President, Chief Executive Officer & Director, GREIF INC -CL A
Hubert Joly & Ole Rosgaard Talk Translating Purpose to Strategy | Leadership Conversations Part 1
In part 1 of this 2-part conversation Greif CEO Ole Rosgaard and Hubert Joly, senior lecturer at the Harvard Business School and ...
About Ole Rosgaard
In a September 2024 two-part conversation with Hubert Joly, Greif CEO Ole Rosgaard discussed translating corporate purpose into strategy and leading through uncertainty. Rosgaard described his view that business needs an "urgent refoundation" around a noble purpose, placing people at the center, and treating profit as an outcome rather than the goal. He attributed many problems in the business world to shareholder primacy and top-down scientific management, as advocated by Milton Friedman and Bob McNamara. Rosgaard stated that a leader's role is to create an environment that unleashes "human magic" and that actions speak louder than words in making purpose real. Rosgaard also addressed leadership during challenging times, saying that "pressure is privilege" and that leaders should take care of themselves physically, mentally, and spiritually. He emphasized the importance of inclusion, stating that everyone needs to feel they belong, and that diversity efforts are ineffective without it. Rosgaard noted that his company changed its executive team and how they work together, and he described writing a leadership philosophy that he revisits to check his own actions. He said that in a volatile world, leaders must learn humility and that resilient organizations will thrive in new environments.
Transcript (9 segments)
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Ole Rosgaard0:05
Hello everyone. I'm here with Hubert Joly, and Hubert is the former CEO of Best Buy, a company that many of you already know and you probably all shop there as well, like I do. But that wasn't where I met Hubert. I met him at Harvard Business School where he was teaching, and he's still teaching at Harvard Business School. I participated in a CEO program and I had a great time with you and the 12 other CEOs that you were trying to train. And I, as many of the others, we really enjoyed your insights very, very much.
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Hubert Joly0:45
Thank you for the opportunity to have this conversation. Your company, Greif, is at such an interesting moment, so I look forward to our conversation. Could you perhaps tell us a little about your career journey from, I know you are a hard-charging McKinsey consultant, to this person you are today who believes in human magic? Are there any key moments that shaped you as a leader? We know that 100% of leaders were born, right? But none of us, certainly not many, were born a leader. So all of us are on this journey. Maybe two or three moments. One of them was 30 years ago. I remember being asked by a couple of friends who are monks to write with them an article about the philosophy and theology of work. Why do we work, right? Is work a punishment because some dude sinned in Paradise? Or is work something we do so that we can do something else that's more fun, like maybe watching the Vikings, I'm from Minnesota, beat the Raiders three to zero after a crazy game? Or is work part of our fulfillment as human beings and gives us an opportunity to do something good in the world? And that, of course, is a choice each of us have to make. Around the same time, I was at McKinsey and I remember a dinner with a client of mine. We were trying to sell him a study, you know how these things go. Instead, he taught us a lesson. He told us, look, the purpose of a company is not to make money. It's an imperative and it's a result, but don't confuse an imperative and the ultimate goal of a business. He said in business there's three imperatives: you have the people imperative, you have the right teams properly motivated; you have the business imperative, you need to have customers who are happy; and then the financial imperative is a result, and you have to treat it in this way. And by the way, that's probably how you should run your monthly performance review meetings: people, business, and finance. Then about 20 years ago, another moment was, in many ways to quote David Brooks, I was at the top of my first mountain. I had been quite successful. I'd been a partner at McKinsey at a young age and I was on the executive team at Vivendi Universal, which is a media and entertainment company. But yet I was not happy. I felt that top of that first mountain was dry, there was no joy. So call it my midlife crisis. That led me to revisit my life and try to discern what was really important for me in my life, and it was not power, fame, glory, and money. I'd been too driven by power, fame, glory, and money, and it led me to refine my purpose in life, which again is to do something good to somebody else. Then the third milestone very quickly was in 2009. I was the CEO of Carlson Companies at the time, and one day my head of HR, Elizabeth Baston, walked into my office and told me, would you like to work with a coach? I said, Elizabeth, have I done something wrong? Has somebody complained? And she said, no, I have this guy Marshall Goldsmith. He helps successful leaders get better by focusing not on what we can change in the past but what we can do going forward. At the time I was struggling with a quest for perfection. I thought I needed to be perfect and therefore I was struggling with feedback. Whenever I would get feedback, 360, I would say who said that, what's wrong with them? And Marshall helped me embrace feedforward: what can I get better at? And of course there was the Best Buy journey, maybe we'll talk a little bit about it, that led me to discover that the power of human magic. It was not about me being the smartest person in the room but about creating the environment for others to be successful. So that was quick, but these were some of the milestones that shaped me along the way.
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Ole Rosgaard5:14
I can certainly relate to that because I experienced something similar in the past where you're trying to emulate somebody that you have a great deal of respect for, but at the end of the day you need to be yourself. You need to be authentic. And to all of us, including me, that means we're not perfect, and feedback is a gift that just helps us improve, and it's a lifelong journey.
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Hubert Joly5:41
That's so true. You mentioned something else I can relate to. You mentioned people, business, and finance, and it's remarkably close to our strategic mission, which starts with people, people always people. And then if you replace business with customer focus like we have, and then ultimately that leads to balance sheet health and so on and so forth. In your book The Heart of Business, you outline the importance of leading with purpose and humanity. Can you tell us a little bit more about this philosophy?
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Ole Rosgaard6:22
Yeah, and I think we can probably all agree today that the world we live in is not working. We have these multiple intersecting crises: global warming, global tensions in the world, societal divides, great inequity. Maybe the world is working for a handful of people but not for the population at large, and there's many sources of worries. So when we look at this, we have to look at who is on my FBI Most Wanted list, who is responsible for this. And I have two people. One is Milton Friedman, who was advocating for shareholder primacy, that the only responsibility of business was to maximize shareholder value. And then Bob McNamara, who is the former executive at Ford and Secretary of Defense in the 60s, who invented top-down scientific management. You take a bunch of smart people, they create a strategy, and then they tell other people what to do. These two things combined, I think, for me have caused many of the problems we're in in the business world. My conclusion from 30 or 40 years in business is that we need an urgent refoundation of business around different principles. These principles are: one, that business is about the pursuit of a noble purpose. And I love your purpose of life around life essentials and the purpose video that you've created. I was inspired by it. But why do we exist? At Best Buy we say we're not a retailer, we're here to enrich lives through technology by addressing key human needs. What's our higher calling? Then place people at the center. I hate the term human resources. It almost indicates human resources that are people as inputs, and the less input we have the better. No, people are the source, they're the engine of everything. So place people at the center, embrace all stakeholders. It's all in service of making a positive difference on the employees, the customers, the communities in which we operate, the planet. I know this is something very important to you. And treat profit as an outcome, as an imperative, not the goal. Of course we have to take care of shareholders. That philosophy is now quite well shared amongst businesses. We also know that it's hard to execute, but I can testify that it is this philosophy that was at the center of the Best Buy resurgence. And it was by unleashing the human magic in people that we were able to create a different outcome.
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Hubert Joly9:17
Just want to go back to purpose again. Could you talk a little bit about why it's important for a company to establish a noble purpose? And can business really be a force for good?
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Ole Rosgaard9:32
Yeah, I think it's the same reason as for us as individuals in our lives. At the New CEO Workshop that you attended at HBS, the first thing we asked the new CEOs to do is write down their retirement speech. I remember very well. None of the CEOs, and I attended that workshop when I became CEO the first time, talk about how they're going to evolve the share price. It's something much bigger and much more human. In our lives, how we want to be remembered is not by the size of our banking account, it's the difference we made in people's lives. And I think in business, if you think about a company as a human organization made of individuals working together, then of course the same logic applies. So purpose is very powerful because it's inspiring. We as human beings want to be inspired, to connect what we do at work with the impact we're having in the world. Also what I found is that companies that have defined themselves around a purpose have a better opportunity to grow the business. At Best Buy, if we had said we are a consumer electronics retailer, we would have been limited to the stores and maybe the online presence. But there's so much more we can do if we are thinking about what are the needs in the world we want to address, because then there's a variety of ways we can fulfill these needs. One of them at Best Buy was Best Buy Health, helping aging seniors or people with chronic diseases stay in their home longer with the help of technology. So yes, I do believe that business can be a force for good. That's what we want in our heart, and also business needs to be a force for good given the multifaceted crisis we are experiencing. Business cannot be successful in isolation. I lived in Minneapolis following the murder of George Floyd. If the city is on fire, you cannot open the stores. If the planet is on fire, you cannot have a business. So we have to feel responsible for the greater good as business leaders and as businesses. That is a great calling. Of course we have to take care of the shareholders, but in the way we do it we have to be a force for good for all of our stakeholders. And I know that you're on that journey too.
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Hubert Joly11:54
Any recommendations on what it takes to make this philosophy come to life?
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Ole Rosgaard12:05
This is hard. At the New CEO Workshop, I asked two questions of the CEOs. One, on a scale of 1 to 10, how important will having a great purpose be to the long-term success of your company? Average nine out of 10, so very high. On a scale of 1 to 10, how effectively is the purpose coming to life today at your company? Five or six. So there's a gap. As in the UK we say, mind the gap. So it's real work. A few things I think we've learned is that you have to do the work to translate the purpose into the strategy, making sure that the purpose becomes the keystone of the strategy and reviewing all of the activities of the company in light of the purpose. What should you stop doing, what should you start doing, and what should you continue doing? So there's strategy work. There's also work on the culture. How do you, because sometimes employees are operating in very toxic environments, and companies put a statement on their purpose and their values but it's not the reality. One of the beliefs I have is that our role as leaders is to create an environment that can unleash that magic, where the human beings working at the company can be the best version of themselves. So how do you define the culture so that you can support the pursuit of the purpose? At Best Buy, it had a lot to do with building a very human culture, be human, because we want it to be of service to the customers. Sometimes you have to go slow to go fast. Do the work on strategy and culture. Also recognize that actions speak louder than words. It's great to do a video, but what are the actions? How do leaders become role models and how do their actions translate the purpose? The last thing I would say that I've learned is that it's really important to help everybody at the company connect what drives them with their work and with the purpose of the company. So it's leadership from the inside out as opposed to top down. But it's tough. It's a lot of work. It's a journey, let me put it that way.