Not A David And Goliath Story

When you tell the success story of The Sound Room, the metaphor of the "David and Goliath" fable is almost too easy. The story would go like this:

 

A local electronics and technology store has found a way to survive for 30 years in big bully corporate store land – Best Buy, Ultimate Electronic and Circuit City. Rising out of the rubble of its enemies, this specialty store thwarted the towering industry titans with its adaptability. To top it off, the owner's name is even David. In the journalism world of writing compelling leads, that should be a slam dunk.

But that is not The Sound Room's story – at least, not according to this fable's David.

"You've got the story wrong," says David Young, who started The Sound Room in 1983. "The story should be on how tough it is for big box stores to stay relevant with so many competitors who are specialists like us."

So, in this case, David, the boutique store owner, is the Goliath. It's a perspective that is hard to ignore when you look at the facts. According to Young, the last year has brought about a great deal of carnage for big box electronics stores – American TV, Ultimate Electronics, Circuit City and (on the chopping block) Best Buy. Some independent electronics and audio dealers have also been closing down recently - small, family owned stores such as Hi-Fi-Fo Fum.

According to Young, the kiss of death for big box and small business alike is an inability to adapt. They stayed with a particular product offering or way of doing business for too long.

"The worst mistake that you can make is to keep doing business the same way that you did business," says Young. "You have to be able to adapt – and today, that is more important than ever."

This statement has weight coming from Young whose company has gone from a one-man shop selling component stereo systems and car audio to in-home

theatres and entire home automation over the last 30 years. While others have stood still in their product offering, Young has adapted to the needs of his clients and anticipated their desires. And that attention to innovation and evolution has paid off. Today, the company has $5 million in revenues and over 30 employees. It also ranks 26th largest on the national list of Private Technology Integrators by CE Pro Magazine.

Change Just to Stay in the Game

Young's results are no surprise to Eliot Frick, founder at bigwidesky, a St. Louis-based marketing company. Frick has seen a shift in the landscape of consumer expectations over the last several years.

"It used to be that a company would implement change to increase quality and capture a higher margin, but now you have to change just to stay in the game" says Frick. "Innovation is particularly valuable in cases like The Sound Room where an early adopter audience would demand new products. But, it is true for all businesses that you must innovate or die."

Frick sees a shift in how quickly people are metabolizing knowledge and that innovation has become a greater expectation for most consumers and companies. This new environment calls into question the validity of some conventional wisdom: Do one thing and do it well.

From Stereos to Home Automation

For some new perspective on that conventional wisdom, consider trail David Young blazed with The Sound Room. Back in 1982, Young was manager at Best Sound in Brentwood, Mo. He was selling reel-to-reel tape decks, record players, receivers and amps to audio aficionados and aficionados wanna-bes. He began to notice that much of his clientele came from the West County area. So after his boss passed on an opportunity to open a location in Creve Coeur, Young put in his notice.

Before Young was even open, he had his first customer – a woman who had been his client at a previous store. One day when he was still remodeling his commercial space, she pulled up and knocked on the door. He tried to explain that the store was not yet open and that she would have to come back later.

"She told me that she was having a party that weekend. and she wanted to be my first customer," says Young who made the home delivery in his 1968 Ford LTD station wagon with wood paneling. "I still have the one-dollar bill she gave me in my wallet. It says, ‘Congratulations, Dave. 11-30-1983. Dr. Loretta Roberts.'"

That first store opened in Creve Coeur selling stereo components and audio equipment. Young had a five-year plan to open another location in Chesterfield. But business started to move faster than he had anticipated, so that five-year plan became an 18-month plan.

"By that point, we were already selling video. People were hooking their VCRs and televisions to their stereo components," says Young. "We had ‘Top Gun' blaring on the televisions. I think ‘Top Gun' actually sold a lot of VCRs and TVs."

Shortly after that, The Sound Room sold one of the first CD players in the area and began renting laser discs for home projectors. A few years later, they started to create specialized audio/visual rooms and home theater systems. And by the early 90s, Young had built a new location in Chesterfield to combine his car audio and home audio businesses. In just ten years, he had gone from stereo equipment to complete home theaters, and he was not done yet.

"In the early 90s, we got into the custom installation business," says Young. "It started with a lighting panel that had different scenes to pause, to watch, to read a book. People loved it and wanted lighting control in other rooms in their house. That got us thinking about other things that they may want to control on the panel."

By the end of the 90s, The Sound Room was installing home automation systems that included multiple layered technologies – security systems, HVAC and lighting. The entire home could be controlled by a central panel or even remotely.

As the business grew and shifted, Young knew that he would need the help of others who were like him but located in different markets. He joined the Home Technology Specialists of America (HTSA), a buying group for smaller retailers across the country.

"Joining and leading the HTSA helped us achieve two things. One, we were able to combine our buying power with other retailers, so that helped us to stay competitive on price. As we began to scale up and offer new products, being competitive on price was increasingly important. Two, it gave me an affinity group. There was a sharing of ideas and practices that led to inspiration for more services."

Today, Young has aspirations to make The Sound Room the one-stop shop for anything that deals with a customer's home network – security, audio, visual, etc. Too often, he says, there is not accountability when something breaks down and Young wants to be the place that customers turn to when they need answers. He currently has technicians on-call 24/7 and new products that monitor a home's network and send alerts when there is a failure.

"If we had just kept selling stereos, then we would be long gone," says Young. "For us it has always been about creating a wow-effect for the customer. It was true when I was selling stereos and it remains true today. We live to see that look on a customer's face when they experience some new technology for the first time."

By constantly evolving, Young has been able to stay ahead of his customer's aspirations. His adaptability has also meant that he can out-maneuver big box competitors.

Here is a list of tips on how to increase your adaptability and become your industry's Goliath:

Innovation is useless if you don't care about the customer

"We have structured the company from the beginning with good people who are passionate ," says Young. "That makes a big difference to customers who are used to purchasing their equipment from Best Buy. The clerks in that store know less than you. We are a group of people who love audio visual and home automation. And we are experts at creating the right experience."

Find an affinity group
Being a small business owner means constantly facing decisions that are anything but black and white. By joining and later becoming the president of the HTSA, Young was able to surround himself with more experience and combine his aspirations with others. That made a direct impact on the company's bottom line since it increased his buying power while also reducing the risks of innovation.

Set aside time for innovation
The day-to-day operations of a company work against inspiring innovative ideas. Frick suggests taking time to create meetings with an affinity group.

"You have to have an ongoing commitment to looking at your company's aspiration and vision," says Frick. "Innovation is not programmable. If it were then everyone would do it all the time. But you can make a commitment to surrounding yourself with people who are aspirational and visionary."

Be the first
The first flat screen. The first stereo-enabled VCR. The first DVD player. The first laser discs. All of them were available at The Sound Room. Thus, the brand has become synonymous with "the bleeding edge." Young points out that you have to like being an early adopter and that being dazzled or wooed by new technology comes naturally to the culture of The Sound Room.

"Pioneer flew me and a group of other dealers to Japan to see the first 50-inch plasma flat screen television in 2000," says Young. "At the time, the television cost $22,000, but we knew it was important to be the first in the market. Our vendor knew we were early adopters and so do our customers."

Reduce your fear of mistakes
The risk of being the first is that (from time to time) you will endorse a dud. That has been true for The Sound Room. Young is quick to point out the failures and mistakes that have occurred with the company along the way. One was called The Frox, a wand that would control your computer and network systems.

"Those guys threw great parties bringing in dealers from New York and San Francisco and blew through tons of venture capital money," says Young. "We sold a couple of systems, but they were expensive, and we ended up eating the cost on them. It taught me to be more cautious and vet our products a little more."

 

How The Sound Room Innovates

Inspiration can come from so many places when it comes to innovation. So, how do you know which direction is right for your business? The Sound Room has created a process for analyzing the viability of new products and services. This allows them to be more intentional in the direction of the company.

Step 1: Learning. Set aside time to talk with an affinity group or customer to learn about the latest products and services.

Step 2: Design and Engineering. The new product of a system is given a series of trials by in-house engineers. They fully vet the system.

Step 3: Training. Sales and technology experts are trained. The sales people have to know the features of the new product and technology department employees have to learn how to fix it.