Relentless Improvement: Why Dick's Sporting Goods Keeps Winning

“Do right for the company. Do right for society. You can’t prosper unless the community around you prospers.” — Ed Stack

At the start of the 2000s, British Cycling barely mattered. Then British Cycling hired Dave Brailsford. In more than a century, Britain had produced no Tour de France winners and just one Olympic gold medal. Brailsford changed that with a concept he called “the aggregation of marginal gains.” James Clear later popularized the idea in Atomic Habits. The idea was simple: improve a thousand tiny things by 1 percent. This philosophy of relentless improvement transformed British Cycling. Over the next decade, British cyclists won five Tours de France and 66 Olympic and Paralympic gold medals. Get 1 percent better every day, and as James Clear notes, you end the year roughly thirty-seven times better than when you started.

Ed Stack applied the same thinking at Dick’s Sporting Goods. Retail was changing. Dick’s responded with House of Sport. The idea was simple: build the store that would destroy Dick’s if a competitor opened it first. The prototypes were enormous. Basketball goals, golf simulators, and ice rinks were added. These stores rolled out slowly. They wanted to get it right. Dick’s refined the concept through relentless improvement and iteration. Day by day. One percent at a time.

Change isn’t optional

E-commerce was exploding. It was the late 2010s. Dick’s Sporting Goods, led by Ed Stack, wanted to design a store of the future. The company’s early prototypes weren’t working. They weren’t different enough from what already existed. Dick’s scrapped its plans. They went back to the drawing board. Then Stack issued a challenge.

Stack told them he wanted a concept that would kill Dick’s Sporting Goods. Design a store that, if it were built across the street from one of their stores, would put them out of business.

The team went to work. The new stores would focus on community, service, and product. Climbing walls, batting cages, and outdoor fields. Nothing was sacred.

The gamble paid off. This new concept, called House of Sport, continued to expand, spreading across the country.

Stack once noted that when kids need new soccer cleats, parents buy them so they can play. Dick’s wants to be where those purchases happen.

Dick’s realized customers wanted something different. Customers don’t always want the cheapest option. They want value. Sometimes value is simply believing the equipment might help you play better.

Stack’s operating philosophy is relentless improvement. You have to reinvent the products you carry and show that value to the customer. Change is non-negotiable.

Ed Stack’s father, Dick, the founder of Dick’s Sporting Goods, didn’t think this way. His mantra was, “This is what we do, and this is how we’ve done it. So why change?”

Dick’s resistance to change was a gift to Ed. It forced him to think through any new business idea he wanted to present to Dick. Ed had to think through every upside and downside. Every idea had to survive scrutiny.

It reinforced a truth Ed never forgot. Most companies don’t fail because they stop working hard. They fail because they become prisoners of their own success. The thing that made them great slowly makes them obsolete.

Ed suspected that was especially true in retail. Change has to be constant. Relentless improvement can never end. You have to stay relevant to customers. You have to rethink everything. Every assumption has to be questioned. Blow up old systems before competitors do it for you.

Question assumptions. Blow up old systems. Avoid complacency. Change isn’t optional. That’s how Ed Stack kept Dick’s relevant.

Customers change

During the late 1990s, customers were sick of late fees. Blockbuster’s business model relied on these fees to drive profits. Netflix capitalized by offering a monthly subscription model with no late fees. It ultimately pivoted to streaming and original content to dominate the market. Blockbuster couldn’t recover.

Customers shifted from driving to a store and worrying about late fees to receiving DVDs in the mail.

Netflix removed the primary source of customer anxiety: late fees. This move built loyalty and trust.

Netflix embraced new platforms offering easy, multichannel experiences. It gave its customers another reason to stay.

Netflix analyzed customer data and used technology to figure out not just why customers buy its subscriptions but also why they leave the platform. The stickier the product became, the less likely customers were to leave.

By the mid-2000s, internet bandwidth had improved. Customer patience simultaneously decreased. Customers no longer wanted to wait for a DVD to come in the mail. They wanted immediate entertainment.

The definition of convenience changed: from no late fees to no wait time.

Realizing this, Netflix cannibalized its DVD business. It went into streaming. Netflix recognized that if it didn’t kill its DVD business, someone else would. Netflix became dominant by destroying the business that made it successful.

Its streaming library grew. A new customer friction point emerged: decision fatigue. Customers spent more time scrolling than watching. They stopped caring about content volume and instead cared more about personalized content recommendations.

Netflix adapted. It invested heavily in data analytics and recommendation algorithms. This data led Netflix to invest in original content like House of Cards.

Customers rarely tell you what to build. They reveal their frustrations. Great companies pay attention.

Retail was every bit as brutal. The graveyard of sporting goods stores kept growing.

Stack figured out a dirty little secret: there’s very little customer loyalty in retail. Customers stick with you until something better comes along. Loyalty is the absence of an alternative.

Like Netflix, Dick’s had to constantly reinvent its product offerings, marketing, and stores.

Stack assumed Dick’s was always under attack. If it’s not true today, it will be tomorrow. Customer loyalty is temporary. That’s why Dick’s constantly reinvents its products, marketing, and stores.

Why Relentless Improvement Never Ends

Long before cranking out cars, the Toyoda family ran a textile business. In the 1890s, Sakichi Toyoda, the founder, introduced a loom that would stop if a single thread broke. Its goal was to prevent the production of defective cloth and allow one worker to manage multiple looms instead of just one. This became a core principle of Kaizen: relentless improvement.

Fast forward to the 1930s. Saikichi’s son, Kiichiro, pivoted Toyota into making automobiles. Then World War II devastated Japan’s economy. Raw materials for automobiles, like steel, were rationed, and domestic demand plummeted.

Simultaneously, American auto giants like Ford were using gigantic assembly lines to crank out identical cars daily by the thousands. Toyota didn’t have the money, space, or market to copy Ford. By the early 1950s, Toyota was on the verge of bankruptcy.

Toyota executives had to find a solution. They visited one of Ford’s massive plants in Michigan to learn their secrets. The executives were impressed by the scale, but they noticed a major flaw: the plant was massively overproducing inventory, creating tons of waste, and allowing hidden defects to go unnoticed. Toyota learned manufacturing by visiting Ford and deciding not to copy Ford.

These same executives were fascinated by an American supermarket: Piggly Wiggly. Customers pulled items off the shelves. Clerks only replaced items that were purchased by customers.

The executives took this concept back to Japan. Toyota changed its workflow. Workers would pull parts only when needed in the exact quantity required. Waste would shrink.

Toyota didn’t stop there. It kept improving by eliminating defects. The executives applied the original loom concepts to the assembly line.

They hung a cord above the assembly line. Any frontline worker could pull the cord to stop the assembly line if they noticed a defect. You’d get fired at a Ford plant for doing this. At Toyota, everyone would rush over when the cord was pulled. They wanted to understand the problem and make sure it never happened again.

Toyota kept improving in the 1950s. American statistician Dr. W. Edwards Deming gave them plenty of material. Deming taught them that improvement in the car’s quality would drive down costs. Toyota blended Deming’s car quality concepts with their frontline empowerment via the cord pull.

Twenty years later, the 1970s oil crisis struck. Americans suddenly wanted smaller, fuel-efficient, reliable cars. American automakers struggled to meet the market’s demands. Toyota’s continuous improvement methods offered a fuel-efficient and reliable product. It was exactly what buyers wanted.

Ed Stack, like Toyota, prioritized relentless improvement at Dick’s Sporting Goods. Dick’s redesigns its stores by building prototypes. As soon as one prototype is operating, Dick’s starts designing the next.

Dick’s Sporting Goods is constantly looking for new ways to present its merchandise. It wants to be the number one sports and fitness retailer for all athletes and outdoor enthusiasts through relentless improvement.

Continuous improvement isn’t easy. Stack says they’ll never relax and be content.

In an environment where many big retailers failed to improve and eventually went out of business, Dick’s sees it as survival.

Redesign existing systems. Constantly prototype. Relentlessly improve. View competition as inspiration. Complacency kills.

Customer service evolves, too

Zappos was a startup trying to find its footing in the late 1990s. Under CEO Tony Hsieh, customer service became an investment in brand equity rather than a cost center.

The company chose not to compete on price. Instead, it bet that unmatched customer service would generate long-term loyalty.

Zappos funneled money into customer service. It could have just as easily invested that cash in traditional advertising.

This investment strategy showed up in simple ways: free shipping both ways and a 360-day return window.

Zappos encouraged customers to order multiple colors and sizes of shoes. It reduced the friction of buying shoes online. The company bet that the ability to buy multiple pairs of shoes, and ship and return them for free, would keep customers coming back for future orders.

The company’s generous return policy kept customers coming back. Zappos discovered that customers with the highest return percentages were counterintuitively the same ones buying more shoes. Making returns painless built trust.

Zappos gave call center employees freedom to focus on the customer experience, as it did with shifting dollars from advertising. The company ditched call scripts, sales quotas, and upselling to prioritize the customer.

The legend of a 10-hour customer service call to resolve a shoe order issue became company lore. Zappos customer service agents were given as much time as possible to resolve customer service issues.

Zappos’ customer service didn’t stop there. Customer service agents were instructed to direct customers to rival websites if Zappos didn’t have the shoes they wanted. They prioritized the customer relationship over a single transaction.

Great service starts with hiring. It’s widely known that Zappos would offer new employees during the four-week onboarding process $2,000 to quit after the first week if it wasn’t a fit. They wanted people who genuinely believed in its mission.

Zappos focused on one-on-one human interaction rather than short-term profits. As a result, the majority of its purchases came from repeat customers.

Dick’s Sporting Goods operated with a similar customer-first mentality to Zappos. Dick Stack roamed the store floors in the late 1940s after he founded the company. He’d visit with the customer. Customers felt seen.

It started the moment the doors opened. Employees, including his son Ed, were on hand to greet everyone who entered the store. You greeted customers immediately and helped them find what they needed.

Dick had a mantra: treat every customer as you would a guest in your house. If a visitor walked in, you stopped what you were doing. You’d walk up to them to say hello, make them feel at home.

That lesson stayed with Ed. You can have the best merchandise in town, but if you don’t prioritize customer service, people won’t come back.

Ed writes in It’s How We Play the Game that nothing annoys him more than walking into a store unacknowledged. He hates having to walk the aisles looking for help. That never would have happened at 345 Court Street.

Great customer service evolves. Customer expectations change. Quality, price, and service never go out of style, whether you’re shopping in person or online.