‘Business needs a noble purpose and a human-centric approach — these core principles revived Best Buy’

Hubert Joly teaches at Harvard Business School. He is a former chairman and CEO of Best Buy Co., Inc. Speaking to Srijana Mitra Das, he discusses why companies must rework purpose and capitalism today:

Q. What is the core of your research?
A. I focus on helping MBA students and executives become better at putting purpose to work. Most people now recognise that the excessive pursuit of profit and top-down management approaches are not working — we need a new model. I believe this new approach must be about businesses pursuing a noble purpose, putting people at the centre and embracing all stakeholders. I wrote ‘The Heart of Business: Leadership Principles for the Next Era of Capitalism’ as a practical handbook for leaders who want to move in this direction.

Q. You turned around a struggling Best Buy 2012 onwards — what was your most formidable challenge and your most important learning from it?
A. In 2012, everyone thought Best Buy would perish. There was not a single buy recommenda- tion on the stock. People thought Amazon would destroy us. They also thought that Microsoft and Apple opening their own stores would wreck us. There were strategic, leadership and opera- tional challenges with our quality of services also h a v i n g g o n e d o w n . Alongside, the share price was falling precipitously. So, there was an all-you-can-eat menu of challenges. Investors recommended that we close stores and fire people — as if people were the problem. But I felt people were the source of the solution and so, I decided to take a human-centric approach.

From a strategic standpoint, we began to match Amazon’s prices, invested online, strengthened the supply chain, started shipping products the same day, bolstered our stores and part- nerships with key vendors. But this was the ‘what’ — the key point was the ‘how’. That came from people. We listened to our front-liners, rebuilt the team at the top and cut non-salary expenses rather than firing people — we thus created an energy which inspired our people to focus on growing the company. A company can define its purpose but to make it come to life, you need your people to feel leadership from the inside-out. As our people began to talk about customer feedback and think autonomously about innovations and solutions to the company’s problems, we entered a growth environment. Alongside, we start- ed thinking about how to connect our peoples’ dreams and aspirations with their work.

The result was more energy, created by unleashing human magic. Another lesson I learnt was that the superhero CEO who knows everything is a myth — people seek leaders who are authentic, vulnerable, honest, empa- thetic and able to listen to them. I also found a strong connection between a happier workforce and a thriving business — in 2012, Best Buy’s share price was 11 dol- lars. Today, this is 123 dollars.

This 11-time share price rise has been driven by the human magic tapped in the company. A company is a human organisation made of individuals working together in pursuit of a goal — if you have teams that are happy to be with you, that leads to happy customers and happy share- holders. A purposeful human organisation achieves this.


Q. Facing digital marketing, how did you make a brick and mortar company like Best Buy become a friend to customers?
A. Technology, digital marketing, etc., can be great tools. But these are tools in service of something — as a company, you must have your value proposition. With Best Buy, we decided to enrich our customers’ lives with technology. This was a good move because companies find their purpose in the intersection of what the world needs and what they are uniquely good at. At Best Buy, we started teams to help customers set up units like a home office. Supporting our customers became our purpose — profit was an outcome of that.

Q. The world confronts a pandemic and climate change now.With such challenges, what leadership principles should businesses adopt?
A. These are multifaceted crises which need a totally new approach. We must change how we think about doing business — after all, the definition of madness, as Albert Einstein said, is doing the same thing repeat- edly and hoping for a different outcome. Businesses must embrace all stakeholders with a declaration of interdependence now. Look at the instability that occurred after George Floyd in the US — if a city is on fire, the stores can’t open. Similarly, with climate change, if the planet is on fire, businesses can’t work. We must conduct our businesses now not only within their four walls but by embracing all stakeholders and working to achieve mutual well-being.


Q. Are there businesses you find inspiring in this light?
A. There are many and that’s good news — Microsoft, led by Satya Nadella, highlights a human-centric approach. Ralph Lauren, on whose board I am, is focused on sustainability and diversity. Unilever under Paul Polman’s leadership did ground-breaking work for the environment. Multiple companies now realise that by investing in all our stakeholders, we can help to create a better future. The Milton Friedman doctrine is definitively over.

(Views expressed are personal)