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*Best Buy is one of the most recognized examples of successful company turnarounds in the past decades. In 2012, the company was ailing, sales were declining (although the company was not yet in the red) and a sense of common purpose was missing within the teams. The turnaround was not executed via a purely financial approach, cutting costs and increasing profitability, but took another standpoint, betting on the human side of each and every employee to reinject meaning and will to achieve something bigger than them, together.

The ongoing digitization of department store companies involves integrating new and very different teams, reinventing the jobs of the existing ones, and finding a common motivating purpose for all of them. In that sense, there are some similarities between what Best Buy went through and what IADS members are currently trying to achieve. This is the reason why we invited Mr Hubert Joly, CEO of Best Buy from 2012 to 2019, to share with us his experience and retrospective understanding of what he achieved during his tenure.*

Introduction

Hubert Joly, a graduate of HEC Paris (business school) and Sciences Po (political sciences school), is a senior lecturer at the Harvard Business School and the former Chairman and Chief Executive Officer of Best Buy from 2012 to 2019. Before this experience, he has held various CEO positions at Vivendi and Carlson Companies, after having been partner at McKinsey for 13 years. Under his leadership at Best Buy, the share value rose from $20 to $70, the company had 5 uninterrupted years of growth and the online share of the business doubled, reaching 17% of the total sales for a turnover of $6.5bn (post-pandemic, online sales  have tripled, and represent 40% of the business). He was also instrumental in redesigning the management team structure, by helping the Board of Directors increase the proportion of female leaders. He has been ranked as one of the top 100 CEOs in the world by the Harvard Business Review, top 30 CEOs in the world by Barron’s, and top 10 CEOs in the US by Glassdoor. Hubert Joly released his book, “The Heart of Business – Leadership Principles for the Next Era of Capitalism”  in 2021, which was sent to IADS members prior to the exchange.

Interview

IADS - When you took over Best Buy, things looked bleak – tell us what it was like and why you accepted this position?

HJ – In 2012, everyone thought Best Buy was going to die in a context where brick & mortar retailers were considered dinosaurs. In addition, I did not have any background in retail at the time. However, after making my due diligence, interviewing Best Buy alumni and employees, and making my own mystery shopping visits, I understood two things:

• Customers needed Best Buy: they wanted to touch, feel, see, and experience the products,
• Vendors needed BB, as it was a great way for them to showcase their R&D investments.

I also realized that all of Best Buy’s problems were self-inflicted: incoherent pricing, poor customer experience, and deteriorating infrastructures (stores). This meant that it was possible to have a grip on these problems, and fix them.

IADS – You have turned around the company in a few years. What do you think was key to this success while so many others in the retail industry tried and failed?

HJ – There were actually two phases to turn around the company and generate growth.

The first phase, “Renew Blue”, was all about the turnaround itself. We are not talking about strategy or vision here, but pure execution: we were fixing what was broken. We pinpointed all the issues and addressed them one by one: matching Amazon prices, investing in customer experience, offering better shipping experience including next-day delivery, investing in stores or partnering with vendors…

This is what we did. The “how” part is more interesting though! The usual recipe involves cutting costs, especially reducing the headcount. In our case, this would have meant closing stores, when a lot of them were profitable. We preferred to have a human-centric approach. This meant two things:

• Listen to the frontliners and see what was wrong. I spent the first week on the job visiting stores and talking to teams, to understand what was going on. All I had to do was to listen and make sure they had the right answers and tools from the leading teams.
• Create positive energy within teams by showing them that they are placed at the centre and listened to.

For me, headcount reduction was really the last resort, I preferred to focus on reducing non-salary expenses (for instance, finding ways to reduce the rate of TVs being broken during handling!),

The second phase, “Building the New Blue”, was launched once we knew the foundations of the company were solid again. We reflected together and defined what company we wanted to be, and how to accelerate our growth. This can only be done by pursuing a noble purpose and putting people at the centre. That’s my idea of leadership.

IADS – To what extent the turnaround was a 100% human adventure, or a human adventure supported by systems? How did you manage this transition from an infrastructural point of view?

HJ – In electronic consumer goods, 90% of the shopping decisions involve a digital touchpoint at some stage, or even start digitally, so of course, emphasising digital solutions was the long-run approach. Every meeting I led always started by discussing e-commerce and digital, and we increased investments in the website. But systems are human-powered, and decisions must be made by someone, so we also invested in employee tools to adopt agile ways of working and spread a digital mindset within the company. That was a true asset for Best Buy during Covid-19 and allowed us to easily transition to contactless pickups and other solutions when stores were closed.

IADS – How did you prioritise the adoption of solutions and make decisions on investments?

HJ – The two phases were different.

The first phase was about eliminating pain points, understanding what was not working and fixing it. For us, that was the search engine, which we redesigned. Then, we worked down the list of remaining pain points and prioritised them by how important they are to the customer journey and business impacts.

In the second phase, the lens was different. We had defined our purpose: enrich people’s lives through technology, and that meant that we were not anymore only addressing tech fans, but also people who needed help with tech. That meant pivoting on several angles: from B to B, to B to C, from being a retailer to something else. Partnering with vendors was key, as they understood that it could be beneficial for them too, and that helped co-fund the needed investments in stores and systems.

IADS – You diversified your leadership team, the board – why did you feel it was important and how did you do it?

HJ – Simply put: I do not think we could have done anything without diversifying the teams. How do you want to address the world if your teams do not reflect its diversity, from a gender, ethnic, background or education perspective? Leaders need to create an environment where they can leverage diverse team members. For example, in Chicago, if your sales team doesn't speak Polish then you might not sell much. Same thing in Orlando for Portuguese, to address Brazilian customers.

For me, diversity is a business imperative. As leaders, we know how to sell business problems: how to attract, develop, and retain customers. These same methods need to be applied to employee retention and attraction. If there is not enough diversity represented within the organisation, you need to understand why it is not drawing these types of profiles, because that is putting you at risk.

IADS – How did you trickle down the changes until the base of the pyramid? How did you share, in a concrete manner, your Noble Purpose with frontliners?

HJ – It did not trickle down. Many companies have worked on defining a purpose.  But let’s be honest: a company’s purpose is corporate speech that doesn’t mean much to frontline workers. Frontline workers need motivation, not corporate speeches. And motivation comes from within, it is intrinsic.

This is what I call the “human magic”. I give you an example: in 2018 a young boy came in with a broken dinosaur toy. He didn't want a new one, he wanted a cure for his dinosaur. Two employees understood what was happening and they started a ‘surgical procedure’ to make the dinosaur feel better. In reality the toy was swapped with a new one, but the boy believed that it was still his original toy and was happy to have it repaired. To be honest, I can’t teach employees how to “cure” a dinosaur, and I do not know about KPIs measuring the number of cured dinosaurs per quarter. So, these employees did that just out of pure motivation. They wanted to make customers happy.

Once again, the “how” is key: how do you make sure that all your employees share the same approach? Not by having a top-down Power Point presentation. Our strategy was to be an inspiring friend to customers, but also to ourselves. So, one day, we closed all our stores on a Saturday morning, and broke the teams into small groups, asking each employee to share their own story and a story of an inspiring friend. Everyone understood, independently of their hierarchical level, that the others were more than employees or co-workers: they were human beings with their complexity. They realised that they needed to treat each other and the customers as human beings and as inspiring friends, rather than walking wallets.

Also: training is important, but it does not work if you return to a poisonous environment. Top-down scientific management approaches don’t work. Bottom-up and inside-out approaches should be prioritised. Here are the ingredients that worked for us:

• Allow every employee to connect to what drives them and connects them to their work,
• Create an environment where there are genuine human connections and where people feel seen.
• Allow for autonomous work.
• Offer a learning environment with individualised weekly coaching.
• Provide psychological safety.

We need to move away from the model where the leader is seen as the superhero who knows everything. Today’s leaders should show signs of authenticity, vulnerability, empathy, humility, and humanity!

Conclusion

**IADS – What is your view on retail after the pandemic? Where are we?

HJ –** 10 years ago, the debate was all about the dichotomy between online and brick-and-mortar. That is not the case anymore. For me, the dichotomy is now between great and mediocre retailers, and their purpose.

Purpose is an intersection of what the world needs, what you are uniquely good at, what you are passionate about, and how you can make money. The crucial question retailers should have to ask themselves to be successful is to know if they would be missed, and why, if they did not exist. Retail is being completely reinvented around purpose, people, and great execution.

To conclude, I remember my conversation with Tim Cook in 2012 about the bad press Best Buy had then. He told me to focus on doing my things and being successful, without minding the press. Department stores are in the same situation today. Keeping the focus is key.

I would also add that I believe that we, as business leaders, have a huge role to play in the society. We cannot predict the business environment or the future, but we can decide what kind of leader we want to be and how we want to contribute to the world. I have 3 guiding ideas:

• Having a purpose,
• Being clear on my principles - key ideas we have about how we want to lead and drive the business,
• Doing our best- we control what we do and how we lead our teams

Credits: IADS (Selvane Mohandas du Ménil)