The Heart of Business
Spoiler alert: This article contains references from The Heart of Business by Hubert Joly.
A BetterUp study found that nine out of ten people were willing to earn less money for more meaningful work. Meaningful work has steadily grown in importance as a driver for job selection since 2005. For companies, the increased productivity from satisfied workers generates roughly an additional $9,000 of value annually and saves $6 million in employee-turnover related costs from reduced attrition. The article then recommended tactical ways to implement meaning at work, but there was no case study to support the recommendations.
Enter Hubert Joly’s The Heart of Business. According to the ex-CEO of Best Buy, at the heart of businesses is the employee. He attributed the turnaround of Best Buy to the human magic that is unleashed when employee’s dreams connect to the company’s purpose. Joly did not rewrite the sales guidebook or retrained the retail clerks that led to the return of sales and increased growth for the electronic retailer. What Joly did was to listen and to see his team as who they were—individuals with dreams who deserve his respect.
“I see therefore I am”
Joly paraphrased René Descartes's “I think therefore I am” to “I see therefore I am”. Best Buy has over 100,000 employees, most of whom are retail clerks. Joly shared his philosophy of connecting what drives a person to the company’s purpose. At an executive retreat, he and the other participants shared their life stories, what drives them, and how this relates to the company's purpose. At the store level, one manager spoke to every employee to find out what their dreams were and worked with them individually to realize those dreams.
The exercise of sharing life stories and dreams makes participants relatable to each other as human beings. Participants stop seeing each other from the lens of office titles, boss and employee, and superior and worker. From my experience, when people understand what drives another person, they form closer relationships and have better collaboration because of the trust and respect that exist between them. The exercise only works when participants share authentically and vulnerably with each other, starting with the leader. This sets the tone for others in the group to follow.
Grow the Pie
With the advent of stakeholder capitalism becoming mainstream, some expect profit will be sacrificed for employees' welfare or the environment. Joly argued that many questions that are asked with “either/or” should be answered with “and”. Instead of asking should we focus on employees or customers, or should we focus on the short term or long term, figure out instead of how to do both. During the turnaround of Best Buy, Joly set the long-term vision with shareholders and then showed them what had been done every quarter to achieve that vision--long-term vision and short-term results.
Joly operated on the “win-win” mindset or the “pie-growing” mentality argued by Alex Edmans in Grow the Pie, another book that I’d recommend on responsible businesses serving society and creating a profit for their investors. Edmans’ research indicates that when leaders maximized all stakeholder value rather than deciding on trade-offs, the business benefits in the long term, and all stakeholders are better off. When an individual's and the company's purpose are connected, human magic is released to create innovative solutions. First, this is because each individual is personally motivated and engaged to find a workable answer. Second, the team pools their knowledge because they are united in their common purpose to solve the problem.
Know Your Role (and What You Know)
Once the bleeding had stopped at Best Buy, Joly looked at how decisions would be made and who should make them. He and his team leveraged the RASCI framework which stands for Responsible, Accountable, Support, Consult, and Inform. I was amazed when Joly said he was only responsible for four decisions: overall company strategy, major investments, who was part of the executive team and setting the tone for team values. Other matters such as brand identity and capital structure should be decided by the marketing and finance teams. He pushed down decision-making as far as possible to create autonomy and enable more human magic in the organization. If you hired the right people, empower them and leave them to do their job without getting in their way.
Having seen more than my fair share of examples of the RASCI framework in practice, the key is to make sure that there is clearly one party responsible for making the decision. Having multiple parties responsible results in analysis paralysis and slows down the team moving forward. Second, make it clear that the team is in charge—they are the experts in their field of expertise, and they should not need to ask the boss about what to do. The team lead may be consulted or informed, but ultimately the decision falls in the hands of the person responsible. If this is not followed through, the RASCI will break down and the team will be frustrated.
See Profit as an Outcome
Joly was hired to turn around Best Buy at a time when the company was losing sales and hemorrhaging money. Instead of starting with the financial statement which is where most turnarounds focus on with “cut, cut, cut”, Joly looked to employees as the source for solutions. He spent his first weeks in a Best Buy store with his badge “CEO in Training” and asked the frontline workers what could be done. Non-salary expenses were reviewed, and headcount was the last resort. For example, Best Buy reduced costs due to television breakage by working with manufacturers to design more damage-proof TVs and printed instructions on the packaging.
Joly's approach to asking questions was logical—he was an outsider without retail experience. But this approach was in sharp contrast to what he was told at business school and how he was trained as a McKinsey consultant. The leader was supposed to be the smartest person in the room with all the answers, driven by power, glory, and money. In Joly’s experience, he found that this does not connect people and the approach no longer works in business today. Instead, leaders need to create the proper environment and serve their teams on the front line.
The Heart of Business was a refreshing look at how work could be made meaningful for everyone, seen from the eyes of front-line retail clerks. In a turnaround situation, when resources are scarce, it was heartening to see that salary expense was the last resort (he even brought back employee discounts that had been reduced). The team operated on a win-win mentality, instead of operating in trade-offs. For Joly, the future of capitalism for a more sustainable future lies in the hands of employees.