Hubert Joly on the Heart of Business (Podcast)

Heart of Business Leadership Principles for the Next Era of Capitalism. Um, he's really a fascinating guy, has an amazing background, both as a consultant from Mackenzie and being on a number of different boards and and running a number of different companies. Everybody who's looked at his work always put some amongst the best. CEO's Top one, d this top thirty. That really just a tremendous, tremendous track record, ard Uh and

I had a fascinating time speaking with him. I think, if you're at all interested in anything involving leadership or the next era of capitalism, or why the old school neutron jack approach to just firing everybody and and cutting costs as a way UH to restore profitability no longer works, You're gonna find this to be a fascinating conversation. So, with no further ado, my interview with you Bear Jolie. M This is Mesters in Business with Very Results on

Bluebird Radio this week. My special guest is Hubert Jolie. He is the former chairman and chief executive officer of Best Buy. He is currently the Senior Lecturer on Business at Harvard Business School. He is on the boards of directors at Johnson and Johnson and Ralph Lauren and has been named one of the Top one good CEOs by Harvard Business Review, one of the top thirty CEOs by Barons, and one of the top ten CEOs to work for in the US by Glass Door. Hubert Jolie, Welcome to Bloomberg. Well,

thank you, Barry very much. Forward to our conversation. So let's start with a little bit of your background. You've been the CEO of three major companies. Tell us about how that came about. Take us to the beginning or early days of your career they have, Barry, I studied in my career with McKinsey and Company in France and

then also in the US. Essentially, I didn't know what I wanted to do so that I thought it would be a great training ground and I ended up saying a dozen years at the firm, done a great deal and had wonderful opportunities to lead great companies. You know.

At first I left McKenzie to lead a client with E d S at a train Data Systems in France, and I ended up doing a number of turnaround and transformations of companies in industry sectors that were challenged by technology, so in video games, in travel, and then of course

ended up with Best Buy. And I ended up working in a variety of industry sectors and those specialization there and every move was a move that was based on it was there was somebody with whom I had developed a relationship that played a critical role until for example, when I left vivent Universal to become the Sea of Counselance Aguity Travel, that was the sea of Acre, which

was one of the true shareholders. I've been a height of mind, and you know, we had stayed with state friends, so very One of the key lessons is that, you know, try to minimize the number of people you annoy, your irritate along the way, and and try to focus on doing a great job where you are, and then you know, I hope that God provides in the end, which is

I think the lesson for me of my career. So so I want to spend more time talking about your career, but I have to ask how did you find yourself moving from France to the United States? What led to that, and what was that transition like, because every time I'm in Paris, I always end up saying to myself, God, I could live here. Yes, thank you for that, Verry. So the first time I moved to the U S

was it was with mckindian company. Had gone to school in France and they have been discussion of you know, should I do an NBA in the US, And after a while kin she said, no, you really don't need to do that, but if you want to spend time in the U S, will send you to one of our offices. So I ended up in the San Francisco office right the years where where the Niners were at the top of that game. Right, So that's it's quite fascinating.

And then the last time I moved to the U S was oh eight two eight, when I became the year of counseling Companies. So moved there from Paris, France to Minneapolis, Minnesota. And you know, I love France. I think it's a great country. I love the U S. What I love about the U S is it's you know, since Jefferson, we've been optimistic. There's been the dream of a better life, and there's this optimism is let me

tell you, it's in France. You know, you talk about a problem that has never been solved, people will say, well, who are you to talk about it? Nobody has been able to solve it? Right, So, but in the US, if a problem has never been solved, you know, immediately a frantic Oh, this is interesting, let's see whether we can solve it. So I love this optimism in this great country and I'm now the dual citizen there. Very really, really interesting. So so let's talk a little bit about

how one becomes a good CEO. Is it effectively on the job training or is it a function of your experience and an ability that makes you a great leader? Yeah, there's a myth that you're born leader. I think that every leader was born, of course, but none of us were born leaders. And I think it's a it's a learning journey. And you know, for me, it's been learning by doing, learning on the job, learning from great mentors.

One of things I learned that most about it when I was at McKinsey was you know, watching my clients leads, and I learned so much from the number of them. Uh, learning from colleagues, you know, I bet buy. I learned so much from the front liners and some of our

great you know, executives, and then the coach. So let's slow down here, can we agree Barry that exactly one of the top one cup one hundred tennis players in the world have a coach being the same is true for the all of the NFL teams, all of the Champions League teams. What about us executives? All right, And so it's interesting that now for CEO is senior executives have a coach is much more popular, but kind of fifteen years ago not so much, and us benefited enormously.

My first coach was you know the intimates of all uh, Marshall Goldsmith's after learned a time from Amy helped me deal with feedback and focus on getting better and asking for advice. And without Marshall, I would not be you know, it is infomercials and before and after a picture, it's most improved. Marshall Goldsmith was where was that at Mackenzie or it was the first time I worked with Marshall was in two thousand and nine. I just became the

CEO of Calsum Companies. In my head of HR Elizabeth Best Tony, so would you like to work with a coach? And my first reaction was am I doing anything wrong? Is anything wrong with me? She said no, no, but I know Marshall he helps you know, great deals get better. You know some of these clients are where at the time Ada Malali or you know, a Ford and Jim came up the World Bank and said, oh that's cool.

I want to be a member of that club. And Marshall was so hope because when I was getting feedback, you know, you know, you do a three sixty, and you know, you hear the good and then you hear a part. And my reaction traditionally was what's wrong with them? Right? What what are they talking about? And Marshall help me and the way he helped me with so he did the three sixty. He gave me first all the good things that people have said, and I said that spent

the time to swallow this, you know, digest this. And then the next day he gave me the other stuff and he said, here's the scoop. You don't need to do anything with it. Right. There's no god that says that you need to get better at any of these stoks. But you can this that you get to decide what you want to work on and get better at right, and think about this. So here is a question that we should ask right. Think about things that you'd like to get better at. Right, and if you cannot think

about anything, try humility right as a potential area. And then you know what Marshall made me do is talk to my team and said, thank you very much for the feedback you've given me. And then, based on what you've said, as they say, to work on three things and the one that the two number was great. And I'm going to follow up with each of you to ask you for advice on how I can get better at these these three things, and then a few months

from now I'll follow up to see how I'm doing. Now, believe me, Barry, first time I did this, this was excruciating pain. I think to admit to my team that I was not perfect. Yet they knew it, they knew it was not perfect, but having to say it out loud that I wanted to get better at something, but

this getting better at something makes it very positive. And then so later on when I joined best Buy it, I repeated that, signaling to every one of the executives it was okay to want to get better at something. And so later on everybody at best Buy head coach and we were all helping out each other and getting better at our job, which is you know what I

think you need to do. So coaching, executive coaching played a key role in my life, very interesting, and I recall seeing martiall goal Smith's name on a book what Got You Here, Won't Get You There? And a quick Google search shows me that, like you, he also is a professor. He teaches at Dartmouth's Talk School of Business and has quite an impressive CV. But I want to

stick with the concept of of coaching and mentors. What did you learn at McKenzie who helped you when you were there sort of develop into the CEO that you are today? Yeah, so it was for me it was two phases barrier at McKinsey. There was before the partnership and then the partnership. So in my first say six years, you know, as an associate and then a manager, I learned a lot about problems solving communications, you know, circums, functional matters and so forth. So you can say I

learned a bunch of technical skills. But when I became a partner, the opportunity I got was, you know, sit down next to the CEO of the clients, you know, watch them, do they a thing, and listen and learn from them. And that makes so I got a great deal, right because they were paying us and I was learning from them, right, I couldn't get a better deal than that, And so I will always remember it was, say a client, you know, Jean Hite de Carpont, He was the CEO

of the the computer company Horney World Ball. And this is the guy who told me that the purpose of the company is not to make money, right, it's an outcome. Right. In business, you have three imperatives. You have the people imperatives, each from the right teams. You have the business imperativity to have customers or clients, and then great products and services.

And then there's a financial imperative. And of course you have to understand that excidence on the financial imperative is the result of excellence on the business imperative, which itself is the result of excellence on the people imperatives. So

it's people business finance, and finance is an outcome. And by the way, it's not the ultimate goal because if you think about a company as a human an organization, a bunch of people working together, you know they're they're probably in there to create something in the world, right and you know, we can dig into this. But that's and believe that that's was thirty years before the VRT

statement of twenty nineteen. You know, we've celebrated in August the second anniversary, and so then it was practical implications around this. When you do your monthly review with your team, start with people an organization. Don't start with financial results. If you start with financial results, you're gonna spend your entire time on financials and you won't understand what's driving these results. Was. If you start with people an organization,

you'll have a chance to spend time on that. Then business, customers, products, and then the CFO will make sure that you'll spend enough time on the financial results. So that's for me, that's what the game changer, and I applied this throughout my career, and you could say, you know, whether it's was in video games or in travel or hospitality or less buy. You know, this focus on people first and treating prophet as an outcome was was a big driver

of performance. And this is not I've not smoked anything illegal when I said, it's very you know, as you know that the share rights of best Buy went from sing out low with eleven daughters, and you know recently it's been between hunted and ten and hunt and twenty. So you know, time standing nine years, that's that's not bad. Maybe you could have done better, Barry, but you know, I don't think I could have done better than ten x. And ps no longer legal in New York, so you

could smoke whatever you like. We're gonna by the way, those those three steps that you just mentioned are right from the book, and we're gonna talk a little more about the book in a few minutes. But before we get to that, I have one last question to ask you, which has to do with the fact that best Buy you mentioned it's up ten x, it's a publicly traded company. Before you were a best Buy, you were also at

a giant company, but it was privately held. Tell us a little bit about what that transition was like, having to answer to shareholders in Wall Street. How did you manage that? Very different experience from everybody I've spoken with over the years. Yeah, very so. I've worked so in a public company based buy. I've worked in a family

owned company which was counseling company. Have worked in a partially private equity owned company Calson U only Travel, one of equity partners of JP Morgan was a forty five percent shareholder. And frankly, I think it's pretty much all

the same. You know, you have shareholders, whether they're you know, large entities like Delity or Wellington, or it's a private equity player, or it's a family, they have expectations and need and by the way, that all of them are human beings right by the way, not focused on the you know, the high intensity trading, the more the longs and and all the shorts. There are human beings. And I have had that. Even though I say profit is an outcoming, it's not the uptionate go. Shareholders, even in

stakeholder capitalism, are a very important stakeholder. You know, they're taking care of our you know, there's they take care of our retirement. So we love them for that. And so when I was a CEO of best Buy, I so enjoyed speaking, spending time with our shareholders, sharing with them, with doing answering their questions. They're smart and it was always taking things away, um and you know, the key was pay attention, listen, and then pay attention to the

say do ratio. Best Buy had lost its credibility because they were saying a lot but not doing much right. So with with my waterfall CFO share in Boccalog, we said, all right, we're gonna say less and do more, and that's how we're gonna build our credibility. And we would, you know, be very transparent, share our situation, the opportunities, we saw what we're gonna do, and then we updated them in our progress until I really enjoyed the conversation.

But in many ways, Barry, I think public privatically or a family, it's largely the same. It's people yet to respect them and take care of their needs. My extra special guest this week is Hubert Jolie. He is the former chairman and chief executive at best Buy, a company that he helped turn around over the course of his tenures there. Let's let's talk a little bit about that.

If you would have asked me a decade ago what the future looked like for best Buy, I would have said they were toasts that Amazon was going to eat their lunch, and they were heading to the to the garbage pile. Tell us what the key was to turning

the company around so successfully? You're great. Everybody thought there was zero by recommendation on the stock in twelve and what A found as there was examining the opportunity to become the CEO, because my first action when I was approached was, you know, this is crazy, right, there's just the same reaction as you described. But what I found is that there was nothing wrong with the backets or the business out outside. All of the problems were self inflicted.

In fact, your customers needed best Buy because we needed a place where to see and touch and see all the parts and ask questions. And the vendor is importantly needed best Buy. It needs a place where to showcase there are products, the food of the billions of dollowers of R and D investment. The problems were self inflicted.

You know, prices were not competitive, The online shopping experience was terrible, speed of shipping was bad, The customer experience in the stores had deteriorated, the constructure was bloated, and and and that's great news because if the problem yourself inflicted, you can fix it. And so the first phase was all about fixing what was broken. And the advice I had been getting Verry was cut cut cuts, you know you're gonna have to close to or head count. Really

the opposite. All of the stores were profitable, so frankly, it was no point in closing stores in a significant passion. It was the first place was a very people centric approach. Listening to the front liners. My first week on the job, I spent it in the store in Saint Cloud, Minnesota. I think in France we would say sat glue, but over there is some clouds, so there you go, and

really listening to the front liners. They had all of the answers about what needed to be done, and so my job was pretty easy was do what they had to do, what they said we needed to do, like a fix of website mixture. The prices were competitive, and

and so forth. The second elemount of you know, the people centrica, build the right team at the top and then instead of focusing on haccount reduction, focus on growing the top line by leading the customer needs and fixing which was broken in the customer experience and treating headcount reduction really as a last resort, and then focus on mobilizing the team on what we need to do for

the for the customers. That sounds tough, but that was you know, that's was our opportunity, and that's what we did for the first two or three or four years. And then once we had saved the company, it was about, you know, how do we know where do we go from here? How what kind of company do we want to build for the future, And that's where we focused

on designing our purpose as a company. We said, we're actually not a consumer ectronics retailer, where a company that's in the business of enriching lives through technology by addressing key human needs, which in we'll talk more about this, but this was transported because it's extended our addressable market

and help just mobilize everybody at the company. We had to work on making this come to life in all of our activities and really creating an environment where you know, I think that the summary of the term around which we unleashed human magic. We had under than her thousand people plus. I think the spring in their steps, connecting what drives them in life with their job and doing you know, magical things for for for customers. And frankly, Berry,

I learned so much along the way. And again all of this sound stuff, but go back to went from eleven Daughters too and Antenn twenty. That's was the That's was the key, to say the very least. So let's talk a little bit about what you guys had done in the physical stores. You know, the big threat to Best Buy was was people show rooming, meaning showing up to look at a product and then buying it for a little cheaper at Amazon. How did you and this is a line from the book, quote how did you

kill show rooming and turn it into showcasing? Unquote. Yeah, so everybody was talking about show rooming at the time. The frequency was not that high actually, but of course it was incredibly frustrating for the Blue Shot associates in our store to spend time with you know, with you, Barry. You know, we love you, but we spent the minutes with you asking nswering all of your questions about their

TVs and then you buy online too. We we we after thirty days of the company, we actually decided that we were going to take price off the table by aligning up places with Amazon and giving the Blue Shirt the authority on the spot to match Amazon prices. And so that took the price off the table and the customers once they were in our stores, there were hours to to lose now, right when you want to drive home with your TV in the back of the car instead of waiting a couple of days from it to

come from Amazon. Immediate gratification has to be a huge benefit you guys have as as the physical store exactly. And then yet of course the investors of you, that's cute, but you're stig to die because your constructure is too high. It's higher than Amazon or Walmart. So we did take two billion dollars of cost down. But the way we the way we want in the end, was with this

harm moment of you know, this idea of showcasing. If you are a Samsung or you know, HP or even Amazon and Google mail with products, you need a place where to showcase your products, right because you spend billions of dollars on R and d uh. And if it's just a vignette on a website or a box on a shelf, you know you're not going to excite the customers. So you need a place where to showcase your your products.

And so we did deals. The first one was with Samsung where we had a meeting in December of twelve. Barre j k C in the vency of Samsung Electronics came to visit us in Minneapolis in December of twelve and over dinner, we did a deal where in a matter of months you would have one thousand Samsung stores within our stores where it could showcase these products, which

was just across the item. We already had an Apple store within the store, and it was good for the customer because they could see the products, it could compare with Apple. It was good for Samsung, right because the alternative for them was to build one thousand stores in the US. Takes times difficult, you know, And of course we have this great location and great traffic and good for us because it was part of our opum strategy,

other people's money strategy. Right, of course, there was some good economics for us, and so that allowed us to upset you know, the cost advantage and the Walmart or or an Amazon would have. And then over time we didn't deal with all of the world's for almost tech companies, including Amazon c hanging out loud, and that was the game changer. And we look at you look at our stores today, you know they're they're they're shiny because you have all of these shiny objects and you can see

an experience all of these fire. So let's goes ding a game changer. So let's let's talk a little bit about both Samsung and Amazon. First, I'm always surprised that people don't realize what a giant product company Samsung is. It's not just phone, but its phones, it's TVs, it's washers, dryers, I mean Samsung basically anything in your house there's a product that Samsung makes, and not just entry level washer dryers or refrigerators. I think that was it last year

or two years ago. They bought the Core, which is like a sub zero high ends um manufacturer of of kitchen appliances. So when you set up the store within the store with Samsung, tell us about what that did and how did that impact Samsung's sales at Best Buys, So yes, I mean you're right to highlight this. There's a great company. The first deal we did with them

was focused on songs and tablets and cameras. So in a in a matter of months, they had these you know stores within our stores, and it really put them on the on the map. And it's interesting if you go back to the nineties, Empson was not the same company. They were really low ends and the chairman at the time, so that the father of the current of j y Le now came to the US and said, at some point I wanted I want Best Buy to carry us,

that it would be the ultimate goal. And now they're one of our top five vendors, probably better than top five, and so it really gave them the physical presence and the proof that it worked for them was then we did the same in the TV department and then in the appliance department. So it's been a series of wins for them. And once we had announced the the deal with SAMs and other events, we had the similar conversation

with you know, uh, Microsoft, Steve Barmer. We had a conversation at CS and the Timath later with the Microsoft stores within the Stove and then it went on and on, and you know, Timko at Apple told me that he didn't really like what condering. It understood it, but it didn't really like it. And Apple has been a very important vendor to to best buys. So what we decided to do with them is do more and so it

was a stronger partnership. So based by just not it's not simply carrying products with partners with the world's almost tech companies and with some of these companies and partners on product developments, new product introduction. Uh and because there's so much innovation that drives the business, it's it's a critical role we play. We also partnering service. Best By sells Apple Care and is an authorized Apple service provider.

So these partnerships really changed the game. And in the US, I think it's not arguing that the only player with which you know, these large companies can do these meaningful deals. So this really changed the the trajectory. You know, I have to ask you about the geek squad. Who's idea was that and how significant is it to to the company.

So Robert Stevens, it was a student at the University of Minnesota, was the founder of of Geek Squad in very creative guy that the Navy itself is good is called the logo and and so forth, and and the base by acquiring the company in two thousand and two, and it was quite still quite small, and now of course it's it's become really big. It's twenty thou employees.

And and it's the key elements of this by differentiation because you know, bas by it's not just in the business of selling you something with a target customer, people who are you know, excited about technology. You need technology but also needs help with it. And so with the Geek Squad and the Blue Shirts were able to advise you when you're looking at what to do, but also helps you implement in your home, helps you, you know, figure out if it's something is not working across a

right your parts. Let's take an example, if if Nextlix is not working tonight at your house, bearer is it because of Netflix? Is it the pipe into the home? Is it the router? Is it the streaming device? Is it the TV? Honey? What is it? Right? And we're honey, all right, and we're gonna be able to help you across a lot of these vendors and so that's a big differentiator for for the company. So pretty genius. My extra special guest this week is Hubert Jolie. His new

book is called The Heart of Business. Let's talk a little bit about writing a book, which is quite an endeavor. What what motivated you to sit down and say, sure, I'll write a book. Well, this is not a traditional seal of book. And I said, this is not a memoir. This is not about the story of the best by turnaround per se. It was a reflection barring. It's really been something that's been thinking about for the last thirty years.

And so much of what I've learned at business school, what McKinsey and the earlier of my career is wrong, dated or incomplete. And you know, when I stepped back today or in the last couple of careers, you know, even though I'm the internal optimist, I have to say it out loud. The world as we know it is

not working. Right when this multi faceted crisis you have of course a health crisis, an economic crisis, societal issues, racial issues, environmental problems, geopolitical tension, it simply is not working. And what's the definition of madness, right, It's doing the same thing and hoping for a different outcome. And for me, on my the I Most wanted list, there's two people,

you know. One is Milton Friedman, you know shareholder primacy, and two is Bob mcnamarathy, former Secretary of Defense, an executive at Ford who is the almost the inventor of tub down scientific management. These approaches don't work, and I think they got us in trouble. And they say growing number of us, right, I'm certainly not the only one to believe that there is a better formula that business

can be a force for good. That you know, it's the idea that you know, business should pursue a noble purpose. Uh and and to take care of all of the stakeholders that you put people at the center. You embrace all stakeholders in some kind of declaration of interdependence. There's no need to choose between you know, employees and customers and shareholders. It's like taking care of customers and employees and and and the community that generate great returns for shareholders.

You treat profit as an outcome. And this formula, you know, people call it stakeholder capital exam or purposeful leadership. I think everybody now talks about and embraces you post people to still a few, which is a great uh. But the challenge that is how do you do this? How

do you make this happen? And very I felt that with my experience UH and and the credibility of the Best by tournament, I could add my voice and my energy to what I call this necessarily foundation of business and capitalism around purpose and humanity and provide like a guide for any leader at any levels frankly who is keen to move in that direction, but like the rest

of us, needs help. And so that's what the genesis of the of the book, and the subtitle of the book is Literacy Principles right for the next era of capitarism. In the book is full of very concrete examples and stories and illustrations. There's questions at the end of each chapter that people can use to to reflect and and act at their at their companies. So that's the that's the book. Speaking of the book, it got a terrific review from all of all people, Amazon's Jeff Bezos. How

did that come about? How did Bezos give you a review? And what's the relationship like between best Buy and Amazon these days? So based By as always sold Amazon products. Of course we think about Amazon as a retailer, of course as a cloud company, but everybody's also a product company right there. They've had you know, the Kindle and of course all of their eco products, and based By had always sold you know, Amazon's products and the stores.

Other retailers decided otherwise, but we thought these were great products and we're here to serve customers. I got to know Jeff personally who the Business council. Both of us were members there on the executive committee. And once I was invited to discuss turnaround, how we approached that transformation, and Jeff was in the first row and and being

very kind. But then we did this significant partnership where I think it was in Amazon gave best Buy the exclusive rights to the fire TV platform, which is their smart TV platform to be embedded into smart TVs and any smart tv with the fire TV embedded in it. Best Buy is going to control that it's only going to be sold at best Buy or by best Buy on mzone. And when we need the announcement for this deal, we did it in the in a story in Bellview, Washington,

and Jeff came and we had some media there. Uh, and you know, Jeff said, a TV is a considerate purchase. You've got to see the TV best, you know, best by the best, best place in the world where you can do this. That's why we're doing that. The partnership and you know, we build the stress based relationship. And of course the media was this was a jaw dropping moment and Jeff is a very generous man. It's it's interesting because it raises another question, which is, how do

you think about competition as you lead a company. Do you obsessed about competition or do you obsessed about your customers and what you can become. And that's one of the things that Jeff and I share, which is you you're obsessed about your customers and becoming the best version of yourself you can be. Of course, at Best Bye, we looked at Amazone. We wanted to actually in a sense we neutralize them, right because the same prices, same great shopping experience that we ship as fast as they do.

So let's call it a draw on the online business. And maybe we have our unique assets and so you're not you don't obsess about your competition. In fact, in some cases, your your your your partner with them, and I think the world and other than the COVID pandemic, there's another pandemic in the world, which is the fear or the obsession about zero sum games. You know, the only way that Amazon could win is that best Buy loses or vice versa. The only way this podcast can

be successful berries if you win and I lose. That's crazy, right. You get to collaborate and create great outcomes. And I think in this world, as leaders, we have to think about how we can create win win win outcomes for our customers, are employees, are vendors, the community, and ultimately the shareholders. And to put some flesh on those bones,

some numbers on it. In two thousand and seven, before the financial cry, as best Buy had done about thirty five billion dollars in revenue in they were somewhere in the neighborhood of forty seven billion. And this year, I think the company is looking for an access of fifty billion. So clearly that's been heading in the in the right direction. Let's talk a little bit about your experience on other boards.

You're on the board of directors of Johnson and Johnson, and we're on the board of directors at Ralph Lauren. What have you learned from those firms that were applicable to Best Buy and what do you bring to the table for those companies? Yes, so I joined the first board. I joined with Rafflin in two thousand and nine and it was the CEO of Calclon Companies, which was you know, can you travel t g I Fridays? And then a

bunch of hotels rejoined and Regisson. The reason why I was interested in joining another board was to try to become a better CEO in the relationship with boards and sitting on somebody else's board, you can see the needs of the board and then you can see how the CEO and their team dealing with you. So that was a great experience because when you become CEO and you deal with the board, yes, dear, experience right, dealing with the board. So that's one of the things you learned

on the job. So that was a great way for me to to learn. And these two companies Jen J and Raffa and there two amazing companies, you know, J and J. I joined recently. I joined about eighteen months ago into watching Alex Gorsky and his team navigate the pandemic, their credit based approach. I mean that they they're the inventor of stakeholder capitalism before it had a name, right with their credo that they are created in three that's focused on all of the stakeholders. They're one of the

most innovative companies. So they showed the value of doing meaningful innovation for the benefit of you know, in their case, their patients. You know, this is a wonderful entrepreneur. Company was founded in sixty seven and it's a great copy one of the most iconic brands on the plant. So how do you drive this and how do you balance left brain and right brain? And of course enjoying cooperating with Patrico Vey, the CEO, who's a terrific guy, and

so you know learning. You know, I'm like a sponge. I love to stand some others what I bring. I would frame it along the lines of what I was looking for my board to do when I was CEO, And I was not looking for the board to give me all of the entries and do my job right, but I used the board. I wanted to build a board that would give me complimentary skills. So I wanted to have the best people on the board that would have skills that could be additive to our management team

and use the board as a sounding board too. I would get any percent of the value of the board meeting in the preparation to the board meeting, and then you know, getting reaction the sounding board. You know, when you're in the weeds, sometimes you're you're missing something, and the being able to access you know, unique expertise from our board. So you know, what I tried to bring on these boards is tried to be a resource for the management team as sounding board and helping them with

the most important issues. I really enjoyed that. I'm at the state now studied a new chapter as you highlighted on other CEO. But it's a matter of giving back and helping the next generation of leaders, you know, be the become the best version of themselves they can be. So I do that through boards and through executive education at Harvard Business School, also coach and mentor never CEOs and executives. So it's I just love doing that. So let's talk a little bit about what you're doing. Now,

tell us about the class you're teaching at Harvard. So on Monday, August, early years that's that's what was the first day of school for the incoming NBA class. And one of the professors in the first year at teach Marketing, which is about focused with you on how do you grow up pretty focusing on the customers. So that's one

of the things I do. Most of part of the faculty that as a program for new CEOs, so twice per year with a small bunch of new CEOs that I did this when I became CEO that come here for three days and we tried to help them out. And also part of the faculty that doing a program called Leading Global Businesses. And last but last this I'm really passionate about this. We're designing and we're gonna pilot a program for companies and then also in the NBA

program called putting Purpose to Work and Unleashing Human Magic. Right, so many companies on on this purpose journey today, and so it's gonna be a series of workshops for the top thirty people's custom programs, one company at a time, and we're gonna try to support them in their journey. We're doing our first fight as this fall and look forward to learning from that experience. And and I think we're just in the early innings of that new era

of capitalism, so so much to learn. U. We're excited to be part of that journey with the Never companies. Quite quite interesting. I have to ask you the obvious question. Is your book a book you assigned to your students? What what do you have them read? The so HBS is a school where there's really not for the most part, men that to be reading of any books. So I know that last year, before the book was established, my

wonderful section A from the NBA program. They all got a copy of the manuscript and we had great conversations too. Sometimes the book gets distributed, yes, to the participants of the executive education programs, but in the NBA there's little men that story reading. It's it's all about the as you know, the case study methodology, which is a wonderful way to to learn, because it's hard to learn just

from reading reading. I mean, I encourage people to read the book, for sure, but it's by practicing that you really learned, right. So that's the that's the HBS way, uh, to say the very least. And one of the things that Bezo specifically mentioned was that he thought your turnarounds at best Buy was going to eventually become a Harvard Business School case study. What what are your thoughts on that. Well, we're actually working on that with Professor Gupta, and it's

gonna be taught for the first time. This is gonna be started, right, This is gonna be the last case of the marketing class in December, and so, of course, in my sex is gonna be ironic. I'm gonna be Professor Jolie and I'm gonna be one of the protagonists. There's been other cases on best Buy, but this one is gonna be very much on the on the turnaround and transformation. So that's gonna be fun. And I've also taught it. We've also taught it in some of the

executive education programs. So Jeff, as always, Jeff is right, there is the best by case now at Harvard Business School really really quite interesting. So you mentioned purposeful leadership. Let's delve into that a little bit. How does one become a purposeful leader who's focused on creating the sort of environment where others can flourish and perform at their best. Yeah, this is for me such an important transformation and point I grew up believing that as as the leader, which

was important was to be smart. Right, we all went to school and to some of the best goals and in the early years of our career. You know, this is that the left brain is what highlight being the smartest person in the room. I've learned over the years that this is not what drives you know, great outcomes over time and an entire reflection and if we slow down, you know, one of the things that thing's important to do is reflect on why do we work? You know,

is work but at a mixed reputation? Right? We work? Is working in punishment because some dude sind in paradise? Right? Or is work something we do so that we can do something else that's more fun? Or is work part of our fulfillment as a human being? Part of our quest for meaning? Right? To talk about Victor Frankel. And you know, one of the things that I really invite myself to do in every leader to do is reflect on this what could it be the meaning of my life? Professionally?

How do I want to be remembered? One of the things we ask the CEOs to do in the new CEO promat however, it is write your retirement speech or with my wife when I when we coach or mentor CEOs, we asked them to write their eulogy. What would you like other people to say on that day when you're not here to listen? And I think this is so meaningful because people talk about the purpose of the corporation.

I think it started with our individual purpose because motivation is intrinsic, right, and so how can you lead others if you cannot lead your life and yourself? For me, that's the that's the beginning, very practical, one of the turning point in our journey at does by Barry with you. Every quarter we would get together as an executive team for an out site and one day I asked every one of the executive team members to come to the out site with a picture of themselves when they were

the all they two or three years old. We got some really cute pictures back in your that and over dinner we spend the evening sharing with each other a life story and what drives us in life? But what's the meaning of our lives? And you know what came out of that discussion, You know several things. One is we realized that all of us were human beings, not just a CFO or CMO or cchl uh in that, with a couple of exceptions, all of us at the same kind of goals in life, which is just the

golden rule, do something good to other people. And that was very transformational because we said, well, where the executive team of best Buy at that time best but you know, we had saved best Buy and it was where do we go from here? Said why don't we use best buyers a platform to do something good in the w else and become a company that customers are gonna love, employees are gonna love, community is gonna love, and of

course shoulders are going to continue to to love. And so there's a seminal idea in my mind which is connecting what drives us as individuals with the purpose of the company. And the thing is for companies that are embark on the purpose journey, they write down their purpose. But if they just try to cascade it down and communicate it to everybody and say why don't you why aren't you excited about this new purpose, it doesn't work.

You really have to start with what drives every individual and the company, and then you realize that yes, what is your role. So in the book, I talked about the five best of purposeful leadership. The first be is to be clear about your what we were talking about, because about your own purpose, because about the purpose of people around you and how it connects with you know, what you're doing at the company. The second way is because about your role as a leader. You know, it's

not to be the smartest person in the room. It's to create the environment in which others can you be the best version of of themselves. And of course you know if you're leading a significant company yet says by you know more than thousand people, is the only thing that happens. The things that you decide that you come up with, you're I'm going to go far right. So it's all about creating this environment. So it's a significant mind shift. It's also about I was gonna say, you know,

I'm struck by your comments. And this comes through the book about showing vulnerability, inspiring people, embracing your humanity. I think back to the former CEO of General Electric, Jack Welsh, whose nickname was neutron Jack for how frequently he would lay off people and close divisions and fire other executives. When when you were putting your philosophy to work at Best Buy. Were you aware that this is a radical

break from what had come before you? Yes, And to quote, so to go back to France in seventeen nine, at the moment of the storming of the Bastial, there's a Louis the sixteenth as Monsieur de la is this a revolt? And course response says that, no, sire, this is a revolution. And I think that's what it is, and it's it's really shifting things. You know, people are not the problem, there's a source, and they're also the ultimate goal. And I think that most people agree with this. Arry the

challenge is not agreeing with this now. I think it's really doing it and it's a I can speak from experience. If you were to look at my face, you would see all of the scouts in my face. They're learning from experience and trying to get better at This is a lifelong journey of learning to be vulnerable. You know, I was raised being taught that you know, you couldn't say I don't know, and now the world we live then, did you have a manual for the COVID pandemic? Did

you have a manual for back to the office. No, so it's clear that we don't know. So yeah, we have to be able to say my name is you bet and I need help, and we're gonna work together to figure it out. So that's a sea change in leadership, leading from a place of purpose and with humanity and a great deal of humility. So I want to talk about the pandemic in a moment. I want to stick with this revolution that you mentioned. There's a quote from

the book that I really like. Quote the Milton Friedman version of capitalism got us here, but now this model is failing. Explain to us how it got us here, why it's failing now, and what comes next. I used this to highlight the idea which merely has been Milton Treatment's only idea. That was context when you spoke. But the obsession with profits being the only thing that matters has proven to be poisonous and an excessive focus on

profits is reasoners And there's several reasons for this. One is when you look at the the reported profit of the company. By the way, if anybody believes that US gap really tries to equate economic performance, you know, study accounting. Again, it's not even trying to set of principles. There's many things that gap profit does not capture, including you know, your negative impact on the environment, or how well your

salesforce is trained. The other thing is that it focuses on an outcomes to in medicines, be a little bit analogous if my empty was focused on my temperature, right, and I don't want a doctor that's purely focused on my temperature because maybe it's gonna put the some of it in the fridge or in the over the right, depending. I want somebody who's going to be interesting what's driving my health and try to help me get healthy. And so we got confused by this obsession and that's what's

the only thing that matters. And of course there's extreme cases, you know, end Round is one of them that where where we lost track of while we're on this planet and responsibility with with doing the right the right thing. So this new model, the reinvention of business probably going back to some of our roots, right with the idea that business is here to pursue in noble purpose. And this is not about socialism. This is about doing something good in the world that's gonna be responding to needs

of customers in a way that's responsible. It's about putting people at the center, embracing all of the stakeholders in a harmonious fashion, refusing zero some games and trading profit as an outcome. I think that's the formula. That's the formula that's employed by some of the best companies on

the on the planet. And as leaders, we need to go back to that and and learn, you know, new things because we're so influenced by you know, some of the techniques we learned last century, including this toub down management approach and using centers. So that's not I think I learned over time. There's researched by the m I team. I chose that financial incentives deter your rate performance, which

is the opposite h what we've learned. Right, But if you if you tread somebody with carrots and sticks, be aware because you've got to get a donkey. And in the world where you need to be ativity and people to be their best motivation is going to be in twinsing. So that's what you need to be able to touch and get pretty environment where people want to be their best, you know, and and make a meaningful contribution in their in their work. So I think this is a very

exciting pace. This is an urgent face because I'm concerned, probably like you and many others, that we have a few ticking time bombs, you know, and three wonderful granddaughters. I want to do my best to try to quote unquote safe the planet right, that leave a better world, right. That's the current trajectory. And this is very consistent. You know, I have a fuller understanding of of your philosophy that profit should be an outcome and not just the goal

in and of itself. You've really put some some meat on those bones. Yeah, thank you, Verry. And and there's practical implications of that again, and studying your monthly business meetings or your even your board meetings with people and organization and then customers and business and then finish when financial results, you know, the if you take care of the first two, you know, the profits will we will follow. And so it's a it's a significant practical and philosophical transformation.

You're talking about quotes We quoted notes in treatment, but I love this quote from the Lebanese spot haliel Jibrand said that work is love made visible. M that's a wonderful quote. Um, and let's talk a little bit about visibility of some of the changes you you did. By the time you step down from the board of directors in June of last year, Best Buy's board of thirteen directors had, for the first time ever, a majority of

women and three African American directors. Tell us how you brought about this increase of diversity, What about diversity throughout the rest of the company, and what was the impact of so much inclusion and um, you know, a shift away from the older homogeneous types of boards. I think very It's clear for every one of these today that I think diverse teams is going to get to a better business outcome. And you know, I do believe that if it had been Leman brothers and sisters instead of

Lehman Brothers, we would have had a different outcome. But if you also take it a very practical fashion. In one of our stories in Chicago that's in the Polish neighborhood, if the blue shirts don't speak collars, you know they're not going to sell much. Or when we had Brazilian tourists in Orlando, you know the bullshers to speak Portuguese. You know they were not going to sell much who having diversity of you know, every dimension, talent, skills, profiles, gender, race.

You know, the country's color is changing very rapidly. It's becoming black and brown, and we have to represent It's very simple. We have to represent the diversity of the customers we we serve. If we don't, bad things happen. It's it's It's very true. There's a business imperative. There's also a moral imperative, you know when we see the

state of the country. Also from the gender standpoint, as you said of great Land daughters, I want them to have the best opportunities and why would it make sense to only recruit from the quarter of the population. And the boards uh I felt the boards composition was a

great place to focus onus on the only one. When we rebuild the board studying in thirteen, we wanted to have the best skills we withd determined to be diverse, so we had an early focus on gender diversity, and then when I started to focus more on ethnic diversity. Will be studying in twenty seen and met a great meeting with Melody Hubson as know of Aerial Investment and she's start the chair of stabacks. Everybody knows, not that she's amazing, Uh it was. She told me that people

cannot be what they cannot see. And so studying at the top and having a board that signaled the direction was important. So you know what we did. And changing the composition of the boy is not that shartment. It's only ten or twelve or thirteen people. How hard can it be. So we told the headhunter, don't bother giving us resumes of non black directors, right, and if you believe that you're unable to find great black candidates, we'll say that's okay, we won't have a problem with that.

Could just work with another firm, you know, it's not a problem. And so we we fluded three amazing directors and no, I'm not long on the board, but they're continue it in this direction and I think it makes a huge difference. And of course Buys headquartered in Minneapolis, and you know, following the killing, the murder of George Floyd's, you know, it's pretty simple if you you know, if the city is on fire, right, if the community is on fire, you just can't open stores, right, you can't

run a business. So in this country, we have this big racial issue that has been going on for centuries. I think this generation is the opportunity to end systemic rations and uh, and that's something we think business can can play a big role in this. So that's you know, and it was determined, and that's what we did. Let's jump to our favorite questions that we ask all our guests, starting with tell us what you're streaming these days? Give

us your favorite Netflix or Amazon Prime. What what's keeping you entertained during the pandemic. You know, I have so much an electronic equipment in our place that I'm doing a lot of meaning I love I always listen to music. I'm a movie bob. I have a collection of probably eight hundred movies on my carriage escape. You know. Set up. Our favorite show, I would say recently has been you know, Good Doctor. I think that's season five is starting at

the end of September. We're very excited about this. And then from a podcast standpoint, I like listening to hbr's Idea Cast. That's a weekly, great weekly podcast. Whitney Johnson has got a great leadership podcast called Disrupt Yourself or And then I have to mention is a young teenager, well teenager would be young anywhere, right, But let's call I'm a teenager logan Lynn. He's got a finance Z podcast that's focused on the Z generation. Oh my god,

the guy is so cool. So everybody, everybody joins and down those finances spell fi n A n Z and that slogan. Then, huh, quite interesting. We hinted at some of your menators, but let's let's jump into that in more depth. Tell us some of the people who helped to shape your career. Oh, there's so many. Marrying you know. Jean Marie de Caponsie kind of mine, had this big influence on me, teaching me so much about to put

people first and treating profits as an outcome. There was two great friends, oh yes, who who happened to be monks, you know, in a religious congregation in the early in the nineties. That was the turning point. They asked me to write a couple of articles with them on the theology and philosophy of work, which is where I got a lot of my roots in terms of you know, work as part of our search for meaning as as individuals, as human beings. That changed my perspective on on on work.

Another turning points, who you know in the my early forties, you could say, to quot out the books, I was at the top of my first mountain, right, had been a partner at mckindean company. I was on the executive team of the event Universal by many measures that had been successful, right except I think the top of that first mountain was very dry, you know, which was not fulfilling. There was no no real meaning. So we called it my midlife crisis. Right, So instead of going on to

an island I did. I stepped back and I did the spiritual exercises. Wignessis of loyal that so you could say the founder of the Jesuits. Of course you could say he was one of my mentors. And that was really helpful to help me discern my calling in life, which today well since that has been to try to make a positive difference from people around me and use the platform they have to make a positive difference in the world, which is what I'm doing now teaching and

mentoring and and and so forth. And then we mentioned Martial gold Smith, my first coach and good friends. Later on they also worked with Eric Kleiner. While you see when when the board so Marshall was doing my annual helping the board with my annual evaluation. And the board realized that Marsha when I were such good friends and said, now we need somebody more objective now. And we got Eric Planer, who is now the CEO of YFC, work with me, but also his firm works with every one

of our executives and helped us with executive team effectiveness. Uh. And you know that was quite transformative. You know, I should have spent more time earlier on not just on building the right team, but enhancing our team effectiveness. And I learned a lot working with Eric in that. In that journey, let's talk a little bit about everybody's favorite question. Tell us about some of your favorite books and and what are you reading right now? I read three books

this summer. The first one is by Rakish Karana, who is not the president of Harvard College in Scotland. Hire aims to hired Hands, which is the history traffic for me, the history of business education in the US over the last time in twenty years, and and how you know the business school curriculum was shaped and how and why? He believes and I do believe as well that we need to evolve it past just learning techniques, but also it's not just about learning you know something or learning

to to do something. It's also learning to be, which is I think an entire journey. I also read That You Know Cast by Isabel Wickerson and a book by my colleague said Down Nearly Remote Work Revolution, which is of course a very timely, timely book, best book ever I've ever read. I have to mention the Maxell Push being French. You know, in Search of Last Time. It's only three thousand pages, so if you have a minute or two, encourage you to to get to it. Victor

Frankel's Man's Search for Meeting is another favorite. And you mentioned that Martial Goldsmith, what got you here won't get you there? And finally I have to mention my wife's book called Aligned, Becoming the Leader You're Meant to Be and maybe it's art consili It's one of the best leadership books that I've ever read. But of course I'm a little bit biased, maybe maybe a little bit biased.

Um So, so you work with grad students in college students, what sort of advice would you give to a recent college graduate who was interested in a career either as an executive or in leadership or or even in retail. I think the advice is the same as we give the u CEOs this write your retirement speech or even better,

write your eulogy. And I know my good friends John Donahoe is now the CEO of Nike, did this when he graduated and he's always kept it, and I understand he goes back to it every year, and it's it's hard, you know, you know, I have children there between the ages of twenty six and thirty four. Early in your adult life, you don't know everything. But try to write it and see what journey you want to be on and how you want to be remembered. That would be

one thought quite interesting. And our final question, what do you know about the world of leadership and executive management today that you wish you knew a couple of decades ago when you were first getting started. Well, there's so much of the years. I think it has to do with, you know, profits being an outcome, not the goal. It's about importance of looking at drivers of of performance. It's about you know, my role as a leader is that to be the smartest person in the room, but to

create the right environment. It's not about being perfect nobody is perfect, and I think that the quest for maybe I'll finish with this. The quest for perfection, you know, can be very dangerous, can be evil, right because if you're if you're trying to be perfect, guess what, You're not gonna be successful. You're gonna be incredibly demanding and harsh with people around you because you're gonna expect them

to be perfect. And so you have to relact and be kind with yourself and others around you and be able to open up and share what you're struggling with, understand what they're struggling with, and help each other out. That's the I think to me, that's a it's such an important, uh consideration. The quest for perfection can be

very dangerous. Be kind, be kind of yourself. You know, during the pandemic, we learned so much right when we used to fly around very long time ago on planes, right, and we were told, you know, by the steward or the stewards, if the oxygen mask comes down, put it on yourself first before you help out it. So as we continue to go through challenging time, taking care of yourself as a leader, you can sure you meditate your flextor the exercise the ask will help you be from

your personal board of director or your best friends. That's the key thing that's gonna be the way that you can then help others who take care of yourself first. Hmm. Quite quite interesting. We have been speaking with Hubert Jolie, former chairman and CEO at Best Buy and currently a lecture at Harvard Business School. Thank you, Hubert for being so generous with your time. If you enjoyed this conversation, be sure and check out any of our previous three

seventy six former discussions that we've had. You can find those at iTunes, Spotify, a cast, wherever you feed your podcast fixed. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. You can sign up for my daily reads. You find those at Rid Halts dot com. Uh follow me on Twitter at rid Halts. I would be remiss if I did not think that rac staff that helps put these conversations together each week. Charlie Vollmer is my audio engineer extraordinaire.

Atika val Bronn is my project manager. Paris Wald is my producer. Michael Batnick is my researcher. I'm Barry Ritolts. You've been listening to Masters in Business on Bloomberg Radio