Episode 35

The Heart of Business

with Hubert Joly

November 11, 2021

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Hubert Joly
Senior Lecturer, Harvard Business School; Former Chairman and CEO, Best Buy; Author, The Heart of Business

Hubert Joly is a senior lecturer at the Harvard Business School and the former Chairman and Chief Executive Officer of Best Buy.

He is also a member of the board of directors of Johnson & Johnson and Ralph Lauren Corporation, a member of the International Advisory Board of HEC Paris, and a Trustee of the Minneapolis Institute of Art and of the New York Public Library.

Joly has been recognized as one of the top 100 CEOs in the world by the Harvard Business Review, one of the top 30 CEOs in the world by Barron’s and one of the top 10 CEOs in the U.S. by Glassdoor.

He is the author of the best-selling book “The Heart of Business – Leadership Principles for the Next Era of Capitalism.”

 

Episode Highlights

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This interview with Hubert Joly was conducted on November 9, 2021 by Gary Bisbee, Ph.D., MBA.

The full interview appears on The Gary Bisbee Show, and it can be viewed on YouTube or heard on your favorite podcast platform including Apple Podcasts, Google Podcasts, Stitcher and Spotify.

 

Who was the most influential on the development of your leadership style?

Over the years I went from this high-charging, deeply analytical McKinsey consultant to somebody now who believes in human magic and pursuing a noble purpose. There were several significant influences along the way. One of them was a client when I was at McKinsey. She told me once: the purpose of a company is not to make money, it’s an outcome, but it’s not the ultimate purpose. There are three imperatives in business: the people imperative, the need to have the right team; the business imperative, to have customers who are happy; and the financial imperative, happy shareholders. But it is excellence on people that leads excellence to on business that leads to excellence on financials. You need to manage like this. Beyond that, there’s this question of “why are we in busines?” Somehow it has to contribute to the common good.

 

You have confidence in yourself as a leader, which is what a change like Best Buy would take. Do you run into other leaders than need that confidence?

You say I’m confident, but like many I suffer from imposter syndrome. If you’re suffering from imposter syndrome, welcome to the club! The reason we suffer from imposter syndrome is that we’re continuously stretching ourselves as leaders. We end up doing things that we’ve not necessarily done before.

In the world we live in today, the idea of not saying “I don’t know” is crazy. Did you have the manual for how to deal with COVID? Probably not. Do you have the manual for how to deal with back to the office? No, there is no such thing. As leaders, we need to be confident to be able to say, “Gee, that’s unprecedented. I don’t have the answer, but let’s figure it out together.” It’s a combination of confidence, but also humility and vulnerability. My most frequently used phrase these days is “my name is Hubert, and I need help.”

 

Are there similarities between big healthcare institutions and big box retailers?

Yes, there are some similarities. One is the importance of what happens on the frontline. In a hospital system, what happens day to day on the front lines with the patients is most important. If we can make sure that the front-liners have the tools they need, and the environment in which they can be the best versions of themselves, it makes a big difference. If things are going well, always credit the front-liners. If things are not going well look upstairs, because upstairs has probably not created the right environment for the front-liners to operate. It’s not about top-down management. It’s about empathy. Having empathy for the front-liners, for the patients, for the employees. When creating the customer experience in retail, true empathetic listening, to understand the experience and design something better, is very powerful.

 

Can you tell us more about your idea of the noble purpose?

My vision of business in this new era of capitalism is indeed about pursuing a noble purpose: putting people at the center, embracing all stakeholders in a declaration of interdependence, and treating profit as an outcome, not the goal. So, what’s this noble purpose thing? It’s not just a statement you put on your website. You find it at the intersection of four circles. One is what the world needs. Two, what you’re passionate about. Three, what you’re uniquely capable of doing as an organization. And four, how you can create economic value. That’s how you define it. It needs to be meaningful, authentic, credible, but also inspiring. If you can align the activities of the company around that, then magic happens. But you need to do the work of making that purpose the cornerstone of the strategy, and translating it into specific, concrete strategic initiatives.

 

What are the first steps for unleashing human magic?

The first step in human magic starts with each of us, in this idea of clarity of our own purpose in life. The second step is to realize that an organization is not going to mobilize by top-down management. Motivation is intrinsic, it comes from within. Your job as a leader is to create that environment.

In the book, I talk about five ingredients. Number one is connecting dreams. Being clear about your purpose, but also understanding the purpose of employees and how it connects to the work. Number two is creating an environment where there are genuine human connections, where everybody can be themselves and the best version of themselves. The third one is around autonomy, where people can decide the best way to do things. It’s a significant mind shift that has massive leadership implications.

At the time of the great resignation, I think we need a great re-recruiting effort which starts with empathetic listening and discovering what really drives the people around us. What is their dream in life?

Transcript

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Gary Bisbee, Jr. 0:49
Hubert Joly is best known for his role as CEO of Best Buy’s historic turnaround. He shares with us the philosophies behind Best Buy’s transformation and explores how to put those ideas into practice. Hubert did not start as the leader he is today. His journey began as a numbers-focused McKinsey analyst. Through his career experience, reflection, and a spiritual journey, Hubert became someone who believes in “Human Magic”, the term he coined in his new book, “The Heart of Business”. “Human Magic” starts with focusing on the individual employee. The best motivation is intrinsic and successful leaders will create environments that foster human connection, individual autonomy, and productive feedback. Successful organizations will structure the opportunity for employees to be able to write themselves into the vision of the enterprise. And the vision for a business should not be the bottom line. Hubert expresses that this new era of capitalism requires that businesses embrace all stakeholders and treat profit as an outcome rather than a goal. Hubert encourages leaders to redefine how they imagined business. He also advises that leaders develop confidence in humility. It’s okay not to know all the answers. It’s more important to admit your shortcomings and ask for advice. Well, good morning, Hubert and welcome.

Hubert Joly 2:18
Thank you, Gary.

Gary Bisbee, Jr. 2:19
We’re pleased to have you at this microphone. You’ve had a remarkably successful career as a leader. And we’d like to learn more about that today and also dig into your experiences at Best Buy, which is one of the most significant turnarounds in business history. And then explore “The Heart of Business”, your new book, which I found to be absolutely easy reading, but chock full of information, built in part on lessons learned during the turnaround of Best Buy. And also, you’re proposing a new era of capitalism that we’ll be interested in exploring. And of course, we’ll accomplish all of that in five minutes Hubert. But why don’t we begin to learn a bit about you? What was the young Hubert like? What did he think about leadership?

Hubert Joly 3:11
Oh, Gary, and I so look forward to our conversation. So what did I think of leadership? I do remember a time when a friend of my parents, in answer to a question, I said, “I don’t know”. And the friend of my parents said, “oh, young man, if you’re going to be in leadership position, never say this”, you know, you have to fudge it. And this was the model of the leader as the superhero, who knows everything. Who is the smartest person in the room, and probably tells other people what to do, so very much the 20th century model and I was very much influenced, I was growing up in France. And that was the model of leadership. When thinking about a CEO, you know, that you would admire or say, “Oh, this one is really brilliant”, right, as if it matters. And then I went to the best business schools in France. I joined McKinsey and Company. So I’m very much a product of the leader as the smartest person in the room, who knows everything and tells other people what to do, which, of course, is something that I’ve changed my point of view on over the years, Gary.

Gary Bisbee, Jr. 4:14
Hubert, as you look back, who was the most influential on the development of your leadership style?

Hubert Joly 4:22
Yeah, so Gary, over the years, I went from this hard charging, deeply analytical, you know, McKinsey consultant to somebody now who believes in “Human Magic” and pursuing a noble purpose. So there were several significant influences along the way. One of them was a client of mine when I was at McKinsey, Jean-Marie de Carpentier, who told me once, I will always remember this, “Hubert, the purpose of a company is not to make money. It’s an outcome. It’s an imperative, but it’s not the ultimate purpose.” He said there’s three imperatives in business. The people imperative, you to have the right team. The business imperative, you need to have customers who are happy. And of course, the financial imperative, you to have happy shareholders. But it’s excellence on people that leads excellence on business that leads to excellence on financials. And he said, “You need to manage like this”. So, for example, to be very concrete, Gary, when you lead a business performance review meeting, start with people, then go to business, and finish with financials. If you start with financials, you’re going to spend the entire meeting on the numbers, and you’re going to miss, what are the key drivers? And then beyond that, there’s this question of, why are we in business? It’s the why question. What’s the purpose of business? And somehow, it has to contribute to the common good, he was saying, so he was a big influence. Another big influence was another client who ended up becoming my spiritual director. I had reached my first mountain to, you know, quote David Brooks, and I’d been successful. I’d been a partner at McKinsey. And I was on the executive team at Vivendi Universal. But I felt emptiness. And so, call this my midlife crisis. This was 20 years ago and I felt the need to really re-examine my life and discover my calling in life, which I did through the Spiritual Exercises of Ignatius of Loyola, the founder of the Jesuits. So that was a big milestone. And the third milestone I’ll mention was my coach Marshall Goldsmith, the father of executive coaching in this country, with whom I stay to work in 2009. Before that, if somebody had told me, you know, Jack or Mary are working with their coach, I would have said, “what’s wrong with them? Why are we spending any money on helping them?” And Marshall had specialized in helping successful leaders get better. Who doesn’t want to get better? Right? And so Marshall taught me so much. He taught me about accepting feedback, focusing on feed-forward, I cannot change the past. But based on what I’m hearing, you know, from my colleagues and co-workers, what do I want to decide what I want to get better at? And in asking for help and then trying to correct all of the quirks, I had this thing about being the smartest person in the room and adding too much value, and not helpful. So your role as a leader is much more to create an environment in which others can be their best. So these were three important milestones for me, Gary.

Gary Bisbee, Jr. 7:27
And that’s really encapsuled as a foundation in the book, “The Heart of Business”, which we’ll get to in a bit, but why don’t we turn to Best Buy? What were the circumstances, Hubert, that led you to Best Buy?

Hubert Joly 7:41
So it was 2012, Gary, and at the time, I was the CEO of a Minnesota based company, Carlson Companies, a travel and hospitality company. And in May of this year, I get a call from my friend Jim Citron, who is a senior partner at Spencer Stewart, who does a lot of the CEO searches, you know Jim, and for a variety of reasons, I was open to leaving Carlson, but my reaction to Jim’s call was, “Jim, you’re crazy, right? I know nothing about retail. And Best Buy, yes, used to be an amazing company, but it’s now a mess. Everybody thinks they’re going to die. Why are you calling me?” And he said, “well, you know, they’re not looking for a retailer because they have plenty of retailers. In house. They’re looking for somebody who’s going to take a fresh look and effectuate a turnaround. And you’ve got great turnaround XP. So do me a favor, take a look.” And whatever Jim tells me to do in life, he’s a dear friend, I tend to do, so I took a look and I saw, Gary, that, contrary to what was written, the world needed Best Buy. As customers, for certainty of our purchases, we need Best Buy to touch and feel and see the products, ask questions. And importantly, the vendors needed Best Buy. They needed a place where to showcase the fruit of their billions of dollars of R&D investment. So this was good news. The other piece of good news, is all of the problems that Best Buy had at the time were self inflicted. Prices were too high. The online shopping experience was mediocre. Speed of shipping was slow. The customer experience in the stores had deteriorated. And the cost structure was bloated. That’s good news, because if you have self inflicted problems, I didn’t need to blame Jeff Bezos or anybody else. The problem is us. So, that convinced me that we had enough assets to be able to effectuate a turnaround.

Gary Bisbee, Jr. 9:31
So given the fact that the problem was Best Buy’s and there was some sense of your ability to influence that or even control that, how did you gain the buy in from the Best Buy leadership team?

Hubert Joly 9:45
Yah, this was an extraordinary time. The advice I was getting from the outside was, “cut, cut, cut”, right? Close stores, fire a lot of people, as if people were the problem. And no, we were the problem. So, how did I gain the trust? First thing is I came with my two ears. You’ll notice that everybody has Best Buy as two ears and just one mouth. So to listen. And I spent my first week on the job working in a store in St. Cloud, Minnesota to learn from the frontliners, right? You know, whether it’s a retailer or hospital system, you know, the truth is on the front line. That’s one of things I’ve learned, you can’t have discovered the truth sitting at your conference table looking at spreadsheets. And the frontliners, Gary, they knew what was going well and what was broken and missing. And so my job was super easy, was to listen to them and then do what they had said we needed to do. And so when we did this, of course, that allowed us to gain some credibility. With the team at headquarters, it was a bit the same, right? Listen to them, and take a positive attitude. I told everybody, look, on day one, everybody starts with an A. I don’t care what happened, you know, last month or two years ago, it doesn’t matter, right? We cannot change it. Everybody starts with an A. Now everybody gets to decide how long they’re going to keep the A, right? Now, some of them didn’t keep the A very long, but that was their decision, not my decision. But by listening and then co-creating the plan and working together, and then the other thing was, in a turnaround, I have this view, Gary, a little bit like IBM in 1992, when Lou Gerstner became CEO, he said that the last thing that IBM needs at this point is a vision, we need execution. We had the same at Best Buy. So we didn’t start with strategy. We started with fixing what was broken. And so I have this bicycle theory, right? It’s really hard to direct a bicycle at standstill, right? You fall. But if the bicycle is moving, it doesn’t matter if it’s not moving exactly in the right direction because you can course correct, but it creates momentum and creates energy, and then, if something is not working, that’s another thing right? Back to the I don’t know, right? Vulnerability, oh, this one didn’t work out as intended. We need to rework this. Be clear, be vulnerable, and say, you know, this didn’t work out. Transparency is our friend.

Gary Bisbee, Jr. 12:13
So I’m curious about sequencing. So there must have been a number of things that weren’t working as intended. How did you go about sequencing or figuring out what was the most important to do today? And then tomorrow, and the day after that?

Hubert Joly 12:27
Yah, so the first thing we said is that it’s about fixing what’s broken, as opposed to doing strategy. Within this, going back to my friend Jean-Marie de Carpentier, we started with people, giving the frontliners what they needed and making sure we had the right team at the top. The other aspect of sequencing or prioritization, so in a turnaround, you know, back to the cut, cut cuts, right? Fire a lot of people, no, that’s not how we do this. In a turnaround, I think the number one priority is see how you can grow the revenue because it’s amazing what revenue growth can do. As it relates to cost, we need to tackle costs as well. Focus first on what I called non-salary expenses, which is everything in the cost structure that has nothing to do with people, which at most companies, is the vast majority of the cost structure. As an example, you know, at Best Buy, we sell a lot of TVs, right? They are large, they’re thin, so they break. We would break, Gary, about $200 million worth of TVs every year.

Gary Bisbee, Jr. 13:33
Wow.

Hubert Joly 13:34
And we did a survey, right? Exactly 0% of customers wanted to buy a broken TV. So if you reduce the breakage or the TV junk out, as we called it, it’s good for the customers and it’s good for the P&L. And you treat headcount reduction only as a last resort, right? And so that’s the other thing. The last thing I would say, it’s about creating energy. In physics, we learn that energy is a finite quantity, right? In an organization, that’s not true. You can actually create energy. How do you create energy? By co-creating the plan, right, because nobody likes to be told what to do. It’s simplifying. So, back to your question about priorities, when I was in the store in St. Cloud, the store General Manager, one of the things he told me when I was listening to him, he said, “Hubert, look, you guys are asking us to focus on 41 key performance indicators.” He says, “I love you guys, but 41, I just can’t. Give me a max, you know, five, and I’ll do it for you.” So, we landed on two, you know. We said, Best Buy, we only have two problems. Revenue is going down and profit margin is going down. Only two problems, right? It’d be more difficult if we had 10 problems, but two problems. How hard can it be?

Gary Bisbee, Jr. 14:53
Right.

Hubert Joly 14:54
And so, simplifying. And then, in terms of, that’s another interesting thing, right? In a turnaround, you don’t try to go for perfection. In the book, there is an entire chapter around, the quest for perfection is evil. You go for a plan that’s good enough. And we took six to eight weeks to do the diagnosis and develop the plan. And then we got going. If instead of focusing on priority three before priority four, we did four before three, who cares? It doesn’t matter, right? So you get going. And that’s what creates the energy and so forth. So these are some of the thoughts about how we handled it.

Gary Bisbee, Jr. 15:33
You mention in the book that feedback was sometimes difficult for you to kind of accept or manage earlier in your career. Can you share with us your thoughts about that, Hubert?

Hubert Joly 15:46
Yeah, and maybe some of our listeners have had this experience, right? You sit down with your boss, and your boss, who is some kind of God, right, who knows everything, tells you the three things you’re doing well and the three things you’re not doing well, and that you need to address. I’ve always found this to be draining, right, because here’s the scoop. And we could do a test on your show, right? Raise your hand if you like to be told what to do. I’m going to bet that nobody is raising their hand, right?

Gary Bisbee, Jr. 16:19
No.

Hubert Joly 16:19
Motivation is intrinsic. And so when I was hearing this feedback, you know, the other thing I was struggling with is, you know, when I would do a 360 and somebody would say something I was not doing perfectly, I’d say, what’s wrong with them, as opposed to me. Where Marshall helped me, so when we get the results of the 360, he would first send me a memo with all of the good things and he says, “Hubert, read this, take your time. I’ll send you a second memo tomorrow”. And on the second memo, he told me, “look, you don’t need to do anything. There is no god that says that, you know, you need to act on any of this. But if you want, you can decide, what are one or two or three areas that you want to get better at?” And that’s a game changer. So, he calls this feed-forward. And at the end of my tenure, Gary at Best Buy, I stopped doing performance reviews for my direct reports. Instead, every six months, they would come to me and they all had a coach and a 360. And they would do the talking. They would say, “okay, these are the things that I’m very proud of. These are things that really worked well. Looking at the last six months, these are maybe a couple of areas where we struggled a little bit, or a lot, depending. Looking ahead, these are the things I’d like to get better at. And this is my action plan. And my role in this discussion was, gee, on the first thing that the things you’re doing well, I think you’re shortchanging yourself. You’re way better than you think. And then on the last point, which is the action plan, really ask a question, how can I be helpful? Because what I was finding, Gary, is that they knew, right, what they were good at. And with the help of a coach and 360, they didn’t need to be told. In fact, you know, the role of the manager is just to tell you what time it is at your clock is not particularly helpful. And so that was a game changer for me first and then for the team, and it creates such a positive environment. And if you meet somebody from Best Buy, you can ask them, “what are you working on?” And they’ll say, “I’m working on these three things. Gary, do you have any advice for me?” It’s a very positive mindset.

Gary Bisbee, Jr. 18:41
It strikes me, Hubert, that you have confidence in yourself as a leader, which is what a change like that would take. Have you run into others that just don’t have the confidence in themselves as a leader, they need to have these kinds of annual reviews and so on.

Hubert Joly 18:59
You say I’m confident. Like many, I am an unsecure over-achiever and I’m trying to get through it. And like many, I suffer from the imposter syndrome. If you’re listening and if you’re suffering from the imposter syndrome, welcome to the club. And the reason why we suffer from the imposter syndrome is that, continuously, we’re stretching ourselves as leaders. And so we end up doing things that we’ve not necessarily done before. And so the turnaround of Best Buy, I had never turned around a major retailer. And certainly today, so maybe we can slow down on this, Gary. In the world we live in, this idea of not saying, “I don’t know”. That’s crazy. Did you have the manual for how to deal with COVID, Gary? Probably not.

Gary Bisbee, Jr. 19:44
Yeah.

Hubert Joly 19:44
Do you have the manual for how to deal with back to the office? No, there is no such thing. And so, I think as leaders, we need to be confident to be able to say, “gee, that’s unprecedented. I don’t have the answer. But let’s figure it out together.” So it’s a combination of confidence, but also humility and vulnerability. And my most frequently used phrase these days is, “my name is Hubert and I need help.”

Gary Bisbee, Jr. 20:14
Yeah, that really enlightened, I would say. But clearly, as you lay out in the book, I think it’s the coming approach to leadership. One of the reasons that the healthcare community, particularly those in health systems, were so interested in the Best Buy turnaround is because Best Buy, known as a big box retailer. Hospitals are known as, you know, big box healthcare delivers. And there was a lot of affinity to what you were doing there. You’re on the J&J board now. But I wondered whether you had any sense, whether you ever heard that before, that there’s similarities between these big healthcare institutions and big box retailers.

Hubert Joly 20:57
So I’m not an expert at this. But I’ve had the opportunity, maybe because close to Minneapolis, we have Rochester with Mayo Clinic, and I’ve gotten to know a number of leaders in health systems, healthcare systems. Yeah, there’s some similarities regarding the importance of, I would say, maybe a couple of things. One is, of course, the importance of what happens on the frontline. In a hospital system, what happens in the office of the chief administrator is sort of interesting. But it’s what happens day to day on the frontline with the patients and so forth. And so, if we can make sure that the frontliners have the tools they need and the environment in which they can be their best, the biggest, most beautiful version of themselves, it makes a big difference. One of things I’ve learned, Gary, is that, if things are going well, always credit the frontliners. If things are not going well, look upstairs because upstairs has probably not created the right environment for the frontliners to operate. And it’s not about top-down management. One of things I’ve learned during the Best Buy journey has been about empathy. And empathy is a word that we didn’t use that much a few years ago in leadership. But certainly during COVID, oh my God, right, being able to have empathy for the frontliners, for the patients, for the employees. And as you create the customer experience in retail, true empathetic leadership, listening, excuse me, to understand the experience in designing something that’s better. That’s very powerful. The second thing I would say is about purpose. So of course, you could say, in health, there’s always a good purpose, which is to restore health. And whether it’s Medtronic, or J&J, or Mayo Clinic, you know, you have a noble purpose. But I think it’s more than this. It’s a couple of things. One is, how can everybody write themselves into the purpose of the enterprise? How can they connect? What drives them individually with their work? And how does this work connect with the purpose of the organization?, It’s also how you actually define the purpose. One of the things we did at Best Buy, once we had turned around the company, and we were working on defining where we wanted to go, was we said we’re actually not a retailer. Yeah, we’re certainly not a brick and mortar retailer. But we’re not even a retailer. We’re in the business, we’re in the happiness business, we’re in the business of enriching lives through technology by addressing key human needs. Now, of course, that’s more inspiring. It’s also something that vastly expands the addressable market, right? That’s how we have this in home advisor program where we’ll go to your home, and we’ll be your CTO, and your CIO to help you take care of everything that’s in your home. That’s also how we got into the health business, helping aging seniors live and stay in their home independently longer by putting sensors into their home. Through AI and remote monitoring and call centers, care centers, we can trigger an intervention. Now, that service is not even sold to our stores. It’s sold through insurance companies. But we were able to address that need by leveraging our capabilities in support of that purpose. And I think in healthcare, for a health system, it’s the same if you’re Mayo Clinic, and if you just define your business as what happens in the four walls at Rochester, or in Arizona, you’re limiting yourself. They say “no, no, no, I’m really in the business of restoring health and helping, you know, wellness”. With technology, you know, you can serve patients anywhere in the nation and in the world. And at a time where a number of businesses are under pressure from a revenue standpoint, I think reimagining the business around that purpose and then mobilizing the entire organization around that noble purpose, can be incredibly powerful. So it’s for you to decide how applicable this is to health systems, but that’s how we went through this at Best Buy.

Gary Bisbee, Jr. 25:04
That’s well said for sure. Hubert, why don’t we turn to “The Heart of Business”, your new book. You just seem to be a natural teacher. And I could see that an extension of that would be writing the book. So what was the inspiration for writing this book, “The Heart of Business”?

Hubert Joly 25:22
At the beginning, I felt that so much of what I had learned, in my early years, in my career, or at business school, or as a consultant, was either wrong, dated or incomplete. And by that, I mean, in particular, a couple of things. One is the idea of shareholder primacy, that the only thing that a company should worry about, its profit maximization like Milton Friedman told us in 1970. And, of course, today, that’s wrong, you know, a business needs to be a force for good, needs to embrace all of the stakeholders and treat profit as an outcome. And then the second thing that I think has been poisonous in the last 50 years is what I was talking about earlier, which is top-down management, which Bob McNamara, the former Secretary of Defense in the 60s, sort of created. Take a bunch of smart people to create a plan, and then communicate a plan, and put incentives in place, and hope that something happens. And that’s really the foundation for a lot of the business world for 50 years. And we know that, you know, at some point last year, I had to slow down and say out loud, the world we live in is not working, right? We have a health crisis. We have an economic crisis. We have big societal issues. We certainly have racial issues. We have environmental issues. We have geopolitical tension. It’s not working, right? And what’s the definition of madness, right, doing the same thing and hoping for a different outcome, Albert Einstein. And so I felt that we need this reinvention, this re-foundation of business and capitalism around purpose and humanity. And increasingly, you know, people embrace that idea, The Business Roundtable, you know, the top companies in the country have all signed a declaration in August of 2019, along these lines. But, we also know that, while it’s easy to say, it’s really hard to do because it requires that we reimagine pretty much everything about business, how we define strategy, how we define the values function, how we lead. And I felt that, over the last 30 years, and certainly during my time at Best Buy, I have learned notably from others, how, you know, this could work and what it takes to lead from a place of purpose and with humanity. And with the success of the Best Buy turnaround, with the share price going from $11 to, now it’s around $130. Maybe you could have done better, Gary. But you know, it gave me some credibility. So I wanted to use that platform to share, you know, for people who are eager to move in that direction, what is really a handbook or a manual, with many, many concrete examples, practices. At the end of each chapter, there is a self reflection question. So it’s a very practical handbook. It’s not per se the story of the Best Buy turnaround, it’s really an architecture and a manual to help anybody who is eager to move in that direction.

Gary Bisbee, Jr. 28:24
I certainly found it that way, very easily readable and it really is practical in the sense that you can change the way you approach things after reading the book. Question about the need for a broader change, crisis, capitalism, and so on, And you use the term “new era of capitalism”. How about your CEO colleagues? I know there’s a lot of talk about this. But, how many are really committed to change, Hubert?

Hubert Joly 28:56
I am so impressed, Gary, today by the leadership qualities of most CEOs. You know, boards, when they think about picking a CEO, they now take these factors into account. And of course, everybody comes in different flavors, right? That’s the beauty and messiness of humanity, right. But I think that the majority of CEOs are convinced that this is the right direction. But the truth is that it’s really hard and it takes work on changing ourselves, right? We all know these stories about, if you want to change the world, begin by changing yourself. And during COVID, if you couldn’t go outside, you had to go inside and reflect on how you wanted to lead and how you want it to be remembered as a leader. So, there’s no shortage of desire. There is a need for, you know, let’s invent together a different way to make this work.

Gary Bisbee, Jr. 29:49
A core part of the book, and it started out the book, is what you call the meaning of work, which is I think on virtually everybody’s mind today with COVID, with remote working, and in fact, some people couldn’t work, and so on. As you’re talking to other CEOs about your thesis here, how important is that and how often does that come up as part of your discussion?

Hubert Joly 30:15
It’s foundational, this question of why we work and what’s our life purpose. At HBS, where I now teach, Gary, we stay to do seminars for companies, and also, we’ll do one in January in the MBA program, around this idea of, how do you put purpose to work? And how do you create an environment where you can unleash “Human Magic”? And the first part is around really discussing and reflecting on your life journey, your life story, your crucibles, and your purpose in life, and using purpose in life as foundation for business purpose. And it’s transformational. And the question arises, because frankly, work has a mixed reputation, right? Is work a punishment or curse-

Gary Bisbee, Jr. 31:03
Right

Hubert Joly 31:04
-because some dude sinned in paradise? In French, Gary, the word “work” is “travail”, which comes from Latin, “trepalium”, which is an instrument of torture. So that tells you. Or, is work something you do so that you can do something else that’s more fun, like watching the Vikings defeat the Green Bay Packers, which rarely happens, but you know. Or, is work part of our search for meaning and part of our fulfillment? Now, of course, it’s a choice we make. But if we can connect what drives us with the purpose of the corporation, its transformational. And a very practical implication of that, something that everybody can do next week, is something we did at Best Buy back in 2016, I remember. So every quarter, I would get the executive team together to work on our strategy, our plan, our culture, you know, you name it. And one day, I asked every one of the executive team members to come to the off-site with a picture of themselves when they were little, two or three years old. Believe me, we got some really cute pictures, of course. But then over dinner, we spent the evening sharing with each other our life story, and our purpose in life. And believe me, you know, this was a turning point because we realize two things. One, every one of the executive team members was a human being, beautiful, but also quirky, messy, you know, not just the CFO or CHO, or CMO, a human being. And two, with a couple of exceptions, all of us shared the same kind of purpose in life, you know, the golden rule, doing something good for other people. And then we reflect on it say, look, we’re the leadership team of Best Buy. Why don’t we use this platform to help fulfill our purpose and to create an organization that employees are going to love, customers are going to love, community is going to love, and shareholders are going to love. And then, it becomes much more than a job, it becomes part of our calling. And the idea of being curious about the purpose of people around you, I think is a game changer. I’ll just add a quick story around this because this is not just for executive teams, it can be at every level. I had a store General Manager in Boston. He would ask every one of the associates in his store, “what is your dream?” At Best Buy or outside of Best Buy, what is your dream, right? Write it down in the break room. He said, “my job is to help you achieve your dream.” At the time of the great resignation, I think we need a great re-recruiting effort which starts with empathetic listening and discovering, because I don’t think it’s rediscovering. It’s discovering what really drives people around us, what’s their life’s purpose and their dream in their life, and it’s a game changer.

Hubert Joly 31:59
And this fits into what you call in the book, “The Noble Purpose”, which seems to underlie the new era of capitalism. Can you tell us more about your thinking about “The Noble Purpose”?

Hubert Joly 34:13
Yeah, because I think that’s, you know, my vision of business in this new era, it is indeed about pursuing a noble purpose, putting people at the center, embracing all stakeholders in a declaration of interdependence, and creating profit as an outcome, not the goal. So what’s this “Noble Purpose” thing? It’s not just a statement you put on your website. For me, you find it at the intersection of four circles. One is what the world needs. Two, what you’re passionate about. Three, what you’re uniquely capable of doing as an organization. And four, how you can create economic value. And that’s how you define it. It needs to be, you know, meaningful, authentic, credible, but also inspiring. And the beauty of that approach is that, of course, it’s inspiring as we discussed. It’s also, you know, a way to expand the addressable markets. And if you can then align the activities of the company around that, then I think magic happens, but you need to do the work of, you know, making that purpose, the cornerstone of the strategy, and translating it into specific, very concrete, strategic initiatives, triaging your activities. We all remember when CVS decided to stop selling, you know, cigarettes. If their purpose was health, stop selling cigarettes and focus on how you’re going to be helpful to the health of your customers, and then do the work to allow everybody to write themselves in that purpose. So I think it’s a profound change. It’s become almost a fad, so there’s adventure here. And that’s why I think the key is to do the work to do the good job of defining it, and then making it come to life.

Gary Bisbee, Jr. 36:04
So I could just see a leader coming up to you saying, Hubert, I believe in the “Human Magic”, what’s the first step I take to unleash the “Human Magic” on my people?

Hubert Joly 36:16
We talked about the “Human Magic” thing because there was a point in the journey at Best Buy where performance started to accelerate and it defied logic. It was too good. And it came when we had managed to unleash that “Human Magic” on the front line where people had a spring in their step and, without being told, would do extraordinary things for customers. I think the first step in the “Human Magic” journey starts with each of us and this idea of clarity of our own purpose in life, right? The second step is to realize that the way the organization is going to mobilize is not through top-down management, right, incentives, right? People have relied on incentives. Here’s the problem. If you use carrots and sticks, you’re going to get donkeys and donkeys don’t do a good job, neither in retail nor in a health system.

Gary Bisbee, Jr. 37:07
Right.

Hubert Joly 37:08
So you don’t want that. At the same time, if I continue on this metaphor, if you pay peanuts, you’ll get monkeys, which is not good enough. So, you need to pay people. But that’s not the main motivator. So then you need to realize that motivation is intrinsic and comes from within. And so, you need to realize that your job as a leader is to know how to create that environment. In the book, I talk about five ingredients. To this, being French, I get to talk about a recipe, right? And the five ingredients are about, number one, connecting dreams, which we were just talking about, right? Being clear about your purpose, but also understanding the purpose of people around you and how it connects to the work. Number two, it’s creating an environment where there’s genuine human connections, where everybody can be themselves and the best version of themselves. My compatriot, Rene Descartes of the Cartesian philosophy, said, “I think, therefore I am”. It’s. It’s “I am seen, I am seen, therefore I am.” And it’s about vulnerability, right? Creating an environment where it’s okay to say I’m struggling. It’s about inclusion, diversity and inclusion. So that’s human connection. The third one is around autonomy, creating an environment where people, you know, back to, they don’t like to be told what to do. So create an environment where we’re clear about the purpose and the principles and, you know, levels of authority. But within that, people can decide what’s the best way to do things. It’s about growth and mastery, so helping every one of the team members become a master at what they do. And here’s the thing I’ve learned, Gary, is that size doesn’t matter. Whether the organization is 100 people, or 100,000 people, or a million people, it doesn’t matter because it’s one individual at a time. And at Best Buy, we developed individualized coaching for 100,000 people on a weekly basis. It’s about not managing for performance, ironically, but focusing on the drivers and treating performance as an outcome. So easy for a manager to yell and scream at an employee because their performance is not good. I can see it if it’s not good. You know, help me create the environment where I can become better. So it’s a significant mind shift, which, as you can feel, has massive leadership implications.

Gary Bisbee, Jr. 39:35
Hubert, a question about the board of directors of Best Buy. During the turnaround, did you need to do any kind of religious work with them? I mean, did you need to teach them the way you’re teaching your leadership teams?

Hubert Joly 39:53
So, they were proud of the journey and I give so much great to our board together with our head of nom-gov, nominating and governance. We redid the board, because, you know, you want a board that’s the best possible board to help steer the company through its transformation. So we looked for the right kind of talent to augment our team, so people who had significant experience with transformations in tech businesses, in service businesses, in a variety of skills, but also people who were aligned from a values standpoint. Let’s slow down again here. I think, Gary, probably the most important decision we make as leaders is who we put in positions of leadership, who we put in positions of power. And one thing I’ve learned over time is, yes, you need the right skills, the right expertise, the right experience, but I was historically spending too much time on this. You also need to be clear about, what kind of leader do you want to have, what kind of leadership principles they embrace. And so increasingly over time, whether it’s recruiting board members or executives, I try to understand, who are they, you know, what kind of a leader do they want to be? How do they want to be remembered? I will always remember that was the best interview question I was ever asked when I was being recruited for the CEO job at Carlson. Marilyn Carlson Nelson, the daughter of the founder, was interviewing me to be her successor as the CEO of the family company, asked me, “Hubert, tell me about your soul.” Who asked this question? And yet, I think as leaders today, we want leaders who are able to lead, I say, with all of their body parts, right, their brain, but also their heart, their soul, their guts, their ears, their eyes. And so, being clear about, you know, what kind of leaders do we want in positions of power, I think is critical.

Gary Bisbee, Jr. 41:50
Let me turn this to a question about the board of directors. You’re on the J&J board, the Ralph Lauren board now. Of course, you were on the Best Buy board. What kind of board member do you want to be? I’m kind of building on, what kind of leader do you want to be? And what are the qualities or characteristics of an excellent board member?

Hubert Joly 42:10
I think that the great thing about, I think, being a CEO dealing with a board is that you remember what it’s like to be the CEO and the management team dealing with the board. So you don’t want to, back to this point, you don’t want to tell the CEO what to do, right, that’s the last thing you want to do. You want to be really clear about, what’s the role of the board versus the management team. So it’s about making sure we have a strategy that’s working, making sure we have the right leader and leadership team, making sure that we comply so nobody goes to jail. And increasingly, I think, Gary, making sure that the right culture exists at the organization. So you want to make sure that you focus on the right topics. And then it’s a combination of challenge and support. As a CEO, I wanted to have a board that would give me superhuman powers by augmenting our skills as a management team. And so, sometimes that’s support, give us things that we don’t have, give us ideas, give us contacts, but also challenge. I loved preparing for the board meetings, because it would force us to articulate our strategy to be better. I felt that, actually, I would get 80% of the value before showing up at the board meeting through the preparation. But then, some of the questions and the challenges that the board would give us were, and you have to see them as not feedback, but feed-forward, right, inputs. One of things I’ve learned from my coaches, when a board member or anybody gives you input or feedback, say “thank you”, smile, and shut up. And so you want a chemistry on the board of people who deeply care about the company who have wisdom, who are not looking for, you know, a power grab and have a way to navigate at the right level, balancing supports and challenge. That’s how I would describe it. It’s a subtle chemistry.

Gary Bisbee, Jr. 44:12
Hubert, this has been just a terrific interview, very informative. You’re an incredibly engaging person, we thank you for your time. I’ve got one last question if I could. We have a number of listeners who are earlier stage leaders, one could say up and coming leaders. What advice would you have for them?

Hubert Joly 44:32
Ah.

Gary Bisbee, Jr. 44:33
Other than to take your course at Harvard, of course, but…

Hubert Joly 44:37
Other than buy the book, which, by the way, all of the proceeds from the book go to my favorite charity, which is the Best Buy Teen Tech Centers, that help disadvantaged kids.

Gary Bisbee, Jr. 44:47
I’ve got the book right here.

Hubert Joly 44:50
“The Heart of Business”, right. I think the advice, Gary, so remember when we were flying, right, in the old days. The stewardess would tell us, “look, if the oxygen mask comes down, put it on yourself first before you help others.” And I think in this crazy environment, our resilience as leaders is challenged. And so you need to make sure that you take care of yourself, so that you can be a great leader. What does that mean concretely? I think that’s gonna mean, you know, probably exercise, breathe. But also, reflection and meditation. And a key question, and I’ll leave with this, is, how do you want to be remembered? One of the exercises we do in the new CEO program at Harvard is we ask the new CEOs to write their retirement speech. And my wonderful wife, Hortense, who is an executive leadership coach, she asked our client, I think it’s even better, to write down their eulogy. You know, the thing that people will say on the day you’re not here to listen anymore. And I think if you write this down, and regularly revisit it as your North Star, and by the way, being kind to yourself because you’re only human, right? So you’re not going to be perfect every day. Right? So, rather ask yourself every day, you know, did I do my best to try and be the leader I want to be? And if the answer is “no”, that’s okay. Don’t be harsh on yourself. There’s always tomorrow. So try again tomorrow and ask for help. Call Gary. You say, “Gary, do you have any advice for me on how I can become a better leader?”

Gary Bisbee, Jr. 46:35
Well said. Hubert, this has been delightful. Thank you so much for being with us. The book is terrific. I urge all of our audience to buy it, read it and act on it. Thank you again, Hubert.

Hubert Joly 46:50
Thank you, Gary. Thank you.

 

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