How must leaders and organizations adapt to the shift towards multi-stakeholder capitalism? World-renowned CEO and author Hubert Joly joined the Yale Center for Customer Insights Learning from Leaders webinar series to share what he believes to be the key to thriving in this new era: the ability to lead with purpose and humanity.
In Hubert’s recently published and critically-acclaimed book The Heart of Business, he shares his philosophy around the purpose of business. He explains that “the heart of business is the idea of pursuing a noble purpose, putting people at the center, creating the environment where you can release that human magic, embrace all stakeholders, and treat profit as an outcome.” This philosophy requires a re-thinking of why we work, a shift to the belief that a company is a human organization made up of individuals working together in the pursuit of a common goal. This provides a stark contrast to the corporations of old, beholden solely to investors and focused on strategy and revenue as key differentiators.
Hubert shared with us some key learnings on this human-centric approach. As he notes, “Strategy is not about beating the competition, it is about becoming the best version of yourself for the benefit of all stakeholders.”
Along with the rise of the conscious consumer, it has become increasingly popular for companies to define their purpose as it relates to the multi-stakeholder landscape. The challenge arises when that purpose stays at a high level of abstraction and doesn’t permeate the organization in a way that drives change.
Hubert defines purpose as the intersection of four things:
- What human needs are you trying to address in the world?
- What are you uniquely good at?
- What are you passionate about?
- How are you going to make money?
Many companies limit themselves by defining their business based on the historical way they’ve transacted in the market. During Hubert’s tenure and transformational leadership at Best Buy, the electronics retailer shifted their purpose to be defined as a company in the business of “enriching lives through technology” by addressing key human needs. Not only was this purpose more inspiring, but it also expanded the addressable market. In the case of Best Buy, redefining its purpose led the company to expand into the health care market, working to place sensors powered by AI in the homes of aging seniors, allowing them to live independently for longer.
They also launched an in-home advisor program where Best Buy employees would help homeowners to design and install systems such as media rooms and smart home technology that help enhance the consumers’ enjoyment of their homes. Hubert compares the service to having your very own Chief Technology Officer for the home.
Most importantly, the company’s expanded brand purpose allowed a stronger link between purpose and humanity, allowing employees to “write themselves into the purpose of the company,” and connect with what intrinsically drives their work at Best Buy.
Creating an Environment for Authentic Connections
While many incoming business leaders would have cut back on human capital in the face of the daunting turnaround needed at Best Buy, Hubert saw the Best Buy employees as the greatest asset available to him. He started his tenure at the company by spending a week working in one of the retail locations, learning directly from frontline employees what the pain points were for the business. Hubert notes that many times, the brand purpose is announced and enacted through a top-down strategy, with no real buy-in or cultural shifts from the front liners themselves.
Hubert’s emphasis was on “unleashing the human magic” of every Best Buy employee, beginning by asking the same question to store associates and c-suite executives alike: “What drives you?” Hubert implemented training programs absent of PowerPoints and messages from the CEO, focusing instead on sharing life stories and asking who they found to be their most inspirational friend. C-suite executives and front liners were asked to share photographs of themselves as children and to explore what kind of leaders they would like to be and how they would like to be remembered. The key takeaway: treating employees as human beings allows them to connect with their work, be the best version of themselves, and unleash “human magic” at scale. Hubert notes that this shift has had the greatest impact on growth.
With the new era of multi-stakeholder capitalism comes the need for a new type of leader. As Hubert has witnessed throughout his career, the old model of leadership sees leaders as superheroes – they know everything, have all the answers, and are often driven by power, fame, glory, and money. The problem is that no one wants to follow these people.
While Hubert used to focus on experience and expertise when hiring, he has turned to understanding who each prospective leader is as a person, what drives them, and how they would like to be remembered. “Are they a good fit for a leadership model that is about purpose, humanity, serving, creating the right environment, authenticity, empathy, and vulnerability?”
Hubert notes that “our role as senior leaders is less about coming up with the right answers from a strategic standpoint, but more about engineering the right environment so we [can unleash ‘human magic’] at scale.”
And Hubert does believe that we are seeing a massive evolution. Companies in general are moving in the direction of purpose and humanity, and leaders are eager to evolve but are unsure how to move forward. This new era of leadership must go beyond business strategy and begin to mobilize the organization and create energy. “In physics we learn that energy is a finite quantity. In a human organization it is not – you can create it by co-creating plans, getting going, celebrating early wins, and being vulnerable and transparent about problems.”
You can catch Hubert’s full talk here.