Leadership

    Three Sad Innovation Lessons From Radio Shack

    radioshack_logo-01Keep Punching, Stay True to Yourself and Trends, Make Things

    The demise of Radio Shack., it’s depressing. Much like Kodak you read the history of events and can point to several ideas not done that could have saved them. You can also point to many ideas they tried that were clearly the wrong bets. Hindsight is better than foresight, but still, if they’d stuck to their original values they might have survived. Radio Shack substituted short sighted management tactics for real innovation and invention and that’s ultimately what killed them. They lost the sense of who they were as a company and that led them down a lot of innovation blind alleys.

    A once loved brand in consumer electronics, and a geek-haven way back before there was such a term, I’ve long been a fan and customer. I’m sad to see them go down. This is personal for me, I was a loyal customer. Radio Shack was at one point — about 1990 — the largest electronics chain in the world. Like Kodak, they did not lack for resources. Why isn’t Radio Shack leading the charge on the Maker Movement — maker culture is where they used to be!

    Three Sad Innovations Lessons from Radio Shack:  

    The first lesson: They quit trying to innovate in Products. They stopped punching — they stopped inventing. Innovation is not acquisition. Innovation is not a big fancy HQ building. Radio Shack moved away from their core value of enablement. Their core customer was a hobbyist, or otherwise stated in modern parlance, they were makers. They drifted away from this core, tempted by the profits in bigger consumer markets like phones and television sets. Radio Shack was the place you could go to get that weird connector to do something creative with your stereo. Or, some transistor or coupler or gizmo to make something work. Components of a solution — enablement! Radio Shack invented (or fast followed) and made these components — until they stopped. I would argue their biggest missed opportunity was in the computer business. The “Trash 80″ (they sold a boatload) was a seminal early PC, and the computer itself is, at core, an enablement machine. A TV is not enablement. A cell phone is not enablement. That’s why I think the Sprint co-branding on the 1,700 remaining stores is not going to help or work. Radio Shack hasn’t known who they are for many years now and they’ve switched target markets many times. Being a retail phone store with a few other items like batteries isn’t going to cut it. If they were still making hip new electronic gadgets and still had gizmo/components they’d be different. And of course, the web makes buying from your couch so easy, why wouldn’t  you order a couple months of batteries online?

    The second lesson: They took their eye off of trends. Management — and there were many teams over the years — ignored trends in a business that has two sets of trends. They needed to keep an eye on current consumer trends, and, longer term technology trends. Leadership at a major consumer electronics chain has to keep one eye on the distant horizon and the other eye on “right now” consumer interests in gadgets. They had this balance right through the early to mid-90′s. Then, they got enamored of bigger markets that were really outside their target. I can just hear some MBA type saying how big a market they were missing with large screen TV’s, and then the failed attempts to build a big-box electronic store resulted from this idea. Management was following fads instead of keeping an eye on big trends, and so, they dropped their profitable mail order business. A long term technology trend they didn’t embrace was the web — they could have been the Amazon of consumer electronics. The trend they should be all over right now is the Maker Movement. It fits their historic core customer and nobody else is doing this in the retail space. They should be Enabling Makers, but noooooo!

    The third lesson: They quit making things. I think a company has to be grounded in who they are and what they do. That’s why looking back the death knell of Radio Shack began when they stopped actually making (manufacturing) electronics in 1992. When you make something, invent something, there is a pride — and you know who you are as a company. When you make something you are innovating in a more complete way then just selling something. Radio Shack invented and manufactured all kinds of electronics and most of the work was done in the good old US of A. Some MBA type at some point said “gee, we don’t need to make all these gizmo’s, let’s buy those parts and products instead.” This is the kind of thinking that passed for strategy at Radio Shack. Funny thing was, the stuff they made themselves was higher profit than the stuff they bought wholesale. So, thinner margins. And, less responsive to current market needs (see trends above). So the MBA types said, “let’s get rid of those low margin products” and they did. Then when the core-target-market hobbyist came in the store, they didn’t have the gizmo they needed anymore. Death spiral! There is such a thing as innovation in pure retail, but it’s very challenging as Radio Shack has learned the hard way. Making your own stuff means that you have more innovation width, more flexibility, and, higher margins.

    I still wish them well but they’ve given me no reason to go to their stores anymore. I don’t need a phone.

    Now, how about a 3D Printer kit? That would bring me back.

     

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