions is good. On the other hand, these smart and well experienced executives need to embrace the changes in the consumer and the industry that continue and have occurred since their departure. As with many things, you cannot go home again and the good old days—good or bad—are gone.
Best Buy like all retailers and all those involved in the evolution of technology must move along with the times. Best Buy has many advantages and terrific scale and leverage. While the results may not always be pretty, they are far from dead or doomed if they take action. We are looking forward to seeing this team move the ball.
What they all have in common is their passion for Best Buy. Can’t be a bad thing, as long as Joly can manage it. With eCommerce the behemoth that it is, Best Buy must reinvent itself. There is a place for them and I believe it’s all about the experience, services and partnerships with manufacturers. Godspeed to them.
While it’s commendable that the founder would return in these tough times, it’s unclear what benefit that will bring. Best Buy flourished in a time very unlike the one we’re in now. Most founders return to re-install what made the company successful in the first place. Not a good prescription for a different environment.
This is not a good thing. If Schulze is so great, and gone only a year, why does BB require a turnaround? If he is such a great morale-booster and employees love him so much, why haven’t they performed for him in the past? What does Schulze have that BB needs at this time? And if he has a silver bullet, why didn’t he use it before?
BB has some problems with their business model that a five-point plan of cliches doesn’t do much to address, and though I wish them all well—the whole happy, laudatory foursome—I think the reunion is going to be a distraction. One thing’s for sure: we will continue to see them as a topic on RW.
The past 60 years demonstrated electronic retailing is a zero sum game of profit margin. There is absolutely nothing Best Buy can do to reverse the nature of their business.
What does it mean? It means that there must be some money left to be gleaned by attachment as the elevator at Best Buy takes its ride to the bottom floor.
This was the team that resigned from the board in order to take the company over. They purposely created a poor performing (i.e. lower stock cost) company that may now be too far gone for anyone to save. This is a model that needs a full correction and has to change its very need to even have brick and mortar stores. Poor leadership will lead to lower prices of the stock, or worse yet, rising stock prices in the short term as these bandits cannibalize the coffers!
The Schulze, Anderson, Lenzmeier trio play off each other very well in bringing strategic, operational, and financial focus. They also can touch Best Buy associates across the country in sparking a return to the halcyon days when Best Buy was besting the competition.
A key focus today, however, lies in the need to put the consumer at the center of the equation. Getting the customer service issues right (lengthen the return times), as well as recognizing that competition is not coming from “Big Box” competitors, but from thousands of small box and online competitors will be essential.
This group has provided phoenix-type rebounds in the past. If they work with other board members, it’s doable again. That means working with Joly, not rolling over him and other board members. Perhaps one added challenge for the trio.
They are in a really tough place. In informal “research” with friends and acquaintances, the idea of Best Buy as a showroom to see the product you want to buy and then actually purchase FROM Amazon (or another on line source) really seems to be the way people are doing it now—if they even BOTHER to go to see and compare actual product, it seems alien to them that they would actually BUY the item there in store! I got responses such as “I would have to lug the item home,” “Shipping is usually free over “$X” amount,” etc.
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Any time you use the words “back” and “return” it rarely portends great things, with one notable exception—the return of Jobs to Apple. As they say, “That was then, this is now.”
BB is under extreme pressure to look forward. It needs focus and, in a shiny object world, BB needs to be able to connect to human beings. If Schulze can make that happen, I applaud him.
There is great opportunity for Best Buy to make the transformation necessary to remain relevant in the market. Such a transformation will be much easier if enabled and motivated by passion that Mr. Schulze et al could bring to the business. This is not a new phenomenon, reminding me of the multiple turnarounds executed by other retailers where passionate prior leaders or founders came back and were able to galvanize both employees and customers.
One possible pitfall to watch for would be if there are any hard feelings at board level created by the activities of the last 12 months….
Maybe Mr. Schulze returning to the board will help take Best Buy back to their roots and become who they were again. But somehow I can’t help but see Best Buy and RadioShack as two companies not sure of what the future will bring. The only way Mr. Schulze’s return will be successful is if he and Joly are really on the same page.
Nine months ago, founder Dick Schultz was ousted at Best Buy. Hubert Joly was recruited from Carson Companies as the new CEO. So far Joly has been doing restructuring and reinventing a new BB.
Schultz tried to take over BB recently, but failed. That raises a clue. Now Schultz and his 2 close executive friends from the “old days” are back on the board. Can they go with the current flow and be content with Joly leading “their” company? Doubts arise. What once was is not ordained to be what will be. Let Joly run the re-making of Best Buy.
Very odd. Why would you bring the good ‘ol boys club back after they missed the Amazon meteor that hit them? Are they the best team to create a vision for their future … or their past?
BBY needs fresh thinking and ‘clear the table’ types of action to continue to exist. This move is not along those lines IMO. Bet: they focus on price vs innovation. When in doubt, those without innovative ideas always revert to price.
Sounds like to me if you can’t beat them from the outside, try to overtake them on the inside.
I hope that’s not the case. I love the history of Best Buy from a single store to becoming a powerhouse retailer. Mr. Schulze and Mr. Anderson are still quite popular with the BB employees, and if they can truly support Mr. Joly, it will be a win/win.
Only time will tell which one it is.
It is great to see Schulze and other players back at the “Buy.” With a pro like CEO Joly we have a chance at seeing the Buy come back. Joly did a piece in the Star Trib that I caught (I used to live in the MN/WI area). Take a read and see why mixing these people, Schulze, Joly, Brad A, and more will change the game at the BUY!
Best Buy’s recent move to match Amazon.com’s prices reflects a dramatic change in company strategy. The age of brick and mortar are beginning to come to an end. Innovation will further lead to increased efficiency in delivery companies. Additionally, consumerization will push prices down to a level which brickosaurs will not be able to sustain.
Shulze, Anderson, and Lenzmeier indicate Best Buy reflecting upon its glory days, which are far from gone. Best buy needs to learn to adapt and quickly to continue to survive and thrive.
As well put by other posters here, the morale boost of these actions is good. On the other hand, these smart and well experienced executives need to embrace the changes in the consumer and the industry that continue and have occurred since their departure. As with many things, you cannot go home again and the good old days—good or bad—are gone.
Best Buy like all retailers and all those involved in the evolution of technology must move along with the times. Best Buy has many advantages and terrific scale and leverage. While the results may not always be pretty, they are far from dead or doomed if they take action. We are looking forward to seeing this team move the ball.
What they all have in common is their passion for Best Buy. Can’t be a bad thing, as long as Joly can manage it. With eCommerce the behemoth that it is, Best Buy must reinvent itself. There is a place for them and I believe it’s all about the experience, services and partnerships with manufacturers. Godspeed to them.
While it’s commendable that the founder would return in these tough times, it’s unclear what benefit that will bring. Best Buy flourished in a time very unlike the one we’re in now. Most founders return to re-install what made the company successful in the first place. Not a good prescription for a different environment.
This is not a good thing. If Schulze is so great, and gone only a year, why does BB require a turnaround? If he is such a great morale-booster and employees love him so much, why haven’t they performed for him in the past? What does Schulze have that BB needs at this time? And if he has a silver bullet, why didn’t he use it before?
BB has some problems with their business model that a five-point plan of cliches doesn’t do much to address, and though I wish them all well—the whole happy, laudatory foursome—I think the reunion is going to be a distraction. One thing’s for sure: we will continue to see them as a topic on RW.
The past 60 years demonstrated electronic retailing is a zero sum game of profit margin. There is absolutely nothing Best Buy can do to reverse the nature of their business.
What does it mean? It means that there must be some money left to be gleaned by attachment as the elevator at Best Buy takes its ride to the bottom floor.
This was the team that resigned from the board in order to take the company over. They purposely created a poor performing (i.e. lower stock cost) company that may now be too far gone for anyone to save. This is a model that needs a full correction and has to change its very need to even have brick and mortar stores. Poor leadership will lead to lower prices of the stock, or worse yet, rising stock prices in the short term as these bandits cannibalize the coffers!
The Schulze, Anderson, Lenzmeier trio play off each other very well in bringing strategic, operational, and financial focus. They also can touch Best Buy associates across the country in sparking a return to the halcyon days when Best Buy was besting the competition.
A key focus today, however, lies in the need to put the consumer at the center of the equation. Getting the customer service issues right (lengthen the return times), as well as recognizing that competition is not coming from “Big Box” competitors, but from thousands of small box and online competitors will be essential.
This group has provided phoenix-type rebounds in the past. If they work with other board members, it’s doable again. That means working with Joly, not rolling over him and other board members. Perhaps one added challenge for the trio.
They are in a really tough place. In informal “research” with friends and acquaintances, the idea of Best Buy as a showroom to see the product you want to buy and then actually purchase FROM Amazon (or another on line source) really seems to be the way people are doing it now—if they even BOTHER to go to see and compare actual product, it seems alien to them that they would actually BUY the item there in store! I got responses such as “I would have to lug the item home,” “Shipping is usually free over “$X” amount,” etc.