The Heart of Business: Hubert Joly with Arianna Huffington | LIVE from NYPL

You're so kind, Arianna, and I so look forward to our conversation. So I did not forecast anything that happened last year believe me. The themes, I think what happens, the themes that are in the book about the importance of leading with purpose and humanity were very relevant before last year. They became even more relevant and there was a moment Arianna last year, maybe all of us, probably at a moment like this, where even though I'm the eternal optimist, I had to pause last year and say, I have to admit it. The world we live in is a mess. You know, we have this health crisis and economic crisis, societal issues, racial issues, environmental issues, geopolitical tension. We just have to say it out loud. And then add what's the definition of madness? Do the same thing and hope for a different outcome. There's no doubt, right? We need this refoundation of business and society around better principles. On my FBI most wanted list before the pandemic and I think after the pandemic, it was two people, Milton Friedman, right? Shareholder primacy and his obsession about profits. And b, Bob McNamara, the former Secretary of Defense, who was the model of scientific top-down management. These approaches don't work. So, you know, the conversation today is about how do we move forward? And I was happy to bring this contribution. I want to add my voice. I mean, you have your voice out there. I want to add my voice and my energy to this discussion and to this necessary and urgent refoundation of business and society around better principles.

Thank you for highlighting this. You yourself have very good tools, you know, at Thrive Global that help companies deal with the wellness and wellbeing of employees. So we share that passion for practical tools. And I think we're going to post it, because it's the first and only business electrocardiogram that can help people assess the health of the heart of your business. Its 20 questions, it's accessible. It's for free. Why did I focus on the heart? So big mistake I made, Arianna, for many years. Maybe I was not the only one, but still was to have my head cut off from the rest of my body as a leader. I thought that leadership was about being smart, being the smartest person and being some kind of superhero who can save the dead because I know, right? I have the answers. I'm the know-it-all. And I think it's coming from Satya, who's talked about as leaders we need to move from being the know-it-all to the learn-it-all. So we're in a shift. One of the things I've learned certainly during the pandemic and over so many years is that as leaders, we now need to lead with all of our body parts, the head, but also the heart, the soul, the guts, the ears, the eyes, and it stems from a discussion, which I think is really fundamental is the discussion of why do we work, right? Why are we even in business? Is work a curse because some dude sinned in paradise? You're multilingual Arianna, so, in French work is travail, which comes from Latin tripalium, which is an instrument of torture. So is that how we see work or do we see work as something we do so that we can do something else that's more fun? Or is work part of our quest for meaning, part of our fulfillment as individuals and this idea of heart, maybe comes in part with the Lebanese poet, Kahlil Gibran, who said work is love made visible, work is love. That's so profound. And once you've had this determination, then you have to look at business differently, because what is a company? A company at the end of the day is a human organization made of individuals working together in pursuit of a goal. And so that goal like for in our lives has got to be more than for-profits. It has to have to do, something to do with doing something good to other people, the golden rule. So that's where the heart discussion comes in.

And I ask you a question because I love how you're helping so many deal with this. In 2012, Arianna, I wrote an article in the Star Tribune, which is the local Minneapolis newspaper. The headline was, I am not the CEO of Best Buy. I have this job, but that's not my identity. And so what I'm going to be and there was a whole story about why I did this, but I'll skip it. But it was a, I can be passionate about my job, about my purpose, but my identity is not stuck with it. And so I said in the article that one of the things I would do at some point is pass the baton of CEO to somebody else. This amazing woman, Corie Barry, who is now the CEO of the company. But my purpose in life would not change. My purpose in life is to try to make positive difference on people around me and use the platform I have to make a positive difference in the world. Which for me today is helping the next generation of leaders, be the best they can be. So I think why we can be all in and I think it's good to be all in. There's still a distance from an identity standpoint so that we don't get confused and you see leaders get lost in their job, in their identity. And then when they don't have that job anymore, they don't exist anymore. So I think and it's all about self-reflection. Maybe I want you to do a bit of an infomercial about how you help people be more self-reflective and don't get lost in the Zoom madness that we've been in so that we can be the best leaders we can be. I don't have the corner of wisdom if somebody has, you may.

What's fascinating with the urgent questions that leaders are facing is there is no playbook for them, right? The pandemic was there. Did you have a playbook for the pandemic? The back to the office discussion, there's no playbook, right? And so, as leaders, I think there's a huge shift. The 20th century model, all of these myth about leadership of the leader, as I mentioned of the superhero, who knows everything, who's there to save the day and was driven too often by power, fame, glory, or money, eh, that doesn't work anymore, right? The kind of leadership that people want to follow today is much more authentic, much more purposeful, and vulnerable. And, you know, maybe I'll point to a couple of ideas. Last year, during the pandemic, remember when we couldn't go outside. And it's something that great leaders did, it was so impactful, was to go inside and spend time with their selves, with themselves and try to define, how do I want to be remembered after the pandemic? What are going to be the guiding principles for my leadership during this time? And then of course the other thing they did, which I think is still very, very relevant and which you practice, is, you know, taking care of yourself as a person, because if you'll lead others, you need to lead yourself first. So remember, Arianna, a long time ago, when we were flying on airplanes, it was a long time ago. When the oxygen mask would come down, we were told, put the mask on yourself first, before you can help others. So everything we can do to breathe, right? All of the micro steps we talk about meditation, journaling, reflection, a group of friends, maybe your spouse or partner to take care of yourself and be kind with yourself, right? Is so critically important and be able to say, you know, we've had some tough moments in the last 18 months and being able to share with them, with people around us, this has been my worst moment and my wonderful wife, who you know asked this question to our clients. What was your best moment last year? Last 18. Which was your worst moment? How did you feel? What did you learn? And what does that say about how your leadership going forward? So we're very far from the know-it-all and that's necessary because the truth is we don't have the answer. We have to be able to say, my name is Hubert. I need help. This is what I know. This is what I don't know. And this is how I'd like to work together so that we can get to an answer and be really humble about it.

Wellness is important. I just drank some water. So thank you. I think it's part of this reinvention is the idea of putting people at the center of business, at the heart of business. And, you know, for decades, companies have said, oh, people are my most important asset, right? We've all heard this, but when the going gets tough, you know, people, you've seen these turnarounds where people announce 10,000 layoffs and the share price goes up. And when I studied at Best Buy, that was the advice I was getting cut, cut, cut. Like if people were the problem. And so what I've learned in the last several years at Best Buy was, what does it mean to concretely put people at the center? And I agree with you, it's not a ping pong table. They're fine, but that doesn't do. That in the worst days at Best Buy, it meant studying with listening to the front liners and asking they knew what was working well and what was not working. And my job was easy, it had to do with listening to them. And there was a lesson here, which was to start with people and my compatriot, Rene Descartes of the Cartesian philosophy said, "I think, therefore I am." I think he's wrong. It's "I am seen, therefore I am." And if we can create an environment where everybody at the company, every single individual, can feel that they are seen, that they exist, that they matter and that they can be the biggest most beautiful version of themselves, it's quite extraordinary. So that was one vignette from the turnaround. And then when we moved to the second phase of our journey, which was building the new blue, when we started to decide, what kind of company do we want to become and how do we accelerate our growth? I think the magic Arianna, was about creating an environment where everybody at the company could connect what drives them with their work and with the purpose of the company. You see many companies today define their purpose, right? Everybody's doing this, but then it stays on the website and then nothing happens. And so of course you need to make the purpose the cornerstone of the strategy, but then you need to go all the way to connect, helping everybody connect what drives them with their work. So I had a store general manager, we got to be very far from ping pong tables. He asked every one of his associates in the store, about 100 of them, what is your dream at Best Buy or outside of Best Buy? And he would write it down. They would write it down in the break room. And then he said, my job is to help you achieve your dream, right? And that was pre-pandemic. I think the question today was being not only what is your dream, but what is your biggest struggle and how let's talk about it. And I don't know I can solve your biggest struggle, but at least let's talk about it. And I know for me, it was in February when I learned like my two parents who are 86 and 88, so they're still kids, but they're aging, but both had COVID. My father didn't have any symptoms but my mother did and she didn't have to go to the hospital. But for two weeks I was scared. All right. And she's recovering, but she's still not her full self, but, you know, that's what everybody has been going through. And that has led to reflections. I know you agree with me on that, on the part of many, many people have said, what is important? How do I measure, how do I define my success? How do I define my life? And this question the heart of business, of the meaning of our life and the meaning of our work is really essential. So as companies, if we can create an environment where all of us can be vulnerable, can be ourselves and I'll finish with something that has always stuck in my mind, which is Kamy Scarlett our head of HR and our head of stores at Best Buy at the time. One day, decide to share with everyone at the company how for years, she'd been struggling with depression following the death of her two parents. Who talks about mental health as a senior executive, right? Aren't we supposed to be strong. This had a sea change, this had a huge impact at the company, she received 100s of emails because all of a sudden she signaled that it was okay to be struggling and that we could help each other. And of course, you've seen and you've been an actor in this, companies deploy on the job mental health and wellness programs to support the struggle at any moment before the crisis I think people say maybe 20% of population, human population would suffer from some kind of mental health issues. What is it now? Is it 50, 60, 80% of us who are struggling and need help? So again, this is a huge shift in the leadership of companies and all of our common friends who lead companies are embracing that, because they know it matters. And even our good friend, Jeff Bezos in his last shareholder letter wrote that while for 27 years, they had put becoming earth's most customer centric company as his main mission, is adding now his second mission, which is to become earth best employer, and best place to work, and safest place to work for employees. Because we all know that if we don't have a robust, exciting value proposition for employees, they're not going to be with us. They have a choice.

And, you know, in one of the, so I am somebody who has evolved from being a heart changing, deeply analytical, McKinsey consultant to somebody who now believes in human magic Arianna, and I didn't smoke anything illegal I can promise as part of that journey. And I want to define what magic is because magic to a large degree explains the surprisingly delightful and the delightfully surprising resurgence of Best Buy, basically in the last few years. And, you know, one day, remember back in 2012, quality of service in our stores had deteriorated. Frankly, it was not great, but fast forward to 2018 was one day a young mother who comes to our store. One of our stores with a young child, maybe three or four-year-old for holiday the child had gotten a dinosaur toy as a gift, was very happy, except that the dinosaur got sick. The way we know the dinosaur got sick is the head was dismantled from the body. So that's how you know and, but the boy wanted the dinosaur be cured. So they go back to the store where they had bought the product and at most stores, you would have been sent to the toy aisle and with some luck, you would have been able to buy a new dinosaur toy, but that's not what happened in that store. On that day there's two wonderful Best Buy blue shirt associates who saw and understood what happened. They took the sick dinosaur, they went behind a counter and started performing a surgical procedure on the dinosaur. And if you've been watching Good Doctor on Amazon, you know, how they would, they walked the child to the steps in the procedure, and of course substituted a new dinosaur but gave back to the child, the cured dinosaur. Now here's a question Arianna, do you think at the time it was a standard operating procedure at Best Buy on how to deal with sick dinosaur or maybe even better a letter from me, on how to deal, no, of course not. These two associates found it in their heart and felt they had the freedom to do what they did. And when I heard about that story, this was a time when the performance of the company was really accelerating. And I thought this is it, at scale we have tens of thousands of Best Buy employees who feel that they're not in the retail business, they're in the happiness business. And that created this irrational performance. And so the challenge for leaders is how do you create the environment that can help create at least that magic? And in the book, of course, being French, I talk about the five ingredients. I gave the recipe for unleashing human magic. And it's a very different approach than the old Bob McNamara, top-down approach of telling people what to do. We could do a survey on this during this conversation, raise your hands if you like to be told what to do, you like to be told what to do, Arianna?

That's right.

The five ingredients and I must say I learned so much from my colleagues at Best Buy who are magicians. So the first ingredient is about this idea of connecting dreams, by connecting what drives people with their work. And then, how the work connects with the purpose of the company. I shared with you how the store general manager was asking these associates about their dream. But that's something that all of us can do, and actually did back in 2016 with my executive team. I, we had a dinner with the executive team where I asked every one of the team members to bring a picture of themselves when they were little. So we had really cool cute pictures and over dinner we shared with each other our life story, and what drives us in life. Our purpose in life. This was transformative, because what it did is helped us realize that these executives were actually surprise, surprise human beings. And that with one or two exceptions, most of us shared the desire to do something good in the world. And that led us to want to do much more than just increase the share price of Best Buy, but say, let's build the company that everybody is going to love, that the customers are going to love, but also the employees, the community and the shareholders. So this idea of connecting dreams. The second ingredient is about creating an environment where there's genuine, authentic human connections, right? Where everybody can feel that they belong. Right? So I shared with you this idea of I am seen, therefore I am, as opposed to, I think, therefore I am, or this is where of course the whole discussion about diversity inclusion comes into play. The third ingredient is about autonomy, creating an environment where, as an individual working at the company, I have an influence on things. I'm just not told what to do. And so for us leaders that means making sure we push down as many decisions as possible, as far down as possible and provide the autonomy for people who are closer to the action. As the CEO, I don't need to make all of these decisions. I can provide input, but I don't need to be making the decision. It's about mastery. So as human beings we like to master something. And here's one thing I've learned about this. Yes, training is important, but individualized coaching, one employee at a time is much better. Here's why. Let's imagine for a second. It's not true, but let's imagine for a second that Roger Federer and I have the same tennis coach. Okay. It's not true, but let's imagine. I can guarantee that the coach would say something different to Roger than to me. And so that means, large organizations, they don't care whether it's 1,000 people or a million it's one individual at a time that we are. And we did this at scale each associate every week, will have a coaching session with their supervisor. And then the fifth ingredient is about creating a growth environment. So talks beautifully about this, which includes the ability to fail. You know, one of the things that, again, Jeff Bezos talks beautifully about is if you're not ready to fail, that means you're not experimenting, right? So these are the five ingredients, easy to list them, very interesting to do this at scale. And in the book, we give a lot of very practical, how to advise. The book is really a guide for leaders who are eager to move in this direction of leading with purpose and humility. So I hope it's helpful to many leaders. And by the way, all of us are leaders right at the minimum we're leaders of our life. So there you have it.

It is so essential what you just said. It goes back to this question of purpose and, following the pandemic is many companies whose top line has been hurt. Right? In fact, later this week I'm going to be with the leadership team of a travel management company. My former company, Carlson Wagonlit Travel. As you can imagine, corporate travel is down. So imagine this company in New York City where you and I live, there's been many restaurants that have been hurt. So a common question for companies how do I find growth? And I think if we define a strategy based on the way we've been doing business, like if at Best Buy we had said, we are a brick and mortar consumer electronics retailer, we'd be dead. So the idea of anchoring the strategy in a noble purpose, I think is a very powerful idea. And this noble purpose can be found at the intersection with, where the world needs key human needs. Number two, what I'm uniquely good at, number three, what we are passionate about and before how we can make money, that can lead to defining a much more inspiring, but also much bigger business opportunity. So at Best Buy, at some point we say, we actually not a retailer, right? We actually in the happiness business, but more precisely we said, we're in the business of enriching lives through technology by addressing key human needs, which has led us to get into the health space, as well as getting into, launching an in-home advisor program, which is where we go to people's home, if their need is complex and, our dream is to become their CIO or CTO for their home, which is of course what everybody needs. And similarly, if you're Ralph Lauren Corporation, I'm on the board of that company, if you just define yourself, which they don't. But if you were to define yourself as an apparel company, you'd be in trouble because who's buying clothes now. So nobody's buying buttons, right? Maybe tops, but no buttons. But if, you're like Ralph, and you have this dream of the company that's there to enable the dream of a better life. There's many, many product categories you can get into and a different connection you can build with your customers. So this anchoring around needs again, vastly expands the addressable market and to your point provides a human connection to the heart. And that's why I believe that the first thing that's the heart of business is this idea of pursuing noble purpose and treating profit as an outcome, not the ultimate goal.

Exactly.

So shareholder is a very important stakeholder. In the U.S. certainly, they manage our savings for our retirement. So we want them to do well. But when you read what key, some of the largest funds I've been seeing in the last three to four years, including Larry Fink, who's been writing to the CEOs of large companies, same with State Street and Vanguard, they're very clear. They're smart. They know that a company that has a noble purpose, a long-term strategy, takes care of all of the stakeholders, is going to create a better outcome. You know, if you're based in Minneapolis, following the horrible murder of George Floyd you know that if the city is on fire, you cannot open your stores. You cannot run a company. If the planet is on fire, you don't have much of a business. So I once shared with our shareholders that our purpose was not to make money. It was a great outcome. And by the way, our share price has gone from $11 to $110. So they knew that we care deeply about them, but it's more effective to treat it as an outcome of a set of great strategy. And the shareholders know this. Now, of course, Arianna, when I started in 2012 if I had told them, look, it's all going to be about stakeholders and kumbaya, they would have said, who is this guy? Right? They already said, who is this guy? When my appointment was announced, share price went down 10%. So here you go.

They love us though. They may not trust us, but they love us. And so initially the focus was on driving performance, but again, with a very human centric approach. And I think that's, sometimes people oppose stakeholder capitalism and shareholder capitalism. I think it's a mistake. I think stakeholder capitalism is about embracing all stakeholders in a declaration of interdependence. The world needs the declaration of interdependence, where business knows that we cannot be successful just within our four walls, if the world is on fire outside of us. And so it's by and of course what's happening also. So shareholders are demanding more responsible business behaviors, employees are, they want to work with a company that respect and where they're going to find meaning and opportunity. Customers want to do business with responsible businesses. And so I think the debate is over. And for me for most business leaders, it's not whether we should move in that direction. I think everybody agrees. The question is more how, which again is where, I've tried in this book to offer some very practical advice on how it's for leaders at all levels who are eager to move in that direction at the end of each chapter, we've put a set of self-reflective question and, what does that mean? What can I do? And so that's the ideas. How do we move? Because it's clear that we have a few ticking time bombs and I have three wonderful granddaughters ages, nine months to two and a half years, I think we need to do better for them.

So let's use this crisis as a catalyst.

I think that's boards, the boards I'm on certainly, if you think about J&J what an extraordinary company. Since 1943, they've had their cradle that embraces all stakeholders. Right? And I talked about Ralph Lauren as well. And so from a board standpoint, yes it raises an interesting question, which is what should be the focus of boards? Historically, the focus of boards were making sure you have the right CEO and the right team. Of course, we have to look at their compensation, because that's a board decision, making sure we have a strategy and that strategy is working and making sure that nobody goes to jail, right? It's about compliance, right? I think there's a fourth leg that's, well, maybe a fourth and a fifth leg, right? Which is about looking at overall impact on all stakeholders. So of course shareholders with the focus on ESG, right? Environmental, societal, and governance helping with that, there's a lot of work on defining metrics, trying to hold boards accountable and therefore management team. There's also I think a need to focus on culture. Because if you believe that the true engine of success is human magic, you need to understand whether the company is creating that environment that can unleash human magic. And the thing is, you're unlikely from the boardroom in the same way that somebody had, and when I joined Best Buy, one of my colleagues told me, Hubert you know the people to drive, lead the company is sitting in your at your conference table looking at spreadsheets. I think it's the same for boards. And I think some of the most productive time I've had on boards is when we go out. So at Best Buy we would take our board to a market. They would talk to front line employees. They would see what's really happening on the front line. So as board members we need to find different ways to look at culture and how our people feel, what metrics do we use? Do we get any reporting on burnouts, right? These are new things. It's not about boards replacing management. Because that'd be crazy. But I think there's a set of new, with this new era, I think there's new dimensions that boards need to look at and are in fact looking at of course.

Yes.

Yes.

And around diversity and inclusion. You know, looking at that, whether it's part of the SEC file documents is a different discussion. But I think companies as leaders, we have to look at the different dimensions and key drivers of our overall performance and to the benefit of the various shareholders. So it's a time of change. It's also an exciting time I feel because there's so much to be invented on how to build this new model of leadership for the greater good. So I'm excited about it.

You begin, Arianna.

My top of the list is of course Thrive by Arianna Huffington. I told you I read it over Christmas last year. Actually I did not read it, I listened to it. And you told me your sister was reading it. I could see you, but then you told me it was your sister. And it's about how we measure success. It's about, you talked about ingredients, right? And I have them here. It's about wellbeing, wisdom, wonder, and giving. So I think for anyone who wants to thrive in this new era Arianna has some magical words for and of course your sister. So that would be a one very briefly hit the others, Viktor Frankl's Man's Search for Meaning, oh my God, that's foundational. I think it's right up there with Marcus Aurelius. This is somebody who spent the war in a concentration camp and was able to survive because he felt he was thinking he was visualizing life after camp and what all of the wonderful things he would do. Marshall Goldsmith's the father of all executive coaches. And I give credit to Marshall for helping me along the journey of becoming a better leader. What Got You Here Won't Get You There. In the first stage of her career so much focused on being smart and getting things done and so forth that doesn't work in the second part of her career, which where it's more about creating the right environment for others to survive. Just Mercy, of course, by Stevenson is such a profound way to learn about the experience of Black African American friends and colleagues and members of our community, which was, I heard him the first time at the Institute in Minneapolis. I was in shock when I heard what he had to say. The last one of course, is Marcel Proust, In Search of Lost Time, only 3,000 pages of the most adorable and charming romantic experience by this amazing French author. So there you have it, quite diverse.

I'm a bit on the fence on this. The question is, do companies need to become B Corps as opposed to C Corps, to be able to lead from a place of purpose and humanity. And I think that maybe getting to changing to being a B Corp is helpful. I don't think it's necessary. And I think it's potentially distracting because, so why is it not necessary? I think that in the U.S. and I could be mistaken, right? But I've heard Marty Lipton talk about it in particular. In Delaware, in particular with the question of business judgment, as leaders, as boards, we actually have the freedom to do what makes sense. And with business judgment, make decisions to invest in your people or in the community, if it's for the greater good in the end. So I've never felt constrained leading Best Buy by the fact, Best Buy was actually a Minnesota company. I think in Minnesota we actually have the right to take into account different stakeholders. The reason why I'm not sure it's a priority to move to a B Corp is that it focuses on the legal aspects. And for me the biggest change doesn't need to be legal, it needs to be in our heart. So change needs to start from within. Now, if at some point you've done everything with your heart and you feel you're constrained by the legal structure of the U.S. corporation then, maybe you can move to a B Corp, but that's not where I would stand. I'm not saying I'm right. It's just an opinion. That's not where I think we need to start.

And at the end of the book in the conclusion, there's a call for action, which actually starts with each of us. Each of us get to decide how we want to live our life and how we want to lead, what kind of a leader we want to be. Then that goes to what the companies do and their boards. And then of course you can have a discussion. There's a set of, I think all of us need to lead. So there can be a discussion at the ecosystem level. So Paul Polman, whom you know is the former CEO of Unilever is doing some very interesting work with Imagine where he's taking a number of industry sectors. So there's the fashion pack and he's doing the same in food, where he takes a bunch of companies, major companies in the sector, have them work together on how can we build a more sustainable model? Because sometimes it's at the industry level, for example, in apparel that you need, you can change the dyeing techniques or technology, how cotton is grown and so forth. So I think that's an interesting one. I think investors also have something to do, the proxy advisory firms, ISS and Glass Lewis maybe they have some work to do. I'm sure they are doing it on. How do we evaluate the performance of a CEO? Today it's only the TSR, total shareholder return. Should we broaden the criteria? Brian Moynihan, the CEO of BOA in his capacity as head of the international business council did some really interesting work on metrics for companies. It's not just profit. What are the different areas where we need to measure? So I think in 1789 and maybe I'll end with this. So Louis the XVI, King of France, turned to Monsieur de La Rochefoucauld after the Bastille had been stormed. And he said, "Is this a revolt?" And Monsieur de La Rochefoucauld's answer was, "No sire, this is a revolution." I think he was right.

I think it's a necessary revolution. I hope we make it a revolution with a sense of urgency because there's a few ticking time bombs. If we don't take care of them, it's going to be a mess and my granddaughters are not going to be happy with me.

Thank you, Arianna, you're such an amazing friend. Thank you for what you're doing in the world. Helping so many companies and employees deal with the mess in which we're in and have a better life, so thank you. You inspire me.

Merci. Thank you.