Purpose needs to become the cornerstone of strategy
On Monday, April 26, the Sciences Po American Foundation welcomed Hubert Joly in conversation with Evan Epstein. Joly is the former Chairman and Chief Executive Officer of Best Buy and is now a senior lecturer at Harvard Business School. He is also a member of the board of directors of Johnson & Johnson and Ralph Lauren Corporation, a member of the International Advisory Board of HEC Paris, and a Trustee of the Minneapolis Institute of Art. Joly has been recognized as one of the top 100 CEOs in the world by the Harvard Business Review, one of the top 30 CEOs in the world by Barron’s and one of the top 10 CEOs in the U.S. by Glassdoor.
Epstein is a corporate governance expert and the inaugural Executive Director of the Center for Business Law, and Adjunct Professor, at the University of California, Hastings College of the Law, in San Francisco, California.
Natacha Valla, economist and Dean of the Sciences Po School of Management and Innovation concluded the conversation.
Joly began the conversation describing the multi-faceted crisis faced today by the US and the world at large, arguing that there is a necessity to reinvent business and capitalism around purpose, people, and all stakeholders.
This also requires us to re-imagine leadership:“The whole idea of the leader as the superhero who is the smartest person in the room does not work anymore,” he said, “that is not the kind of leadership people want.”
He described his experience at Best Buy where change started by listening to the people on the frontlines.
“We followed a people-driven approach,” he added. Joly denounced the idea of business as a zero-sum game and encouraged business leaders instead to build relationships with stakeholders in a win-win approach.
Epstein asked Joly further questions about his views on noble purpose and humanity in business. Joly described the three imperatives of business:
- the people imperative,
- the business imperative, and
- the financial imperative, with profit being an outcome, not a goal
"A noble purpose needs to become the cornerstone of the company's strategy." At the end of the day, Joly added, “a company is a human organization made of individuals working together on pursuit of a goal.”
Epstein asked Joly his thoughts on criticisms of stakeholder capitalism as simply trying to sell a story. Joly responded that from his perspective, stakeholder capitalism does not need to be opposed to shareholder capitalism.
“What is at the heart of business" Joly said, "is pursuing a noble purpose, putting people at the center, embracing all stakeholders, creating an environment where employees can blossom, and treating profits as an outcome. Stakeholder capitalism is a way to perfom for everybody."
He argued that ignoring the wider community is nonsensical when one’s employees and customers all come from the community.
Valla concluded the conversation by introducing a European perspective and discussing the case of new reforms coming from Brussels. She reiterated the importance of linking frontline workers to the boardroom, reforming business incongruency, defining one’s dream, and redefining the evolving role of the CEO.
“It’s a renewal of capitalism,” she said. “We need to have the ambition to write the next chapter.”
Joly’s upcoming book, The Heart of Business: Leadership Principles for the Next Era of Capitalism, was released on May 4, 2021 by Harvard Business Review Press. The Heart of Business unveils the powerful philosophy behind the resurgence of Best Buy, a company that was expected to fail in 2012 when Joly took over as CEO.
More information on The Heart of Business can be found on Joly’s website.