Business Transformation with former Best Buy CEO - CXOTALK #707
The world we are in is facing a multifaceted crisis, right? We have a health crisis, economic crisis, societal crisis, racial, environmental, geopolitical, you name it. Of course, the definition of madness is doing the same thing and hoping for a better outcome. Hubert Joly, former CEO of Best Buy, wrote this really good book. You know if I say something is a good book, I really mean it.
It's called The Heart of Business. The Heart of Business is the idea of pursuing a noble purpose, putting people at the center and creating an environment that can unleash human magic, embracing all stakeholders in some kind of declaration of interdependence, and treating profit as an outcome. Now, Michael, that's a simple formula.
It's easy to say; really hard to do. We know this because so many of us now are on this journey to reinvent business around purpose in humanity. The book is about providing the benefit of my experience and my work and what it takes to do this. It's around revisiting – I know we're going to talk about this – revisiting the meaning of work, revisiting what is the essence of a business, revisiting how we mobilize people, and revisiting how we lead. To quote Louis the VXI at the end of the 18th Century, this is not a revolt. He asked one of his secretaries, "Is this a revolt?" Monsieur La Rochefoucauld said, "No, sir.
This is not a revolt. This is a revolution." You made a very provocative statement that implies business is not first and foremost about making money. I learned that from a client 30 years ago. I was a partner at McKinsey & Company.
It was dinner with the CEO of a major computer information technology company. He told me, over dinner with two of my partners, "The purpose of a company is not to make money. Making money is an imperative, of course, and it's mainly a result.
It's an outcome." "In business," he continued, "there are three imperatives." Once I say it, you're going to say, "Yeah, of course, it's obvious." • You have the people imperative, meaning you need to have good team members properly trained and equipped. • You have a business imperative, which is you need to have customers to whom you sell good products and services. • Then you have a financial imperative.
You need to make money. But then he said, "It's truly the way it works, right? Excellence on the people imperative is what creates excellence on the business imperative, which then creates excellence on the financial imperative." But, he says, "It's really important to not confuse an imperative and the purpose." Then he gave a very practical illustration of this. He said, "When you do a monthly business review with your team, don't start with financial results.
End with financial results. If you start with financial results, you're probably going to spend the entire meeting on financials and you won't have time for people and customers. "Whereas, if you start with people and business and end with financials, you'll have enough time to spend on finance because your CFO will make sure. But you will focus on what really drives the outcome and, therefore, ironically, it's by not focusing on financial results that you will get the best financial results." I think Best Buy is the living proof of that because we apply that philosophy.
I'll say that the share price of Best Buy went from a low of $11 in 2012 to now about $120, which I think, in 9 years doing times 11, I think it's okay. Right, Michael? What happened at Best Buy and how did these principles inform your decision-making? Yes. I assume you had to make some really tough decisions at that time. Let's rewind to 2012. At that time [laughter] – you'll remember this, Michael – everybody thought Best Buy was going to die.
In fact, there was exactly a zero buy recommendation on the stock. Amazon was going to kill us. Apple and Microsoft opening their stores was going to kill us. Before I took the job – because I didn't need to take the job. Let's be clear – I actually did some research.
What I found was two things. One is the world needed Best Buy. As customers, when we buy these complex products, sometimes it's helpful to be able to go to the store and talk to somebody. Fortunately, the vendors needed Best Buy because they needed a place to showcase the fruit of their billions of dollars of R&D investment.
The problem was essentially a series of issues that were self-inflicted. Prices were not competitive. The service was not great.
The online experience was horrendous, and we know how important that is. Things like that. If it's self-inflicted, Michael, of course, you can correct because it's in your control. Now, the advice I was getting at the time from many was, "Cut. Cut. Cut."
You know the usual recipe of turnarounds: close stores, fire people (like if people would be the problem). We did the opposite of that. We had – eventually, we were going to die. Because we were going to die, we had a very people and human-centric approach to the turnaround. What do I mean by this? Let's be real concrete, right? Everybody says people are the most important thing, right? So, it started with people. It started with people meaning listening to the front-liners.
I spent my first week on the job, Michael, working in a store in St. Cloud, Minnesota, listening to what the front-liners had to say. In a company, that's where you get the truth, right? It's about what's working, what's not working. They gave me pretty much 80% of what we needed to do, and then it was a matter of doing it because if I had just listened and done nothing, not a good outcome. It was also a people-centric approach. So, I have to admit.
Don't share this with Secretary McCarthy. I'm not talking about the current leader of the House, but the old senator from the '50s. I'm a Maoist at heart. I believe fish rot from the head. Sometimes, in a turnaround, the approach to change management is to change management. But it's about people and making sure you have the right people at the top.
Then it's people last. It's people first because of this, and it's people last in terms of you count headcount as a last resort. I hate it when companies announce, "We're going to eliminate 10,000 or 20,000 jobs." The stock price goes up. I think this is sickening.
My approach to a turnaround, Michael, number one, grow the revenue. It's amazing what revenue growth can do. Two, you are probably going to have to cut costs. At Best Buy, we did. Over 8 years, we took $2 billion of cost out. As you do this, focus first on what I call non-salary expenses, which is the element of the cost structures that have nothing to do with people.
In most companies, that's actually the vast majority of the cost structure. It's about eliminating waste, inefficiencies. Then you reduce headcount as a last resort.
As you do this, you're still being human because you are going to try to redeploy people within the company or, if you can't, then you're going to try to treat people (on the way out) as well as you treated them on the way in. The last piece about the humanity of that first phase, which was the first three years of our journey, Renew Blue, it's all about creating energy. We've been trained that, as leaders, we need to be smart, come up with the best strategy, and that's what's going to make a difference.
I actually have a different view today. I believe that strategy is fine, but it's all about creating energy so that you can get things done. How do you do this? It's about co-creating the plan so that people own it. It's about getting going. It's about celebrating early wins.
It's about talking about the problems. If there are problems, let's talk about them and let's handle them together. It's people first, people last, and creating energy. What I find particularly interesting about what you just said is this combination of driving efficiency in, it sounds like, a very intense way.
However, combined equally with respect for the people and creating humanity. Yes. In fact, the source to efficiency is the human genius. [Laughter] Even in tech companies, who is behind the tech? It's people.
We saw that even more, Michael, in the second phase of our journey. The turnaround was Renew Blue, so call it from 2012 to 2016. At some point, we decided that the turnaround was over and that we needed to move to a growth phase where we would focus on building the best version of Best Buy we could. That's where we spent more time defining our purpose as a company and we spent more time also on creating the environment where we could unleash human magic.
I'm sure we'll talk about this. Many companies today talk about purpose. It's become very, very fashionable.
But then if you just state your purpose and nothing happens, it's not exciting. There's all of the work to go from thinking about the purpose to creating a situation where every employee can write themselves into that purpose. That's when you see irrational levels of performance, which is essentially what we've seen at Best Buy. Let's talk about purpose for a moment. We do hear this term kind of popping up everywhere.
I think very often it's a good, politically correct, motherhood and apple pie kind of, you know, it feels good, but there is no real substance. How do we convert that into something substantive and meaningful? Yeah, so let me make it really concrete and share some of the lessons learned along the way. I'll tell you that it was challenging. This was not a walk in the park. As a result, we've learned a lot [laughter], frankly, during that time.
Back in 2016, as we were looking to accelerate our growth, we did the good work around market research, segmentation, targeting, positioning – what I teach my students at Harvard Business School in the marketing course. Then we also wanted to go beyond that and started to think about our why – maybe influenced by Simon Sinek – why do we exist? That's where we came up with the concept, actually said it, "We are not a retailer. We are not a retailer. We are a company that's in the business of enriching lives through technology by addressing key human needs."
Defining your purpose, I think you find a company purpose at the intersection between four circles: • What the world needs. What are the human needs you're trying to address? • What you are uniquely good at. • What you are passionate about. • Then, of course, how you can make money. This is real substantive. This is not philanthropy.
This is not CSR or OESG. This is a business discussion. The benefit of defining the business in terms of its purpose is that, number one, it vastly expands the addressable market. There are a couple of examples of that. That's how, at Best Buy, we went into the healthcare space helping aging seniors live and stay in their home independently longer by placing sensors under their bed, under their sofa, in the kitchen, in the bathroom. Fall detection.
People who have aging parents know what I'm talking about. They live independently, but you want to keep an eye on them. With remote monitoring, artificial intelligence, and care centers, you can actually really be helpful. That's a service that's sold through insurance companies. We would never have thought about this if we had thought of it ourselves as a retailer. The other example is something I hope everybody will take advantage of, which is the in-home advisor program where, if your need is complex, it's too complex to be handled in the store or online, we actually come to you.
We'll aspire, if you let us, to become, over time, like your CIO, your CTO for your home. Our homes are becoming more and more complex, so that's a real need. Again, you would not have done that as a retailer.
The second thing it does, a noble purpose, it's inspiring for customers. In our hearts, as human beings, we have a desire profoundly to do good things to other people. It's the Golden Rule. We want to make a difference, a positive difference, in the world. Now, again, if you just stay at the definition of the purpose, nothing happens. The two examples I've given you show how you can make it a cornerstone of your strategy and come up with specific initiatives that support that purpose.
But then, it's still not sufficient because you're not yet touching everybody at the company. At Best Buy, there are roughly 100,000 people. You want 100,000 people, including the blue shirts in the stores and whatnot, to write themselves into the story. Here is the challenge, Michael. Let's imagine for a second that you and I walk into a Best Buy store. There are a few nearby where you live.
We're very excited. We're here to tell the store employees, "We have some exciting news. We have a new corporate purpose as a company.
It's to enrich lives through technology by addressing key human needs." What do you think would b ethe reaction of the store employees? They're going to say, "You're saying what? You want me to do what at 10:00 a.m. when I take my shift?" [Laughter] This is corporate speech, "We love you – maybe. But you have to do more work."
This was such an interesting journey, so this is what we did because we did not walk into the store like this. But we had 40 or 60 of our best leaders (who knew the company really well) work on our brand identity and work on translating it into very concrete human terms. It culminated into a training program.
I give them so much credit. A Saturday in June, four years ago, we closed the stores for a few hours, all of the stores. We assembled all of the staff and, of course, I was in one of the stores.
No PowerPoint presentations. No video. Nothing like this. We went into small groups, and we did two things. We shared with each other our life story, so I was paired with a young woman.
She had been in an abusive relationship with an ex-boyfriend. She had been homeless. For her, Best Buy was really her home and her family.
Of course, Michael, all of a sudden, I see her not so much as an employee but as a human being. Then the second exercise was to share with each other the story of somebody in your life who is an inspiring friend and what they do to be an inspiring friend. For me, it's my older brother. Philippe is just a wonderful guy. I love him. Then we said, "Okay.
What we want to do, looking ahead, is actually what we did our best today. We want to treat each other and our customers as human beings, not as walking wallets, and we want to be to each other and the customers inspiring friends." Now, all of a sudden, I can write myself into that story, irrespective of my job at the company. I can find a personal connection between what drives me as a human being in my job and the purpose of the company. Now, of course, it's a bit more complicated in that you also need to create the right environment – maybe we'll talk about it – where, on a sustainable basis, you can unleash that human magic. We've all gone to training.
It's all feeling good. But then if you go back to a poisonous environment, then that's not good. You need then to work on the environment so that that's sustainable and that can be done at scale.
What's interesting in this approach, Michael, is that it's very different from the top-down approach. On my FBI most wanted list, there are two people, Michael. [Laughter] One is Milton Friedman.
The idea of shareholder privacy. Everybody knows that he invented that in 1970. It was all about profits.
That's poisonous. Then the other one is Bob McNamara, the former U.S. Secretary of Defense, who invented scientific top-down management where you take a bunch of smart people and they come up with a smart strategy. Then they tell other people what to do and they make sure there's compliance. That doesn't work.
Motivation is intrinsic and we need to have it come from within. That's where it's really a revolution. Let me ask you a very kind of practical question that comes from Wayne Anderson on Twitter. He says, "How do you square, quote, optimizing the cost of benefits, which is really," he says, "a euphemism for reducing non-salary support for employees? How do you square that view of efficiency with this kind of humanity-led approach that you're describing?" I'll add, especially at a public company where you're under such intense scrutiny, and you're kind of violating, in a way, the traditional norms of Milton Friedman-esque economics and philosophy. Wayne is referring to maybe he's an ex-Best Buy employee, which would be wonderful. If we make it a bit more granular in my hierarchy, first is to grow revenue.
Two is to go after non-salary expenses. The third one is indeed optimized benefits. The fourth one, as a last resort, is to reduce headcount. Optimizing benefit, the best example I'd like to give is, in the U.S., of course, most large companies are self-insured from a healthcare standpoint. If you can find ways to improve the health of your employees, this will reduce your healthcare cost.
It's good for the employees because nobody wants to be sick, right? You want to be healthy. And it reduces the healthcare costs. That's a good case where it's obviously a win-win case. Now, there are some cases when the times are really tough where you may reduce some of the benefits. You do this.
There's a hierarchy. It's before reducing headcount. As an example, in my career, one of the things that I've done is sometimes vacations or paid time off, at some companies you could carry it over to the next year. If you change that policy and you say, "No, you cannot carry it over," first of all, it's not entirely bad because it encourages people to take that time off.
But it's actually a saving. Now, I'd rather have the saving if it can save a few jobs. That's how I think about it. Now, to the Milton Friedman and to the debate, I hope it's helpful to Wayne. I'm not saying any of this is easy, but that's the philosophy.
It's a preference. It's a hierarchy of preferences. As it relates to shareholders, in my philosophy, shareholders are a very important stakeholders. There are savings. We give our savings to these financial institutions and they're there to optimize their performance. They're really other human beings.
By the way, they share our concerns about the environment and about really investing for the long-term and so forth. My view of stakeholder capitalism or the view of the heart of business is not at the expense of shareholders. In fact, in many, many ways, the way to maximize shareholder performance is by focusing on the noble purpose, on people, on embracing all stakeholders, and to refuse— So, I think, other than the COVID disease or pandemic, there's another pandemic in the world, which is the idea of zero-sum game. Michael, the only way for you to win is if I lose.
I think that's crazy. As leaders – and all of us are leaders because, at a minimum, we are the leaders of our lives – looking for ways to simultaneously serve the needs of our various stakeholders is the approach. I'll give an example. Amazon was supposed to kill us. What Best Buy has done is we've partnered with them. We're selling all of their products in our stores.
At some point, Amazon even gave us the exclusive rights to the Fire TV platform to be embedded in smart TVs. Best Buy is the only place where you can actually get these TVs, either at Best Buy or by Best Buy on Amazon. Instead of being afraid of Amazon, we found a way to partner. The same with Apple. Apple have got their own stores. We could see them as a competitor.
We found ways to collaborate for the benefit of our customers, for the benefit of the two companies and, therefore, of our two shareholders. I think that we have to challenge ourselves to find win-win-win solutions. Can we shift gears slightly? Let me ask you to put your CEO hat on.
Tell us about customer experience, the role of customer experience, what it is, and your thoughts on that topic. The resurgence of Best Buy is a very people-centric, employee-centric story. It's also a very customer-centric story in two phases. In the first phase, the turnaround phase (Renew Blue), it was about fixing what was broken. We started measuring our net promoter score, and we started looking at what were all of the policies or practices we had that were causing some of the customers to be detractors.
It's a pretty rudimentary approach where you look at the list and try your best to identify the pain points. You work them one at a time, so it's a pain point elimination approach. It's reducing the pain.
That was the first phase. In the second phase, we shifted gear. Believe me, we're still in the process of eliminating some pain points because nobody is perfect here. We shifted the mindset to more of, how can we create happiness? It's less about reducing the negative but building the positive.
That's where it's related to the purpose of truly understanding the underlying human needs of our customers and understanding what it would take to create the best possible experience in response to these customer needs. That would entail creating something that was not about fixing something that existed but, in many cases, inventing something that was completely new. Let me give you a couple of examples.
I already mentioned the in-home advisor program. That was completely new. It's about having this relationship, so moving from selling products through transactions to selling solutions and building a relationship. The other one was support. So, as we have a lot of technology in our homes, if Netflix is not working tonight, is it because of Netflix or the pipe into the home, so Comcast, Verizon, or your local provider? Is it the router, the wi-fi, the TV, the streaming device? "Honey, what is it?" Of course, we bought this, you know, it's probably ten different vendors. And so, Best Buy can be "Honey" because we can take care of everything in your home, irrespective of where you bought it.
That's what the customers want. They don't want to have to call ten different providers. So, we're going to be at your beck and call to take care of that.
In theory, that seems very straightforward. We have to give the customer what they want. But in a large organization, what's the mechanism for understanding what those customers want and then, very importantly, for feeding it back upstream so that you're designing the product, in essence, in accordance with what those customers are telling you? I think the two phases were a little bit different. To identify the pain points, again, the net promoter score survey, or just yourself. I think one of the things I've learned is that when you're a leader, try to experience yourself what the customers are experiencing. Michael, that gave me a gigantic excuse to buy a lot of electronic products during my tenure [laughter] at the company, which was so cool.
Make sure that you experience it end-to-end. You don't delegate anything or you don't tell people you're the CEO. You want to experience it end-to-end.
In the second phase, which was more about creating happiness, I think that's where we invested in teams that had deep experience with CX and UX (customer experience, user experience). We went to creating these agile teams, so a completely different approach. There are many, many companies now on that journey where you empower multifunctional teams to quickly create MVPs (minimal viable solutions), so it's a completely different approach from the siloed approach that was years ago, the waterfall approach. You take months to gather the requirements, then years to develop a solution, and when you implement it, the needs have changed. Really creating this new way of working with expertise on customer experience and user experience design but, importantly, empowering a multifunctional agile team to make decisions, try things, and improve them along the way, this is allowing many companies to move much faster.
During the COVID crisis, we've seen this huge acceleration of putting in place new approaches in support of what a company is trying to accomplish. What about from a cultural standpoint? You've put these teams together. You've put the tools in place. You've provided the mandates and the incentives, but that doesn't mean that people's habits of how they think about customers and think about their departments and the silos, that's not going to just change. What about that aspect? The agile teams sort of challenge the silos because these agile teams are working together, oftentimes in the same location. The challenge is not so much for the teams but more for middle management because their role is really challenged.
More profoundly, I think this leads to the discussion of the ingredients of what I call unleashing human magic. Being originally from France, is it okay if I talk about ingredients in a recipe? Unleash magic, right? [Laughter] There are five that I think we've identified that are really making a difference. It's a little bit like the parable of the sower. Maybe that's your point. If you plant the seed in the rocks or in the bushes, it's not going to grow, so you need to have a fertile ground, good soil that's going to produce wonderful trees or plants. The five ingredients are what? One, it's about connecting dreams.
No, I've not been smoking anything illegal. What do I mean by connecting dreams? I think magic happens if every one of us as individuals can connect what drives us—what our purpose in life is—with our work and with the purpose of the company. I shared with you this training that we did in the stores. That was a big deal.
Another illustration of how you do this is this store general manager in Boston who would ask every one of the associates in the store (about 100 people), what is your dream? At Best Buy he'd ask, "What is your dream? Write it down in the breakroom." Then he would say, "My job is to help you achieve your dream." I think being clear about what is our purpose as individuals but being curious about the purpose of people around you, as leaders, that's not a silver bullet. There's no silver bullet. But that's a big deal.
The second ingredient is creating or enabling genuine, authentic human connections. If we follow this idea of the purposeful human organization, human connections is really the essence of our lives. What does that mean to create that? In a store I was visiting, there was a young associate who told me that his life changed the day a manager recognized him and took an interest in him. My compatriot, the philosopher Rene Descartes of the Cartesian Philosophy (logic) famously said a few centuries ago, "I think, therefore I am."
I think he's wrong. For people, it's, "I am seen. Therefore, I am." If we can create an environment where everyone around us feels seen and respected, and that they can be vulnerable, they can say, "I'm struggling with this. I need help."
My most frequently used phrase now as a leader is, "My name is Hubert, and I need help." I think, during this crisis, we've had many occasions where we felt that. I think it's important to say that the myth of the leader as the superhero, that's gone.
The third ingredient is around autonomy. Guess why. Nobody likes to be told what to do. Michael, do you like to be told what to do? I think my wife would agree with that one. [Laughter] [Laughter] None of us like to be told.
Motivation is intrinsic, so how can we create an environment where we empower our teams? There's a lot of discussion around that in the Harvard Business, which is this guide to unleashing human magic. The fourth one is around mastery. People like to grow their skills. Now, that has significant implications from a leadership standpoint. Traditionally, leaders would look at results, especially in sales. Did you hit your quota? If I'm in sales, if I hit my quota, that's fine.
If I did not, the fact that you are pointing out that I didn't hit it, do you think I'm stupid? I know I didn't hit it. Could you help me understand how I can get better? So, focus on the drivers. The other key insight from our journey was it's one employee at a time. It's individualized coaching because our needs are different.
Then the fifth ingredient is about growth. Life is about growth. Somehow, as human beings, we have to grow and the organization has to grow because this is what life is about. All of this sounds really soft. Two things: One, it's hard to do.
From personal experience, I know. Two, this is what creates irrationally good, surprisingly delightful outcomes for stakeholders, including shareholders. This has been such a wonderful learning journey for all of us and so exhilarating to create this environment where people have a spring in their step and they feel they can do great things for each other and for our customers. The thing that really strikes me the most, hearing you speak, is I have the strong belief that you really mean it. [Laughter] You're a funny man.
Yes, I do. [Laughter] Very often, I think business leaders mouth these words but, again, it becomes a marketing veneer as opposed to, shall we say, a way of life with real substance behind it. Back to your first question, the reason why I wanted to write this book is, because of the surprisingly delightful success and resurgence of Best Buy, it gives me credibility in the concrete examples of what it really means and, of course, the conviction that this was huge in explaining the outcome. To the extent that everybody now is on this journey of following a noble purpose and rediscovering our humanity, for me, it was very meaningful to be able to offer these tools and practical and principle examples. At the end of each chapter, there is a set of self-reflective questions.
One of the things is on our site. That may be a resource for our listeners today, Michael. On my site, which is very simply hurbertjoly.org – so my first name, my last name, no dot, dash, or anything, just hubertjoly.org – you'll find a business electrocardiogram, which is really an assessment tool to help you assess the health of the heart of your business, identify the areas where you've got some real strengths (you're really good at this) and other areas maybe where there is opportunity.
Of course, then there are a few suggestions around that. That's my purpose is to help others, fellow travelers who are on this journey, which I think is all of us. We're all on this journey. I certainly don't have the corner on wisdom around this, but I wanted to share what I know. We have a couple of questions from Twitter.
I'm just going to ask you to answer these quickly because, unfortunately, we're going to run out of time. People listening, now is the time. It's your last call if you want to ask a question. What a great opportunity.
First off from Prem from @prem_k. Prem says his son just had his first class on economics, business, and entrepreneurship. What advice would you have for the young one? I think it's advice for all of us, Michael, especially as we exit this pandemic, and we are in this new era, quite a new era, because this is an era where we need to create a future that does not exist yet but that needs to be better and more sustainable.
The advice for all of us as leaders is, work on yourself, work on defining what is going to be your purpose in life. A good friend of mine, John Donahoe, CEO of Nike, he's a great man, so I'm doing some name-dropping because I love him. [Laughter] When he ended business school, he wrote down his retirement speech, how he wanted to be remembered. Then he kept it and went back to it every year so that he could check-in.
Now, the advice of this young man is that this is frankly hard to write your retirement speech at that age. I know because I have my kids and my students. It's a journey. Keep asking yourself this question of what's really meaningful to you, how you want to live your life, and then take care of yourself in that journey and check back in (meditate) at the end of the day or of the week. Revisit how you've lived your week.
It's really about being a purposeful leader and avoid making one of the mistakes I made in my life, which is, for too many years I had my head disconnected from the rest of my body. I thought that being smart was really essential. It's okay to be smart. That's nothing wrong with that.
But I think, as leaders, learning to lead with all of our body parts—our heads, but also our hearts, our soul, our guts, our ears, our eyes—really learning to be a whole person, not a businessman during the day and then a good human being at the end of the day. We're just one. We have another question from Twitter. This is again from Wayne Anderson.
He says, "People are very diverse. How can a business have heart and identity while balancing the needs for employees to have space and develop their own personal identity?" I think it's the heart of the matter, it's the heart of business. It's creating that environment where every one of us can feel we belong in our full identity and that we have enough space that we have the autonomy to do our thing. That's the essence of this. One of the convictions I have, Wayne, is that here size doesn't matter – paradoxically.
Whether you're a 100-person organization or a million-person organization, it's the same because it's one team and one individual at a time. The fact that Wayne is asking these questions gives me the sense that probably Wayne has some of the answers. Please, Wayne, share with us your thoughts on this because, as I said, I don't have the corner on wisdom on any of that. He actually comes back with yet another question. He says, "Where does diversity fit in with the five points of unleashing human magic? It's a key element of human connection because it's one individual at a time, and so that's one element of diversity.
But then you also have to look at systemic issues around gender and race. As part of my journey, I've been a huge advocate – not just talking but doing – on promoting gender and race diversity. That's there, Wayne, because that means all of us.
How stupid would it be for a company to only recruit employees or leaders from one-quarter of the population? People would look like Michael and I. [Laughter] Aging white men. That'd be stupid. There's nothing wrong with Michael, but I think if it had been, for example, Lehman Brothers & Sisters as opposed to Lehman Brothers, it would have been a better outcome. Race, of course, is a huge point.
I think, in this country, we finally realized how urgent and important it is to do our best to end systemic racism. I think companies are on that journey. It's essential.
It's not a sideshow. It's not something you do when you've done everything else. It's the essence of creating a magical organization – in my book. What advice do you have? Again, putting on your CEO hat. What advice do you have to businesses who have just been struggling during this very difficult past year and are now thinking about the next steps? What should those folks do? People talk about a restart, reopening the economy.
I think this is wrong. My view of what has happened in the last 12 to 15 months, it's analogous to when 66 million years ago planet Earth was hit by an asteroid, which killed all of the dinosaurs. Of course, new species emerged. Now, of course, there are some of us like Zoom and how they are booming, and so forth.
But many of us, as you pointed out, Michael, their top line has been hurt. For me, it's not a restart. It's a reset. Many companies are doing this. They have to do three things.
One is to reimagine their business around this idea of purpose, so as to expand your addressable market. If you're a hospital system like Mayo Clinic, don't think of yourself as a brick-and-mortar hospital system. Think about it as a company that's involved in health and wellness. With technology, all of a sudden, through teleconsultation and digital surgery, you can actually address a much bigger market. So, reimagining your business around the human needs you're trying to address and leveraging technology. Two is to refocus.
The world has changed. The buying behaviors of customers have vastly changed. Look at where they are. Look at what's driving consumers around the circular economy, for example, and adapt your positioning accordingly. The third one is to reconfigure your business.
We've seen a huge acceleration of technology penetration, certainly in retail. Right, Michael? I think, last quarter, Best Buy's share of online sales was 45%. A year ago, it was half. You have to completely rethink all of the aspects of your value chain from how you manage your workforce to how you manage your supply chain, your customer experience, and using technology quite often. Really create a better outcome for your customers and your employees and your shareholders. It's a reset.
That's the idea. Arsalan Khan is another regular listener. Thank you, Arsalan, as always, for participating. He asks a great question. He says, "How do you avoid the trap of the lowest hanging fruit?" I think it depends a little bit on the circumstances. When I started at Best Buy, which was a matter of saving the company and fixing what was broken, going after the low-hanging fruit was actually a good idea because it could create the momentum and the confidence that we could do this.
Now, if you only go after the low-hanging fruit and that's your only strategy, then I think that it's not going to go as far as necessary. Then you have to step back and look at what's essential. I'll share one piece of advice I got (when I was a CEO) from one of my new colleagues at Harvard, Frances Frei who said, "Hubert." She was a marketing professor.
She said, "You're going to need to learn what you want to be bad at." I said, "Frances, you're kidding me. I cannot be bad at anything. I don't want to be bad at anything."
She said, "Then if you're going to be not focusing, if you're not going to decide what you're going to be bad at, it's going to be heroic mediocracy. You're going to try to do everything and nothing is going to be great." Really, through customer insights, identifying what is going to make the difference, what is this human need that you want to focus on, and what is it that you're completely uniquely able to do that you're going to do an amazing job of, and that's the mindset. As an example, Michael, you're wearing Apple AirPods. They're wonderful. Apple is an amazing company.
They are terrible at helping you with non-Apple products. They're really focused on their ecosystem and so forth. That's a great lesson for all of us, I think. With that, I want to say a heartfelt thank you to Hubert Joly.
He is the author of The Heart of Business. If I hold a book up, it's not because I'm paid to do it. It's because I think it's a really good. It's a really good book, so you should absolutely check it out. Hubert, thank you so much for taking time to speak with us today.
Well, thank you, Michael. I did put all of my heart in that book, so I really hope it's helpful to people. I so enjoyed our conversation, Michael. The way you do this show is extraordinary, so thank you for sharing your time with me. You're very kind. I want to say thank you especially to all the people who watched and, in particular, to the people who ask questions.
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Bye-bye.
2021-05-29 11:33
