Best Buy's Organizational Change Model: An Analysis of Strategies

1 Organizational Change Model Organizational Change Model of Best Buy Ashawnta Gillman MGT 435: Organizational Change Dr. Rob Shah October 17, 2022

2 Organizational Change Model Introduction: Organizational Change Change is inevitable, and every organization goes through it. External and internal forces typically trigger organizational change. (Weiss, 2016) It enables companies to transform their organization to increase productivity and meet stakeholders' needs. Several factors can be why an organization changes, such as environmental, economic, technological, geopolitical, sociocultural, and many others. There are many change models/theories that a company can use as a tool to help implement changes efficiently and effectively. Those include Cummings and Worley's five dimensions of leading and managing change, Ackerman and Anderson's roadmap for change, Kotter's change management tool, and Three components of organizational change. Best Buy is the organization I will discuss that has responded to external change. This assignment will discuss how Best Buy has changed and which change model best fits each implementation of change. Need for Change: Best Buy’s Issues At the time, Best Buy's margins were declining and had negative comps. (Reagan, 2017) “Employee engagement seemed to be at an all-time low. Online shopping took a major toll on Best Buy's sales, causing them to plummet downhill. Furthermore, like many other retailers, Best Buy stores were bleeding money. "As customers came to test products they wanted, they eventually bought them online from Amazon at a cheaper price (Bariso, 2019)." There were also questions about whether the company would survive or not. Joly stepped in “just after its quarterly profits plummeted by 91 percent and its stock price hit a nine-year low (Blanding, 2021).” Fortunately for Best Buy, they had a significant organizational change coming. They

3 Organizational Change Model appointed new CEO Hubert Joly in 2012, who had a plan to turn the company around. In an interview with CNBC, Hubert said that his transformation strategy was mainly about fixing what was broken. “Hubert Joly laid out his transformation plan “Renew Blue” to reverse sales declines and improve profitability through cost cuts and growing online sales (Reagan, 2017)." Once hired, Joly led the company through their successful and influential "Renew Blue" transformation. As a result, it improved customer satisfaction, market share gains, revenue growth, and margins. Joly's plan was like Cummings and Worley’s five dimensions of leading and managing change. His plan consisted of 1. Reinvigorate the customer experience by offering customers unique benefits, exclusive membership programs, and multi-channel shopping experiences. 2. Attract and grow "transformational leaders" and energize employees to deliver "extraordinary results." 3. Work with vendors to innovate and "drive value." 4. Increase the company's investment capital return by increasing revenue and efficiency. 5. Making the world a better place through recycling and providing teens with access to technology. (Murray, 2012) Joly drove five consecutive years of sales growth, a 263% increase in shareholder return, and doubled online sales. Most notable is that Joy achieved outsized financial results by focusing on a purpose bigger than money. (McLeod, 2021) Finding a Solution: Corie Barry In June 2019, Best Buy appointed its new CEO, Corie Barry. Unfortunately for Barry, right after assuming her new leadership position, the COVID-19 Pandemic came about. Before becoming CEO, Corie served in several other executive positions. She was critical in developing and executing the company's “Building the New Blue” growth strategy and related transformation. However, Barry knew she needed a plan to counter the Pandemic, and Joly's plan

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4 Organizational Change Model did not fit the current external factor. "Corie Barry said the pandemic has forever changed the way consumers shop, and the retailer is not waiting to adapt (Repko, 2021).” Barry's plan followed the Three Components of Organizational Change. As stated by expert Daryl Conner, these components of organizational change include intent, people, and delivery. (Weiss, 2016) The world of retail was changing for the future, with employee and customer safety becoming a sudden concern. During this time, many companies began asking their employees to work from home, so the demand for products that would aid them in doing so would rise. Due to the Pandemic, many schools were also converting to virtual learning. With this rise, Barry said the company began to "double down" on stocking the products customers would need to do so. "Barry and her team decided to change their stores to an operating model of curbside pickup, which allowed consumers to order online or over the phone and then pick up their items without physically entering a store (Bariso, 2020).” When referring to the Three Components of Change, this step would fall under the intent of the change. In other words, this refers to why the company or organization needs to implement the change. Though Best Buy could adapt to changes quickly, it still met some bumps along the road. With the rollout of the curbside pickup came the challenges came how effective the employee buy-in would be. The change would require more training, advertisement, and employee work overload. Barry faced this challenge head-on by trusting her store managers and listening to their feedback. She explained that her store managers had slightly different solutions on how the new change would work in their stores. This method was most effective and efficient because each decided and would use the tools and their knowledge to make it work. "Barry says the feedback loop continues to be important: hearing from managers what is working, what is not working,

5 Organizational Change Model and what tweaks can help (Bariso, 2020)." In doing this, Barry strengthens her relationship with her frontline employees since they are the ones who know their situations best. Barry's hardest decision due to the Pandemic was the lay-off of 51,000 employees. Showing empathy, Barry and the company paid employees,” Full-time workers will get $500, and part-time workers will get $200, including those who are losing their jobs (Repko, 2021),” for four weeks since they were unable to work due to store closures. “The idea was to provide employee pay as a bridge until the time the federal stimulus program kicked in (Bariso, 2020)." The company also provided websites and other tools to aid employees in how to file for unemployment. Nevertheless, Barry's empathy did not stop with employees only. CEO Barry saw the importance of showing empathy towards customers as well. As Best Buy stores began to transition to appointment-only, representatives would make a courtesy call to explain expectations of how the experience would take place. They made sure to inform customers to bring a mask, or one would be provided upon arrival, and they would be paired with a representative as they walked the store to ensure they kept social distancing. This part of her plan would refer to the people of the Three Components of Change. "As policies and processes change, try communicating these directly with your customer, and walk them through as much as possible. As a leader, they will build trust and encourage continued loyalty (Bariso, 2020).” When it comes to delivery, Corie Barry did excellently. She implemented her change by communicating effectively with her employees. Barry was clear and concise on what was changing and whom it would affect. Listening to her employees allowed the flow of change to transition smoothly. She showed empathy for employees as well as her customers. Barry could have used many different change-model tools to help implement her change, but the best fit was

6 Organizational Change Model the Three Components of Change. This change model was like Barry's plan and proved the most effective. Former CEO Hubert Joly's plan would have been ineffective due to different times and factors such as the Pandemic. “Along the way, the company’s share price grew from a low of $11 in 2012 to $110 by 2020 (Blanding, 2021).” Conclusion Best Buy has proven itself to be a successful business and one of the leading companies in the market of technology sales. By embracing change, the company retained over 80 percent of its sales during the last six weeks of the quarter. (Bariso, 2020) In this paper, I have shown how Best Buy has implemented various change models and how those changes have also affected the company.

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7 Organizational Change Model References Bariso, J. (2020, May 31). The Coronavirus Could Have Destroyed Best Buy. Then, Best Buy Fought Back. inc.com. Retrieved October 17, 2022, from https://www.inc.com/justin- bariso/corie-barry-best-buy-strategy.html Bariso, J. (2019, March 4). Amazon Almost Killed Best Buy. Then, Best Buy Did Something Completely Brilliant. inc.com. Retrieved October 17, 2022, from https://www.inc.com/justin-bariso/amazon-almost-killed-best-buy-then-best-buy-did- something-completely-brilliant.html Blanding, M. (2021, May 4). Best Buy: How Human Connection Saved a Failing Retailer. HBS Working Knowledge. Retrieved October 17, 2022, from https://hbswk.hbs.edu/item/best- buy-how-human-connection-saved-a-failing-retailer McLeod, L. E. (2021, May 3). The Best Buy Turnaround: Purpose-Driven Leadership With Hubert Joly. Forbes. Retrieved October 17, 2022, from https://www.forbes.com/sites/lisaearlemcleod/2021/05/03/the-best-buy-turnaround- purpose-driven-leadership-with--hubert-joly/?sh=1fb1800469efto.html Murray, L. (2012, November 13). Best Buy CEO outlines 5-point plan to “Renew Blue.” Dallas Business Journals. Retrieved October 17, 2022, from https://www.bizjournals.com/dallas/news/2012/11/13/best-buy-ceo-outlines-5-point-plan- to.html

8 Organizational Change Model Repko, M. (2021, February 25). Best Buy is speeding changes to adapt to a post-pandemic consumer: Smaller—and fewer—stores ahead. CNBC. Retrieved October 17, 2022, from https://www.cnbc.com/2021/02/25/best-buy-is-speeding-changes-to-adapt-to-a-post- pandemic-consumer.html . Weiss, J. W. (2016). Organizational change (2nd ed.). Retrieved from https://content.uagc.edu/

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