Live session with… Hubert Joly, former Chairman & CEO of Best Buy

Welcome to this webinar!

We are please to receive Hubert Joly, former Chairman & CEO of Best Buy, on the occasion of the release of his new book, The Heart of Business. During this one-hour live session, we discuss his insights on finding the meaning of work through a company’s purpose, the impacts of the current pandemic on jobs and engagement, the importance of feedback, and of course his inspiring journey to becoming one of the most influential business leaders in the world, as well his amazing tenure as Best Buy’s CEO at a critical time for the business.

Thibaut Munier: We were waiting for this moment with you Hubert and so I hope that everyone can see us well and we have an hour with Hubert to chat about his latest book. So I will start with a quick introduction and then we will have a sample of questions and then we’ll open up for questions so please start asking when a question comes to you.

So dear Hubert, it is an absolute honor to have you today. When we first met in Palo Alto a couple of years ago, you were the CEO of Best Buy, you came to Numberly and you gave us a speech on how you were trying back then to turn around Best Buy. And listening to you back then, I must say Hubert, was a shock, truly a good shock but a shock. It was a shock because I didn’t know you before, I must say, and I didn’t expect you, I must admit, I must confess, as one of the top CEOs in the US, as a member of Corporate America, I didn’t expect you to have this philosophy of putting people first. And I apologize for that, I definitely had some preconceived ideas that Europeans might have sometimes, you know about Corporate America, but still I think you were a strange animal in the business council, I think this gathering of the top US companies that you had attended in San Francisco before we met. And I assume you weren’t the typical mainstream guy in that room.

So you were special, definitely, and your speech was special and I remember being so surprised by what you said by your vision of putting people first, because I thought that was kind of European and still the way you included it, you framed it in a very comprehensive vision was extremely American. So it reminded me of the ideas obviously behind the social market economy, the social market chart, the rhyme capitalism or social economic model, combining the three market capitalistic, economic systems alongside social policies that established both fair competition within the market and also welfare state. So I remember thinking, so it is actually possible, in a large corporation, to get the best of the two worlds : to put people first and to have economic performance, so this is fantastic, this is the future. And your speech was a true inspiration and highlight for Numberly’s growth in the Silicon Valley. So today with Yseulys it is with a huge pleasure to welcome you Hubert, you are now a Numberly friend and we are so glad to have you present your book, present your groundbreaking ideas and some of this fantastic journey you had. So we gathered a few  friends Hubert today, many Numberly people who have avidly, I must say, read your book over the past few weeks and prepare this session. Some of our clients, some of our prospects, some of our board members, our shareholders, our partners, a lot of people in fact, a whole community because your ideas are enlightening and so timely in today’s post crisis reflection. So welcome Hubert.

Hubert Joly: Thank you Thibaut, I so look forward to our conversation and thank you for inviting me.

Thibaut Munier: You are very welcome. So I will have the pleasure today to chat with you with Yseulys and Guillaume Floquet, hello Guillaume, our Chief People Officer. So to start I must say, we received a lot of feedbacks, and i know you love feedback Hubert, so we received some pieces of feedback from the people we sent this invitation to this webinar to, and I thought I had to mention this one, someone who told me : “As someone who worked at Best Buy under Hubert” and I hid his name here,[H: who is this, who is this ahaha T: I will tell you afterwards !] “I am very interested ! He is such an amazing man and an outstanding leader. I don’t know if I could name a leader that is more universally beloved by their organization than Hubert, thanks for thinking of me”. So this is the type of leader you have been for the teams you had and I think this is fantastic.

And to kick off the session, I would like to tell you first of all that we expect many questions, so please ask them and we will pick what we think, what our people at Numberly think, are the most relevant ones and those will get the book, The Heart of Business, don’t forget to put your name when you ask a question. So this book is the Heart of Business, it is available I think Hubert, everyone needs to read it, it is an absolute read. So the first section we wanted to open with you, Hubert was the turnaround of Best Buy, because I think this will give a lot of sense to everything we’ll say after, and so I wanted to obviously quote someone, someone named Jeff, saying “I’ve watched Best Buy for a long time and the last five years since Hubert Joly came to Best Buy have been remarkable, I mean the turnaround that got done there, from just a business case study point of view, is going to be written about and talked about for a long time”. And that was Mr. Bezos, just three years ago, so congratulations and I want to say first that Best Buy in 2012 when you arrived, was a company that was very sick I think, and to be honest a lot of people thought that it was going to die, it was back then, selling boxes, hardware boxes and everyone thought, I think, that Amazon was going to destroy that business. Some people even said in the press that it was crazy or suicidal for you to take the job, so Hubert can you describe what you did at Best Buy and how you turnaround the company ?

Hubert Joly: Thank you, Thibaut, you are being overly generous.

So, back in 2012, yes people thought we were going to die, Amazon was going to kill us, some of the vendors were opening their own stores, so we were very challenged. My view of the situation was that actually, the world needed Best Buy because customers, for some of their purchases, need to see, feel and touch the product and ask questions. And then, the vendors, like Apple, Microsoft, Samsung and Sony, needed Best Buy to showcase the fruit of their billions of dollars of R&D investments.
The problems that Best Buy had, in a sense it had nothing to do with Amazon, they were self-inflicted, you know, prices were too high, the quality of service online and in the stores was really going down, so the good news with self-inflicted problems is that you can fix them.

So we embarked on a journey to fix Best Buy, there were two main phases, one was really the turnaround, the first three or four years, it was about saving the company, so that was Renew Blue, and then the second phase was accelerating growth and trying to create the company we wanted to become, so it was building the New Blue. In both cases this was a very people-centric approach so, you know analysts and investors told me initially “you have to cut cut cut right, close stores and fire a lot of people”. We did the opposite, it was a very people-centric approach. To illustrate that, my first week on the job, I actually spent it working in a store in Saint Cloud, Minnesota listening to the front-liners. We had all of the answers, so people were not the problem, they were the source of the solution. It was also about… Of course, at the top of the company, we had to make some changes but it was also looking first at people to make sure we had the right team. It starts with people and it ends with people.

One thing that I have learned from Jean-Marie Descarpentries, one of my clients when I was at McKinsey was: in a turnaround the first priority is to grow the revenue, it’s amazing what revenue growth can do right, you guys understand this better than anybody else, and to relieve the costs, focus first on non-salary expenses, all of the elements of the cost reduction have nothing to do with people, as an example at Best Buy we sell large appliances, when we deliver them, we may damage them, and of course the customer is not going to like this. So if you can reduce damages, eliminate, generally speaking, waste and inefficiencies in your processes, it is good for the customer right, because no customer wants a damaged appliance and it’s good of course for the P&L. And treat headcount reduction as a last resort.

And lastly, I would say Thibaut, for that first phase is that, sometimes as leaders, we think that our role is to create the perfect strategy, the perfect plan and have everybody implement that. What I learned is that our job as leaders is notably, mainly maybe to create energy. Energy is not a finite resource, so it was about co-creating the plan, getting going, celebrating early wins, when there are problems, being transparent about them say “oh, that didn’t work, let’s get a team together to fix the problem” so very human-centric approach, not starting with finance, ending with finance.

Thibaut Munier: So that’s fascinating this idea of creating energy, I remember you telling us “if you want to learn how to ride a bike, you need speed right” and that’s a little bit counterintuitive because the first reaction is fear, it is not to go too fast and you said exactly the opposite.

Hubert Joly: In the beginning, we had two months to create a plan because our founder wanted to make the company private so the board said “we need to present something to the Street” so we had two months to create something.
And it was far from perfect, in fact, you know what we shared with the investors produced merely a yawn. But what was good is that it allowed us to get going. So the bicycle theory is that you know it is really hard to direct a bicycle at a standstill, if you don’t move, you fall. And if you move, it doesn’t matter if you are not going exactly in the right direction because you can course-correct.
So the lesson here is that sometimes we spend too much time trying to come up with the perfect plan as opposed to getting going and correcting along the way because movement creates energy and you’ll come up with new things along the way, so that was an insight of the bicycle theory.

Thibaut Munier: Talking about movement, tell us a little bit about what happened  with Amazon because they started with being probably an enemy, at least that’s how it was perceived by the analysts, and you turned them into a partner,  how did you do that ?
How did you turn Amazon into a partner?

Hubert Joly: So, sometimes in retail, people obsess about Amazon “what are they doing, it’s not fair”. In fact, in our case, it was not fair because they were not collecting the sales tax, which was a big subsidy they were getting from the government.
The first thing we did, Thibaut, is actually neutralize them by making sure we had the same prices as they did, that our online shopping experience was great, that the speed of shipping was as good as theirs, I mean today we ship as fast, you know same-day, next-day. So in soccer terms, we would call this a draw and then instead of obsessing about them, beyond that, we tried to become the best version of Best Buy we could become. In competition if you can be unique, instead of trying to be Amazon, you know don’t try to be somebody else, everybody else is already taken, try to be yourself.

And then, there was a question, should we sell in our stores and on BestBuy.com, Amazon’s products. So Amazon is a competitor but they are also a vendor of hardware products. And we concluded differently from what Walmart and Target had concluded, [we concluded] that we would sell their products because our mission was to help customers and these were great products. So we always sold their products. Then there was a second step, one of our strategies was to partner with the main tech companies and create, in a sense, mini-stores within our stores. So there was an Apple store, then there was a Samsung store, a Microsoft store, Sony stores… So everybody had the ability to showcase their products, which was good for the customer because they could compare, good for the vendors because the alternative is to build your own stores, which takes a long time and is good for us because of course, we would collect some money from that.

Thibaut Munier: Yeah you made them pay for that, so that was actually the beginning of retail media.

Hubert Joly: Exactly, and so physically for, it might be at the same time for Google and Amazon, both organizations have a table in our store where they can demonstrate Alexa and Ok Google, their smart assistants and whatnot, all the functionalities.
And then there was a further step with Amazon because one thing that we do as Best Buy is that we work with the vendors on future technology and products, so what Amazon did, which was jaw-dropping for the media, is that they gave us the exclusive rights to their Fire TV Platform, to be embedded by us in Smart TVs or any other brands for that matter and this would be exclusively sold at Best Buy or by Best Buy on Amazon.com. So when we made this announcement, in 2018, Jeff [Bezos] came to one of our stores in Bellevue, Washington and we had the media, The Wall Street Journal, Start Tribune… and people were blown away we were doing this.
See, other than the pandemic, I think there is a disease in this world, which is the idea of zero-sum games, on this webinar, the only way you can win Thibaut is if I lose. That’s stupid, right? We are going to win together so instead of focusing on zero-sum games, try to create expensive opportunities and it’s Ben Zander’s book “The Art of Possibility”, look for a win-win-win. I think as leaders, it is imperative to look for ways where everybody wins, this is a much better recipe at least in my mind when you can do that.

Thibaut Munier: Thank you Hubert, I think this is very inspirational, it is also important I think to be aware that we have a number of retailers in the room probably, so I’d love to finish that section if you could tell us a little bit about, one of the most impressive things to me is how you turned Best Buy from a seller of boxes, of hardware and stuff into a service company partly. 

Hubert Joly: I think that is very relevant today, as many companies try to define their purpose or their reason for being, their “raison d’être”, which has become quite fashionable and was critical in our journey. So after we turned the business around, we spent time trying to define our growth strategy. As we exit the pandemic crisis, many companies are looking for ways to grow, because the pandemic has quite a negative impact on the business.
So a key moment, Thibaut, was when we said “we are actually not a retailer”. So here is the scoop, Best Buy is not a retailer. We are a company that is focused on a purpose which is to enrich lives through technology by addressing key human needs. Which is more inspiring for everybody working at the company because we try to do good things for other people. It is also a way to vastly expand the addressable market, so that’s how we got into the health space. Many of us have ageing parents so we know that if seniors, ageing seniors can stay in their home and live in their home independently longer, it’s good for everybody. So by putting sensors under their beds, under their sofa, in the kitchen, in the bathroom, for detection, with AI and remote monitoring and a care center, we can detect if something is going wrong and trigger an intervention. And that service is actually sold through insurance companies, some of the devices are sold in our stores, but the channel is actually more insurance companies.

It is leveraging our unique assets and so, you go after these opportunities if you have defined a purpose, an intersection of what the world needs, what you are uniquely good at, what you are passionate about and how you can make money.
Another illustration of this is our in-home advisor program, if your need is too complex to be handled in a store or online, so in the US people have big houses, so let’s say you are redoing your family room, we’ll come to you, for free, we’ll come to your house and we’ll have a conversation there, we’ll develop a proposal, you can always say no, but our inspiration is to become the CIO or CTO for your home. We can vastly expand our opportunities, so defining a purpose and making it come to life with specific initiatives is a game-changer in our growth and mobilizing an entire organization.

Thibaut Munier: Wonderful. So we will come into the purpose section, but first, we identified in your book, the critical role of the meaning of work with this beautiful quote from Khalil Gibran “Work is Love made visible”, so please comment a little bit on that Hubert, that’s a critical part.

Hubert Joly: When we think about business activity, there is a question that is not asked often enough, it is the question of “why do we work? What is our view of work?”. And of course, in the Judeo-Christian tradition, work has a mixed reputation because work can be seen as a curse, a punishment because some dude sinned in paradise.
We can also see work as something we do so that we can do something else that is more fun, like going on vacation with friends or something like this, but there is no meaning in work.
Or, we can see work as a key element of our fulfilment as human beings, of course, we work the best part of our lives, so if we can connect our quest for meaning as human beings, with what we do, with our work, then something magical happens.
And if we step back, human beings are the only animals that work truly and have put meaning in their work. So asking ourselves as leaders, “what is my purpose in life and through my work, and how do I connect that with the activities I am performing?”
And of course, this is in a context where, according to Gallup, less than 20% of people are engaged at work. And we also have a very current question which is in the context of back to the office, all the companies that do surveys on their employees are hearing that employees want to continue to work from home, and if that is not going to be tolerated, people will just quit and go do something else.
People are asking themselves “what is really important in life?” and I think that is a great question and as leaders, it is imperative to spend time with it. A good exercise I ask people [to do] is “write your retirement speech, how do you want to be remembered” and in addition, not only ask yourself this question but ask people around you on your team. See them, not just as colleagues but as human beings with their own quest for meaning. I think these are critical foundational questions because it sheds light on how we see economic activity and business.

Thibaut Munier: Great so I will go right away write my retirement speech Hubert, but maybe before that we thought, and that was one of your ideas, we could ask the audience, why do you work ? So all of you attendees here can answer the question below on your Slide section, so I will let you a couple of minutes, we’ll continue and we will comment on some of the answers. Guillaume, your time, my friend. 

Guillaume Floquet: Yes, well Hubert, thank you for your first comment, I loved your book, actually I had a few lives in different companies and today with Numberly where I found the typical way of thinking that I really enjoyed. But what struck me when I read your book, is that you articulate two concepts together. There is the first one that I think is more vertical, it is not the representation made on this slide, but nevertheless, it’s benevolence. Because benevolence requires to accept imperfection and you talked about imperfection in your book and to show vulnerability to others as a leader, as people could show vulnerability to their boss, on a daily basis. The second one is more horizontal, it’s about kindness, and you are also talking about kindness and specifically, you talked about it like “kindness consists in understanding the value of serving others”, so you were touching on the meaning of work and maybe one of the meaning of work be useful for others, so how did you manage to educate your teams and at different levels to these two concepts, so we definitely not learn that either at school or many or most of the environments in which we are working in. So how did you manage to do that for the people surrounding you and beyond ?

Hubert Joly: So I don’t think that my teams needed to be educated because they actually taught me a lot. But it’s true that one of the questions we would ask in particular [to] the frontline leaders.
So every year at the company we would get all of the store GMs together before the holiday season to get ready for the holiday season and it was also a cultural moment where we asked everyone and the frontliners, frontline managers “what drives you?” and “how does your work connect with what drives you ?”. And it was striking. I think, if we step back, it’s quite universal, in the heart of everybody, most people is a desire to do something good for other people, it’s the golden rule. It is the most fundamental… Even Darth Vader, his son believed there was still something good in him. And in the end, there is something good in him. So I think it’s not difficult, there’s no need to educate people because it is there, which our role as a leader is to create an environment where it’s actually encouraged to connect that desire to do something good for others with the way the company works.

So I’ll give you a couple of illustrations of that, one was probably just like you guys, every quarter we would get our executive team together to work on our strategy, our plan, our progress, our organization and so forth. As we were exiting the turnaround and moving towards the growth strategy, I asked every one of the executive team members to bring to the offsites, a picture of themselves when they were little and then over dinner, we spent the evening sharing with each other our life stories and our greatest desires in life, our quest for meaning, how we wanted to be remembered, what kind of leader we wanted to be.
And that did two things, one is that it allowed us to discover that members of the executive team were actually human beings. Not just the CHRO or CFO or CMO but individuals with the complexity of their lives. And that 80% of us were driven by the same desire to do something good in the world and there were a couple of exceptions who didn’t last on the team because they were more self-serving, it was more about them than anything else.

And that gave us a desire to encourage, to showcase “we are the leadership of Best Buy, why don’t we use the platform we have, which is Best Buy, to make a positive difference in the world.” And what was true for the executive team was also true in the field, I remember visiting a high-performing store in the Boston market, where the store GM would ask every one of the associates of the store “what is your dream, outside of Best Buy, what is your dream ? Write it down in the break room” and then he said “my role as the store GM is to help you achieve your dream”.
So you are really creating this environment where you can get to know people around you at a much deeper level and be in the business of connecting dreams and that’s the recipe for me, the key ingredient to unleashing human magic and your role as a leader, at the end of the day, is not to tell other people what to do which is the old paradigm, but more to create an environment where they can connect, the fire they have inside themselves with the activities of the company.”

Thibaut Munier: But it’s not only the leaders, it is also the people in the front line and maybe you can tell us about the dinosaur story.

Hubert Joly: All of us are leaders right, Thibaut, at minimum we are leaders of our lives. So the dinosaur story, it blew my mind and really helped me understand what human magic is about.
Back in 2012, Best Buy had been suffering from a mediocre level of service, it really deteriorated our personal performance, but if you fast forward to 2018, things were changing. And one day, I heard about something that happened inside of one of our stores, which is a young mother and her child, a three or four-year-old boy. They come to the store, the young boy had for the holidays, as a gift, a dinosaur toy. Now the sad news is that the dinosaur was quite sick, the way you know this is that the head was quite dismantled from the rest of the body which is not good. But he wanted the dinosaur to be cured so they went back to the store where they bought the dinosaur.
At most stores, most companies would have sent them to the toy aisle and with some luck, they would have been able to buy a new dinosaur. That is not what happened on that day, in that store, it is two associates, two Blue Shirts who understood what was going on, the boy wanted a cure for the dinosaur. So they took the dinosaur, they went behind a counter and started performing a surgical procedure on the dinosaur. Of course, they substituted it for a new dinosaur and gave the child a cured dinosaur. Of course, you can imagine the joy of the boy and his mother.

Now here is the question, in the traditional fashion of excellent management, do you think there was a standard operating procedure at Best Buy on how to deal with sick dinosaurs or maybe even better, a personal memo from me with incentives maybe, on how to deal with this kind of situation. Of course not. And this is a situation where these two Blue Shirts, found in their hearts how to take care of the dinosaur and cure the dinosaur. And also because they had the freedom to do this and this was a time, Thibaut, where the sales were accelerating, so what we had done is creating an environment where people could feel that their mission was to create happiness around them, with the customers, and I thought that was magical as it was happening. 

Thibaut Munier: Absolutely and I love that story I must say Hubert and I told my kids about it. And I want to thank your kids because I think we owe them a lot because they are partly the reason why you wrote your book so we will talk about purpose in a minute. But I want first to give some feedback to the audience and to you about the question. We have an unbelievable amount of answers, some people answered “because they need to pay rent”, “because they need to eat” of course. But some of us work because of “curiosity” , “because I want to enjoy human team and engaging experience” , “because I want to challenge myself”, “I want to feel useful, to have an impact”, “I want to leave something useful, I want to leave a trace behind me”. So we will send you all of these answers, to everybody. But this is the first time I must say in one of our numerous webinars I must say, that we have such a deep involvement so, thank you everyone for that, it is a great reflection, and also we had that question Hubert, because you talk a lot about human connection at work and Guillaume just highlighted the role of this and after a year of remote work and in-person interaction is seen as a risk, how do you recreate human connection ?

Hubert Joly: I think it starts with a realization, first the borders of human connections at work and what it really means before we go into the remote environment. We have been trained to believe per René Descartes of the Cartesian philosophy that the key in the world is, the key- thought is “I think therefore I am”. So we have been trained to be smart as leaders.
I was struck one day when, speaking with a younger associate in one of our stores, and what the young man told me is that his life has changed the day a manager recognized him and took an interest in him. That gave him a spring in his step. And the lesson for me was that instead of “I think therefore I am”, it’s “I am seen therefore I am”. “Ego videare, Ergo Sum “ if I put it in Latin. And I think part of creating human magic in an organization is that everybody feels seen and they exist, they can be themselves, the biggest version of themselves was the key to the discussion around diversity and inclusion where everybody feels that they belong and that they make a contribution.

New to this, is the idea of vulnerability. Because we have gained this myth about great leaders, great contributors and superheroes who saved the day, and I think it’s a much more powerful idea and we saw this during the pandemic for sure, to have this image of us as leaders and contributors, being vulnerable. Our Head of HR Kamy took the risk one day to share with everybody at the company that for years, she had suffered from depression, following the death of her two parents. And there are not many CEO-level executives in large or small companies that are comfortable talking about the fact that they are struggling. And yet when she did this, it changed the conversation because it is established, especially coming from our Head of HR who is a senior executive at the company, that it was okay to be human.
And of course, in the context of the pandemic we have seen the humanity of our co-workers, those of us who are working from home, we have seen their spouses, their children, their dogs, their cats, their wifi problems, their struggles, their anxiety, same with our frontline workers who expose themselves to great risk.

Like my executive team would say, we discovered or rediscovered the humanity of our co-workers and I don’t think that is going to go away. The implications for me on this is that as leaders we need to learn to lead with all of our body parts, not just our brain but also our heart, our soul, our guts, our ears, our eyes. So of course today, most companies are working on “back to the office” and how do we orchestrate this and it is not an easy task. In that context, there is an idea which is the preferential option for the poor, so putting the emphasis on those who are the most vulnerable, those who are struggling the most, what does that mean concretely? That means people who have difficulties working from home, also new employees, onboarding is a challenge, when you are in a remote environment it is hard to really connect on a deeper level than if you are in a physical environment. So even though you may decide that some of the work is going to continue to be done remotely, putting a special emphasis on the newbies, the new colleagues, on the team or on the board, and making sure that you have a special attention to that, creating special moments where people can get together and get to know each other.
For leaders to reach out proactively, of course to every one of the team members but with a special emphasis on those that we feel are struggling the most. So we are being challenged to lead, certainly from a place of humanity as we go through this.

Thibaut Munier: Absolutely, this really puts to the test the second ingredient, I think, the purpose that you highlights so well in your book and maybe you can tell us a little bit about this and what is your issue with Milton Friedman’s doctrine, this article from 1970 “The social responsibility of business is to just increase profits”. So what is your problem with Milton Friedman, Hubert ?

Hubert Joly: I think he is guilty as charged! I think he has had a very strong influence on the economic world for about 50 years, as the dominant view was that shareholders value maximization, profits maximization was the sole responsibility. And I think that we know now, I mean we’ve been knowing already at the time, that this was dangerous.
Of course, we need to make a profit, we all understand this and shareholders are very important stakeholders, but what we have found Thibaut is that an excessive focus on profit is wrong. First of all, we have to recognize that the definition of profit in the P&L, whether you use IFRS or GAAP, is not even trying to represent the economic reality, so don’t be fooled by the numbers, there are many ways that GAAP accounting does not represent economic reality. For example, you write down goodwill, you never write it up, you never put on your balance sheet an investment you have made in the well-being or training of your employees. So, it doesn’t take into account all of the externalities, the damages you are creating in the environment are not there.

But also, focusing on profits is not effective because it might be better to focus on the drivers of performance, rather than the outcome. It’s like if my MD was purely focused on managing my temperature, I don’t want that MD right cause maybe he will put the thermometer in the fridge to lower my temperature. I would rather have somebody who is more deeply looking at my health, and my well-being, so people and customers. A narrow-minded focus on profit is dangerous, it’s not effective, and I think the world has awakened to this realization. I think the business was on the table, famously in August of 2019, came up with a new statement of corporate purpose that reached more purpose-level and embraced all stakeholders.
I think most people now agree with that, the challenge is that this is hard to do because it requires that we rethink what work is about, what companies are about and how we relate. Which is why this book really is a manual, a guide on how to move in that direction so, created for my fellow travellers who are trying to lead from that perspective.

Thibaut Munier: Yes and we have this cartoon about brand purpose because so many companies have had to maybe come up with some brand purpose at some point. So how did you avoid just being something you have to pay service to pretty much, so that’s one of the key questions and maybe you can tell us a little bit about the declaration of interdependence that you propose in your book ?

Hubert Joly: I think that it’s interesting, Thibaut, you have seen the rise of shareholders activism in the last few years, I think today there is a rise of stakeholder activism. In fact, employees are demanding more from companies, employees don’t like to be fooled so if a company’s purpose or values are fake, they are not going to work there, same with customers, same with partners.
And we have seen around … Even shareholders demanding more, in fact over the last several years, Larry Flynt of Blackrock but also same with State Street, Vanguard, they are all telling companies that of course, profit is important but that they also need to take into account their long-term strategy, their impact on society, their impact on the environment.
And one of the realizations is that business cannot perform in isolation. Best Buy’s Headquarters are in Minneapolis, following the murder of George Floyd, when the city is on fire, you cannot open your stores, you cannot run the business, similarly, if the planet is on fire, you cannot operate the business, the biggest business risk according to Larry Flynt.

So I think the model going forward, for companies, is to in fact be driven by a noble purpose, put people at the centre and embrace all stakeholders in a way that is congruent and treat profits as an outcome. To make it concrete, someone on the board of Ralph Lauren, and it’s interesting how they have this designer change program, of course, they are designers, so in the design of the program they incorporate diversity matters, they operate the circular economy in their business model. So, ESG or CSR is no longer an afterthought, something you do once you have done everything else, it needs to be incorporated from the ground up, into the strategy and the business model of the company.
And because all of the stakeholders are putting pressure from the outside-in, I think there is no choice, companies have to move in that direction. To be clear, I don’t believe for a second that doing this needs to be at the expense of… or is an excuse not to perform from a financial standpoint. In fact, on the contrary, I believe that this is the way to create the most value, for all stakeholders, including shareholders.
And of course, the fact that at Best Buy our share price has gone from 11 dollars at the low in 2012 to now, around 115$ is an indication that this actually works.

Thibaut Munier: Absolutely and this is something honestly I can imagine with some of the words you use “noble purpose”, “magic”, “putting people first”, I can imagine some skepticism, cynicism maybe in Europe or elsewhere actually, but the great thing in your book is that you make the demonstration, you make it work, you actually have a very pragmatic way of proving things with facts and I think this will make the difference, so …

Hubert Joly: In my sense at least, is that most leaders, most companies now believe that this is the right direction. So it is less about convincing people that this is the right thing to do, it is more about: how do you do this, what are the practical implications and that is why the book is full of tips and approaches of how to move in that direction.

Thibaut Munier: Yes sure. Hubert talking about pragmatic things, I remember once we were discussing together and I was saying it must have been a challenge arriving at Best Buy, and you told me “no it was easy, when I arrived, the purpose was easy it was just to survive, the complexity was after because we survived, what’s the next step ?” So can you tell us, I mean what was the complexity finding the next purpose after surviving ? 

Hubert Joly: The first phase was “do not die” and the team told me afterwards, “yes Hubert you have been clear” because I was always telling them “say it if it was not that clear” but they said, “No you are very clear if we don’t change, we die”. So we decided to change. And it was about fixing things that were broken so it has a certain simplicity to it.
The second phase was not about fixing, there was no gun to our heads, but it was about what kind of company do we want to create? What do we want to look like when we grow up? So what is our desire?

Let’s get back to that executive team dinner, based on our own individual life purposes, we wanted to create a company that employees would love, customers would love, to be a great citizen in the community and that of course shareholders would love as well. So it was imagining the possibilities and then doing the work of course because this is not just about dreaming. Yes, it was about love in a sense and imagining the possibilities. The challenge was figuring out how to make sure that everybody would write themselves into the story. That was the challenge because imagine Yseulys, you and I walk into a Best Buy store and we tell the associates in the store, the managers: “We have great news now our purpose is to enrich lives with technology by addressing key human needs”. They are going to say: “Hubert what are you saying ? You want us to do what at 10 am when we take our shifts ?”.
So that was the challenge, you cannot just stay with corporate-level concepts. And so in the book, I tell the story about how we enabled everyone to write themselves into the story. That was a unique moment, there was a training where we closed all of our stores and we did some exercises where everybody clicked and was able to say “this connects with who I am” and this is very real which then led to the dinosaur story.

Thibaut Munier: Guillaume I think you had one question here.

Guillaume Floquet: Yes maybe I am going to come back to one of your tips actually because we are seeing more and more companies even in Europe or in the rest of the world, opting for being a mission-driven company or being a B-certified corporation and all of this could be a little bit fake or be seen that way, so most of them and maybe that’s my view, are more talking about it than leading through it. And maybe because of the pressure of investors at least that’s what they say, so we have been talking about it, but it seems to prevent them from acting on it. So what would be the prerequisite in your view, that could create the alignment that you were talking about on this introduction on purpose ?

Hubert Joly: Guillaume, I don’t believe for a second that companies need to become B-Corps or “Entreprises à mission” to move in that direction. In fact, it is almost a distraction because it deals with something quite conceptual as opposed to behaviours, which is what then triggers the alignment. There is no prerequisite to creating an alignment amongst stakeholders. My view with this approach is that you start with people, make sure you have the right team and that they are given the right tools. Everything I heard in that store in Saint Cloud, Minnesota where I spent my first week, they told me what needed to change. You focus on the customers and doing great things for them, you understand the drivers that lead to great outcomes. So you do the work of knitting people, business, and finance and believing in the partners as we have discussed with Thibaut around Amazon.

So there is no prerequisite, there is no obstacle, there is no conceptual obstacle, shareholders are not stupid, they understand that for a retailer to be great, people need to be happy working there and that customers need to be happy, and the board also understands this. So sometimes we make it too complicated and it is a matter of doing the workaround and creating the right initiatives and the right environment to get this done. But there is no prerequisite other than… My view is that the most critical decision we make, and of course Guillaume you all relate to that, the most important leadership decision we make is who do we put in a position of power.

Thibaut Munier: Yes, tell us about change management Hubert.

Hubert Joly: My initial approach to change management was to change management. I am a bit of a Maoist so I believe that fish rots from the head so we had to change a few people at the top. But I think that in change management, you change behaviours by changing behaviours so focusing on people and customers. For me as the CEO, then lead to … you know people pay attention to what the CEO… how the CEO is spending their time.
And then at some point, the team encouraged us to clearly specify leadership expectations. If the most important decision we make is who do we put in a position of power, being clear about the requirements to be in a position of power was an important step and that was the leverage point.

Yseulys Costes: If I may, there are some questions and purpose we can go through. We have quite a lot so, the first one which says “you say profit is more of an outcome, can you elaborate?”, first point and then “what is the necessity of being profitable” second point, “profit is only an outcome based on calculation norms”. So what to you think about that ?

Yseulys Costes: Can you elaborate on “profits is the outcome”, what is the necessity of being profitable and profit is only an outcome based on calculation norms?

Hubert Joly: So profit is an imperative, you cannot survive if you are not profitable, if your economic performance is mediocre compared to the competition, the activists will go after you, the shareholders are not some abstract notions. They are the people to whom we give our money, right, money comes from us, and particularly in the US, we ask them to make sure that our money is available when we retire, that we have enough when we retire. So that is the reality of shareholders. And so of course, we have to perform for them.
The question of treating it as an outcome is this idea that instead of focusing on managing the P&L or the balance sheet, well it’s not bad to do that, but going upstream and looking at the drivers of performance. So even in that turnaround, I have done quite a few turnarounds when I was at McKinsey, the key is to understand the key operational drivers of performance and to make sure that you maximise those. The big idea is to treat profit as a very important imperative and as an outcome, as opposed to the ultimate goal both in our lives and for the company.

Guillaume Floquet: Could you give us a few examples of your KPIs?

Hubert Joly: Well, you build KPIs around various stakeholders so around people, so you have employee engagement, turnover, diversity, for customers it is going to be the NPS, Customer lifetime value and all of the metrics, you guys are the expert at this around your marketing activity and so forth.
Then of course you have your carbon footprint, it is interesting how companies when they make operational decisions now, look at it in a much more multifaceted fashion.
I was at a board meeting recently where we were reviewing supply-chain optimisation and the criteria were: was it good for the customers but also what is good on the planet, and what is good for shareholders. So of course profit, the financial indicators are important.
One of the interesting discussions these days is, should the world develop some norms and standards around measuring the companies performance for the various stakeholders. So we have the Commission in Brussels, working hard to create something very complicated, different initiatives.
For me ultimately, what I believe is that the best indicators are going to be those who are created by the companies, that are specific to them. In general, the way we want to measure ourselves, it is better that we define how we want to measure ourselves than if others imposed this on us. But at the same time, I recognize the need for comparable norms so that it is easier for investors and rating agencies in the public to compare.

Yseulys Costes: Thank you Hubert, perhaps another question from Alexandra who asks “we are facing issues sometimes to keep inspiring our teams, mainly when we are a hyper operational job focus, any advice or tips? “ You started talking about that with your people in your stalls so some tips ?
→ We sometimes face issues to keep inspiring our teams, mainly when we are a hyper operational job focus, any advice or tips?

Hubert Joly: Any situation can lead to quite a bit of excitement, it is all about how as leaders we shape that environment.
So in the very dark days of Best Buy, whenever we thought we were going to die, we were focused on our operational improvement, but it is the way you approach this, it is how you work on this with your teams, and then you celebrate progress.
So there is a key concept, I learned that from Jean Marie Descarpentries as well, sometimes people spend a lot of time focusing on goals and perfection… His idea was that progress momentum is the key, including when dealing with the investors.
For example when we unlocked “ship-from-store”, which was a big unlock for us, initially we did it in 50 stores, we showed that it would work and then we told the investors we are going to move to 250 stores and we told them later that it would be 1000 stores, and that is the progress we were making.
The focus on the month to month progress and improvement, getting better, is a better focus than … An alternative, sometimes you see companies setting goals, saying they want to be number one, they want to be the best. And then you have rankings, I think this is a disease, I think it’s more about becoming the best version of yourself and getting better than becoming the best. It is my view.

Yseulys Costes: Thank you very much Hubert, I do agree, it will apply more than it applies today. Another question, Hubert you mentioned the importance of honesty and goals as important turnaround pillars, which do you think is important success or integrity ?

Hubert Joly: So, Yseulys, 98% of the questions that are asked with “ either” and “or” are better answers that end. So I am not going to fall into this trap. *laughs*
But integrity is foundational, if we don’t have integrity, if we don’t have vulnerability, if we don’t have transparency, there is no way you can be successful. In the book, I tell the story of when one of my heroes Alan Mullaly became the CEO of Ford and Ford was about to lose 17 Billion dollars, that is what they were expecting. And they did lose 17 Billion dollars, I think it was in 2006, so they didn’t have a forecasting problem, but at the same time, you know how you do green and red right to assess your performance, everything was green. And one day, Mark Fields, the president of the US Market, the Thursday’s weekly appreciation performance review, had a red. That was when he admitted there was a problem and that I say “clap clap clap” if we can admit that we have issues then, we can work together to solve the problems.
So integrity and transparency and vulnerability is what leads to excellence.

Yseulys Costes: Thank you very much Hubert another question which is “Could you elaborate on how to decide who to put in a position of power? Thank you”

Hubert Joly: Historically we have put a lot of emphasis on expertise and experience, and it is not entirely bad but we have increasingly placed more and more importance on who the person is, what kind of a leader they are, what drives them and what difference do they want to make.
And one of the leadership expectations at Best Buy is to be clear about who you serve. I told the officers at Best Buy, if you are here to serve yourself or your boss or me as the CEO, it is okay, I don’t have a problem with that, except you can’t work here. We are going to promote you to be a Best Buy customer, we are going to take good care of you. I want you to feel that you are here to serve others, serve the frontliners, serve the organization but it’s not about serving yourself.
An amazing question I had when I was being interviewed for the CEO job was at Carlson Company, my job before Best Buy, I was interviewed by Marilyn Carlson Nelson, the daughter of the founder, it was to replace her, one of the questions she asked me was “Hubert, tell me about your soul”.

Thibaut Munier: I wonder who got that in an interview already.

Yseulys Costes: Thank you very much and I think it’s an amazing word to end this session, it’s already been one hour spent with you and it goes too fast. Thank you so much, each time I am lucky enough to exchange with you it’s really a pleasure so thank you all for being with us for this hour and please spread the word, and discuss about it because it is not an easy discussion, but it’s a discussion we need to have now and which are important. So bring your ideas and bring your soul in this discussion in Europe, in the US, wherever you are, thank you very much.