Former Best Buy CEO Hubert Joly: Empowering Workers to Create ‘Magic’

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1:09Welcome to the new world of work. I'm Adi Ignatius, editor-in-chief of Harvard Business Review. And each week on this show, I sit down with a top-tier CEO and talk about various aspects of the future of work, how we collaborate together, how we innovate together, really what's the best way of growing and growing together going forward. So before I introduce this week's guests, I want to make a quick note from our sponsor, Unisys. Unisys is an IT company that builds critical solutions trusted by demanding businesses and governments around the world. They partner with clients to enable cloud transformation, protect critical operations, and empower the modern workforce.

1:52Visit unisys.com to learn more. So our guest this week is Hubert Joly, the former chair and CEO of Best Buy. In 2012, Hubert, who's a French-American citizen, took over a Best Buy, the company that seemed destined to be wiped out by Amazon. And he led a remarkable turnaround. By the time he stepped down as CEO in 2019 and as chair last year, the company was back on top with increases in revenue, market share, margin, customer satisfaction, and more. Hubert is currently a senior lecturer at Harvard Business School, and he is author of the new book, The Heart of Business, Leadership Principles for the Next Era of Capitalism, which is a Wall Street Journal bestseller.

2:38Full disclosure, HBR is the publisher of that book, proud publisher. So Hubert, welcome. It's really great to have you. Thank you for having me. I look forward to our conversation. All right, well, let's do it. So let's start with Best Buy. I mean, you know, I talked about your role in the amazing turnaround of Best Buy. I mean, if there was ever a company that seemed likely to be wiped out by the forces of retail and Amazon, it would be Best Buy. How in the world is Best Buy still around? You're right. I mean, back in 2012, everybody thought we were going to die. There was zero buy recommendations on the stock.

3:12I think there's a few lessons that can be learned from that. They're actually very relevant to this very challenging times. And the first thing, it was a very people-centric turnaround. Everybody was saying, cut, cut, cut, close doors, fire a lot of people. You know, the usual recipe of turnarounds. No, it started with listening to the frontliners. They had all of the answers. I spent my first week in a store in SunCloud with my blue shirt and my khaki pants, a badge called, you know, CEO in training to just listen to the frontliners. They had all of the answers and our job was easy. So we talked today about empathy.

3:48I think it was empathetic listening to the frontliners and to the customers addressing the pain points. And so the other thing was about, you know, as we reach to people, headcount reduction is a last resort. You know, as leaders, we need to first focus on growing the top line. And as we need to cost, first focus on what I call the non-salary expenses, which is out of the elements of the cost structure that have nothing to do with people, in which at most companies is the majority of the cost structures. Out of the$2 billion we took out in terms of cost, about 70 % was non-salary expenses. So a lot of people focus, it's about creating energy, right?

4:26A company at the end of the day, you and I have talked about this, is a human organization made of individuals working together in pursuit of a goal. And so as leaders, sometimes we focus too much on the what to do. The how is very important in finding ways to create that energy by co-creating the plan, getting going, celebrating wins. So that was the first phase. The second phase, which is also very relevant today, is about purpose. If I had joined the company and said, the key thing was... This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new.

5:02It can help you with practically anything on the web, like restoring a vintage motorcycle, from a 50-page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners. Sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra, Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean.

5:43And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. What I'm going to do in the next few years is double the share price or the earnings per share. Who would have cared at the company? This is not motivating. And so what we did a few years into the journey was to redefine who we were. And we said we're not actually a consumer electronics retailer. We're a company that's in the business of enriching lives through technology by addressing key human needs. And the beauty of that is, number one, it's inspiring, but also it vastly expands the addressable market.

6:18So as companies are hit by this crisis, sometimes you need to grow, you need to redefine what ultimate needs you're serving. And so you align the entire company around us. That was a second key thing. The third that I would highlight, there's many, many lessons, but we'll get into it. The third one is that I learned so much about, you know, the old method of top-down management. You take a bunch of smart people, they define what to do, and they tell other people what to do. They put incentives in place. That doesn't work, right? I think motivation is leadership from the inside out. Try to define, and that's a good moment, actually, to do it now.

6:56What's important to me in my life? What kind of a leader do I want to be? What kind of purpose do I want to pursue? and what is driving people around me and connect, help everybody at the company connect what drives them with their work and with the purpose of the company. That's how we unleash human magic and get these incredible results. So these are three important things in the industry that go beyond just the specifics of the Best Buy stuff. Yeah, so there's several. I want to follow up on several of these things. So forgetting the specifics of Best Buy for the moment and, you know, a technology company and how you tried to reinvent yourself.

7:31So the sequence, I guess, I mean, as you said, you went on a listening tour initially. So I think you're saying that to create a winning strategy, you kind of need to go deep into the company and connect with employees before you can even start to figure out what is the new mission, what is the strategy? Is that what you're saying? In fact, in our case, it's been an august to the IBM turnaround that Lou Gershner did in the 90s, right? He said the last thing that IBM needs at this point is a vision. We need execution. In our case, we found that the world needed Best Buy. As customers for some of our purchases, we need a place where we can touch, feel the products and ask questions.

8:09And importantly, the vendors also needed us. Our problem was that all of our problems were self-inflicted. Our execution was terrible. Prices were too high. Our online shopping experience. So it's a case where, yes, starting with listening to what's happening on the front line to know what's going on. And then there's a case where operational progress creates strategic degrees of freedom. So sometimes, logically, we need strategy first and then execution. In this case, you flip it. It's operational progress before strategy. Because if your prices are not competitive or your website is not working, there's no point in doing strategy, right?

8:48So we started with a very incremental, let's fix everything that's broken. And then over time, we elevated our game to define that new purpose and a whole new set of very, very exciting strategies. But it took time. Yeah. So you use the term human magic. And I don't want to blow by that. And, you know, it's in your book. And, you know, you're familiar with it. You're sort of throwing it around. But what is human magic? What do you mean by that? Human magic is when at scale, you have employees that do things for each other and for customers that nobody has told them to do. So to illustrate the point, one day there is a young mother who comes to a store with her young child.

9:27And for holiday, the child had had a dinosaur as a gift. The bad news, the sad news is the dinosaur is sick. The way we know this is the head is dismantled from the body. So very sick. Yeah, that's sick. Yes. And the child doesn't want a new dinosaur. He wants the dinosaur to be fixed, to be saved. and so most stores you know you would have been maybe sent to the toy island with some luck you would have found a new dinosaur but that's not what this episode is brought to you by google chrome you think you know a browser but gemini and chrome that's new it can help you with practically anything on the web like restoring a vintage motorcycle from a 50-page restoration blog or finally break down that long article you've had open for weeks gemini and chrome is here for it Ready to make anything online make sense?

10:11There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners. Sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. The child wanted, and what happened on that store, that Best Buy store, when he came in Florida, is two associates who understood what was going on.

10:57And they took the sick dinosaur. They went behind a counter. And they started to perform, like in Good Doctor on Amazon, you know, a surgical procedure, step by step, explaining to the child the steps they were taking. As if they were doctors. Yes, they were doctors. In fact, we gave them badges as dinosaur doctors. Substituted, of course, a new dinosaur and gave the child a cured dinosaur. Now, do you think, Addy, that at the time there was a standard operating procedure at Best Buy on how to deal with sick dinosaur or even better, maybe a memo from me, the very smart CEO on how to deal with...

11:32Of course not. They found it in their heart to make that customer, that little child, not even a customer, that child and that mother very happy. And so I think from a leadership perspective, in particular at this time of great resignation, right, how do we, our role as leaders is to create an environment where people naturally from their heart want to do this. And one of the things we've learned during that turnaround journey was that the old Bob McNamara top-down management simply doesn't work. Like incentives don't work. You have to find, you have to help people connect what drives them, which is the golden rule.

12:10Everybody wants to do something good to other people and see how it connects to their work. Create an environment that's very human, where there's genuine human connection. We're working at the same company, which we are, because we both work for Harvard. You know, we get to know each other. It's a safe environment. My compatriot, René Descartes, the Cartesian philosophy, He said, I think, therefore I am. I think he's wrong. He's dead, but he was wrong. It's I am seen, therefore I am. I exist. My boss knows what drives me, knows my struggle, knows me as a human being, respects me as a human being.

12:51And he's interested in how, what my dreams are. We had a store general manager in Boston who would ask every one of the associates in the store, what is your dream? At Best Buy, outside of Best Buy, what is your dream? It's a very practical question we can ask everybody around us. Okay, write it down in the break room for everybody to see. And then he said, my job is to help you achieve your dream. And that's the kind of leadership behavior with a lot of human focus, empathy, focus on each individual. Size doesn't matter, right? I don't care whether you have a company with 1 ,000 people or a million people.

13:24It's one individual at a time where you can focus on creating the environment where they can become the best, biggest, most beautiful version of themselves. So I think what you're saying, if we all had done that, the dinosaurs would not be extinct. But to follow up on that, is the issue about empowering people, respecting them and empowering them, or inspiring them to create a little magic in their work lives? So I think it's a set of ingredients. And in the heart of business, of course, being French, if you allow me, I have ingredients for a recipe. And there's multiple ingredients. One, I think that having the company focused on a noble purpose, doing something good in the world, like in our case, a best buy, enriching lives through technology, is important because it focuses on something bigger than ourselves.

14:12That's important. But the second thing is, so we need the purpose. We need values. We need to know what the values are, because values are what people do when nobody's watching, right? We need some principles. Then we need clarity around decision-making. And that's one of the things I've learned during that journey is that as the CEO, I make very, very few decisions. And the key for me is to push them down as far as possible. So these blue shirts, in my example, they knew they had the power. They were empowered in their store to do this. and with the sense of we're here to create happiness.

15:15This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners. Sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. right and i have this uh and it's a colleague and amy edmondson talks about creating a safe environment right uh and um cammy scallett our head of hr you know one day in a big conference in front of everybody says do you know what sop stands for right normally in retail it's standard operating procedure she said no no it's service over policy right and early on when i joined we said that we should stop doing anything that's either stupid, goofy, or crazy.

16:15That was the extent of the new policy, right? And so you empower people. If you see something, do something, and it's creating that sense that, yes, I can make a difference. I can create a world around me. And that's not, initially, you can take that's going to be chaos. No, because if you have this purpose, the values, the principles, clarity about what people are doing, that's how you unleash your magic. And it's so beautiful to see because there was a point, Eddie, where I said, I've actually lost control of this operation. I mean, it's completely out of my hands now. And that's when the performance started.

16:49Amazing. So if you just joined us, this is HBR's The New World of Work. My guest is Hubert Jody, the former CEO of Best Buy. If you have questions for Hubert, please type them in and we'll try to get to some. And the questions can be in French or in English. Or Chinese. Chinese. Whatever it is. so I have one question about flexible work if I understand things right when you came to Best Buy there had been a flexible work program but your initial response was yeah let's let's get people together we're I guess building a culture you know so so talk about you know what you were trying to achieve and how that how that played out and then what would be relevant today because it was in 2012 so when I joined the company there was a program called ROW results only work environment which was well-intentioned because the idea that what really matters in a sense is results and everybody gets to decide how they how they do the work and specifically where they do the work and as manager you wouldn't you know have a say on whether people would join a meeting or would be and my team was very divided around this right you know there was team members that said you know this is not a way to work other people say well you know this is not the biggest issue we have to deal with, frankly.

18:01And because they were not able to decide, I had to look into this. And we decided to kill the program for a variety of reasons. One, the assumption of the program was that delegation is always the right leadership approach. And I think that's fundamentally flawed. Sometimes, if you ask me to build a brick wall, you're going to need to be very directive, because I have no interest in building it, and I don't know how, so you need to really tell me. The other thing is that the ship was sinking. At the time, remember, there was no Zoom, there was no team. The only way you could communicate remotely was through conference calls, which is not really a very effective way to have intensive, life-saving, problem-solving moments.

18:42So he said, let's suspend the program and let's hold hands on deck. And, of course, today we've all learned that we've been very, very productive, certainly for certain activities working remotely. Some of the work still needed to be done in stores or in hospitals, frankly. And, of course, technology was there. One of the key questions that, as leaders, we are all trying to figure things out is how do we reinvent work in that context? but the context in 2012 was very different. Yeah, no, for sure. Although I'd like to talk to you about then 2021. Yes. Because what we're writing about by and large is that, well, actually our stories contradict one another in some ways because there's some people who think you really need, leadership needs to step up and just say, this is what we're doing and that people will adapt and remember what it was like to be in the office together.

19:37On the other hand, we're publishing articles that say, know that what people, what workers desire now is agency.

20:11This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. Flexibility. And you're right. We're talking about a certain strata of non-frontline employees who are lucky enough to have the option.

20:48So let's make that clear. So fine. We're productive remotely. We're productive and hybrid. But there is the cultural aspect that we haven't solved for. And it may be that that's what we need to solve for, how to create and sustain cultures effectively in a dispersed world. that we're certainly not good at. But you have sort of done the culture work before. What do you think about all that? Yeah, this is probably one of the top two or three greatest challenges we're facing, right? On your show, Satya, this was a wonderful interview, talked about the big reshuffle. Because there's so many things happening at the same time.

21:25You have the great resignation, as you recall. People have taken the time to step back and think about what's important. So they're really rethinking, they're leaving companies. there's diverging points of view right some of many of the employees want the flexibility they also want the intimacy and then there's the question if you're a big company like amazon or microsoft or you know apple or best how do you decide and who should decide and uh is it should it be uniform across the entire company should be uniform during the so i think people are rethinking i think it's actually a great opportunity because work had been structured in the same way for scores of many, many years.

22:05And so I see it as an opportunity. It's very challenging because we don't know what the future is going to be like with Omicron and everything. But it's the opportunity to work with the employees on what's the best approach. And so I see people trying to push this down. So this should be decided not at the company level, but at the team level, whatever that means, and that we should involve them in the decision making. They should be empowered to make decisions. And you're seeing people say, you know, it should be uniform. There's some tasks that are extremely well done remotely, like coding, you know, can be.

22:39But maybe, you know, design of a new product that's different or onboarding new employees. There's some cultural moments or big team meetings where we're trying to do a strategy. You know, then you have people huddle. And so I think that there is a big puzzle. And I think the only thing we know is that we don't know. I think that's a great leadership trend today is to be able to say, my name is Hubert. I don't know. I'm going to need help. We're going to figure this out. We're going to experiment. I'm not seeing anybody who says, I have got the definitive answer on that. So I think we're going to see a lot of experimentation in the next few quarters.

23:15We're going to see things emerge and best practices. The idea of the leader banging their fist on the table and saying, that's the way it is. I don't think so. Yeah. So I'm actually going to go to the first audience question now, which is apropos, as Rene DeCoultre would say. This is from Marilyn O 'Hearn from Kansas City, Missouri. So it really is, it's a question about purpose during the Great Reshuffle, but specifically on diversity and inclusion, you know, issues I know you care about a lot and talk about a lot. But how do you move forward with a commitment to diversity and inclusion when you're in a kind of virtual or hybrid work situation?

23:57Yeah. So I think that irrespective of whether it's hybrid or not, to start with a very clear point of view, that diversity and inclusion is not a nice-to-have thing. It's a business imperative. If your team does not represent the customers you're trying to serve or the communities in which you operate, you're going to miss how stupid would it be if you and I were partners in a business we're going to decide to recruit from only a quarter of the population people who look like you and I I think it would be crazy and stupid so you have to build diversity in the context of hybrids so make it a business priority because people have been talking about it for many years experience a membership that backs your business journey with American Express Business Platinum.

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25:57We do the work. We set goals. Boards are now holding management teams accountable. We track progress. We do all of the work. in the context of hybrid work, there's new challenges that have emerged. And I think in particular of gender diversity. I think we've seen women leave the workforce in great numbers. That's a problem. People don't have the same setup at home. For those from a work from home standpoint, not everybody has got the same setup. How do we deal with this? There's also diversity around health conditions. And so there's a business imperative now for leaders to be human leaders, right?

26:35And to really connect with their team members, their colleagues. And a great question that I know people ask in their empathetic listening tours is, what are you struggling with? I may or may not be able to solve your struggle, but it's reach out. Because here's the scoop. Everybody is struggling, right? So we might as well say it loud. And understand what are the struggles. Understand it at the individual level, at the community level, at the group level. I'm seen, therefore I am. I am seen, therefore I am. Empathy is not a word that we were using much five years ago in the business world. I think this is maybe the key word today.