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One fine morning, three weeks ago, a colleague visited myoffice with some startling news. BestBuy had announced the sudden resignation of homegrown CEO Brain Dunn. Another colleague happened by, heard the newsand began the natural speculation of just what might have happened to bringthis shocker about.
Having no information other than essentially the headline,we respectively assumed that recent very troubling financials and a fewheadline grabbing corporate flubs (noted here in recent Discount Insightstitled,
Fright Before Christmas, Best Buy’s Fight After Christmas, and
Best Buy’s Final Frontier?) were theprime causes of the CEO’s ‘resignation’. The most alarming of these severe missteps was the last-minute,prior-to-Christmas delay in announcing the company’s inability in fulfilling onlineorders made in November and December, beginning with orders placed as far backas Black Friday.
Later that morning the headlines exploded, revealing that indeedDunn had left under the cloud of an ongoing investigation into his personalconduct involving corporate funds and a personal/professionalrelationship. Surprise upon surprise asthe troubled retailer’s board was tasked to determine who and what were thebest drivers to steer the company through its murky near-term gauntlet of a future.
As it turns out, the board’s first decision was to navigatethrough a seemingly overcrowded minefield of possibilities to determine whichcourses are best to follow to find the next CEO. Before doing this, this disparate group mustconsider a multitude of options as to how to strategically right the company’sship unless they decide to throw all such determinations on the plate of thenext CEO.
Brian Dunn was the prototypical American success story. Mr. Dunn began his career with Best Buy as astore sales associate in 1985, when the company operated only a dozenstores. Within four years he became astore manager and a year later he was made a district manager in
Minnesota. All this as he was barely thirty withouthaving attended university.
In June 2009, Dunn was named a company director and replacedBrad Anderson as CEO. Like manyretailers at the time, the company was stung by the horrors of the recession,Best Buy’s only national brick and mortar competitor,
Circuit Cityhad just liquidated and most analysts expected Best Buy to pick up the spoils. However, with chillingly typical tone deafness, Best Buy stores didlittle to overtly attract the throngs of shoppers who no longer had a
Circuit City option. Many of its stores offered meek signageoffering
Circuit City ex-pats the obvious option of visitingthe service counter for any electronics that required repair.
Shortly after this, expansion minded hhgregg announced theywould honor
Circuit City extended warrantees as they began to take over severalabandoned
Circuit City locations whileentering new markets in states previously undreamed of by analysts. Thus hhgregg gained the attention ofconsumers abandoned by
Circuit City as well as byanalysts on Wall Street. Much of thisupstart glory was gained at Best Buy’s passive expense.
Initially upon hearing of Brian Dunn’s departure and justbefore word passed of an investigation into the man’s personal conduct, manyassumed that Best Buy’s board had decided that it was time to aggressivelyrethink the future. Those were hopefulmoments. As word came out of a possiblepersonal scandal, the company began to almost bleed rumors as what wasnext. More than indicating what might belikely to come, it seemed confusion reigned.
Stories emerged that founder Richard Schulze, who wasbelieved to be increasing his role in the company, was at odds with severalboard members as to how to begin the recruiting process and what philosophy topursue in planning a more positive future. The company promised to issue an impartial, detailed explanation of theDunn ‘affair’ after the investigation, which is being led by a former
U.S.attorney and ex-enforcement director for the SEC, is completed. This is likely to lead to more embarrassmentfor Mr. Dunn or for the corporation ifhe is exonerated after allegedly being forced to resign. In fact he may be eligible for a severancepackage of as much as $3.35 million, depending on the outcome of theinvestigation.
Meanwhile troubling headlines abound as to the next stepsfor the troubled company.
BestBuy: Search for CEO Could Take Up to Nine Months, is one troublingheadline.
Best Buy Appoints CEO SearchCommittee sounds innocent enough but is followed by the fact that aspart of Best Buy’s commitment to transparency, the board will also publiclyannounce a selected search firm in addition to its own widespread recruitingefforts and will post the position on the company website. The final searchfirm selection will be announced in the next few weeks.
The only internal candidate currently under consideration isG. "Mike" Mikan, a former healthcare executive who is serving asinterim CEO. Many observers, especiallythose representing Wall Street worry that not being able to imminently name apermanent CEO suggests either a lack of a succession plan or a managerialbreach within the company.
Other recent headlines include,
Best Buy's CEO Succession Circus Continues, which raises thequestions of many as to the need to take months to conduct the search for a newleader and perhaps a new operational plan.
Best Buy’s Dunn May Be Able to Get$3.35 Million Package, speaks for itself and portends more drama andembarrassment than even a healthy company should stand.
Meanwhile Best Buy continues with its plan to immediatelyclose fifty stores and try to shrink many of its others. Professional suggestions race across theInternet including radically reducing store size and selection while ramping upits diminutive Best Buy Mobile locations. Some even suggest reviewing a possible acquisition of the ubiquitous butequally troubled RadioShack chain.
Whatever the outcome, this turn of events must be viewed asan opportunity for a retailer that has been coming up short on its sales flooras it tries to build its web presence through serious stumbles. The company momentarily basked in the demiseof
Circuit City but now finds itself battlingbrilliant regional CE chains, CE independents with a strong national webpresence and Walmart, Target, Costco and other strong discounters, while ittries to discourage its image as a showroom for Amazon and other efficient webmerchants. And the beat goes on.
Having no information other than essentially the headline,we respectively assumed that recent very troubling financials and a fewheadline grabbing corporate flubs (noted here in recent Discount Insightstitled, Fright Before Christmas, Best Buy’s Fight After Christmas, and Best Buy’s Final Frontier?) were theprime causes of the CEO’s ‘resignation’. The most alarming of these severe missteps was the last-minute,prior-to-Christmas delay in announcing the company’s inability in fulfilling onlineorders made in November and December, beginning with orders placed as far backas Black Friday. 
