How Crises Forged Opportunities For Excellent Leadership

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0:35The versatile Equinox tackles your entire day. The spacious Traverse fits your crew and your whole weekend. And tracks bring style with value you can count on. All infused with tech that has your back. So your drive always hits the right chord. Chevrolet. Together let's drive. 2020 has been a particularly challenging year. This said, I find that this has been a year where we've seen some extraordinary examples of great leadership. I think the model of the leader as the superhero who's got all of the answers, eh, that's over. The leader who is driven by power, fame, glory, and money, eh, that's over.

1:21This was a year where we realized that our humanity was essential and that led to leaders being very centered around their principles and their values. This is a time when the greatest leaders we've seen were leaders who were authentic, they're caring, they're genuine, they're transparent, they're vulnerable, and creating an environment where people can be the best versions of themselves. If it was not clear before, it became incredibly clear. People are not just an input to business, they're the center, they're the heart of business. So when it was a matter of sheltering in place, remember these days, the associates who were working from home, you know, we discovered their entire life.

2:03You know, the kids, the cats, the dogs, also the environment in which they lived. For some people, it was really hard. Also dealing with mental health issues. So understanding the whole person, understanding their human needs, their need for truth. So it was critical for leaders at that time to communicate, to be vulnerable and transparent. I've seen many leaders just say it. This is what I know. This is what I don't know. This is what I'm doing to figure this out. This is true outside of a crisis. This was particularly true during that time. When the environment is challenging, when business gets tough, you see so many times companies first focusing on reducing their headcount.

2:46You see these headlines, Company X is hurting, 10 ,000 layoffs, share price goes up. I hate this. My approach to turnarounds and to leading in a time of crisis is the opposite of that, is to see headcount reduction as the last resort. There's four levers that I tend to focus on. Number one, always seek to see how you can grow the top line. It's always the first priority. Then as relates to cost cutting, the first priority is attacking what I call non-salary expenses, which are all of the costs that have nothing to do with people. At most companies, that's actually the vast majority of the cost structure.

3:23At Best Buy, we sell probably 10 or$15 billion worth of TVs. Because these TVs now are very big and very thin, we break a lot of TVs. What we did at Best Buy is work with the vendors, the supply chain, the associates in the stores to reduce the likelihood that a TV would break down. That's a way to cut costs that's good for the customer and for the bottom line. The third lever is around benefits, creatively managing benefits. So a big cost in benefits is health care. If you can work in your organization to improve the health and well-being of the associates, if you're self-insured, you're going to reduce your health care costs.

4:01And again, that doesn't entail cutting headcount. Now, sometimes increasing revenue, reducing non-salary expenses, managing benefits is not enough. And you're going to have to reduce headcount. But then you have to be thoughtful about this. At some point at Best Buy, we decided to close our small Best Buy mobile standalone stores that were essentially mall-based. Now, the associates in these stores were very valuable associates in whom we had invested. They're highly skilled. So with turnover, you can actually redeploy these associates. So instead of telling them here's your severance package, we said well you can have a severance package but frankly our preference would be for you to continue to work at Best Buy and we're going to do our best to find a new opportunity for you at the company.

4:43Another example of this is to consider if your headcount is an issue, is it a temporary issue or is it a permanent issue? So there's a range of things you can do. Of course we've seen many companies furlough their employees which is a temporary measure. You've seen leaders in particular take temporary compensation reduction, maybe eliminate bonuses, reduce the hours. So depending on the company there's going to be different approaches but the key idea is if the need for cost saving is temporary then think about temporary measures. This crisis provided the opportunity to pursue this noble purpose in this idea that you can do well by doing good.

5:20You know after the killing of George Floyd I saw a moment in time which I think is there to absolutely last where everybody realized you cannot run a business if the community is on fire. And so this issue of systemic racism, this is not just a political or societal or moral issue. This is a business imperative. If the place is on fire, you cannot open your stores. If society breaks down, you cannot have a flourishing economy. I'm actually blown away by how seriously, from the head and From the heart, you see business leaders deciding to do their part to end systemic racism here in the US. In the corporate world, once we've determined that something is important, we know how to create and implement strategies.

6:07The reason why, other of the previous diversity and inclusion efforts had not really paid off, is that I think most companies were paying lip service to it. So you're now seeing leaders creating very robust plans, setting goals publicly to hold themselves accountable and make the investments, review all of their HR policies, changing their sourcing practices, changing their workplace practices, and taking this much, much more seriously. I still believe it's going to be a journey, but I'm actually quite optimistic that we have the opportunity to end systemic racism in this country during this generation.

6:44The vision of business today is very different. This is an expansive view of business and leadership. The mission has changed. It's not solely shareholder value maximization. It's providing value to all of the stakeholders. The scope has changed. It's not just about the shareholders and the customers, it's also the community, the environment. And then the leadership model has changed. It's gone from the superhero to this much more purposeful, authentic, genuine leader that creates an environment for his team or her team to blossom into good things in the world. So a time of significant change for sure.

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