Best Buy’s turnaround: refusing a zero-sum game
Arriving in 2012 at the bedside of Best Buy, the leader in US consumer electronics sales, Hubert Joly brought the business back to health. His secret: relying on a universal shared cause, which he calls purpose.
[highlight_box title=”Biography” text=”A graduate of HEC Paris (1981) and Sciences Po (1983), Hubert Joly was a partner at McKinsey before leading several large groups, notably Electronic Data System France (1996), Vivendi Universal Games (1999), Carlson Wagonlit Travel (2004), and Carlson Companies (2008). Named Best Buy CEO in 2012, he is the architect of its recovery. He passed the reins to Corie Barry in 2019 while remaining executive chairman of the company. At the same time, he founded the Purposeful Leadership chair at HEC Paris.” ” img=”https://business-digest.eu:443/wp-content/uploads/2020/01/BD302022-1.jpg”]
In August, 181 CEOs of the largest American companies, members of the Business Roundtable, signed a declaration stating that the purpose of a company was not only to maximize profits for shareholders but also to serve all of its stakeholders. The declaration was controversial. But not for Joly; he was convinced from the start.
Institute an inclusive vision
“It is essential for a business to have a purpose, around which the interests of its different stakeholders are aligned. Looking after the interests of employees and fulfilling obligations to shareholders is not mutually exclusive. Happy employees, in turn, make customers happy and get good results,” Joly explains. “When I joined Best Buy in 2012, the company was under threat. I was told that I was going to have to close stores and lay off staff. The opposite happened. We increased our sales and saved money by tackling non-salary costs. Staff should only be touched as a last resort.” When, in fact, store closures were necessary, the company sought to preserve employment: “In 2017, when we decided to close 200 obsolete Best Buy Mobile stores, all the employees had offers of redeployment within the company.”
Hubert Joly’s “purpose” is the equivalent of the “just cause” described in The Infinite Game. “Andrew Carnegie was a businessman without faith or law, before becoming a philanthropist late in life: he was absolutely not about that,” Joly says. “Purpose relates to the common good and must be placed at the heart of an enterprise’s activity, rather than at its periphery. Our purpose at Best Buy is to enrich the lives of our customers with technological solutions tailored to their needs. For example, we are helping older people to live longer in their homes by equipping them with suitable electronic equipment.”
Excerpt from Business Digest N°302, December 2019 – January 2020