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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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Moore’s Law defines the history of technology. It held that the number of circuits etched on a given piece of silicon could double every 18 months as far as its author, Intel co-founder Gordon Moore, could see. Moore’s Law has spawned constant revolutions since then, not just in computing but in communications, in science, in a host of areas. Moore’s Law applies to radios, and to optical fiber, but there are some areas where it doesn’t apply. In this blog we’ll take a daily look at new implications of Moore’s Law in real time, as it rolls forward to create our future.
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February 21, 2006

Fall of Radio Shack

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Posted by Dana Blankenhorn

r-shack.jpgNews that David Edmondson, the CEO of Radio Shack, had to quit after a week because he phonied-up his resume was sad to read.

The more I thought about the story, the sadder I got.

That's because Radio Shack had every opportunity to be a dominant player in the computer space. Back in the early 1980s, when investors thought Microsoft CEO Bill Gates needed "adult supervision," a Radio Shack executive named Jon Shirley was hired to provide it. Before that, Radio Shack was one of the very first PC makers,

Its TRS-100 was still one of the best portables I ever had -- $400, an internal modem, a decent keyboard, 4 pounds in weight, and enough storage to deal with most writing assignments. During a 1984 documentary on the failed Gary Hart campaign, "The Boys on the Bus," the TRS-100 stole the show. As time went on the boys started ignoring the story around them and gathered around the machine, exchanging tech tips.

Even after leaving the PC business Radio Shack remained a very vital retailer, surfing from PCs to cellphones to satellite dishes, and keeping up its quirky stock of electronic parts -- batteries, headphones, etc. In many small American towns, in fact, Radio Shack is the only game in town.

david%20edmondson.jpgThe story told by former CEO David Edmondson, 46, illustrates just how much the company coasted, sitting on big leads in the space until they evaporated. As C}Net wrote, "When Edmondson's resume was vetted at the time of his first hiring in 1994, RadioShack was not in the practice of verifying academic credentials." What Radio Shack cared about was that Edmondson was a great salesman. He moved merchandise. And from there he shucked-and-jived himself right to the top.

Even a cursory check of those credentials would have shown that Edmondson was not the educated man he portrayed in board meetings. He said he had theology and psychology degrees from an outfit called Pacific Coast Baptist College in California. In fact, he had just a three-year degree from the "school," which has since moved itself to Oklahoma and now calls itself the Heartland Baptist Bible College.

Yet despite all this, Radio Shack was still the #3 electronics retailer in America when Edmondson took over. The real problem was that BestBuy changed its own focus, adding salesmen, trimming the size of stores, and taking away market share. Edmondson never responded. If he had, it wouldn't have mattered what degree he had. But recently the company announced it would have to shutter 400-700 stores, write-off inventory, and take an earnings hit of up to $100 million.

THAT'S why you fire a CEO. If the guy had turned the company around, and not run it into the ground, it wouldn't have mattered if everything he knew had been learned in kindergarten.

The fact that Radio Shack is still covering up its larger management mistakes, turning a corporate failure into an individual's humiliation, tells me they still have much further to go -- down.

Comments (1) + TrackBacks (0) | Category: Business Strategy | Consumer Electronics | Economics | History | marketing


COMMENTS

1. Jesse Kopelman on February 22, 2006 07:08 PM writes...

Radio Shack needs to go back to its original customers -- hobbyists who are looking for components. There are plenty of people out there who want to do custom home A/V setups, build their own gaming or HTPCs, or trick out their car electronics. There has got to be money in catering to them. I think there is especially a brick and mortar opportunity because some these componenets are purely aesthetic and one would like to see and handle before buying, while others cost less than the shipping would, and still others are impulse buys that you want to have right away.

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