Hubert Joly
Former Chairman and CEO, Best Buy
People who are driven by the intrinsic motivation — their values, their purpose — as opposed to extrinsic motivation — money, power, fame, glory — end up, I think, being better leaders and being rewarded more than the others.
Summary
This week’s episode of “Leadership Matters” features a formidable leader who, at the helm of some of the world’s largest companies, has helped to redefine the purpose of the corporation and create careers with meaning.
Hubert Joly is a French businessman, author, and professor at Harvard Business School. Over the course of his career, he has led a wide variety of companies across industries — including Best Buy, Carlson, and Vivendi — often to remarkable financial results. Since leaving Best Buy in 2020, Hubert has committed himself to paying forward the skills and knowledge he’s developed over the years, in 2021 publishing The Heart of Business: Leadership Principles for the Next Era of Capitalism. In the book, Hubert reflects on his personal journey as a leader and the shift in values that led him to pursue a legacy rooted in impact, not just financial results.
In their conversation, Alan and Hubert discuss some highlights from Hubert’s remarkable career and his philosophy on business leadership. From Hubert’s childhood in Nancy, France, to his thoughts on what makes for effective leadership in the 21st century, their conversation makes clear why Hubert such a venerated business figure — and why he continues to be quoted in boardrooms and executive suites around the globe.
Mentions & Resources in this Episode
The Heart of Business: Leadership Principles for the Next Era of Capitalism, by Hubert Joly
Business Roundtable’s “Statement on the Purpose of a Corporation”
The Second Mountain: The Quest for a Moral Life, by David Brooks
Guest Bio
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 New York Public Library and the Minneapolis Institute of Art.
Joly has been ranked 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 has also been recognized as one the top 50 management thinkers in the world by Thinkers50 and received the organization’s 2021 Leadership Award.
He is the author of the best-selling and highly acclaimed book The Heart of Business: Leadership Principles for the Next Era of Capitalism.
Episode Transcription
Alan Fleischmann
You're listening to “Leadership Matters” on SiriusXM and at leadershipmattersshow.com. I'm your host, Alan Fleischmann. My guest today is a formidable leader who has been at the helm of some of the world's largest companies.
Hubert Joly is an author, a professor at Harvard Business School, and the esteemed former CEO of Carlson Companies and Best Buy. If any executive is a living testament to the vital importance of management expertise, it is Hubert.
After getting his started McKinsey, where he eventually rose to the rank of partner, Hubert began an executive career that has included video games, digital media, corporate travel, hospitality, big box retail, and so much more.
Since leaving Best Buy in 2020, Hubert has committed himself to paying forward the skills and knowledge that he's developed over the years. His most recent book, The Heart of Business – Leadership Principles for the Next Era of Capitalism, was published in 2021.
Few leaders match Hubert’s business acumen, and his students at Harvard Business School are lucky to have him. I am so thrilled that he's with us today. We have so much to discuss about his life, his career, and the lessons in leadership that he's learned along the way.
Hubert, welcome to “Leadership Matters.” I've been wanting to have you on for so long — after I read your book, in particular — but even before then as I watched your career. It is such a pleasure having you join us today.
Hubert Joly
And thank you, Alan. Thank you for having me.
Alan Fleischmann
We're thrilled; this is going to be fun. I love that you bring such energy and joy to what you do, but also great purpose. And I know that our listeners will want to learn from you today as well. But why don't we start with your life story a little bit? Let's start with your early life. You grew up in northeastern France, as one of four brothers. What was life like around the house?
Hubert Joly
So yes, I grew up in the city of Nancy in Lorraine. It was a happy family — not well off, but not poor, so nothing dramatic. There are a few things I remember very vividly.
First, something that served me as a leader for a long time — and that happens to many of us, frankly — were the very high expectations of my mother. My mother saw something in me. And she always wanted me to do more. And that started at that young age. By the way, when my book came out, and it was number three on the Wall Street Journal bestsellers list, she said, “You know, it's good to start low." I was able to tell her at that time, a couple of years ago, “Mom, you have a problem with self-confidence and self-acceptance. It is your problem. It's not my problem anymore.” But I'm very grateful to her because her high expectations drove me to excel.
And the other thing that I remember from that age — again, a wonderful youth — is my older brother, Phillippe, whom I absolutely adore. We're best friends. He’s my inspiring friend. He was the cool guy who was two years older than I was, and in many ways that led me to feel that I did not belong. Because he was the cool guy, and I was not.
And so, we all grew up with some wonderful things in our life and some wounds, and these were my two — not being enough and not belonging.
Alan Fleischmann
And you are number two of the four brothers.
Hubert Joly
I was number two, yes.
Alan Fleischmann
And what did they end up doing, the different brothers? I'm curious.
Hubert Joly
So, my brother Philippe studied as a ski instructor at Club Med and ended up being a one of the senior executives at Danone, the French food company.
Number three, Eric, is now head of Germany, Switzerland, and Austria for Guerlain, one of the perfume brands of LVMH.
And number four, Marc, is a senior executive at Cisco, the networking company.
Everyone has done well, and everyone has a wonderful family. Imagine the life of my mother, with four boys, and we were only five-and-a-half years apart. She had a full-time job.
Alan Fleischmann
It was a very loud house, not a quiet house. Did they all feel the same pressure that you did? Or was it just the way you interpreted it?
Hubert Joly
I think she focused the pressure on me because I always did well in school, and she felt that she could bet on that horse. And that sometimes happens for parents. She wanted to have me live the life that she hadn't had.
Alan Fleischmann
Interesting, interesting. And is she doing well in life now?
Hubert Joly
My parents are…they're wonderful, thank you for asking. They’re 87 and 89. I always see them during the time we spend in France around the holidays. They’re just wonderful. They’ve been married since 1956. They're just a wonderful, wonderful couple. I'm so grateful for all the love they gave us. Now, of course, you look up to them, and you say that they only have a few years left, so you want to spend quality time with them and make sure that they feel happy, surrounded, loved, and respected. That's what you do.
Alan Fleischmann
That’s a great story. What did your dad and mom do when you were growing up? What kind of work did they do?
Hubert Joly
So, my mom had the full-time job of raising boys. And my father was a sales manager at a beer company that was part of Danone, so he spent his entire life at Dannon. So did my older brother. This was a family business — he was on the road a lot because he had to visit wholesalers and cafés and restaurants and sell the beer.
Alan Fleischmann
That's amazing. So you studied, and you went off to get a business degree. Was that your next thing the next thing you did that got you out of town, you went to university? Tell us a little bit about that. You went to Paris, right?
Hubert Joly
After high school, I went to Paris — the French education system is a bit different from the US — but I ended up going to the French business school, HEC Paris. And I got a Master of Science in Management from that school. I was top of my class.
And then I also got a Master's in Public Administration from Institut d’Etudes de Politiques de Paris at the time.
Alan Fleischmann
Wow. And Sciences Po was where you got your master’s degree?
Hubert Joly
Yes, I went to Sciences Po where I got my master’s in public administration.
Alan Fleischmann
So did you know that you wanted to go into the corporate world when you left high school, or while going to university?
Hubert Joly
When I was 10, my godfather and uncle was a vet. And I thought I wanted to be a vet, because he would take me with him to take care of cows, horses, sheep, and so forth. But then after a while I said, “No, that's not the life.” And I decided I wanted to be in business.
And there was a moment when I was working in a supermarket in France, probably at the age of 15 or 16, trying to make some money to buy a bicycle. And this was a dull job. I was putting price tags on vegetable cans. I never saw a manager; this was a self-service and there was no interaction with clients. I felt that the life of a frontliner was really miserable, and I pledged to myself that, if one day I was going to be in a position of leadership, I would focus on trying to create an environment where frontliners have a better life.
And when we get to the Best Buy story, or even the hospitality story, that stuck with me. The sad thing is that, for most people, their job is not fulfilling. There is another pandemic in addition to COVID right now — it’s pandemic of disengagement at work, right? Where people feel that their job is a necessary evil. It's not fun.
When I was working in that supermarket after two weeks, I got hit by a truck. And that meant that I had paid leave to recover. And I was in heaven. I was paid; I didn't have to work.
And for most people work is this dull, uninspiring activity that's a necessary evil. So think about the enormous potential for companies that are able, as I call it, to “unleash human magic” by creating an environment where frontliners can have a fulfilling job — where there's meaning, growth opportunity, and so forth. I think that’s what I became passionate about. I think it goes back goes back to that experience working in that supermarket, Alan.
Alan Fleischmann
It’s those experiences as a youth that guide you. So, when did you actually start working as a kid?
Hubert Joly
When I was a teenager, I was doing babysitting, so probably 12 or 13. And that supermarket job at 15 was my first a corporate job.
Alan Fleischmann
And you've probably loved every minute of it. So it sounds like the people side of you…
Hubert Joly
I found that it was good because I was able to buy a bicycle. But the job itself was meaningless and boring, not inspiring.
Alan Fleischmann
Yeah. It was important to know what you wanted and what you didn't want in life. It drove what you did. Tell us a little bit about anything from high school, anything you want to reflect on that we haven't talked about.
Hubert Joly
I loved it. I mean, I was kind of a boring kid, because I was always number one in my class. I was working hard. I loved math. I love studying. And I was not one of the coolest kids out here. I think, looking at you, I think you were probably the coolest kid, doing all sorts of things.
Now, the one thing I would say that I remember fondly is that I was a ski instructor, also to make some money. During the Christmas break and spring break, I would be a ski instructor teaching young kids and beginners. So that was that was my cool side.
Alan Fleischmann
Well, that definitely sounds like a cool side. Because not everybody can do that.
So let's talk about anything you’d like from when you were getting your degrees. Obviously, your management career was born out of that focus, leading you to the corporate world. Any other career paths at that point that you were considering?
Hubert Joly
To rewind to the early 1980s…
At that time in France, the government was playing a central role. In 1981, François Mitterand, a socialist supported by communists, became President of the French Republic. And historically, even, the government’s public sector played a huge role; in the royal past, the goal was to go through government.
So, at some point, I did what I contemplated. And fortunately for me, when I was at school, some of the professors were high-level civil servants. And when I looked at who they were and what they were doing, I said, “No, that's not what I want to do.” And I made the bet that over time, the economy would be liberalized, the free markets would emerge, and that globalization would take place. And I made the best decision to go into the private sector, the business world. In particular, at the time, I had a fascination with the U.S., like many kids in Europe. You watch these American movies, of course. We'll never forget, especially if you're born in Lorraine, that the U.S. saved our bacon twice last century. So the US was our savior, and this was the country of Clark Gable, Gary Grant, and Humphrey Bogart, and the mecca of business.
So I joined McKinsey & Company at a young age, and there is a story there actually. There was discussion about whether I should go to the U.S. to go to business school. I actually applied to HBS and got a scholarship, but the dollar was so high that it was beyond my range. But they told me, “Look, if you'd like to spend time in the U.S., we can send you to one of our offices. And you can spend time there.” I asked which office, and they told me I could pick, so I picked San Francisco.
In January of 1985, I moved to San Francisco and spent a couple of years there working for McKinsey. And there was a lot of excitement in San Francisco. They were all talking about football. As you remember, this was one of the years when the Niners won the Super Bowl. I think they beat the Miami Dolphins at Stanford. And there was this big parade in Market. And so I was plunged into American football at that young age. Joe Montana Bill and Jerry Rice were big in these years.
Alan Fleischmann
Well, it sounds like you became a big fan. Was there a cultural shock for you at all, coming to the U.S.? Or did it feel normal and natural?
Hubert Joly
It was a wonderful culture shock; I love this country. France is also a wonderful country, but we've been pessimists since Voltaire. And in France, if something has never been done before, it's probably because it's not doable. In Silicon Valley, if you and I are together we say, “Oh, this has never been done before. Let's try to crack it.” Right? So, there's this sense of possibility, this optimism that has existed since the founding of this nation — and Thomas Jefferson, of course, was this optimist. So that was the first thing that struck me — this sense of optimism and possibilities.
And then the second thing — my compatriot, Alexis de Tocqueville, visited this great country in the middle of the 19th century and was really impressed by how people in the U.S. counted on themselves to create a better future. Nobody was turning to Washington and saying, “Let's make sure the government fixes things for us.” And when I moved to Minneapolis, many years later, I was struck by this concept of “everybody gets in the boat and rows and feels responsible for the greater good of the community,” which I think is just wonderful. Of course, in the last few years, this country has become a little bit more — this is an understatement — divided. We're not the best version of ourselves today. But I think the DNA of the country is just wonderful.
Alan Fleischmann
The altruism and the community building. Yeah, we have to realize that and reaffirm that. We may be a little sidetracked, but it’s a big part of who we are. I think that's right.
Tell us a little bit about your career at McKinsey, because you were there for 12 years, right?
Hubert Joly
A dozen years, and I became partner at a young age of 30. All of us, as you know, are on a journey as individuals and as leaders. And if I think about my professional life, I'm someone who started as a McKinsey consultant — all about problem solving. I thought that being smart was the most important thing in the world. That's what McKinsey believes in. And I had 12 years of training on being smart. And now, of course, I know that being smart is overrated. I think people say that above an IQ of 120 or 125 doesn't make any difference. I don't know what my IQ is.
But today, I'm somebody who believes in human magic, and in the importance, not of being the smartest person in the room, but of creating the right environment for others. So, I'm so grateful for all the years I spent at McKinsey, learning from my colleagues and, importantly, learning from my clients. Maybe we'll double click into this. But I'm also glad I've graduated from that and that I was able to cure myself from this idea that being smart is the most important thing we have.
Alan Fleischmann
I think having the right questions is sometimes much more important than having the right answers. And I think your curiosity keeps us young and relevant. And I think you're an incredible example of that in everything you do. There's a humility when you ask questions, and there's an arrogance if you have all the answers.
Hubert Joly
And the other thing, of course, is in the world we live in, right? Business leaders, and leaders of any types, are confronted now with an endless series of crises, where there's no manual. Did you have the manual when COVID hit? Exactly. No. We did not when inflation hit. We also didn’t have the manual for when the war in Ukraine hit, or when global warming hits.
I was speaking with a CEO of a Global Fortune 50 company recently, and he said, “Look, my raw materials are coming from China and Russia. My supply chain is a mess. There is inflation through the gazoo. My employees are fatigued. There is a recession coming. I don't know how to deal with that.” And he shared that with his team and his team said, “Of course, how could you? Let's all roll up our sleeves and figure it out together.” And so yes, humility has become my favorite phrase. “My name is Hubert, and I need help. My name is Hubert, I don't know.”
Alan Fleischmann
I always say the three best words are “I don't know” sometimes, because then we get people to come up with a collaboration — some kind of teamwork comes out of that. Everyone feels that they can contribute. But when you say, “I know everything,” it doesn't work, and we don't know everything, to your point. In fact, we're being challenged in ways we have not been challenged before, which is why I love your book, because it gives you a bit of a blueprint. But we'll get there in a second. Anything from McKinsey from those experiences? How long were you in San Francisco before you went back?
Hubert Joly
After a couple of years. I mentioned that I learned so much from clients. I will always remember one of these clients, the CEO of a major multinational company. We had invited him for dinner in the office in Paris to try to sell him some stuff. As a partner, you're always trying to sell something. But instead, he lectured us. I was with two or three of my other partners, and he had just gotten back from a seminar of CEOs. And he said, “During that workshop, here's a few things we said. Number one, the purpose of a company is not to make money.” This was the early ’90s. Now, of course, we've all read the Business Roundtable statement on the purpose of the corporation. And many of us talk about the importance of purpose. But this was 30 years ago. He said that profits are of course an imperative — also an outcome — but they’re not the ultimate goal.
That stayed with me… there are three imperatives. The first is the people imperative; you need to have the right team properly equipped and motivated. You have the business imperative; you need to have customers who love your products. And then you have the financial imperative to make money. They say, by the way, that you need to take this in sequence. It's excellence in people that leads to excellence in business, that leads to excellence in finance. And, by the way, there is no trade off. The best companies simultaneously optimize on these three imperatives. But then he said again that the ultimate purpose is probably not to make money. The ultimate purpose probably has something to do with doing something good in the world.
He then gave me a very practical implication of that that stayed with me, very concrete. He said, “Hubert, when you do your monthly performance review meetings, don't start with the financial results. If you do, you're going to spend the entire meeting dissecting these numbers. And you actually want to understand the drivers of that. Start with people and organization, then go to business or customers or products and what have you. And finish with finance. Your CFO will make sure that you spend enough time on it. But that's the right sequence.” And that's something I've done throughout my career; it makes a huge difference. If you don't, then you don't spend enough time on people and organization. You don't spend enough time on customers and products. And you miss the point. That was very profound. So I had this wonderful deal where the clients would pay us and I would learn from them. How cool is that?
Alan Fleischmann
I love that. And do you think — before we get into that — that it's harder during downtimes, or more stressful times, to have that kind of ethos and focus on purpose rather than profit — about the things that matter — than it is when things are flourishing?
Hubert Joly
Well, when we talk about the Best Buy turnaround, you'll see that this is the approach we followed. And by the way, one of the other principles he taught me was that when you do a turnaround, headcount reduction should be a last resort.
The first priority in a turnaround is to grow the revenue. It’s so amazing what revenue growth can do. Of course, you're also going to have to cut costs most of the time, but he said to focus first on the non-salary expenses, which is all of the elements of the cost structure that have nothing to do with people. At most companies, that's the bulk of the cost structure. For example, at Best Buy, we sell a lot of TVs, right? They're large, they're thin, and they break. We will break about $200 million worth of TVs every year. That's a lot of money, right? Because we sell a lot of TVs. But if you can cut it in half, that's $100 million in savings, right? You're good with calculations. And of course, no customers want to buy a broken TV, so it's good for the customers. And it's good for the business.
And sometimes you do have to cut headcount, but it should be the last resort. And that sends the signal that people are not the problem. They're going to be part of the solution. And of course, even when you eliminate positions, you can still redeploy people, and so on and so forth.
So it's a very human-centered approach. And I think that human-centric approach also applies not only during the good times; it's also during the bad times. I've done multiple turnarounds. And I've applied that philosophy in each one of them.
Alan Fleischmann
That's brilliant. Figure out the ways in which you can create new value that actually matters, and then cut costs. That's amazing.
Was there one industry in particular that you enjoyed the most when you were at McKinsey, or is it that you were engrossed in so many?
Hubert Joly
I was working across multiple industries — a lot in tech, working for computer companies, telcos, and IT services, but I was also working in luxury and financial services. I have a very curious mind, so this was a treasure trove where you could find all of these wonderful nuggets. But my main focus was tech companies.
Alan Fleischmann
And then you went back to France. You became the president of EDS France after McKinsey. Did you go back to McKinsey for a bit in France and then go to EDS?
Hubert Joly
Yeah, exactly. So I had been back in France, and EDS was one of my clients. So that's quite a traditional story. I had worked for EDS Europe and EDS France. And one day, Gary Fernandez, the vice chairman of EDS — that’s the old Ross Perot company — said, “The one thing we know about France is that we don't know. And your job would be to figure it out, and then do it.” I said, “I love that, Gary.” And of course, that was crazy, because I was 35 and I had never managed anything. But they gave me that business. They were probably very desperate. And when they gave me that business, EDS was not doing well in France. It was about 3,000 people. And this was a wonderful, wonderful time. It was my first operational role, and I learned so much from applying all these theories. I had no idea whether I could be a good leader, but it was fun.
Alan Fleischmann
That’s so cool. How long were you there?
Hubert Joly
I was there for three years, and we completely turned around the business. It had been declining precipitously, and we tripled its size. We improved dramatically. A fun thing is that we oversaw the IT systems for the World Cup in France in 1988. After three years, the new CEO Dick Brown was centralizing things in Plano, Texas, and I was no longer the king of France. I said that he could have EDS, and I could have the rest of the world. So I left and moved to Los Angeles to become the CEO of a video game company that's now part of Activision Blizzard.
Alan Fleischmann
And then you went to Vivendi?
Hubert Joly
So that was part of Vivendi; another fun fact is that in 2008, I greenlit World of Warcraft, and I have credits in Diablo II.
Alan Fleischmann
So that was a big deal. And it was during that period when they acquired Universal Studios?
Hubert Joly
Yep.
Alan Fleischmann
And so you were there for the late ’90s, right when it was very exciting.
Hubert Joly
Yeah, it was around 2000. And there was actually a very important crucible for me at that time, a searing moment that shaped my leadership.
It was around 2000 when Vivendi acquired Universal, and I was the CEO of that video game company in Los Angeles. I applied to lead the integration between Vivendi and Universal. Through my McKinsey career, I had done post-merger management, and I felt that I could add value. But frankly, my real motivation was to get closer to the top. I find that in our lives it’s important to know what's driving us. At that time, I was driven by power, fame, glory, and money. I was very ambitious. There’s nothing wrong with ambition, but I was too driven by wanting to go up.
The good news is that I got punished. So call this the “top of my first mountain,” to quote David Brooks — I had been a partner at McKinsey at a young age, and I was on the senior team at Universal. The punishment was that the post-merger management job was meaningless. There were no synergies between Vivendi and Universal, so I had a completely meaningless job for a year. Fortunately, I was able to move on from that. But I realized that the top of the first mountain I found was desolate, was dry; there was no joy and meaning, because I was too full of myself in many ways. Call this my midlife crisis; maybe I'm not the only person in the world to whom a midlife crisis has happened, right?
That led me to step back and revisit my life story and try to discern my calling in life. What do I want to do in my life? My wife, Hortense Le Gentil, who is this amazing executive leadership coach, asks our clients, who are CEOs or senior executives, to write down their eulogy. What do you want people to say on that day when you're no longer here to listen? At business school, we have a program for new CEOs where we asked them to write down their retirement speech. How do you want to be remembered? And David Brooks talks about the resume values and the eulogy values. That was a pivot for me. I said, “No, nobody will care about what job I will have had in life. But I need to be clear about what purpose I want to pursue in life.” So that was a very valuable crucible. And I think that helped me in the next chapter of my life.
Alan Fleischmann
How did you learn about David Brooks’ brilliant idea of resume values versus eulogy values?
Hubert Joly
David has got this great book called The Second Mountain in which he talks about it. And he's been speaking about it as well. In fact, there was in a program at Harvard last week, where we saw a video of the 92nd Street Y where he talks about this.
And if we talk about leadership… In the 20th Century, there was this myth of the leader as the superhero, as we've talked about — somebody who knows everything and tells other people what to do. Takes no prisoners, big ego, and what have you — I think you and I probably know a few of those. Nobody wants to follow a leader like this anymore. People want to follow leaders who are centered, have good values, and are very human. They care. They’re okay to be vulnerable. The words authenticity, vulnerability, humility, and humanity are key words to describe great leaders today. And that means that all of us have — certainly I've had — to forget about other words. I've had a lot of work to do over the last 20 years to become a better version of myself. I don't like who I was 20 years ago. I was not a bad person, but I don't think I was driven by the right things.
Alan Fleischmann
But I also wonder if there was an extraordinary epiphany moment of realization about yourself, where you saw that you were not living the life you wanted to lead and leading the life you wanted to live. It sounds like, at that same point, you changed the type of jobs you did, which led you to be the CEO, which then allowed you to test yourself even further. In other words, you can think, “This is how I want to lead my life…this is that the kind of authentic leader I want to be.” But when given the full reins, you were able to actually…
Hubert Joly
This is is so interesting, because people who are driven by the intrinsic motivation — their values, their purpose — as opposed to extrinsic motivation — money, power, fame, glory — end up, I think, being better leaders and being rewarded more than the others. So that's the paradox. And my good friend, Bill George, talks about it in the latest version of True North. He has been a very inspiring mentor for me.
So I think you're absolutely right. Having said that, this is hard work. One of the things that really helped me in my journey was working with a coach. In 2009, I was the CEO of Carlson Companies. And one day, Elizabeth Bastoni, who was my head of HR at the time, walks into my office and says, “Would you like to work with a coach?” And I said, “Elizabeth, have I done something wrong? Has someone companied?” because, at the time, coaching was very remedial; you would give a coach to Jack or Mary because they had problems. And she said, “No, no, this is different. This is there's this guy Marshall Goldsmith…” Many of our listeners have heard about Marshall, a great friend whom I didn't know at the time. “He specializes in helping successful leaders get better.” So he had great clients, such as Alan Mullaly, who was at Ford at the time; Dr. Jim Kim, the president of the World Bank; and more. I said, “Sign me up!” And it's ironic, because in sports every athlete has a coach. Who are we as business leaders to believe that we can perform without any help? That's crazy and stupid.
And Marshall, in his last book, The Earned Life, talks about his three best clients. One of them was Alan Mullaly at Ford, the second one was Frances Hesselbein, who just passed away, unfortunately, this weekend, former president of the Girl Scouts. And he said that these were the top two because they were always the best. And then there's this guy Hubert Joly who is most improved. If you start low enough, Alan, you can always get better.
Alan Fleischmann
I love the words humanity and humility. You actually sound so clear. You removed yourself from being in your own way and allowed yourself to focus on the other stakeholders that matter to you, rather than what so many people too often do. We get so stuck in our own self and our own journey; we talk ourselves down, and then wonder why we're so frustrated, versus talking ourselves up by really focusing on what we can do for others.
Hubert Joly
So true.
Alan Fleischmann
And your book is the book on your life. There's always an optimism — a pragmatic optimism, but an optimism.
Hubert Joly
Well, that's because it's interesting, right? Today, there's so many reasons to be pessimistic. Let's be clear: the world we live in, in many ways, is not working. I think it's appropriate to say that, but I think leaders need to bring a form of optimism. In physics, we learned that energy is a finite quantity. We cannot create energy, unfortunately, these days. But if a company is a human organization, of course, you can create energy. The big role of leaders is to create this by showing what's possible, and then co-creating the plan with a team and then celebrating what's possible.
There's a great story I heard last week about the Famous Coach K, who led the Duke basketball team. And in that game against Kentucky, two-and-a-half seconds before the end, they're led by one point. So that’s pretty grim. And of course, the team is pretty desperate, but Coach K walks up to team and just says very kindly, “We’re going to win.” And then he says — I forgot the name of the player, so any Duke fans, please forgive me — "Joe, do you think you can throw the ball to Jack?” And Joe says, “Of course I can.” And then, “Jack, if you get the ball, you think and score?” “Well, if I get the ball, of course, that's what I do.” We have a plan. Let's do it. And of course, that's what they did.
And it's creating this sense of realistic optimism, this sense of possibility. Deciding every day that I'm going to show up in a way that creates energy as opposed to drains energy. It's a big decision that we get to make every day. And only we can make that decision; nobody else can make that decision for us.
Alan Fleischmann
Yeah. And how we present ourselves to the outside world, and reserve and conserve and produce our own energy…
But then, what you’re saying is that the connectivity to how we present ourselves is really what happens to other people with their energy.
Hubert Joly
And then be careful. So there's this great phrase that is inscribed on the shoulder the study of Curt Carlson at the Carlson Company’s headquarters. It's in Latin: “Illegitimi non carborundum,” which in English means, “don't let the bastards grind you down.” So if you're in a company or a team, and there's somebody who's draining you, why would you give them that power to drain you if you don't respect them? Why would you give them that power? You have the power to decide how you want to feel. And a lot of self-reflection and self-awareness around that with your team creates the right environment for others.
Alan Fleischmann
You’re listening to “Leadership Matters” on SiriusXM and at a leadershipmattersshow.com. I'm your host, Alan Fleischmann. I'm here today with Hubert Joly. Not only is he a Harvard Business School professor, he's also the former CEO of Best Buy and Carlson Companies. He’s discussing his extraordinary life journey and wisdom, including that from his incredible book — one of the best books I've read in years — called The Heart of Business: Leadership Principles for the Next Era of Capitalism. And I have to say, Hubert, I'm stunned by the fact that you use the word capitalism. I'm a little obsessed with that word. Because I believe that for us to have a great democracy, we need to have a better capitalism. And for us to have a better capitalism, we need to have a more thriving democracy. It's a word that people don't use. They use stakeholder capitalism, but they don't talk about capitalism. And you said earlier on the show, in essence, that we have a lot of work to do. There are some things that aren't working. And that's one, but it can only work if we directly focus on it and actually address what is working and could work better. And that seems to be a big theme of what you do.
Hubert Joly
Yeah, it's so true. And while I'm the eternal optimist, as we've just discussed, a couple of years ago, I had to say out loud, “Look, the world we live in is not working. We have a health crisis, an economic crisis, societal issues, racial issues, an environmental time bomb, and rising geopolitical tensions. It's not working.” What's the definition of madness? Doing the same thing and hoping for a different outcome — that's attributed to Einstein.
For me, there are two people on my most wanted to FBI list. Milton Friedman, who famously said in September 1970 that the only focus and priority and goal of the corporation was profit maximization. And then Bob McNamara, the Secretary of Defense during the Vietnam War, who had been a senior executive at Ford and was all about top-down, scientific management with numbers. I think these are very flawed perspectives. And what we need today, I believe, is that we need a real foundation of business and capitalism around purpose, people, and stakeholders.
So my vision is that the business is about pursuing a noble purpose, making a positive difference in the world. That's the North Star. You put people at the center as the engine. I don't care whether you're a tech company or a non-tech company, it's always people who are driving things. You have to embrace all stakeholders. In a declaration of interdependence, we've all realized that business cannot be successful in isolation.
So Best Buy is headquartered in Minneapolis, and following the murder of George Floyd, if the city's on fire, you cannot open your stores. Because you cannot run a business. If the planet is on fire, we won't have a business. So we have to embrace all of the stakeholders in the declaration of interdependence, and then treat profit as an outcome, not the goal. Now, again, most people believe that it's really hard to do. And my journey has been at Best Buy; we have learned a ton about that.
My new mission, now that I've passed the baton at Best Buy to the amazing team led by Cory Barry, is to help the next generation of leaders — people who are eager to move in that direction and feel that they need some help. And I don't have all the answers. But I'm eager to do my part to support them and help them unleash that human magic that is dormant at so many companies. I'm a big believer that today business can be a force for good — that business can help solve some of the biggest societal issues we’re facing. And there are a lot of surveys showing that, increasingly, people are turning to business leaders to try to make a difference.
Alan Fleischmann
I've been talking about statesmanship coming from CEOs for a long time. And that we've seen that shift, to your point, where you don't look to your public sector leaders in the same way we once did. We look for the catalytic leader coming from the private sector — even civil society and the organizations in the nonprofit world are looking more to private sector leaders as well.
Certainly, my biggest hope is what you just said. That human ingenuity is the cure to a lot of the ills that we have — whether it's climate change, cybersecurity challenges, or COVID-related. We saw this, obviously, with that first Pfizer shot in London. It gave us all hope that science does indeed win when people come together; human ingenuity can win in the end, if we actually do it right. You do need to have a supply and demand. You need to have enough revenue, and profit to pay people. In the venture capital-backed world, you don't always have profitable companies; you're not really sure the product is going to win. But you got a lot of money behind them while they're trying to create the runway for profit. That doesn't work in the Best Buy world, as you know. As a turnaround artist, you had to have enough of those TV sold to allow for those things, so that you can actually do what you need to do for your shareholders and also for your employees and your customers. But your point is, if we get them aligned with the right purpose — if you get it aligned with the right focus, and you do right by your stakeholders — you're going to ultimately have the right product. It's delivering the right way.
Hubert Joly
Well said, yeah. Well said.
Alan Fleischmann
Okay, good. I know that right now, as people are talking themselves into a recession sometimes, saying that there are clouds in the sky versus that this is a realignment coming out of a difficult pandemic and addressing a major war happening in Europe. These are realignments that are necessary to deal with the supply chain challenges that occurred; that's where we got our inflation from. Demand was high; supply was low. But we can talk ourselves into that, or we can say that we have the technology today to solve our greatest challenges; we can realign again, in a much quicker way than we could have in a downturn a few years ago. I'm curious how optimistic you are and what you think about that.
Hubert Joly
Well, it's a lot of work. But it starts with defining your corporate purpose — I call that your noble purpose, or higher purpose — which is something that can be very motivating for employees but also a force for growth.
So let me give an example. There's an insurance company down in South Africa, their name is Discovery Limited and they’re a health insurance company. Typically, they insure your health, and then they pay claims when you're not healthy. That's a traditional way to think about insurance. Except Discovery Limited, as they define themselves, are actually going to help you become healthier. They've devised a number of programs to encourage their insured population to exercise and to live a healthier life. They’ve used social science psychology to try to create better behaviors. Their purpose is not to cover your health claims, but to help you live a healthier life. And of course, they're winning in the marketplace — the healthier you have you are, the fewer claims they have to pay. It’s a win-win outcome. So that’s a good example.
At Best Buy also, the first phase was fixing what was broken; there were a lot of things that needed to be fixed in terms of the customer experience, the cost structure, and more. But after we went through that journey, as we were thinking about our growth strategy, we asked, “What should our purpose be?” That's when we defined our purpose as “enriched life through technology” by addressing key human needs, whether it's entertainment, communication, productivity, or health. For me, when a company defines its purpose, it's found at the intersection between the human needs you want to address in the world, what you're uniquely good at, what you're passionate about, and how you can make money.
And that's how we landed on that purpose that at Best Buy. It led us to say, “We're not actually a retailer; we’re a company that's going to enrich lives through technology,” and this got us to explore a number of growth opportunities — including, for example, helping aging seniors stay in their home longer. There are a big aging population rates, and it's not good for them to go into hospital or hospice — if we can help them stay in their home longer, that's better for them. So we put devices in their home, and with remote monitoring and a care center, you can help detect whether something wrong is happening and then trigger an intervention. We would never have thought about it if we have thought about the company as a retailer. But this is turning into a significant growth opportunity.
Alan Fleischmann
And you did it in a way that it did become the ethos of the whole corporation, right? The whole corporation — even your salespeople — probably felt that they were not just selling products; they were delivering…
Hubert Joly
They were helping other human beings. It's a very human thing. And now, of course, many companies have defined a noble purpose, but the challenge is how to make it come to life. I think it starts with a personal reflection.
For us at Best Buy, it actually started with the executive team. One day every quarter, we would get together at an off-site to work on our strategy, our plans, and our progress. Many companies do that. During one of these off-sites, we had asked every one of the executive team members to come to the site with a picture of themselves when they were little. We got some really cute pictures — as two- or three-year-olds, as you can imagine. And then we spent the evening over dinner, each sharing our life story and our purpose.
We realized two things. Everyone on the executive team is a human being — not just a CFO, CMO, or CHR, but a quirky, complicated, messy, beautiful human being. And we also realized that we often don't know our colleagues that well at a very personal level. Everyone on the team, with a couple exceptions, shared the same kind of purpose in life: do something good for someone else.
After realizing this, we stepped back and said, “Look, we're the leadership team of BestBuy. Why don't we use the platform we have to create a company that we would love to work for? And that employees would like to work for, and customers, vendors, shareholders, and the community would like to deal with? And that becomes a calling, as opposed to just a job?”
Then, of course, the journey was having that vision realized by 125,000 people at the company, which was a fun thing to discover how to do. But that’s what has happened. And that is what has led us to unleash that human magic, where people have a spring in their step and feel like they're doing something good for other human beings.
Alan Fleischmann
Love that. And that also goes to what you said earlier about people wanting that in their lives right now. They're looking for that. It's the best of the generations that are following us in some ways, because they're making that purpose. They’re making that a mission. They want to be part of something bigger than themselves.
Hubert Joly
And also their concerns. So we have four kids, who have three granddaughters. They're thinking about the world 20 years from now. Of course, it's going to continue to evolve into much more diverse world, but also a cooking planet. My granddaughters are between the ages of two and four, and I know that maybe in 10 years from now, they’ll ask me, “Happy… you knew that the world was not going well, right? We have global warming, and what did you do?” I want to be able to respond.
And I think many leaders want to be able to respond and feel that they've done their best to transform the business that they're leading — to make it better and do it in a way that makes business sense. A good example of that — Best Buy is not perfect, it’s on a journey — but an example I love about Best Buy is this recycling program they have. If you want to bring a product back to the store — electronics that you have in your home, irrespective of where you bought them — we'll take them from you. And then we work with partners to recycle it and extract the rare minerals — the metals, the gold, the copper, and so forth — that are in there. It’s good for the customers, because you can get rid of all of that junk. It's good for the stores, because we build traffic to the stores. And it's good for the planet. That's one of the ways we've reduced our carbon footprint. Again, we're not perfect; we're not done. There's more work to be done in partnership with our vendors. But if we can find win-win-win ways to solve this problem where it's good for the planet, good for society, good for business, good for customers, good for employees, that’s ideal. Because there is also the pandemic of zero-sum games — like the idea that the only way for this conversation to go well is, if you're brilliant, and I'm terrible. That's stupid, right? Of course, each of us is trying to be our best in anything that we do. I believe in human ingenuity to find win-win-win outcomes. That's the mission.
Alan Fleischmann
I love it. I love it. I know that we needed two hours. In fact, maybe we’ll have you and your wife come on together — that would be an interesting combination. We should do another.
Hubert Joly
If she's on the show, people will listen to her and not to me.
Alan Fleischmann
Oh, I don't know about that… It would be great to have both of you together, but certainly more with you as well as with her. But in the last remaining minute or two, the one thing I really want is for people to read your book. I think it’s extraordinary. And there are many books when a CEO steps down that are memoirs. Your book wasn’t; your book was a journey. Certainly, I went on the journey with you by reading the book, but I’ll add that your book really gave me principles and ideas. It inspired me and challenged me. If there were a few of those principles you'd want people to hear before we end this show and pick up again on the next one, what would they be?
Hubert Joly
Thank you, Alan, for this question. I think it starts with personal purpose, as we've discussed. Deciding who you are, who you want to be, how you want to be remembered. What is your leadership purpose, your life purpose? And your key beliefs? That’s the other thing…do you believe that human beings intrinsically are good or bad? Both, right? Yes, the answer is yes. But how, but how do you want to lead against that? That’s the backdrop.
It's also about asking yourself, “Why am I working? Is work a punishment? Is that a necessary evil? Is that something I do so that I can do something else? Or is it part of my calling, part of my fulfillment?” Like Viktor Frankl said in Man's Search for Meaning, “What is the purpose of the company I work at? How does it connect with my own purpose? And how can I therefore live a happy life at the company? And then what kind of a leader do I want to be? Do I want to be that? That leader that is that superhero? Who knows everything? And tells other people what to do? Or is it a humbler — no, more human, more vulnerable, more authentic — leader who is there to create an environment where others can be successful?”
I’ll finish with a story. One day, we were discussing leadership with our officers at Best Buy. And I told them, “Look, if you're here to serve yourself, or your boss, or me as the CEO of the company, it's okay; I don't have a problem with that. Except you cannot work here — we're going to promote you to customer. We’re going to love you. But you can't work here. On the other hand, if you're here to serve others and be the best version of yourself — you're not going to be perfect, but work on being the best version of yourself in serving others — then we're good. It's your choice.”
Alan Fleischmann
I love that. I love that you said we're going to promote you to be a customer. Well, this has been this has been absolutely amazing, as I knew it would be, and I knew that we would need more time. So I am really genuinely hoping to come back on so we can talk more about these principles because, Hubert, what you offer in your life's work and your life's journey is filled with wisdom. And there's a craving among aspiring CEOs — leaders in business running divisions or companies, those working as consultants, all kinds of people that listen to the show — to really have that purpose, harness it, and figure out how they can make a difference. You are inspiring.
On behalf of “Leadership Matters” on SiriusXM, we have had Hubert Joly today on his experiences and the journey that led him from being a CEO — who turned things around on many occasions, including at Best Buy — to being an amazing professor, author, consultant, advisor, colleague, and friend. I just want to say thank you for all that you're doing. I love that your grandchildren call you Happy, because you do leave me feeling more optimistic, and I am grateful for that as well.
So thank you, Hubert, for being with us today. And then thank you so much to everyone. I look forward to more!