The Heart of Business: Leadership Principles for the Next Era of Capitalism
Hubert Joly
Harvard Business Review Press (May 2021)
“People won’t care how much you know until they know how much you care.” Theodore Roosevelt
In 1970, Milton Friedman famously argued — in an essay for The New York Times — “that the only responsibility of business was to maximize profits. These profits, if only returned to the firm’s owners (the , on whose behalf the management should rightfully act), could then be put to charitable purposes as saw fit.” By essentially delegating the task of collecting and disbursing taxes to corporate managers, in Friedman’s analysis, allowed themselves to unwittingly become pawns in a larger battle to derail the capitalist system. Arthur Levitt captured this perspective succinctly when he wrote, “the business of business is profits.”
Hubert Joly strongly disagrees. In a book written with the substantial assistance of Caroline Lambert, he observes, “Through all my experiences, culminating in the incredible years at Best Buy [when he was its Chairman and CEO], I have come to believe — to know — that [begin italics] purpose [end italics] and [begin italics] human connection [end italics] constitute the very heart of business. And I believe they should be at the heart of the necessary and urgent refoundation of business now underway… So, financial performance is an imperative and an outcome, but it is not the goal.” In brief, the business of business is serving a noble purpose.
A purpose–driven workplace culture is one within which personal growth and professional development — as well as profitability — are most likely to thrive. According to Joly, “Unleashing human magic means creating an environment in which [begin italics] individuals [end italics] flourish. When people are doing what matters to them and what they believe in, they will walk through the walls, pouring their energy, creativity, and emotions into their job.”
As the example of Best Buy suggests, the secret sauce consists of five essential ingredients:
1. Connecting individual search for meaning with the company’s noble purpose
2. Developing authentic human connections
3. Fostering autonomy
4. Growing mastery
5. Nurturing a growth environment
Note the use of a gerund. It correctly indicates that each ingredient is an ongoing process. Note, also, #5′s implicit comparison with a garden, tended by leaders at all levels who possess a green thumb.
At or near the central business district of most large cities, there is a farmer‘s market at which — at least until COVID-19 — several merchants offer slices of fresh fruit as samples of their wares. In that same spirit, I offer seven brief excerpts that suggest the thrust and flavor of Joly‘s perspectives:
o “Profit does not take into account the impact of a business on the rest of society. The full cost of waste or carbon footprint on the environment does not appear on a financial statement, even though its very real and be very painful.” (Page 56)
o “A noble framework is at the top of my framework Employees stand at its center because the secret of business is to have great people do great work for customers in a way that delivers great results…[Begin italics] Doing great work [end italics] starts when people feel treated like individuals — not [begin italics] human capital [end italics] — in a work environment where they can thrive.” (67)
o “Best Buy‘s purpose was [begin italics] to enrich our customers‘ lives through technology. [end italics] We would do this by addressing their key needs in areas such as entertainment, productivity, communication, food, security, and health and wellness.” (69–70)
Personal note: I have a TQ (technological quotient) of a muffin. One of my key needs is to understand the range of options among technology products offered to me at my local Best Buy. I receive a thorough, unhurried briefing every time. I also [begin italics] feel appreciated [end italics] throughout each visit.
o “looking after [begin italics] all [end italics] stakeholders in no way means marginalizing shareholders. Let me be clear: the problem is not shareholders, but considering shareholders as a faceless, heartless monolith that has to be favored at the expense of all other stakeholders.” (91)
o “Unleashing human magic means creating an environment in which [begin italics] individuals [end italics] flourish. Because when people are doing what matters to them and what they believe in, they will walk through walls, pouring their energy, creativity, and emotions into their job.” (131)
o “To bring all the key elements together, we must shift traditional views of leadership. This is what part four of is about. The model of the leader as a smart, powerful superhero is outdated. Today’s leaders have to be purposeful, be clear about whom they serve, be conscious of what their true role is, be driven by values, and be authentic — the five ‘B’s’ of the purposeful leader.” (209)
o “To be successful, the adoption of a new noble purpose will likely require a significant transformation of the company. It will likely require changing the way work gets done. This is not just about strategy but about changing the human side of the organization. It is about creating an environment where everyone can blossom and where human magic can be unleashed.” (233)
Hubert Joly is well–aware of the fact that companies annually ranked among the most highly–admired and best to work for are also annually ranked among those most profitable, and have the greatest cap value in their industry segment. That is no coincidence. However different they may be in most respects, all of these peak performers demonstrate each day — day after day, fiscal year after fiscal year — “that [begin italics] purpose [end italics] and [begin italics] human connection [end italics] constitute the very heart of business.”
I congratulate him on this book. In my opinion, it is certain to become a “classic” contribution to thought leadership. Bravo!