by Mike Behr

Last week I wrote a post about Best Buy and Circuit City in an effort to discuss how innovative companies stay ahead of their competitors. I got a couple of great responses from two successful entrepreneurs which you can find here highlighting the problems that Best Buy has had with Geek Squad.

What I really wanted to emphasize is that companies need to think ahead, innovate and continuously take risks. Those that choose what I call the “me too” strategy always follow and are never first to market with an innovation.

This was the path and eventual demise of the May Department Store Company and could perhaps be the path of Circuit City if they don’t try to get a leg up on Best Buy and the emerging competition from discounters such as Wal-Mart.

Even if Best Buy’s Geek Squad is experiencing quality problems and perhaps there are issues with the pricing model, they should work those out over time and probably have a dominant position on servicing consumer technology needs. That is a position that will give them a leg up on discounters who may beat them on price, but lack a comparable ability to serve those customers with installation and troubleshooting. That need appears to be growing as technology keeps changing. Here is a “60 minutes” feature on the Geeks. Best Buy’s deep pockets allow them to operate in the red and work these kinks out where other competitors may not have that same luxury.

Another example of Best Buy’s innovative culture has to do with the radical work scheduling practices they have implemented at their corporate offices. This was the cover story in Business Week on 12/11/2006. It should be noted that Best Buy looks for innovation both inside its company, as demonstrated with the flextime initiative, and outside the company, as we see in their purchase of Geek Squad in 2002.

Wal-Mart is also a pretty progressive company and becoming a big player in the consumer electronics market. It will be interesting to see how Circuit City does over the next few years with Best Buy continuing to dominate and Wal-Mart, Dell and others growing their consumer electronics business.