On EXCEL-lence: an interview with the recipient of the 2002 EXCEL award.

The No. 1 specialty retailer of digital technology and entertainment products, Best Buy Co. Inc., operates 1,900 stores internationally, generates US$20 billion in annual revenues and was ranked by The Wall Street Journal as the best-performing stock over five years among 1,000 publicly traded companies. Best Buy Chairman and CEO Richard M. Schulze spoke at the opening general session at IABC's international conference in June, where he was presented the EXCEL (Excellence in Communication Leadership) award. This award is given annually to a business leader who supports, encourages and practices exemplary communication and whose organization reflects that philosophy and standard. Gloria Gordon, Communication World editor, sat down with Schulze to find out how communication has contributed to his company's success.

Gloria Gordon: Since you founded your first store, you've been one of the world's leading retailers. In addition to your obvious business acumen, what communication strategies do you feel contributed to your success?

Richard Schulze: I'd have to say that one consideration stands out as the most important--the ability to listen carefully to those constituents you value highly. In our case, it's obviously customers, No. 1; employees, No. 2; suppliers; and, of course, shareholders. You can make adjustments in your business by listening to the constituents you engage with each and every day.

GG: Could you describe the areas that most challenged your leadership and communication skills when you first began your venture?

RS: That would have to be consistency. You have to develop consistency in your messages, then identify your audience and understand what it takes to reach that audience so they're actually received, learned and understood.

GG: Could you describe any specific communication tactic, such as face-to-face meetings, newsletters or the Internet, that has helped you achieve the results that you accomplished?

RS: It's a combination of everything. Of course, I don't think there's a substitute for face-to-face. If you can be face-to-face with the people who ask the questions or who need to know, you can communicate most effectively one-on-one. But the reality is that the need to approach each and every one of our constituencies varies. There are times when regional meetings can best serve your objectives. On some occasions, investor conferences are the best medium. We use TV or video to reach our large, diverse population of employees, which is often the most looked forward to because of its delivery, entertainment, personality and communication. Because of the Internet, or in our case, an intranet, the ability to continually provide up-to-date news and information goes a long way toward making it a stronger, easier way to communicate with our employee base.

GG: What roles do your communication employees take in helping you achieve your goals?

RS: It's the consistency of the message. They focus on understanding who the various employee groups, or constituencies, are. There also are investors and suppliers, so essentially it's making sure we're consistent and timely in our communication. The message is clear, concise, on time and delivered in such a way that the audience sees it, knows it and can respond to it.

GG: If you were to write a description for a communicator applying for a job with your organization, what would be your requirements?

RS: It begins with the individual's ability to become a problem-solver. As a corporation spends considerable time and dollars in creating a business plan for the future, what's critical here is that it's properly communicated and ultimately properly implemented. You have to have people who are strategic--they understand the value of what it takes to solve that problem, and they're not afraid of details. They have to be people who will work and rework. They'll challenge their own work and open it [up] to others for advice and information to make sure we get the best quality product.

GG: How many communication specialists and managers do you employ?

RS: More than 100 in the organization of 90,000 employees. It's a small number, but an effective group, very effective.

GG: As the CEO, what do you consider your principal do's and principal don'ts if you were to advise another CEO?

RS: I would say, don't under-invest in communication. I think it's really critical that communication is valued high enough that you entrust your communication team to know and understand what it takes to land a message, create a business plan, then submit in their budgets what kind of investments or spending, be it capital or operating, are necessary to land that message. Because, often, the relationship between the reality of that cost and the historical cost sends shockwaves to the people who look at it. They genuinely don't understand why communicating these simple messages should cost so much money.

With us, it's been an evolving strategy where it was incumbent on the communication team to bring the output of past initiatives back to the measuring stick. This helps prove that by spending X dollars on a given project, certain results were created that helped the organization. The first and foremost place I see taking dollars from any kind of a budget is to take it from advertising and put it in communication. Then you're obviously landing one of your key constituents' requirements, and you're doing it from one that would be a single message among millions.

GG: Have you had any formal training in communication, or have you honed your skills on the job?

RS: I think it's a combination of both. Certainly in the early going it was on the job. It's because of my trust and confidence in people--the value I place on people and their development--that I'm pretty open about what we're doing. I believe every employee in the organization at every level deserves to know why we've chosen to do what we're doing. If you give them a piece of the puzzle, and not the whole thing, they get lost.

The challenge, however, came as we evolved. It's one thing to do that for 300 employees or 1,000 employees or 10,000 employees. It's another when you get to 90,000, and ultimately it's going to be in different languages. I think one of the wake-up calls our people are going to have over time is when they have to learn to speak languages other than their own. We'll see how they handle that, but the reality is that you need to respect other cultures. I would have to say it's clearly a case of just focusing on your audience, so I took formal training for that because I was on television so much.

GG: What do you think have been the most significant challenges in communicating successfully through diverse markets and diverse work forces in particular?

RS: It's making sure that signing in the store is written in the languages of the consumers who are shopping there. You need to have a diverse population of employees on the floor that can communicate, whether it be to Hispanic, African-American, Asian or Indian consumers. We have the obligation to make sure those messages are landed in the language of the consumers who shop at our stores.

GG: As one of the most profitable businesses in the United States, do you have a method to measure how and if your communication skills actually contributed directly to the bottom line?

RS: I think the most obvious was the Shrink-Stopper Program. The plan came from our operations and our loss prevention teams, but the traction to land it came from our communication team.

Together they said, "We've got this challenge, and we need to land this message to all of our employee base in a way that will be memorable, that they can relate with, that everybody will own." The teams put together an entertaining, but very effective, campaign to stop theft and incorrect pricing of retail items in each store. A little better than 1 percent improvement was made over the course of the last half a dozen years, in particular since 1995, resulting in about a US$200 million savings. Next year, our analysts are forecasting $24 to $25 billion, so that number goes to $250 million. It's a huge savings. Clearly it's one of the largest and most prominent of our measurements.

Twice a year we communicate a survey of eight or nine key questions about employees on the job. Our intent is to make sure we know that we're keeping score on how we perform at retail. The communication team spends a tremendous amount of time sending back messages to us so we can collect data and make changes in the retail stores to ensure that we get as many people performing at the upper level as possible.

GG: When you went public, did you use any specific or any particular communication strategies that would apply to the Wall Street market?

RS: It was something I warmed up to and enjoyed tackling one-on-one. The ability for our investment community to have access to the CEO was certainly a positive. In addition, we would take them on store tours. We organized teams of people within our districts and regions to be sponsors of smaller groups throughout the store. We communicated our game plan and our business plan. We organized trips to our corporate facilities and spent a whole day taking investors through our buying, advertising, service and logistics and distribution facilities, so they understood what our resources were, how we structured our business and what our processes were.

It's a combination of our Internet site, which constantly brings to the attention of our investment community what we're doing. We webcast our telephone conferences; we do quarterly conference calls to our investment community where we have hundreds of analysts and the buy-side money managers on the phone listening to our communication.

GG: You mentioned that you would take advertising money and give it to the communicators. How do you see marketing as a different tactic from communicating, or do you?

RS: Marketing creates the objective. They're pulling together the product offering, the pricing strategy, the timing, the visual merchandising, the display, the offer. The communication group obviously needs to land the importance of what all this means to the company. So we have two teams who are engaged in that--the advertising department works on the creative and the presentation of the message, then the communication team offers, through our product-specific magazine, Retail Weekly, and a monthly TV news show, "TAG TV."

GG: In this business you must experience ups and downs. How do you prepare yourself and your employees for those that occur from time to time?

RS: Honesty. Openness. Call a spade a spade. It is what it is. This is the challenge; this is the victory. Be quick to acknowledge the victory, be thorough in rewarding those who perform in an extraordinary fashion. Obviously, be honest with where we stand; talk about things as far ahead as you can; allow employees to know and understand impending challenges, whether they be economic, industry, competitive or internal. It's really a case of sharing as much information as is practical about the holistic nature of everything we deal with. And that's why we need so many communication professionals: because we have so many messages and so many priorities. You have to pick and choose what these are, you have to understand your audience.; and you have to land your messages accordingly.

GG: Have you had to close any stores or do any layoffs?

RS: Not one. When you're a growth engine like us, you know, you're fortunate. You can over-hire at some point with the internal growth--we're putting 60 stores on a year--so you can afford to over-hire and then know you're going to have a place for these people when things stabilize. But I would have to say the only stores that we've ever closed are stores that are too small to handle our particular growth and product assortments. Where we're under-serving the market, we'll close a store and reopen one across the street or next door, or we'll expand the store, but we've never closed a store because of underperformance.