Ex-Circuit City CEO Talks Strategic Planning, Hubris

Former Circuit City CEO Alan Wurtzel shared a 60-year case study of the success — and ultimate failure — of the one-time multi-billion dollar consumer electronics store at George Mason University's Arlington campus this week.

Wurtzel discussed his new book, "Good to Great to Gone: The 60-Year Rise and Fall of Circuit City," with Washington Business Journal Publisher Alex Orfinger on Thursday in front of a crowd of more than 100 students and area entrepreneurs as part of Amplifier Ventures and Arlington Economic Development's Venture Camp.

Wurtzel talked about the importance of strategic planning — with particular emphasis on taking into account changes in demographics, products and competition — and "habits of mind" he developed while running the company in its heyday.

"There are no rules for strategic planning … because the world is constantly changing," he said. "What works today is unlikely to work tomorrow."

Such planning is "ephemeral," or "limited to time or place," he said. Wurtzel defined strategic planning as "the art and science of matching the resources and strengths of your organization with the external environment."

That environment is constantly changing. Wurtzel suggests a three-year plan, updated every other year. That's long enough to determine whether things turned out better or worse than planned, and the world has changed enough so that executives can reflect on what worked and what different.

Wurtzel also touched on a few "habits of mind" that he details in his book:

• "Be humble, run scared"
• "Curiosity sustains the cat"
• "Evidence trumps ideology"
• "Maintain a current roadmap"

A collective gasp could be heard in the crowd when Orfinger asked why Circuit City failed.

First, Wurtzel said, was hubris.

Wurtzel stepped down as CEO in 1986 after 13 years at the helm — and after elevating Circuit City to a $1 billion company. Over the next 10 years, it would grow to $10 billion.

But later executives began to stop paying attention to the marketplace. Best Buy was carrying low-margin products like video games and CDs; Circuit City ignored the former and only "reluctantly" carried a small selection of the latter.

And the retail culture was changing, thanks to the growing popularity of stores like Kmart, Walmart and Costco. Customers could find what they want and carry it to a checkout; Circuit City clung to the belief that everyone must talk to a sales rep.

Later, the company's leadership would destroy the culture he and his father had worked to build, Wurtzel said, and a series of bad financial decisions left Circuit City without cash in the bank or the ability to get credit when the economic downturn hit in 2008. Circuit City began liquidating its assets in 2009.

The crowd asked question after question. One woman, who is in strategic planning, asked if he were starting today, would Wurtzel still take the every-other-year approach to updating his plan given the rapid change in technology.

"Absolutely. I don't think it has anything to do with technology," Wurtzel said. "It's having the time to step back and look — thoughtfully, rather than mechanically — at what's happened in the last period of time. And the CEO has to do it. He has to put a lot of heart and soul and brainpower into that plan."

Wurtzel's father, Samuel, started the business in the 1940s after the family, living in New York at a time, stopped in Richmond on their way to North Carolina for a vacation. The elder Wurtzel was in a Richmond barber shop when he heard the first television station had launched in the South.

And he was curious about it. Circuit City was soon born.

It was 1949 in a post-World War II society — and the 60 years that followed saw radical changes in technology. The Interstate Highway System was launched in 1956. A few years later, 1959 saw the advent of the discount store. Alan Wurtzel became Circuit City's chief executive officer in 1973.

The title of Wurtzel's book is inspired by Jim Collins' 2001 book "Good to Great." Collins looked at 11 Fortune 500 companies that managed to outperform the S&P 500 by three times for 15 years — including Philip Morris, Walgreens and Circuit City.

Collins found that common threads among the successful companies included CEOs who were more interested in their company's success than their own fame or fortune and put an emphasis on hiring good people.

"It's good to see this kind of activity coming out to Arlington," said Todd Cofer, CEO of the Washington-based startup Bookend Technology. Bookend is designed to better connect students, parents and teachers by upgrading the traditional report card system.

"For us, we're starting a company. We're going through some of those same growing pains right now," said Cofer, of Arlington.

Francis Donohue III, a consultant with Booz Allen Hamilton, said Wurtzel's talk was analytical and objective without being self-blaming.

"It was an honest portrayal of the rise of a great company and its slow crumbling into a new technological age," he said.

The final fall Venture Camp discussion will be on 3-D printing. It starts at 6 p.m. Nov. 13.

Read more:

Circuit City's Undoing? Hubris (Washington Business Journal)

More on Venture Camp:

'Anything We Can Imagine Can Be Built'