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The Heart of Business: Leadership Principles for the Next Era of Capitalism

The Heart of Business: Leadership Principles for the Next Era of Capitalism PDF

Author: Hubert Joly

Publisher: Harvard Business Review Press


Publish Date: May 4, 2021

ISBN-10: 1647820383

Pages: 304

File Type: PDF

Language: English

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Book Preface

I am honored to have the opportunity to write this foreword for my good friend Hubert Joly’s masterpiece, The Heart of Business. This book should become the guiding light for a new generation of business leaders who will revitalize capitalism around their employees, customers, suppliers, and communities while realizing sustainable returns for their investors.
This is not your typical book by a former CEO. Instead, Hubert weaves his lifetime of experience in the trenches of global business with deep personal wisdom. In doing so, he models a way of leading that all business leaders should pursue.
Arriving at the point where he could write such an important book was not an easy path. Hubert is a learner who courageously took on challenging turnaround roles in industries where he had no prior experience. He used his rigorous French education and elite training as a McKinsey consultant to lead five companies as CEO, culminating in the transformation of Best Buy. During these years, Hubert went through a personal transformation, from seeking to be the smartest person at the table to becoming a passionate and compassionate leader of people.
Hubert and I met shortly after he moved to Minneapolis as CEO of Carlson Companies, and we became neighbors. We learned we had much in common in our beliefs about leadership, the purpose of capitalism, and what is required to build and sustain great companies. We had followed similar paths through the corporate world—Hubert in France and I in America—learning the hard way that leadership is not about being the person who has all the answers.

By the time Hubert became CEO of Best Buy in 2012, he had led turnarounds as head of EDS France, Vivendi’s video game division, Carlson Wagonlit Travel, and Carlson Companies. Despite his achievements at EDS and Vivendi, by his early forties he was feeling disillusioned from chasing success. This is what inspired him to take “a step back and spend time looking into my soul to find a better direction for my life.” In his study with Catholic monks and a number of CEOs in France, he realized that work is a noble calling to serve others and an expression of love. Quoting the poet Khalil Gibran, who wrote, “Work is love made visible,” Hubert believes work must be guided by the pursuit of a purpose with people at its center. This conviction has shaped his life and his career.
In The Heart of Business, Hubert shares all aspects of his personal journey to his heart, as he learned that engaging people in a shared mission was a more powerful way to lead. As a private person, he found out that sharing his vulnerabilities connected him to people in a deeper way and encouraged them to be open with him. He writes, “There can be no genuine human connection without vulnerability, and no vulnerability without imperfections.”
Hubert was not alone in having mid-career feelings of reaching the mountaintop at a young age and asking, “Is this all there is?” I too felt this way in my forties in my later years at Honeywell. Immersed in my third consecutive turnaround, I was striving to become CEO of this global company. One day while driving home in 1988, I looked in the rearview mirror and saw a miserable person. I finally admitted to myself that I was losing my way, striving to win a title in a business I wasn’t passionate about, rather than fulfilling my calling. Instead of leading with my heart, I was suppressing my passion and compassion. Thanks to my wife’s urging and encouragement from my men’s group, that wake-up call led me to accept Medtronic’s offer, where I spent the best 13 years of my professional career.
In 1995, my wife, Penny, and I met with Buddhist monk Thich Nhat Hanh, who taught us, “The longest journey you will ever take is the 18 inches from your head to your heart.” Yet wisdom gained on the journey does not always translate immediately into action. Even as CEO of Medtronic, I was still learning that lesson. Although I had worked on making that journey to my heart, I realized I had a way to go. In a similar fashion, Hubert provides a refreshing perspective for someone who has been so successful. The key lesson is to have an open heart and a beginner’s mind as you journey inward to discover your authentic self.
Just as Hubert’s personal journey transformed his leadership to be more heart centered, so did his philosophy of leadership. Through his experiences, he recognized companies must undertake their own journeys as well—moving from pursuing financial goals to discovering that the heart of business resides in its people. Hubert observes that “corporations are not soulless entities, but human organizations with people at their center, working together in support of that purpose.” When companies do this, it unleashes “human magic” by creating an environment where all employees can blossom and reach their full potential. He argues that central to every business is its purpose, which enables the organization to contribute to the common good and serve all its stakeholders.
Given the dire straits Best Buy was in, many analysts were predicting in 2012 it would go out of business or be taken apart by a private equity firm. After Hubert was elected CEO, he and I spent many hours together discussing the challenges he faced. Most CEOs asked to lead such a turnaround would follow the conventional corporate turnaround playbook: (1) close 30–40% of stores and sell real estate, (2) terminate 30,000–40,000 employees, (3) narrow product categories, (4) squeeze suppliers for lower prices, and (5) then get paid a large incentive.
Hubert took a different tack—recognizing that purpose and people were the key to unleashing the energy required to undertake the difficult task of turning the business around. Acknowledging he knew little about the retail business, he became a learner, traveling to St. Cloud, Minnesota, dressed in khaki pants and the iconic Best Buy Blue Shirt with a tag that read “CEO in Training.” There he spent his first four days at Best Buy understanding what was wrong through the eyes of customers and frontline employees.
Hubert inspired Best Buy’s employees to engage in Best Buy’s turnaround strategy, “Renew Blue.” His priorities were building Best Buy’s revenues and improving its margins, with reducing jobs and closing stores as the last resort. He did so by creating a positive environment and being fully transparent about the company’s challenges.
Turnarounds can take a long time—a time filled with uncertainty—so Hubert looked for small wins to celebrate publicly, such as announcing flat sales at the end of 2012, signaling that revenue declines were over. Instead of squeezing suppliers, he partnered with them—even arch-rival Amazon—by using floor space to create “mini-stores” for Samsung, Microsoft, and Apple, and adding appliances and health care. These steps gave Best Buy’s 125,000 employees reason for hope and rewards for their hard work, creating the “human magic” he was after.
As a result, increased sales and margin improvements strengthened the company’s depressed stock price, rewarding its shareholders. With Best Buy’s turnaround complete by 2016, Hubert guided the crafting of the company’s mission “to enrich customers’ lives through technology” as he shifted to its growth strategy, “Building the New Blue.”
While much can be learned from Hubert’s successful turnaround of Best Buy, The Heart of Business has so much more to offer. Its most meaningful messages address what it will take for organizations to succeed in the years ahead by inspiring employees to align in pursuit of a common purpose. By enabling employees to realize their work fulfills a noble purpose, he calls for a refocusing of companies around employees in service to customers and the common good.
Hubert makes a compelling case that pursuing a company’s purpose is superior to Milton Friedman’s dictate that “the social responsibility of business is to increase its profits.” He believes, and I agree, that sustainable profits are the successful outcome of organizations that are mission driven and focus on all their stakeholders.
In the future, every company will need to focus on its purpose, or raison d’être, in order to establish legitimacy in serving society by creating value for all stakeholders. Companies that follow Hubert’s approach will provide rewarding work and well-paying jobs for their employees, products and services that enhance and improve their customers’ lives, and sustainable returns for their investors, thus becoming the force for good needed to transform society.
Hubert Joly has shown us the way to achieve this vision in a magnificent book that encapsulates all his philosophies into an integrated whole. If business leaders heed its messages and pursue this approach, the world will be a lot better for it.
Bill George is senior fellow at Harvard Business School, former Chair and CEO of Medtronic, and author of Discover Your True North.

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