In this edition of Author Talks, McKinsey Global Publishing’s Tom Fleming talks with Hubert Joly, former chairman and CEO of Best Buy and currently a senior lecturer of business administration at Harvard Business School. In his new book, The Heart of Business: Leadership Principles for the Next Era of Capitalism (Harvard Business Review Press, May 2021), Joly (an alumnus of McKinsey’s Paris and New York offices) highlights the leadership principles that fueled Best Buy’s resurgence and describes his own quest to become a more authentic, vulnerable, and human leader. An edited version of the conversation follows.
What problem were you trying to solve with this book?
The world is clearly facing a multifaceted crisis, whether it’s the health crisis, economic crisis, social-justice crisis, the environment, and so forth.
And what’s the definition of madness? Doing the same thing and hoping for a different outcome. For 40 years, we’ve been following a model that was based on two sources of inspiration: [conservative economist] Milton Friedman’s primacy of shareholders and Bob McNamara’s1 [principle of] use your brain to get to the right answer, and then tell people what to do.
Clearly, this has gotten us into trouble. And so I felt—before the COVID-19 crisis, of course, but even more so now—that we need an urgent refoundation of business and capitalism around purpose and humanity. To find new ways for all of us to lead so that we can create a better future, a more sustainable future.
What surprised you most about writing the book—whether in the research or response?
The greatest surprise or delight is just how widely held this view is—that leading with purpose and humanity is the way to go. And yet at the same time how hard this is, and how all of us are on a journey to become better.
My main driver in writing this book was not to tell the world that “I’ve got it; I’ve figured it out.” I did feel, though, that much of what I learned when I was at business school or in my early years as an executive is either wrong, dated, or incomplete.
And so I wanted to provide a guide to leaders at all levels who are eager to abandon old ways and are keen to lead from a place of purpose, and with humanity.
What do you say to leaders who think that concepts like purpose—and leading with humanity—are ‘squishy’?
The image of profits and the image of the leader as a superhero able to save the day, and the leader driven by power, fame, glory, or money—that’s still a very strong image. I see it in some of my peers. I’m teaching at Harvard now, and I see it at business school. But the approach has limitations.
Take incentives. There’s research that shows that financial incentives deteriorate performance. If I ask, “When you get up in the morning, do you think about your day as, ‘How am I going to optimize my year-end bonus today?’” Of course not. Motivation is primarily intrinsic: “How does what I’m doing connect with my search for meaning?” And if companies can connect the individual search for meaning with the purpose of the company, then magic happens.
Don’t get me wrong. Shareholders are really important; I care deeply about shareholders. They’re going to take care of our retirements, so you want to make sure that they do well [laughs].
But people are the source, they’re the engine of any organization. We also know that we have to take care of our employees, our customers, our business partners, and the community. Best Buy is headquartered in Minneapolis. When the city is on fire, you cannot run a business. If the planet is on fire, you cannot run a business.
In the book, you call for a new way to manage and lead—an approach you call ‘unleashing human magic.’ What do you mean by that?
As we think through how we move forward with business and capitalism, it requires us to rethink things. One is to rethink our view of work. Work is sometimes seen as a curse, as something we do so that we can do something else that’s more fun.
I have a different view. I love the Lebanese poet Kahlil Gibran, who said, “Work is love made visible.” Work can be part of our calling, part of our search for meaning, why we exist. And I think in the heart of every individual, there’s a desire to do good things in the world.
I love the Lebanese poet Kahlil Gibran, who said, ‘Work is love made visible.’ Work can be part of our calling, part of our search for meaning, why we exist.
The second thing is how we think about companies. Do we see them as money-producing machines? Or do we see them as human organizations made of individuals working together in pursuit of a goal? And in most people’s lives, their greatest desire is not how much money they’re going to make, or [how quickly] they make VP [vice president] or something like this, it’s the Golden Rule. If you can create this environment where there’s connection of purpose and people can be themselves, then magic happens.
What does this look like in practice?
Let me give you an example. A mother comes into one of our [Best Buy] stores with her young child. The child had gotten a tiny dinosaur toy as a gift. And the bad news is, the head is disconnected; the dinosaur is not in good shape.
The child would like the dinosaur to be cured, so they go to Best Buy. In the old days, [they] would have been shunted to the toy aisle to get a new dinosaur. But two associates in that store saw the situation, understood it at a very human level, took the dinosaur, and went behind the counter to perform a “surgical procedure” on the dinosaur.
Do you think there was a standard operating procedure at Best Buy on how to deal with a sick dinosaur?
And they walked the child step by step through the procedure—substituting, of course, the dinosaur with a new one—and they gave the child a “cured” dinosaur. Now, close your eyes and imagine the joy of the child and mother.
Do you think there was a standard operating procedure at Best Buy on how to deal with a sick dinosaur? Or a memo from me, the CEO, to everybody: “When you see a sick dinosaur, this is what you’re going to do”? These associates found it in their hearts to create joy in this little boy. And they felt that they had the freedom to do that.
That’s our role as leaders, to create this environment.
How did you come to the view of leadership you describe in the book?
There were a number of milestones in the last 30 years that helped me become—hopefully—a better leader. [One important] moment for me was my midlife crisis. I had gotten to “the top.” I had been a partner at McKinsey; I was a member of the executive team at Vivendi Universal. And when I got to the top of that “first mountain”—I felt emptiness. I had worked so hard; I’d been successful. There was nothing there.
As a leader, we need to spend time with ourselves. In my case, I did the spiritual exercises of Ignatius of Loyola, the founder of the Jesuits, to revisit my life and try to discern my calling in life, my purpose. And for me, my purpose is to try to make a positive difference on the people around me and use the platform I have to make a positive difference in the world.
When I got to Best Buy, it struck me. Even during the turnaround, when we were supposed to sink [as a company], and after a gathering of all our store GMs [general managers], where we discussed the way forward, the feedback I got at the end of the day wasn’t: “Oh, my God. Your plan is so great, so compelling, so smart.” [The feedback] was: “You gave me hope”; it’s how I made them feel.
And that changes completely the view of the role of the leader. The view of the leader as the smartest person in the room, driven by power, fame, glory, and money; the superhero who is there to save the day. But that doesn’t work; that doesn’t connect with people. Leaders must create an environment in which others can blossom.
Also, they need to be very clear about who they serve. So I told all of the [corporate] officers at Best Buy: “Look, if you believe you’re here to serve yourself or your boss or me, as the CEO of the company, it’s OK. I don’t have a problem with that. Except you cannot work here. You can be promoted to being a Best Buy customer, which is a wonderful thing. But you cannot work here. On the other hand, if you’re here to serve people on the front line, then we’re good.”
Integrity is important, and so are values. As is being an authentic, vulnerable, very human leader—which is the only way you can connect with others, opening up and connecting at a very personal level. And that’s been my journey.