Best Buy: Merging Lean Sigma with Innovation Harvard Case Solution & Analysis

BEST BUY: MERGING LEAN SIX SIGMA WITH INNOVATION

1.      INTRODUCTION

Best Buy Co Inc. headquartered in Richfield, Minnesota is a multinational American retailer of Consumer Electronics Corporation. It also retails home office products, entertainment products, appliances and its related services (COMMISSION, 2011). They operate under different names through their call centers, retail stores and online retail operations e.g. Best Buy (Bestbuy.com, Bestbuy.ca, Bestbuy.co.uk, BestBuyMobile.com etc). In addition to this, it also operates under the names of Carphone Warehouse (CarphoneWarehouse.com), Five Star (Five-Star.cn), Future Shop (FutureShop.ca), Geek Squad, Pacific sales, the Phone House (PhoneHouse.com), Napster (Napster.com), and Magnolia Audio Video.  Best buy operates in two segments; first comes the domestic segment and the other is the international segment (COMMISSION, 2011).

The domestic segment as of FY 2011 operates in all the states districts and territories under various brand names, which are not confined to the ones that are mentioned above. Whereas, the international segment operates in Canada (Best Buy, Best Buy Mobile, Cell Shop, Connect Pro, Future Shop and Greek Squad), Europe (Best Buy, The Carphone Warehouse, The Phone House and the Greek Squad), China (Best Buy, Greek Squad, Five Star), Mexico (Best Buy and Greek Squad) and Turkey (Best Buy and Greek Squad) (COMMISSION, 2011).

At present the operations under the domestic segment are carried by store brand name and district managers, which are overseen by the retail field officer. The manager and the officers meet regularly to discuss issues on how to manage process efficiencies. This has helped them in corporate retail management, by setting up standard procedures that has been adjusted according to local consumer demands. Moreover, the international operations are each carried in a different manner so as to facilitate consumers (COMMISSION, 2011). For example, the European market is controlled through a corporate retail management program, which looks into the issues of advertising, inventory management, purchasing and price setting. The Canadian market uses a standardized operating system that employs an operating model, which is imitated from the U.S Best Buy Mobile stores (COMMISSION, 2011). The Chinese market operations are in practice to support Five Star and Best Buy; these are the two brands that are operating there. And lastly, the U.K, Mexican and Turkish markets operate on the U.S model of Best Buy Stores (COMMISSION, 2011).

2.      LEAN SIX SIGMA & INNOVATION

a.      Definition: LEAN SIX SIGMA

Lean Six Sigma is a well-known business improvement methodology that combines two ideas into one so as to enhance process efficiency (Mary, 2013). The two ideas are, Lean, which means improvement in time required to deliver a particular service or products and the other is Six Sigma, that involves tools and techniques used to minimize product returns by mitigating defects that will ultimately result in improved customer satisfaction (Mary, 2013).

b.      Definition: INNOVATION

Innovation is all about finding novel ideas and ways of performing the same old or new tasks at hand (Michael, 2013). It refers to the transformation of old ways of carrying operations such that it may help the company either in reducing costs or by improving output process by removing bottlenecks or in modifying existent ways of carrying operations or in carrying operations in such a manner that reduces wastage (Michael, 2013). All of these are innovations in their own fashion. The below listed are some types of innovations (Michael, 2013).

c.       Types of Innovation

There are four types of innovations that include: the product innovation, process innovation, position innovation and paradigm innovation. Each of these is defined below individually (Kim, 2014).

1.      Product innovation

The product innovation refers to the transitions that a company offers in its products or service offerings. This change is implemented to the product, which is handed over to the end user (Kim, 2014).

2.      Process innovation

As the name suggests process innovation refers to the transition, which takes place in the process through which the product or service is created. This involves steps and methods that are applied to remove bottlenecks and to achieve reduced lead times (Kim, 2014).

3.      Position innovation

The position innovation involves use of novel ideas to communicate the product or service. An example of this will be guerrilla marketing, or positioning the brand such, which delivers the message to the intended audience in an unexpected manner. This innovation leads to better imprinting of the brand in the consumer mindset (Kim, 2014) .

4.      Paradigm innovation

This innovation can be best described as an organizational revamp. One which helps the organization in transforming the ways they think and look at a particular task at hand (Kim, 2014). Mike Fisher for example in case of Best Buy tries to in-group the people, who were pessimistic about Lean Six Sigma’s success and applicability at the organization. This can also be described as change management within the whole organization in a simple manner (Kim, 2014)............

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This event is designed to highlight the entrepreneurial thinking and action - a certain style of business leadership - within a large enterprise. Based on primary and secondary research, business hero Mike Fisher, senior director of Lean and Six Sigma in the Best Buy. The main character as well as his immediate subordinates were interviewed in the case, and articles were available to support the environment in general, around which it was designed. The situation in the headquarters of Best Buy, a large U.S. consumer electronics retailer. The case covers the period from 2005 to 2011. "Hide
by Jay Rao Source: Babson College 8 pages. Publication Date: December 1, 2011. Prod. #: BAB697-PDF-ENG

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