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Best Buy savior Hubert Joly details a new approach to leadership

May 4, 2021, 10:09 AM UTC
Hubert Joly, chairman and chief executive officer of Best Buy Co. Inc., laughs during the 2015 Fortune Global Forum in San Francisco, California, U.S., on Monday, Nov. 2, 2015.
Hubert Joly, chairman and chief executive officer of Best Buy Co. Inc., laughs during the 2015 Fortune Global Forum in San Francisco, California on Nov. 2, 2015.
David Paul Morris-Bloomberg via Getty Images

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Good morning.

Hubert Joly is one of my business heroes. Best Buy had been given up for dead when he took over as CEO in 2012.  Who needed a giant electronics store in the age of e-commerce? In a new book out today—The Heart of Business—Joly says that on day one, he addressed his 500 directors and officers and told them: “The purpose of a company is not to make money, but to make a positive contribution in people’s lives.” I can imagine one thousand eyes rolling.

But no one rolls their eyes today. A month after Joly took over, Best Buy stock bottomed out at $11. Yesterday, it closed at $117. “Ten times is not bad,” he said with a smile when we spoke on Zoom yesterday. And he did it by putting the company’s purpose—to enrich lives through technology—at the very center of its business.

Joly was at the leading edge of what he now calls a “revolution”—an “urgent refoundation of business and capitalism around purpose.” “The tide is turning,” he told me. “Employees demand this. Customers demand this. Shareholders demand it. Society demands it.” And the pandemic, which hit after he stepped down as CEO, has “vastly accelerated it. You have a health crisis, an economic crisis, a societal crisis, a racial crisis, an environmental crisis.  You have this ‘all you can eat’ menu. Status quo is not an option.”

A new age of business requires a new approach to leadership; that’s the central message of this book. Joly puts Milton Friedman—who articulated the doctrine of shareholder primacy—and Robert McNamara—who instituted scientific management at Ford—at the top of his “FBI most wanted” list. “This is what got us in trouble.  So much of what I learned in business school is either wrong, dated, or at best incomplete.” The new model requires leaders who can create “an environment that unleashes human magic, rather than pretend they can come up with all the answers.”

To understand the new model, read this book. And while you won’t be able to see him, imagine the author with a smile on his face and a twinkle in his eye. He is the most personable CEO I’ve met since Alan Mulally. But his message is dead serious.

By the way, for those still skeptical about the turn toward stakeholder capitalism, there’s some new research out by three professors from Harvard, Stanford and University of Texas, looking at how companies behaved toward employees during the pandemic. I won’t attempt to explain the methodology here, but their conclusion is that companies that had made commitments to new stakeholder model “were more humane toward their employees,” says Ethan Rouen, one of the coauthors. They took actions that companies in similar financial positions didn’t. “The commitments were credible.” Check it out in full academic detail here.

More news below.  And a new episode of Leadership Next is out this morning, featuring Adobe CEO Shantanu Narayen. Get it on Apple or Spotify.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.

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