A Sign of Greatness: Offering To Resign Because You’re Accountable For A Failure, Brad Anderson

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Send them to OurAmericanStories.com. They're some of our favorites. And we continue now with our Do the Right Thing series about ethical dilemmas. And it's sponsored, as always, by the great folks at the Daniels Fund.

Our own Alex Cortez brings us this latest edition. Today, we hear from Brad Anderson, who was a sales clerk at Best Buy in its earliest days, and grew along with it to become CEO, helping grow the company to $50 billion in annual revenue and 180,000 team members. But what Brad's most proud of are the innovations and ethics of those on the front line, like Sherry Ballard.

I think this is a good parable, sort of, for Sherry's story, someone I'm close with today, is a good parable of what can be the best inside of business. I first heard about Sherry because we were completely disorganized group. We basically did everything hand to mouth. And when we started to grow, we had to formalize things, and virtually nothing had been formalized up to that point in time. So we hired a division of Accenture Consulting to come in, and they did a plan, and they put a sort of order to the stores as we were growing the stores. And I went out, along with two other executives, to teach this new order structure that everybody would then comply with into the system. So we went out, we spent weeks going all over the country, every store, teaching people how to do this.

And then we went back to see the glories of our work. And nobody changed a thing. So I wound up hiring a bunch of psychologists, led by a lady named Elizabeth Gibson, who were actually, because it wasn't the plan we needed, we actually needed, it wasn't that the plan was bad, it was that nobody had any reason to really implement it. And so we hired these psychologists, because essentially you had to change human behavior. And the only way you're going to change, we had to change the behavior of leadership levels throughout the entire organization. So they went out to, and the lead psychologist comes into my office and she says, we've discovered this wonderful woman working for you.

And I said, great. And well, she's quitting. And why is she quitting? She's quitting because she's had this theft ring inside a store she's managing in Michigan.

And she is angry at herself and ashamed at herself that she's let this happen and therefore is quitting. And my first thought is, this woman actually has a common ability. Man, she was really good at it. And she was really be great. Wow. Yeah.

Stop it from quitting. So thank God she didn't. I mean, she was correctly self-accountable because she should have, a more experienced leader probably would have seen what she didn't see. So she wasn't a thief, but she played a role in setting the environment in which they could thrive. But the fact that she knew that she was accountable meant she could fix it. She was going to learn something from it. Whereas so many times when you run into that kind of situation, when somebody's trying to either cover it up or won't deal with their own accountability, they're not going to change.

They're going to, they will recreate that same environment again, because they never faced their own role in creating it. So it was, it was like, again, so much of the time, it's the antithesis of what you think that's the truth. That her, her facing her responsibility for it meant, wow, somebody it's, it's what, it's what venture capitalists try to do. They want to find a company. They want to invest with somebody who's already had five or six failures because they, they, they want to see that person still in the game.

And he is learning from the mistakes that they've made so that they, they're much advantaged over somebody else's likely to make the same mistakes. Yeah. She, she, she could, there was a, yeah, she was justified wanting to be fired. And not that long after that, she's, again, this goes to how disorderly we're, she's running our human resources or she's either running or high up in the human resources department. And the same psychologist comes in and tells me that the firm that has been fired by Best Buy is that, wait a minute, we fired you? Yeah, you fired us. Who fired you?

Sherry Ballard did. And so, so I'm sitting there incredibly grateful these people, because unlike me, they actually got the change implemented and they helped me find talent like a Sherry Ballard who got promoted to the system and she went ahead and fired him. And so I'm so angry at her. So I go, well, so I go railing into her office to just bang her on the head and she fights back. I mean, ferociously fights back that her decision is the right decision.

Well, I overruled that decision, but I, I really had respect for her when I left that room. Because even though I didn't agree with any of her logic, I knew I had an authentic human being who stood on their own principle and that I could trust. And that is somebody you can trust who has a substance outside of just going along with the, that is a, I mean, that is, every great business I've ever seen is built on that foundation. And you're listening to Brad Anderson, the former CEO of Best Buy, talking about Sherry Ballard, who rose from store manager to being responsible for all of the Best Buy stores in America, Mexico, e-commerce, and the company's real estate strategy. And that someone like Brad Anderson would respect another executive coming at him as the boss head on and allowing the two of them to just disagree and move on.

And why? Because trust, well, that was one of the most important principles that Brad Anderson ascribed to in his new leadership role at Best Buy. And at the Daniels Fund, trust is one of the big principles in their Daniels Fund ethics initiative.

And trust is the foundation of not only American commerce, but any relationship in the end, whether it's a marital one or a friendship. When we come back, more of our Do the Right Thing series with former executives from Best Buy here on Our American Stories. Folks, if you love the great American stories we tell and love America like we do, we're asking you to become a part of the Our American Stories family. If you agree that America is a good and great country, please make a donation. A monthly gift of $17.76 is fast becoming a favorite option for supporters. Go to our American stories.com now and go to the donate button and help us keep the great American stories coming.

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There's a better way to fly private. And we continue with our American stories and with former Best Buy CEO Brad Anderson for our Do the Right Thing series sponsored by the great folks at the Daniels Fund. In the last segment, Brad told us how Sherry Ballard tried to resign to be accountable for a failure. Our own Alex Cortez reminded Brad that he had made a very similar offer to Best Buy's founder, Dick Schultz. Let's return to Brad.

Yeah, it's pretty similar to Sherry's actually. I never thought of it that kind of context, but yeah, we had a, this was 1997, the beginning of 1997 and we had just had, I had to call the suppliers to say we were going to pay them late because on, I think we were doing a billion and a half in revenue and we made 2 million as, as accounting practices were in the time, which today I'm sure he restated, we would have lost the fair amount of money, but we barely were making money and we couldn't pay our suppliers on time. It's a whole bunch of, you know, I can give you a whole bunch of excuses for it, but you know, we were not successful.

Brad wasn't going to tell us the excuses for it because he believes that ultimately he's accountable, but I managed to get the whole story out of him. Well, the problem was it was, well, first of all, this is Best Buy was a company. You put like this big edifice on a, on a piece of sand because the industry was always, always moving and it was lethal. The companies, you know, like you had all these very successful, like CompUSA, the first computer retailer superstore, hugely successful for a few years and then out of business a few years later because they couldn't adapt to how fast the industry changed.

So what had happened during that particular year is with the first part of the year, the first nine months had been great. And then this would be, very few people remember this, but Intel used to, because of Moore's law, you know, computers were, you know, twice as fast for half the money in a, in a two-year span of time that it was Moore's, Gordon Moore's law. Well, Intel, which created Moore's law was producing computers that were always, we considered computers like selling, we call the bananas. So if you didn't sell it before the banana was ripe, you and the margins were, you know, sometimes negative for a computer line if you sold it fast.

So it was a, it was a, it was an extremely lethal industry to be in. And Intel decided because of their just, they're just functioning with their innovation team, that they would release a new processor in January. Well, you know, almost all the money, especially on a low margin business like us was made in December, which meant we would be normally, if they were doing it in a regular time, let's say this happened in March, we'd made sure we were out of computers and starting in February, we'd be out of stock for, but you know, you're going, so you'll have a dip in sales for the month waiting. And then you'd have a spike in March when they introduced the new, new microprocessors.

So you'd have these, you'd have these cycles. And we were thriving in the business that everybody else was failing in. Cause we figured out how to deal with that, but not for a change in December, which meant you have no computers to sell to your customers in the month that you do two and a half times a normal nuts business and usually make all your profit. And that happened that year.

And that happened that year. So we were, we were doing really well, but we were always in this, you know, this really difficult, dangerous industry. And all of a sudden, if we had sold computers in December, it would have meant that we would have taken all back in January when the faster microprocessor came out. So that, that, that also destroyed our cashflow. That's why we couldn't pay the suppliers. So that, you know, you know, again, you could, I could have said as an executive said, not my fault, but yeah, it's my fault.

I mean, I'm running the, you know, I'm running that company and I'm making those choices and we steered into that water and that's where we were. I asked Brad, did he think that was ethical of Intel? Should they care about the ramifications on business partners like Best Buy?

If we went out of business, you know, big deal. So, I mean, it's not their job to protect us. And, and their job is that kind of from a customer standpoint, they were getting the, they were getting their new microprocessor to the market as fast as they Moore's law, as they had to beat everybody else. I actually, one of the people I most admire was the guy running Intel at the time, Andy Grove. He wrote the book, only the paranoid survive, right? So he's paranoid.

He doesn't, you know, he, he doesn't want AMD to have a chance to get a microprocessor into the market before Intel does, just cause he's trying to protect his retailers. Now they did some other stuff that was a little less ethical at the time, but, but, but they're just being the animal they are. It's like, you know, the thing about, you know, what is it?

The frog riding on the back of the, you know, it it's, it's, it's there. That's the creature they are. They were, and for their shareholders standpoint, fine. They didn't have to protect us. We'd grown the business tremendously. We're not successful. So I went in to tell the founder that if I were in his shoes, I would fire me for the results.

And he didn't, but I would have. So now out of that, we became pretty successful like a year later, but, uh, I do believe in accountability. So I didn't best buy founder Dick Schultz, fire Brad. For the same reason, I didn't want Sherry fired.

I think, right. It's like, you're going to bring somebody else in, you know, you, what I was worried about is because, you know, Dick Schultz, the founder best buy is a moral, loyal man that, and, and I played a significant role in helping get the company where it was at, including where it was at then. Part of the reason I was saying it so directly to him is I was worried that he would not fire me for the wrong reasons.

And, uh, I wanted to make sure he knew that I thought I should be fired and, and I want to make it as easy as possible for him to do it. But I think I, this is speaking, I don't know, but I'm guessing that he might not have fired here in this for me for the same reason that he, at least I was acknowledging that I owned the problem. And that if he brought somebody else in that didn't own the problem, it wouldn't necessarily have turned around as fast. A lot of people would have made a different decision in that context.

Uh, and, and it could have been the wrong decision, but, but if you're framing it with a sense of morality, you're going to have to make a good one. He said, what do we do to fix it? And I had thought about what do we do to fix it.

That's where we get the other part of the story I told you about where we had to standardize practices and that was hiring an Accenture to come in and develop new practices and then basically make the business much more scientific than it was. And then, uh, he said, well, you know, he said, well, you know, I don't know how to do it. I don't know how to do it. I don't know how to do it.

I don't know how to do it. Basically make the business much more scientific than it was much more professional scientific than it was. And that costs money to develop the plan to do that. And then, and then we had to implement the plan. So that was the, those two stories are actually connected, but it, I do think underneath it all, you got, how does he know it's going to work anymore than anybody else does.

Right. It's, there's, it was an, it was an idea about how you're going to fix it. And, and, and the, you know, and included a price tag that was 20 times what we earned the following year in terms of, we were going to have to invest money we didn't have to fix it. So it was a real leap of faith. So not only is this guy coming in to quit, but he's got the strategy for fixing it.

It's expensive. And, and I got to, I got to do that leap of faith to be able to, so I don't know what, you know, yeah, I, I, I hope he would have kept me fired if I didn't have a strategy to turn her out. Then he, yeah, if he didn't fire me, that would be, I'd say inexcusable. And what turned out what we did to fix it was, which we'd done it a long time ago, but it worked. And a special thanks to Alex and Robbie for their production and work on that piece. And also a special thanks to Brad Anderson, who is the former CEO of Best Buy. And our Do the Right Thing series, as always, is sponsored by the great folks at the Daniels Fund to learn about bringing their ethics programs to your school, business or police department.

Go to danielsfund.org or Do the Right Thing series with former CEO of Best Buy Brad Anderson here on Our American Stories. Hey, it's your fave pop culture queen Paris Hilton here with big news. I've created my very own 3D interactive world.

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Check out paris.world.co today. See you there. So you never became a soccer star, but you could still show out during the FIFA World Cup 2022 with cool soccer swag from Frito Lay, the official USA snack of the FIFA World Cup 2022. Look for the Golden World Soccer Ball, then pass the ball to fellow fans for a chance to score custom swag. Scan the QR code on specially marked bags of lays, Cheetos or Doritos or visit fritolayscore.com to join the Pass the Ball Challenge. No purchase necessary. Open the legal residence of the USDC.

18 plus C rules at fritolayscore.com. When the world gets in the way of your music, try the new Bose QuietComfort Earbuds 2. Next gen earbuds uniquely tuned to the shape of your ears. They use exclusive Bose technology that personalizes the audio performance to fit you. Delivering the world's best noise cancellation and powerfully immersive sound. So you can hear and feel every detail of the music you love. Bose QuietComfort Earbuds 2. Sound shape to you. To learn more, visit Bose.com.