For years, the dominant narrative in tech has been about startups disrupting established companies and large companies' flatfooted responses to the challenge. Yet here's a surprise: While many have struggled to adapt to e-commerce's threats and opportunities, some large companies have done an admirable job of striking back against upstarts seeking to win their customers.
Specifically, this week, large retailers have disappointed investors. Home Depot gave a weak forecast for the current quarter, partly because of problems with its website. Additionally, Kohl's stock fell 19 percent after supplying a weak 2019 forecast owing to lower-than-expected revenue from its Amazon Returns partnership.
Are any brick-and-mortar retailers adapting well? Best Buy is. In August 2012, Hubert Joly, who had previously run hospitality company Carlson, took over as Best Buy's CEO following a whopping $1.7 billion loss and the departure of its previous CEO in the wake of a "close relationship" with a female employee, according to Bloomberg.
By the time Joly handed over Best Buy's reins to Corie Barry, who had recently served as its chief financial and strategic transformation officer, in June 2019, its shares had soared 330 percent from $20 to about $68 and in the quarter ending May 2019, the 125,000-employee electronics retailer had earned a 3 percent net profit margin.
There are many things Joly did to turn around Best Buy -- but the most powerful, surprising, and broadly applicable thing he did was to change the company's approach to managing its people. Instead of treating Best Buy employees as costs to be minimized -- his predecessor eliminated employee discounts -- Joly prioritized creating meaning for them.
More specifically, one of Joly's early changes at Best Buy was to describe the company's purpose and to encourage Best Buy's managers to listen to employees' dreams and help connect their dreams with Best Buy's purpose.
This is a powerful and controversial idea. As Joly said in November 2018, in an interview for Twin Cities Business magazine about his selection as 2018's Twin Cities Business Person of the Year, "[Making money is a company's] imperative ... But it's not the purpose. I believe the purpose of a company is to contribute to the common good: its customers, its employees, and the community in which it operates. If you can connect the search for meaning of the individual with the purpose of the company, then magical things happen."
There's nothing new in talking about this notion (for example, I wrote about this in my 2003 book,Value Leadership). But what I find powerful is how Best Buy applied the idea -- encouraging managers in its stores to connect each employee's search for meaning with the company's purpose.
This worked well in a Best Buy store near Boston. As Joly said in a July 2019 meeting with students at his alma mater, the French business school HEC, according to HEC Stories, "I watched the head of [this store] ask his employees what their dreams were. One said he wanted to buy a house for his family. The manager told him that they would work together to help him develop his skills, move up in the company, and make his dream a reality."
If you articulate the company's purpose and help employees connect with it, then each employee will find ways to make life better for your company's customers and communities. And the more that happens, the better your company will perform.
As Joly said, "Achieving something significant doesn't have to involve huge humanitarian efforts. My personal goal is to make a positive difference for the people around me and to use the platform I have to make a positive difference in the world. It's basically a very limited goal! But it's the meaning of my life."
Joly's story raises a question of great concern to many: What is the meaning of your life? I wrote about this in a column back in 2015 -- and I advised my students to answer this question by testing out possible career options using three questions:
- Am I passionate about the work?
- Am I one of the world's best at doing this work?
- Will the market compensate me well enough for it?
At the HEC meeting, noted HEC Stories, Joly said, "I think it's really admirable to follow one's passion, but if it doesn't lead to a job and you want to earn a minimum amount of money, you will have a problem. ... You have to find the meeting point between what you love, what you're good at, what the world needs, and what will earn you some money."
Joly's motivation is making a positive difference in the world. Your company could be better if it followed his lead.