Capitalism has delivered magnificent results, but capitalism as we know it is failing us. We need bold corporate ‘leaders’ who think, act, and lead in a bold new way. Purpose-led corporations are gaining traction, but conservative corporate chiefs are concerned about the business case. In this episode, the NYSE large listed corporation, Best Buy’s Former Chairman and CEO, Hubert Joly, shares with us why the capitalist world we live in is not working and how purpose-led corporations can and do successfully ‘turnaround’ to deliver superlative results. Hubert also shares exclusive sneak peeks and insights from his new book, The Heart of Business Leadership Principles in a New Era of Capitalism. Don’t miss out on this radical new way to create a competitive advantage and deliver ‘good news’ on the NYSE, especially in this new era of leadership and capitalism! Tune in now!
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NYSE Biz Case for Purpose-Led Corporations in the USA
Harvard Snr. Lecturer and Best Buy Former CEO, Chairman Hubert Joly
Our thoughtful, bold leader joins us from Harvard Business School in this episode. He’s a Senior Lecturer at Harvard Business School. He is the former Chief Executive Officer and Chairman of a large successful New York Stock Exchange-listed corporation, the retail consumer electronics and technology giant Best Buy. He was brought into Best Buy to lead the turnaround and the resurgence and take the corporation from a scandalous low to a stock exchange high.
He has been ranked worldwide as one of the Top Performing and Best 100 CEOs by Harvard Business Review, one of the Top 30 CEOs Worldwide by Barons, and in the United States, one of the Top 10 Chief Executive Officers as ranked by Glassdoor. He has also been widely recognized as one of the Top 50 Management Thinkers in the world by Thinkers50 and received their 2021 leadership award.
In his birth country, France, he was awarded the French National Order of Merit in 2017 and the French National Order of the Legion of Honor, the highest civic merit award in France. He has served on multiple boards, including Johnson & Johnson and Ralph Lauren Corporation. He is the author of the bestselling business book, The Heart of Business: Leadership Principles for the Next Era of Capitalism.
Stay tuned as he shares with us how he led the turnaround and resurgence of Best Buy, focused on purpose and people to deliver superlative results, his personal transformational stories, and why Nelson Mandela’s leadership is relevant in the world of business now. We warmly welcome Hubert Joly to the show.
Hubert, bonjour. Merci beaucoup. It’s lovely to have you as part of this conversation. Thank you so much.
Thank you for having me. I so look forward to our conversation.
First of all, congratulations on your book, The Heart of Business: Leadership Principles for the Next Era of Capitalism. I think it’s a wonderful book with many exciting concepts and philosophies that the world needs now. I was curious to know what inspired you to write the book. I know you published it in 2021 through Harvard Business Press. What inspired the book? Why at this point in world economics and history?
We urgently need a refoundation of business around purpose and people. Why do I say this? Even though I’m an eternal optimist, for me, during this pandemic crisis, I had to say it out loud. The world we live in is not working. We’ve had a health crisis, an economic crisis, significant societal issues, racial inequity, an environmental time bomb, and geopolitical attention. It’s not working. Maybe for a few people, but it’s not working for most people.
What’s the definition of madness? Do the same thing and hope for a different outcome. Most wanted in my FBI list are Milton Friedman and Bob McNamara, proponents of shareholder primacy and top-down command management (Friedman was a Chicago University, American ‘free-market’ economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences. McNamara is an American business executive and the controversial eighth US Defense Secretary during the Vietnam war). These things no longer work. I felt, with this refoundation around, the new idea is that a business is a purposeful human organization that should be oriented towards the pursuit of a noble higher purpose, putting people at the center, embracing all stakeholders, and treating profit as an outcome (not a goal).
Many believe that’s the right direction, but we know this is hard. What I wanted to do based on my years of journey in business and leadership is to provide a handbook for leaders who are eager to move in that direction and need help. I thought that I had something to offer from that standpoint at that time.
You have so much to offer, Hubert. I was curious because even after you decided to join Best Buy in 2012, I believe that Jim Citrin, who was heading up the CEO Practice of Spencer Stuart at that time, called you and said, “Would you be interested in the CEO job for Best Buy?” I think your response was, “Jim, you’re crazy.” My question is, what flipped your thinking? What made you decide to step into Best Buy in 2012?
Jim is one of my best friends. Sometimes it’s good to follow your best friend’s advice, but beyond that, I took the time to study because he had asked me to do that. What I found is that Best Buy has been a very successful company. It’s an iconic American company, which had fallen, but when I studied, I found two things. One, the world needed Best Buy. As customers, it’s helpful to touch, feel, and see the product stock from somebody knowledgeable. The customers and the vendors also needed Best Buy because they needed a place to showcase the fruit of their billions of dollars of R&D investments.
At the same time, the company had problems. It was the all-you-can-eat menu of challenges, strategic challenges, operational challenges, leadership challenges, and shareholder challenges. Still, the good news was all of the problems were self-inflicted. Once the good news is self-inflicted problems, you can solve them. I lived in Minnesota then and felt that saving this iconic, great American Minnesotan company was meaningful. I felt that with my experience turning around several companies over the years, this is something I could do. I got excited about it. I threw my hat in the ring and convinced the board to give me the job.
The rest is history, or so they say. The book is so much based on your turnaround of Best Buy. I wondered, going back to the book’s concept, how would you define this new era of capitalism?
This new era of capitalism is one where, if I had to define it, it’s almost a frontier. In the old days, the role of business was all about profit optimization. That’s what Milton Friedman told us. It was all about the four walls of the business. That’s the only thing we were responsible for. The leader was the superhero, the smartest person in the room who would tell other people what to do, and he was revered as a superhero. That’s the past.
What’s the new model? It’s one where there is the expectation that business needs to be a force for good. The foundation for the business is the pursuit of this higher noble purpose. The second thing is that it’s not only about the four walls. We need to embrace all stakeholders in some declaration of interdependence. You see the best companies when they craft their strategy; they think about their employees, who are the engine. They think about their customers and build loving relationships with them, but they also embark on their vendors. They’re very respectful of the community and the environment. Also, they treat profit as an outcome.
The third thing is this is not the leader as the know-it-all or the superhero. This is the purposeful leader who knows that their role is not to be the smartest person in the room but to create an environment for others to be the best version of themselves to unleash that human magic. There are words we use now to describe great leadership which we didn’t use to use. Words such as vulnerability, authenticity, humility, and humanity. In many ways, in this world that’s characterized by enormous uncertainty and chaos, it has become super easy for leaders to say, “My name is Hubert, and I don’t know, I’m going to need your help, and we are going to need to figure this out together,” which is the opposite of the know-it-all of the last century.
That’s a complete paradigm shift. We often hear executives struggling with that because it completely shifts their notion of ‘strong’ leadership and high performing before, versus being willing to share that vulnerability. I gathered and gleaned that you, Hubert, also went through your transformation from an old Hubert to this newer Hubert. I believe that in your 40s, you were a little disillusioned. I believe you went to go and study with some Catholic monks and other CEOs in France. Can you share with us what your pivotal defining moment is?
You are right; all of us are on a leadership journey. I’ve transformed from the heart-charging McKinsey consultant who is all about problem-solving to somebody who believes in human magic. I did not smoke anything illegal along the way, but there were several pivotal moments, but maybe 1 or 2 of them were more meaningful. One of them was a few years ago. To quote David Brooks, “I had been at the top of my first mountain.” I had been a partner at McKinsey& Company at a young age. I was on the executive team of Vivendi Universal and was very successful.
At the top of my first mountain, it was desolate. There was no joy and taste. I was not happy. I think that what I realized at that time was that I had been too driven by power, fame, glory, and money. This may be good for other people, but these were not good drivers for me. That led me to want to step back. What helped me was to do the spiritual exercises of Ignatius of Loyola, the founder of the Jesuits. When you revisit your life story and contemplate, you meditate, pray, and try to discern your calling. That helped me reorient my life in pursuit of doing something good (and doing well) for others. That was very meaningful. Like many leaders, the other pivotal moment was that I was suffering from a disease, which was the quest for perfection. I thought that I needed to be perfect. That’s a bad mistake.
A friend of mine who’s a monk told me that the quest for perfection is evil because you’re never going to be perfect. You’re not going to like yourself and your team members because they’re human beings, so they’re not going to be perfect. You’re missing the opportunity to connect with others in their weaknesses and vulnerability. That is where love comes into play. I was lucky because I was introduced to Marshall Goldsmith, the father of all executive coaches, who became my coach and helped me. I was struggling with feedback and imperfections. He helped me discover feedforward. What would I like to get better at, and how can I help others help me get better? That was a very joyous moment for me and helpful.
That’s pretty profound, and I was wondering, was there a specific moment when you had that kind of epiphany? Were you in a particular place or setting? Was there an event? What triggered it for you?
In 2009, I was at the time the CEO of Carlson Companies, another great Minnesota company, and Elizabeth Bastoni, who was the head of HR of the company, one day walked into my office and told me, “Hubert, would you like to work with a coach?” I said, “Elizabeth, has somebody complained? Have I done something wrong?” At that time, coaches are seen as remedial. We would give Jack or Mary a coach because they had a problem. She said, “No. Marshall is somebody who specializes in helping successful leaders get better.” Some of his clients include Alan Mulally, the former CEO of Ford, and Dr. Jim Kim, the President of the World Bank. I said, “Sign me up.”
What was meaningful is that when I became CEO of Best Buy in 2012, about three months into it, I told my team, “Let’s agree that this turnaround is going to be hard. The reason we know this turnaround is going to be hard is that everybody thinks we’re going to die.” That’s how we know. That means that all of us, myself included, will need to be the best leaders we can be. I have a coach, Marshall is going to come in, and I would love for you to spend a bit of time with him and share with him your observations about what I’m doing well and areas where I could be better.
Marshall gathered all of this and shared it with me. He first gave me your first list, which is all of the good things. The next day, he gave me the other list. He told me, “On the second list, you don’t need to do anything about it. No law says you and maybe even these people, who knows whether they’re right. However, you can pick maybe 2 or 3 things on this list where you’d like to get better.”
I returned to my team and said, “Thank you so much for your time with Marshall. Thank you for all of the wonderful feedback you shared with him. Based on what you’ve shared with him, I’ve decided to work on these three things. Number 2, number 3, and number 3. I will follow up with each of you to ask for advice on improving. Three or four months from now, I’ll follow up one more time, ask you how I’m doing, and ask for more help.
I can tell you the first time I did this, it was excruciating pain for me to share with my team areas where I needed to be better, but it was terrific because I got some excellent advice. Also, I signaled to the team that trying to get better at several things was okay. That was very pivotal for me, Anne.
That’s a wonderful way of framing it. Instead of how we tend to self-flagellate and beat ourselves up, I know you also talked about being kind to yourself. I think it’s a beautiful way to frame it as being better and choosing if you want. Would you be willing to share the three items that you selected?
Over time, they evolved. One of them was to become a more effective delegator. It doesn’t mean I had to delegate all the time, but to decide when and how to delegate. It was also becoming a better coach for my team. There was later another area, which was to learn how to create a more growth-oriented environment. These are good things.
Is it growth for yourself, your people, the company, or all of it?
All of the above.
Can you take us through how did you execute that, Hubert? You had follow-ups with your teams. Were there measurements? What was your process?
Sharing with the team the areas where I wanted to be better was very important. Follow up with them 3 or 4 months later and ask them for more feedback. Also, I asked for help from both my team members, but also to my coach. He gave me some practical tools. None of this is extraordinary. When I play tennis, I like to play tennis with a coach to get better. Over the last few years, I’ve been trying to improve my forehand.
A tennis pro gives me some tricks. When I ski, I like to ski with an instructor to get better. This is nothing dramatic. The irony is that while business leaders want to get great performance, it’s interesting that athletes who also want performance have coaches. Still, historically, business leaders thought they didn’t need any help, which is crazy. Of course, you need help.Historically, business leaders thought they didn't need any help, which is crazy. Of course, everyone needs help. Click To Tweet
Coming back to the book. You talked about purposeful leadership. In your experience and framework, how do you define ‘purpose’ and purposeful leadership?
We start with individual purpose. It’s a journey to uncover what is our purpose in life. One of the programs at Harvard Business School that we do for new CEOs is asking them to write down their retirement speech and how they want to be remembered. My wife, Hortense, an executive leadership coach, asked our clients to write down their eulogies. How do they want to be remembered? What do they want people to say on that day when they’re not going to be around? I believe that personal purpose is the foundation for great leadership.Personal purpose is the foundation of great leadership. Click To Tweet
At the business level, there’s been a lot of talk about companies choosing a purpose. For me, a way to think and to define a great noble higher corporate purpose is to find it at the intersection between four circles. 1. What human needs are you trying to address and serve worldwide? 2. What products are you selling? 3. What are you uniquely good at? It’s because if you don’t have that, then it’s wishful thinking. 4. What are you, your team, and your employees passionate about?
The first circle is how can you make money? If you grow these four circles and find the intersection, that’s where you can find your purpose. For example, at Best Buy, when we worked on that, we said we were not a retailer because a retailer is not a need. That’s a definition of a business. We said our purpose is to enrich lives through technology by addressing key human needs.
By the way, Anne, the beauty of that is number 1) It’s more inspiring and 2) it vastly expanded our addressable market. A critical choice that companies and teams have to make is how ambitious their purpose should be as a company. I’ve defined four levels of potential ambition.
1) You don’t care. 2) You do not harm. 3) Do something good in the world. 4) Play a key role in addressing significant societal issues. One of the interesting things I’ve found is that in this challenging world, companies that choose a higher purpose genuinely and authentically tend to generate more energy within their teams. It’s because people want to rise to the occasion. It may be challenging, but it’s energizing and allows you to mobilize a great team.
Defining that purpose is one thing, but companies have a big gap between the state purpose and what employees, customers, and vendors genuinely experience. The work is twofold. It’s reflecting that purpose into strategy and deciding what you’re going to stop doing, start doing, continue doing, or evolve in support of that purpose to make it come to life as the strategy angle. It’s purpose and strategy, and then it’s culture. What is the culture? What environment do you need to create to make that purpose come to life? If you work on purpose, strategy, (structure), and culture, which are nicely congruent, then you have something magical.
You spoke in your book about unleashing the magic and starting with people’s dreams. Can you take us through how you came up with a beautiful purpose for Best Buy as a company? Firstly, how did you arrive at the purpose of the company? Secondly, how did you take people through connecting their purpose to the bigger purpose?
For the first question, the process of defining the purpose is we did various things. One aspect was strategy work and understanding the customer need in the market. Also, segmentation, targeting, and positioning of what we teach at Harvard Business School around strategy and marketing, but then there was a problem. The process of defining our purpose at Best Buy started with a bit of strategy work. Understanding the customers’ needs, going through segmentation, targeting, and positioning what we teach at the Harvard Business School around strategy and marketing, but then there was a critical moment. Every quarter, as a management team, we would get together for enough sites as we worked on strategy and all of these things.
One time, we asked every one of the executive team members to come offsite with a picture of themselves when they were little. We got some cute pictures, as you can imagine. Over dinner, we spend the evening sharing our life stories and purpose. It was fascinating because we discovered that everyone on the executive team was a human being, not just a CFO, CMO, or CHRO, but a complicated, messy, beautiful human being.
Second, with a couple of exceptions, we discovered that all of us on the executive team shared the same kind of purpose in life, which at the highest level was about doing something good to somebody else, the golden rule. That led us to step back and say, “We’re the leadership team of Best Buy. Why don’t we use the platform to build an organization that employees and customers will love, the community, and shareholders?
It means it’s the kind of company we’d like to work for and use that platform to create a positive difference in the world. That changed everything because it evolved from being a job to being part of our calling. We continued to work and crafted that noble higher purpose to enrich lives through technology, which was much more meaningful than being a consumer electronics retailer. That’s the work on defining the purpose, and there was some work to reflect it in the strategy. Indeed, critical and maybe the most difficult was ensuring that everybody at the company could write themselves into that story and make that purpose come to life. We’ve crafted the phrase unleashing human magic in support of that purpose. Let me first define human magic.
I’ll do it with a true story, which happened one day in Florida in one of our stores. First of all, context. When I became CEO in 2012, the quality of service in our stores had gone down, which was one of our problems. Fast forward a few years that day, I learned in that store in Florida that a young woman with her little boy had returned to the Best Buy store. The young boy bought, as a gift, a dinosaur toy that presumably Santa Claus had bought at Best Buy. The sad news is that the dinosaur was sick. We know the dinosaur was sick because the head was dismantled from the rest of the body, but the boy wanted a cure for the dinosaur. The mother returns to the store, and she would’ve been sent to the toy aisle at most stores.
With some luck, she would have been able to buy a new dinosaur toy, but that’s not what he wanted. He wanted a cure for it. On that day, in that store, two blue-shirt associates from the Best Buy store understood what was going on. They took the dinosaur from the little child, went behind a counter, and started performing a surgical procedure on the dinosaur, walking the little boy through the steps. They substituted a new dinosaur and gave it back to the boy to cure the dinosaur. You can imagine the joy of the little boy and his mother. Now, here’s the question.
Do you think that at Best Buy at that time, there was a standard operating procedure on dealing with sick dinosaurs or, even better, maybe a memo from this very smart CEO on how to deal with these kinds of situations? Of course not. These two blue-shirt associates found it in their hearts to do this. Nobody had told them. This was a time when the performance of the company had progressed. The comparable sales were up. It was almost irrational how good it was. “What have we done?” We have unleashed human magic at a scale where you have 100,000 people who are there to do extraordinary things for other human beings.
That was an a-ha moment. The question is, “What did we do?” It’s because this was an accident. We had created an environment where 100,000 people could be the best version of themselves they could be. Back to the purpose definition, imagine you and me walking into a Best Buy store and telling the general manager and his or her team, “We have some big news. We have defined a new corporate purpose. It’s to enrich lives for technology.”Best Buy had created an environment where a hundred thousand people could be the best version of themselves. Click To Tweet
“Hubert, we love you, but we have no idea what you said. This is corporate speech.” We used a process to help people understand what we were trying to do and create that environment. If I talk about that process, it was not a top-down communication of that corporate purpose. I give 100% of the credit to our team. One day on a Saturday in June, we closed our stores for a few hours early in the morning because we liked the revenue on a Saturday.
There was no PowerPoint presentation, no video from the CEO, and nothing like this. We were put into small groups, and we were asked to share a life story and the story of an inspiring friend in our life. It’s because our team had figured that our true positioning was inspiring friends, each other, and the customers. I remember I was paired, in particular, with a young woman. She had been in an abusive relationship with an ex-boyfriend. She had been homeless, and Best Buy was her home.
Suddenly, I see her not as an employee but as a complicated, quirky, and beautiful human being. The story of an inspiring friend for me is my older brother, Philippe. He’s a wonderful guy. I look up at him. We love each other, and hopefully, everybody’s got an inspiring friend. The team said, “What we are trying to do,” which we already do when we are at our best. It is to treat each other and the customers as human beings, not as walking wallets, but as if we were inspiring friends to them. Everybody can understand that.
It was that humanity that we were trying to establish. All the work was about creating a human environment where people could be the best, biggest, and most beautiful versions of themselves. As a leader, our job is not so much to come up with the right strategies to create. The leader, as a gardener, makes sure that the soil is fertilized so that these human seeds can grow and blossom.
That’s wonderful, Hubert. Was it that experience that then gave people the permission, the connection, and the leverage to continue that, or were there other initiatives to help put fertilizer into that garden?
It was a pivotal moment, but it was much more work to be done because if you go back to a toxic environment after a beautiful training, it will not work. There was an entire orchestration around several ingredients that I talked about in the book. These ingredients are human magic. One was, finding meaning. The critical thing was to help everybody articulate their meaning and what drives them and then connect what drives them to their work.
For example, I had a store general manager in Boston. He was not the only one, but I remember visiting his store. He would ask every one of the associates at Best Buy or outside Best Buy, “What is your dream? Write it down in the break room, and my job is to help you achieve your dream.” Another one was human connections. Making sure everybody feels that they exist, are recognized, respected, and belong. My compatriot René Descartes said famously,” I think, therefore I am.” I think he’s wrong. It’s, “I am seen, therefore I am.”
It’s being seen as you are. Kamy, our Head of HR at that time, once shared with everybody at the company that, for years, she had suffered from depression following the death of her two parents. What C-Suite executive admits that they’re going through a depression? Nobody. We’re supposed to be superheroes. The fact that she did convey something important. It’s that we are all humans and that we can connect in our imperfections.
Autonomy was a big deal, so we pushed decision-making down, and we created a lot of possibilities for blue shirts to become surgeons, as we’ve discussed. Creating a learning environment is another, but one individual at a time. That’s a big idea. A company is a human organization made of individuals working together. We develop individualized coaching. These are some examples where we fundamentally changed how the organization felt and how it functioned in support of developing a more human organization and that purpose of being an inspiring friend to customers.
That’s profound, Hubert. As you were talking, I was thinking, what about the people inside the organization who didn’t necessarily have that mindset or are willing to step out of themselves and break through their barriers? How did you manage those kinds of issues inside the business?
One of the critical things, and maybe one of the most important decisions we make as leaders, is who we put in positions of power. It’s because there are very few things as leaders that we do. It’s all done through others. I think it’s pretty essential that you explicitly define leadership expectations. We define those, and they’re spelled out in the book. The attributes of purposeful leaders start with being clear about your purpose and your role as a leader, which is more to create that environment. I told the officers at Best Buy you have to be clear about who they serve. If you believe you’re serving yourself, your boss, or me as the company’s CEO, it’s okay. I have no problem with that, except you cannot work here. We’re going to promote you to customers.
It is things like that. There were two situations when somebody struggled with how we defined leadership expectations. One is, “I’m trying, but I need help. I know sometimes I lose my temper.” Some people have problems with anger management, let’s say. If somebody says, “I need help to solve this,” we will give them some help.
Conversely, that person would say, “That’s in my DNA. That’s who I am. That’s how I lead. Don’t you love the results I’m getting?” We would tell them, “It’s okay, but you can’t work here. It’s your choice.” If you don’t like our principles, maybe you need to find a better place for yourself.
There are some clear boundaries around these new principles and whether people would adapt to the environment or work elsewhere. Coming back and zooming out a little, at the outset, you were talking about some of the issues in the world. What are the most significant leadership challenges in the United States and the world for you now?
There are so many leadership challenges. I think all of us can see it. The world is facing unprecedented challenges where there’s no manual. Maybe you had the manual for COVID; how to deal with the war in Ukraine, climate change, or these significant societal issues we’re dealing with. It’s a series of challenges and crises where any reasonable leader will say, “I don’t know how to deal with this.” I’ve had some very interesting discussions with CEOs and leaders about how you lead in that context. What came out of this discussion or these discussions was that you first have to start with yourself. During COVID, when you couldn’t go outside, you could go inside and reflect, “What kind of a leader do I want to be during this crisis? How do I want to be remembered?”
Go back to the team’s purpose, “Why are we here?” It’s because there may be chaos outside, but probably the purpose has not changed and is anchored around that purpose. Also, discuss and agree to principles or values you could call them as well. What is going to guide us? For example, during COVID, I was still Chairman of the Board at Best Buy, but with a new CEO, Corie Barry, who’s a fantastic leader. Our guiding principle was to prioritize the safety of our employees and our customers. We’ll delay for as long as humanly possible laying off anyone.
We will protect the company and make sure we return from this stronger. She didn’t say, “We’re going to hit our quarterly earnings guidance every quarter.” She crafted these principles. Its purpose, principles, or values, and then it’s an exciting idea. It’s doing your best. Let me say a few words about this. Many leaders like me have been trained to be focused on results and performance. Remember a boss of mine years ago who told me, “We appreciate the effort but only care about results.”
In a context where the environment is entirely unpredictable, do you know what the environment will be next year or the year after? Who knows? Being focused on results is a mistake. It’s paradoxical, but it’s true. The only thing we can control is what we can control. It means our behaviors, being the best version of ourselves with our team, and having the humility to know when we fail, try again, and so forth. It implies a particular kindness in these difficult times where at the end of the day, end of the week, or the end of the quarter, not everything is perfect, but it’s, “Did I do my best to be the kind of leader I wanted to be?” It’s a significant mind shift.
In that mind shift, how did you manage the investment community? Also, we know there’s a shift towards impact investing. We know Larry Fink has been writing to CEOs calling for a different approach to business, a different role for business, and a different role for chief executives. However, there is still this pressure to deliver financial returns to shareholders apart from other stakeholders. Can you share how you managed the investment community and their expectations in those moments? The second question is, in delivering stakeholder value, how did you decide how much value goes to whom?
I go back to 2012 to make it very concrete. At Best Buy, I was getting advice from investors and analysts to cut (costs). The usual recipe for turnarounds. I was told, “Hubert, you’re going to have to close many stores. You’re going to have to fire a lot of people.” We looked, and all of the stores were profitable. It was not such a great idea to close stores, and firing many people almost implies that people are the problem. Many companies see people as a cost as opposed to an asset. When we developed an approach to the turnaround, it was a multi-stakeholder approach studying with customers, employees, vendors, community and treating profit as an outcome.
We did share with the shareholders our targets, but we also explained to them how we would go about this. When we did our first investor presentation, everybody yawned. We had zero credibility. It was all a matter of the progress we were going to make. We felt we needed to rebuild our credibility with the investors and the team. Showing progress was important.
What have I learned from that journey? One is that you are in charge of a management team, so you must decide what is right. There were voices around me, and I needed to listen. However, you decide what’s right instead of doing what people suppose or expect you to do. You have to do what’s right. The other thing I’ve learned is that there’s another pandemic in the world, which is the pandemic of the zero-sum game.
I learned from a client a long time ago that 98% of the questions that are asked as either/or are better answered as and. Should you focus on the short-term or the long-term? It’s both. Should you focus on the employees or the shareholder? It’s both. Should you focus on revenue or cost? It’s both. For the benefit of all stakeholders, we had to show short-term progress but make sure we would not do things that would be stupid and would endanger our long-term performance.
I have a big belief that you must look for win-win situations constantly. The best companies know that if they invest in their people and if their people are engaged and happy, that’s how they get happy customers. If you have happy customers, that’s how you get more revenue. It’s not more complicated. The best companies now fully embrace this idea of a declaration of interdependence. When they craft their strategy, they craft it with all the stakeholders in mind and the question of trade-offs.
Sometimes there are tensions between serving this stakeholder or that stakeholder. You must lean into these tensions and constantly look for ways to have win-win outcomes pragmatically. Let me provide a couple of examples. With the frontline employees and their compensation, I wish I could move them from $15 to $50 per hour. I can’t do this. Indeed, not overnight. You pace yourself.
We went from $10 initially. I think now; we are at the high $10. You then look for ways to fund that through efficiency so that you can invest more in the frontlines and go to where you want to go over time. A beautiful example of a win-win for the planet and the customers in Best Buy is our recycling program. Best Buy has this program where you can bring any electronics in your home to the stores, irrespective of where you bought it.
That allows you to clean up any excess you have at home; then, we’ll recycle it for free. It’s good for the planet. It’s good for the customers. It’s also good for us because it brings traffic to our stores. After all, once you are there, you may buy something. You never know. That’s an example of a win-win. Our responsibility as leaders is to find these win-win situations. It’s too easy to say, “No. These are all trade-offs.”
It’s a shift in mindset, as you said. On mindset do you think you grew up with that mindset? Could you share a childhood experience in terms of something significant for you and the people who shaped you. or did something that switched your mindset?
It’s been a journey. The reason why I have scars on my face is that I learned along the way. Let me give you a couple of childhood examples of learning. I remember my parents had some friends visiting. One of their friends asked me a question, and in answer to that question, “I don’t know.” A friend of my parents says, “Young man, you should never say I don’t know because you will lose your credibility.”I was shocked because if I didn’t know, I don’t know. One of the things I’ve learned from a leadership standpoint is that leaders need to move from being the know-it-alls to the learning-alls. Also, being able to say, “My name is Hubert, and I don’t know. I need help,” I think is a great leadership strength.
Another moment in my youth is like many; I was doing a summer job to be able to buy myself a bicycle. I worked in a supermarket in France, putting price tags on vegetable cans. I have to tell you, this was the most tedious, boring, and inspiring job. I never saw a manager. No one took any interest in me, and it stuck with me. I said, “One day, if I have the responsibility for an organization, I want to always keep in mind the experience of the front liners and try my best to create an environment where it’s a bit more inspiring. When I started at Best Buy, my first week on the job, I spent it working in a store in St. Cloud, Minnesota, to learn from the front liners. I asked them three questions, “What’s working? What’s not working? What do you need?” They had all of the answers. That’s the inspiration.
Hubert, I’m curious. Was it a moment? Was it a series of moments? What event or series of events woke you up in your transformation journey?
It was a series of moments. Another one that I think shaped me was many years ago. I was at McKinsey Company and having dinner with a client at that time. I talk about it in the heart of business with the CEO of a client. We had invited him to the office to try to sell him something. During the evening, he lectured us. I was there with 2 or 3 of my partners. He shared something they had reflected on with several other CEOs.
If I start from the beginning, he said, “The purpose of a company is not to make money.” That was many years ago. It’s imperative. It’s an outcome. He said, “In business, there are three imperatives. There are the people imperative. Make sure that you have the right team and that they’re properly equipped and motivated. You have the business imperative. You need to have customers who are happy with your products. You also have the financial imperative. By the way, it’s a sequence.”
Excellence in the people imperative leads to excellence in the business imperative, which leads to excellence in the financial imperative. He said the art of management is to improve on these three dimensions simultaneously, but the purpose is not to make money because a company is a human organization. Probably purpose has to do with doing something good for other people.
He then gave me some very practical advice, Anne. I will never forget that. He said, “When you do a monthly business performance review, don’t start with financial results because I know you, if you start with financial results, you’re going to spend the entire meeting dissecting the financial results. Start with people and organizations, then go to customers and products and services and finish with financial results because that’s why you’ll understand the drivers. Your CFO will ensure you spend enough time on the financials, but it’s a better approach.” He helped me reconceptualize business around these three imperatives and the intuition that there was a higher purpose somewhere. I thought that was beautiful.
Shifting to another leader whom we both have a lot of admiration and respect for, Nelson Mandela. I was curious to know, is there a particular moment when Mandela’s life, leadership, or legacy example stood out for you and made an impression? Was it a movie? Was it a poem? Was it a book? What was that moment for you? Where were you? What stood out?
There are so many moments, and like many, I have watched that incredible movie Invictus. There are so many incredible moments. When you go back in history, he leaves jail, and he’s determined to create an inclusive South African and hold firms to that. Both the kindness, but also the firmness to stand firm on that. The idea of inclusion, bringing the nation of South Africa, and the movie Invictus around the rugby and the World Cup. As a Frenchman, I love rugby.
I remember the French in that 1995 World Cup. South Africa played them, and they got down to the third round in a rain-filled rugby field. I remember the French playing the Springboks in a nail-biting match then.
He used that team to create change. That team of primarily White men going to Soweto and playing rugby with these kids changed their hearts. It’s the idea that business can be a force for good, and we are here. A business is more than for profit. He didn’t fire his White bodyguards. He included them. When you are excluded, that’s something I learned from Marilyn Carlson Nelson, the daughter of the founder of Carlson Companies. One day, she told me, “When you feel excluded by another group, draw a bigger circle that will include that other group.”
The US is a very divided country as we know it now. Instead of insulting or disrespecting the other side, go out of your way to try to understand them. For example, I’m more of a democrat leaning voter. I subscribe to the social network of former President Trump not because I embrace these ideas but because to try to understand what’s going on in that world. It’s this idea. Let’s draw a bigger circle.
I think that business in this divided world, and we’re seeing this now in the US, can be a great unifier because if you take all of the employees of Best Buy, I’m sure they cover the entire political spectrum. With this human organization, we’re working together in stores or our warehouses. How can we be together in service of doing something good where we can respect each other and treat each other as human beings?
When a customer comes in the door, we’re not going to ask them, “How did they vote last time?” It’s all about connecting with them as human beings. We owe Nelson Mandela a massive debt of gratitude for these leadership lessons of not letting anger dominate. It should have been easy for him to be angry and seek revenge. One of the things I’ve learned from my coach, Marshall, is, “Never say anything or do anything when you’re angry.”
On that note, Hubert, do you think Mandela’s leadership example is relevant? If so, what are the critical aspects of his leadership that you think the world needs now?
When I think about him, I think about values and principles. It’s back to this. Being clear and being driven. The leadership attributes we talked about at Best Buy were values-driven. We have so many crises in front of us or looming in a chaotic world; what are our fundamental values, and how do we want to navigate that?
If it’s the value of mutual respect for humanity, if that’s the guiding principle, let’s build our actions on the base of that principle. The values of respect and inclusion guide us in these difficult times. One of the beliefs I have now is that in the space of these unprecedented challenges, as leaders, we have a choice. Choice one, for example, would be, “I surrender. I’ve lost any hope. This is going to be bad.”In the space of these unprecedented challenges as leaders, we have a choice to surrender or do our best. Click To Tweet
Another choice would be anger and revenge. Another choice is, “I’m going to do my best, but there’s nothing much I can do.” The final choice is this can be our finest hour. In May of 1940, when France and the Netherlands had been invaded, Great Britain was alone. Winston Churchill didn’t have all the answers, but he stood up with the British people and said, “We will never surrender.”
He had this ability to provide optimism and hope and lift the spirit of an entire nation and the entire empire. South Africa played a key role, and Australia and so forth. It lifted everyone to unimaginable levels. It’s a leadership moment where we can decide that we are here to create a future that does not exist yet but needs to be better than what we have. That’s our choice.
When you talk about lifting the spirits, what do you say to executives and boards that are uncomfortable talking about their souls? What would you say to them about having that conversation in terms of energizing the spirit of boards, executive teams, and entire companies?
I think that’s where, as leaders, we need to be role models. Not to teach lessons to anybody, but the way you change behaviors is by changing behavior. When she became CEO, my wonderful successor at Best Buy, Corie started by sharing her life story and how she had grown up with parents who were artists, and there was not much food on the dinner table.The way you change behaviors is by changing your behavior. Click To Tweet
She shared what drives her in life, which is stewardship. A big mistake I made for too long was I had my head cut off from the rest of my body. I now believe we must lead with all our body parts as leaders. Our head, heart, soul, guts, ears, or eyes. It’s for leaders to role model this. Once the leader role model humanity and vulnerability, it is easier for others to follow.
It’s a big idea for a leader as a role model and as a coach and somebody who cares deeply about others. Sometimes people say that it takes time to change the culture. I don’t think so. I think culture can change quickly. At Microsoft, when Satya Nadella became the CEO, Microsoft was a significant partner for Best Buy. I was watching what he did. In a matter of weeks, he completely changed the culture at Microsoft through role modeling and coaching.
As we know, the tone is often set at the top, and if we can get that critical mass at the top. Switching to some lighter moments and some fun facts about you, Hubert. You mentioned your elder brother Philippe as somebody you genuinely admire and who inspires you. What is it about him that inspires you?
One of the things that inspire me; he is a great coach. We often go skiing together. He is a fabulous, very gifted, and very talented skier. He has taken me to places I would never think I could go on my own, but he is not a crazy risk-taker. He makes sure that we’re safe, and he encourages me. He makes me better. He makes me do things I never thought I could do through inspiration, coaching, and caring. That’s truly remarkable how he does this.
Does he live in France?
Yeah, he does live in France.
I know you’ve been knighted with the French National Order of Merit. Also, in 2017, you received another French award, the French National Order of Legion of Honor, which I believe is the highest civic award. What did that moment mean to you?
I’m always a bit self-conscious when I’m being recognized like this. I got another award. I had a lovely reception. An interesting phenomenon is CEOs tend to get most of the credit when there’s a success story. We always have to remember that the reason why we get the credit is that it’s easier for the media to put their attention to one individual. I know that in the case of Best Buy, it’s 125,000 people. I learned so much from my colleagues.
Whenever I get recognized, I take it with a grain of salt. I say, “Thank you,” but I know in my heart that I’ve learned so much and owe so much to so many over the years. Also, I’m self-conscious about not getting my ego in the way. When I was a CEO, the primary mission of my Head of Communication was to make sure I was never in the media. I was never on the cover of any magazine because I didn’t want my ego to get to my head.
Those were disciplines you put in place to keep that in check. With those awards, isn’t it a collective award?
That’s how you rationalize it, so I accepted it on their behalf. In fact, at the recognition event, there was a table with front liners from Best Buy, and they got a big standing ovation from the room. That’s how I deflected and directed the attention.
What is one thing about you that people seldom know?
Maybe it’s one thing about my eclectic musical taste that goes from Glenn Gould, the most excellent interpreter of the Goldberg Variations by Bach (the Goldberg Variations is a musical composition for the keyboard by Johann Sebastian Bach, consisting of an aria and a set of 30 variations. First published in 1741, it is named after Johann Gottlieb Goldberg, who may also have been the first performer of the work), Eminem (an American rapper), Dr. Dre (an American rapper), and 50 Cents (Curtis James Jackson III, known professionally as 50 Cent, is an American rapper, actor, and businessman). I have a very eclectic musical taste.
That makes for a very interesting household of a change in mood, beat, and tempo. In our final moments together, do you have any final thoughts about the future of bold leadership and what the world needs now?
The future of leadership, I’m very much encouraged when I see my students at HBS or the participants in the executive education program, this next generation of leaders. We have great leaders keen to make a difference and care deeply about the planet and society. I so enjoy working with them. I am doing my best to help them become the best, most beautiful, and most powerful versions of themselves. That makes me optimistic. I like it when I work with them to help them refine their purpose in life and the difference they want to make in the world. I always go back to these questions. Who do I want to be as a leader? How do I want to be remembered? What difference do I want to make in the world?
Hubert Joly, merci beaucoup. I look forward to reconnecting again soon, sharing more of your work, and finding opportunities to do this together. Thank you so much. Au revoir.
Thank you so much. I enjoyed our conversation.
A colleague and friend in the United States, an executive in a top international executive search firm, asked, “Can you prove the business case for purpose-led corporations?” My response was a resounding YES. The successful turnaround and resurgence of Best Buy, a New York Stock Exchange Consumer Retail Electronics and Technology Corporation, prove the business case and heralds a new era for capitalism.
Typical turnaround strategies often include operational initiatives implemented by Best Buy, including enhancing the customer shopping experience in-store and online, cutting $2 billion out of cost, forging strategic solid technology partnerships, and exiting international markets. However, under the remarkable leadership of former Chief Executive Officer and Chairman Hubert Joly, what is unique, what differentiates, and what is different about Best Buy is how they implemented it. This is not a typical turnaround hatchet job. Yes, they had a clear vision, goals, and plans, but they led with a noble inspiring purpose—their reason why they were in business.
In this instance, to help customers, their customers pursue their passion and enrich their lives with the help of technology. They made purpose the very cornerstone of their business strategy, not an add-on, but the foundation of the strategy. They put all people from the shop floor to the top at the very heart of their business. This impacted what decisions they made and how they made those decisions.
Finally, they expanded the four walls of their business. They understood and recognized the interdependence of multiple stakeholders, customers, employees, communities, shareholders, and suppliers. More specifically, they learned from the frontline. They selected top talent for the top. They forged strategic solid technology partnerships with global corporations, including Google, Amazon, and Microsoft. They transformed those competitors into suppliers and business partnerships.
They focused on the topline revenue. Profit was an outcome, not a specific objective. They cut non-salary-related costs. They optimized employee benefits, and job cuts were their absolute last resort. Culturally, they led significant changes from the top, encouraging vulnerability and transparency and empowering every Best Buy team member to get to know each other first and foremost as fellow human beings.
Secondly, to define and align their personal purpose, their reason for being, with the corporation’s purpose. What were the business results? What happened between 2013 and 2018, a five-year reporting period? Revenue and market share went up. Operating income, return on capital, and earnings per share climbed. The toughest test, the stock price, went from below $25 to above $75. It more than tripled in five years.
You, too, can lead with purpose, put people at the heart of your business, expand the four walls of your corporation, and deliver superlative results. Until next time, remember that leading boldly is about making thoughtful and clear choices. Bold leadership is about making bold decisions and taking bold action one step at a time. One step for you, but together, a giant step for humanity.
Take care and take thoughtful, bold action.
- The Heart of Business: Leadership Principles for the Next Era of Capitalism
About Hubert Joly
At HBS, he teaches a Leadership course in the MBA program and leads, with a number of his colleagues, several executive education programs, including the New CEO workshop, the CEO gathering, Leading Global Businesses, Growing as a Purposeful Leader, and custom programs for companies focused on (1) helping them develop their next generation of leaders and (2) putting purpose to work and « unleashing human magic ».