CEO Hubert Joly had no retail experience when he arrived three years ago. Recasting the boardroom helped him drive an extraordinary turnaround.
How does a board of directors help drive a corporate turnaround?
In the case of Best Buy—a company that has beaten Wall Street’s expectations for the past 11 quarters—a board of directors stocked with sitting CEOs has helped significantly.
Speaking on a panel at the Fortune Global Forum in San Francisco, a three-day event that kicked off Monday in San Francisco, Best Buy chairman and CEO Hubert Joly explained that when he arrived at the world’s largest electronics retailer from hospitality giant Carlson in September 2012, he diagnosed his new organization as “dysfunctional,” as Fortune‘s Jen Wieczner explained in her recent story about Best Buy’s remarkable revival. Joly not only oversaw the redesign of most of Best Buy’s 1,433 U.S. stores, overhauled employee training programs, ramped up the e-commerce business, and cut $1 billion in annual expenses. The ambitious Frenchman also reformulated the company’s board of directors.
“A sitting CEO has the breadth of experience to advise,” Joly explained during the Fortune Global Forum session, which also included BT Group BT CEO Gavin Patterson and Hugo Sarrazin, who heads McKinsey Digital Labs, a unit of consulting firm McKinsey & Co.
Among the sitting CEOs whom Joly recruited to join the board: Domino’s Patrick Doyle, the Weather Company’s David Kenny, and SunGard’s Russell Fradin, who is now Best Buy’s lead independent director.
While Best Buy BBY stock sunk below $12 at the end of 2012, the shares have roughly tripled since then. Credit goes to a CEO who came in three years ago with zero retail experience—but knew how to ask for help.
At the Fortune Global Forum session, Joly advised other CEOs in the audience to use their board of directors as a “strategic weapon.”
“The key is the head of the nominating committee,” Joly added. “Getting someone who is diligent and tough as nails is critical.”
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