Former Best Buy CEO: seek purpose, not profits

Hubert Joly, a top executive for some of the world’s most notable brands, tells a funny story about how a workplace culture that considers vulnerability a weakness can be a disaster. Joly comes to the story — and recognizes its value — from a transformational success he helped engineer at electronics retailer Best Buy, where the company overcame several competitive and industry obstacles during his tenure.

The scene: Alan Mulally had just been named CEO of Ford in 2006, when the automaker was projected to lose $17 billion for the year. Joly says his friend Mulally set up a traffic light color-code system for weekly business plan review meetings: green when things are on track; amber when things are bad but a plan is underway to fix it; and red when performance is off — with no plan to fix it. (Joly told me this story in a zoom call; it’s also recounted in a recent book he wrote on leadership.)

‘(Employees) expect you to grasp who they are and make them feel seen, respected, heard, understood and included. This means you have to open up and make yourself vulnerable.’ Hubert Joly

For the first few weeks Mulally went around the room and each executive gave a report. Every person gave the green for thumbs up — all’s well. Finally, Joly says, an exasperated Mulally paused at a meeting and said: “You know, we are losing billions of dollars. Isn’t there anything not going well?”

Mark Fields, an executive in the room who then ran Ford’s Americas operations and would later become its CEO, was the first to admit a problem. He was the first person, Joly says, to be vulnerable in a setting that frowned upon any supposed sign of weakness.  “Everyone thought he was going to be fired,” Joly says.

To be sure, while many people’s eyes nervously hit the floor, Mulally, says Joly, began to clap. The CEO then asked “who can help Mark” with his problem? It was a technical glitch in the mechanics of the Ford Edge, which had led to delays of launching that vehicle in Canada. Several executives spoke up with ideas for Fields, while Mulally, an engineer, sat quietly and watched the vigorous conversation unfold. It turned out to be a pivotal moment in Ford’s eventual turnaround.

Joly, whose new book is “The Heart of Business: Leadership Principles for the Next Era of Capitalism,” written with journalist Caroline Lambert, says that story crystalizes his approach to leadership: be a servant leader. Be a leader who creates space and grace for teams and individuals to perform well. And be a leader who recognizes the chase for perfection is insignificant compared to the chase to build a workplace with energy and inspiration, where people’s purpose is more than a paycheck.

“If everyone is perfect, you can’t improve the company. And that includes me, it starts with me,” says Joly, 61. “Performance is tied to vulnerability. Earlier on (in my career) I confused performance with perfection. The way to get top performance is to recognize you are not perfect, and be vulnerable.”

‘Purpose and humanity’

I recently read Joly’s book — which talks about his relationship with Naples resident and philanthropist Dick Schulze, who opened the first Best Buy in 1983 in Burnsville, Minnesota. (Best Buy was a continuation of Schulze’s first retail business, Sound of Music, which focused on high fidelity stereo gear and opened in 1966.) Schulze ran Best Buy for decades and helped grow it into an electronics retail giant. But by spring 2012 Schulze was in a dispute with the board and angling to take the company private.

Joly, in his book, writes that “a company fighting with its founder seemed crazy to me.” He met with Schulze several times, including once in Naples, both to learn about the business and help repair Schulze’s relationship with the board. Joly was successful: After a 10-month feud, Schulze was back with Best Buy in a productive way, providing counsel to Joly under the title chairman emeritus.  

In 2012 Best Buy’s board also hired the French-born Joly, then CEO of global travel conglomerate Carlson, to lead the company’s turnaround efforts. With a focus on reinventing the customer experience in stores and maintaining low prices, Joly’s plan, Renew Blue, was a success. Best Buy’s stock tripled in value within a year, and nearly a decade later the company remains an industry leader.

What Joly didn’t know when he took on the Best Buy turnaround was how relevant his five ‘Bes’ of leadership would be to creating the kind of sustainable changes he sought. Joly wrote an article for the Harvard Business Review on his five Bes, “A time to lead with purpose and humanity,” in March 2020 — a week after the world shut down. “Choosing why and how we execute power, and whom we put in positions of leadership,” Joly writes, “are some of the most crucial choices we make as a leader.”

Joly’s five Bes include:

• Be clear about your purpose: First, Joly tells me, is you must understand your purpose as a leader — your why. Then, instead of asking job candidates and employees about their experience and skillset, ask them about their dreams and purpose. Some of the questions Joly will ask are  “what gives you energy, what drives you and how do you want to be remembered?”

• Be clear about your role as a leader: When circumstances are dire, says Joly, whether a recession or a pandemic, that’s when it’s essential to help “others see possibilities and potential.” Another key? Be a thermostat, not a thermometer, and remain positive, calm and centered. “You can’t choose your circumstances,” he says, “but you can control your mindset.”

(Out of Joly’s book, our 30-minute chat, his HBR article and another video I watched of Joly talking about leadership, that quote — mindset over circumstances — is my favorite Joly-ism. Good advice for any leader, both personally, with his or her team and even in parenting.)

• Be clear about whom you serve: Joly told the corporate officers of Best Buy that “if you believe you are serving yourself, your boss or me as the CEO, it’s OK, it’s your choice. But then you shouldn’t work here. You should be promoted to customer.” That’s his way of laying out a clear message that there was no room at Best Buy “for people whose main purpose is to advance their own interests.”

• Be driven by values: No matter how good the values are, they can’t be only on paper. “A leader’s role is to live by these values, explicitly promote them and make sure they are part of the fabric of the business,” Joly writes.

• Be authentic: Team members, says Joly, want the boss to be human. “They expect you to grasp who they are and make them feel seen, respected, heard, understood and included,” he says. “This means you have to open up and make yourself vulnerable.”

A little help

Vulnerability came up a lot in my conversation with Joly. “My most frequently used phrase now is ‘my name is Hubert and I need help,’ Joly says. “And that’s OK.”

Joly was CEO at Best Buy for seven years and chairman through June 2020. He’s currently a board member at Johnson & Johnson and Ralph Lauren, and a senior lecturer at the Harvard Business School. Prior to Best Buy and Carlson, Joly was CEO of French media and entertainment giant Vivendi and a consultant at McKinsey.

For a lot of his career Joly says he was rarely vulnerable. He instead prided himself on being the smartest guy in the room. But Joly’s gradual change to thinking about leadership as someone who facilitates success of others — not a know-it-all — has been, outside of family, one of the most positive consequential happenings in his life. “So much of what I learned in business school or McKinsey is either wrong, dated or at best incomplete,” he says.

So even with being vulnerable what’s the best way to lead people today at a company? Joly jokes that since he’s French, he has both a theory and five ingredients to explain it. But here it is boiled down to simply three factors: “The heart of business,” and leadership, Joly says, “is about pursuing a noble purpose, putting people at the center and creating an environment where they can blossom and be magical.”