I recently learned of a great example illustrating the culture of Silicon Valley. Back in 2001, the very successful Best Buy bought Musicland, a huge chain of retail music stores. If you’ve been in a Sam Goody, Suncoast Video, or Media Play, you’ve been in a Musicland store. 

Best Buy wanted to enter as a big box retailer into mall-based stores. They had convinced themselves that everything seemed to make sense about the acquisition. They could convert the myriad of mall stores to the Best Buy brand, with Best Buy retail music, cell phones, and mp3 players. They didn’t heed the complaints of Sam Goody customers, unfortunately, who were repulsed by the corporate takeover, and they didn’t look at where the market was going, which was devaluation of music as a central identity amid the rise of social networking and gaming. 

Then Napster was created and burst onto the scene with freely downloadable and instantly accessible music. All of a sudden, teenagers everywhere stopped buying retail music and started downloading for free.

Best Buy ended up losing over a billion dollars on the Musicland purchase and sale. As a result of this debacle, Best Buy created an internal program to respond to and take much more seriously the feedback from Best Buy employees on the store floors, who interact with customers on a day-to-day basis. 

This illustrates the power of recognizing and fulfilling customer sentiment and needs, whether they are articulated or not.