The role of the CEO has changed a great deal over the past few decades and even over the past 10 years. Hubert Joly, the former CEO of Best Buy and member of the Harvard Business School faculty since 2020, understands this deeply from personal experience. In his book The Heart of Business, Joly has sought to capture key leadership principles for what he calls the next era of capitalism, an approach that has helped him, Best Buy, and other companies achieve great levels of success in a challenging environment.
The new reality for CEOs requires a new approach to leadership, says Joly. The older leadership model viewed the CEO as a superhero—the smartest person in the room, who was supposed to provide all the answers. While that model may have worked in times of relative stability, it is less effective today for two reasons. First, the environment has changed as our world has been rocked by volatile markets, a global pandemic, geopolitical strife, climate change, and technology that is advancing at light speed. Second, companies are now expected to be more than for-profit, with their responsibilities going beyond the four walls of the business and encompassing a broad range of stakeholders who feel they have or should have a voice. In such an environment, no one person—not even an experienced and capable CEO—can bring all the answers to the table.
As a result, the CEO's role has shifted from all-knowing superhero to coach-in-chief—someone who focuses on creating an environment where people can do their best work. Successful leaders today are driven and have high levels of aspiration for organizational performance. But they also need to have a certain way of being, distinguished by a strong sense of purpose, a focus on serving others, great values, and a good dose of humility, curiosity, empathy, and humanity. Joly says, "These are words we probably would not have used to describe the characteristics of a great CEO even a decade ago. These characteristics, though, provide the foundation for driving extraordinary performance."
Steps to Extraordinary Performance
Pursue a noble purpose
Put people at the center of the business
Create an environment where every employee can blossom
Treat profit as an outcome, not the goal
A Shift in Perspective
By his own admission, Joly did not embody these characteristics 20 years ago. He started out as a hard-driving McKinsey consultant, becoming a partner at a young age, and later joined the executive team at Vivendi Universal. "Despite these accomplishments, I felt no joy," he says. "I had been too driven by power, fame, glory, and money. I'd also been on a quest for perfection, confusing it with excellence. I realized I did not like the leader I had become. Some reflection, soul searching, and practical experience led me to the conclusion that being driven by a higher purpose and being a more human leader was not only more fulfilling for me personally but was also much more effective."
This personal transformation was a key ingredient in Joly's well-known turnaround of Best Buy. In 2012, many pundits were predicting the company's demise. But eight years later, Best Buy was transformed as Joly and his team rebuilt the company into one of the nation's favorite employers, made it a leader in sustainability and innovation, vastly increased customer satisfaction, and drove significant value creation. The approach that enabled the transformation of the company—and increased share price from $11 to $100—was centered on pursuing a higher purpose, putting people at the center, and embracing all stakeholders. By shifting the purpose from selling TVs and other devices to "enriching people's lives through technology," and by bringing that purpose to life throughout the organization, Joly and his team delivered impressive results.
Joly believes that purpose starts from the inside out. That’s one reason why Joly sees the personal side of leadership as crucial. He explains, "The key to leading in times of great chaos and challenge is your personal journey as a leader. When everything around you is volatile, you need to anchor your leadership in something stable. You need to have clarity around your key values and principles, and you need to know your purpose in life and what legacy you want to leave."
Just as individuals need a purpose to anchor them, especially in times of uncertainty, so do companies. If you think of a company as a human organization made up of individuals working together, it makes sense that everyone would need to get behind a shared goal to move forward. It matters what that goal is, however. Joly says organizations can find a higher, more noble purpose at the intersection of four key considerations:
What the world needs
What the company is uniquely good at
What people at the company are passionate about
How it can make money
Research has consistently shown that employees are more engaged when companies pursue a higher purpose rather than focus on simply making money. They are more willing to go the extra mile, and they'll innovate more because they are trying to solve real problems, not just maximize shareholder value. Joly calls this effect "human magic." The outcomes of this magic can be amazing.
Creating the Purposeful Organization
Identifying a purpose is just one step. Joly has encountered many businesses that rush to articulate a newly defined purpose but struggle to bring it to life throughout the organization. Too often, companies view execution as a simple communication challenge. Instead, says Joly, companies should slow down and do the hard work needed to tightly define and align purpose, strategy, and culture.
Fundamentally, the chosen purpose must be translated into a powerful strategy. As part of this, the company must look hard at the markets it serves, assess what it brings to those markets, and determine what needs to be stopped, started, or continued to align the business and its purpose.
Driving purpose throughout the organization also requires determining what kind of culture will best support the purpose and the strategy. Companies should then work to create an environment in which that culture can flourish.
According to Joly, changing the structure, the incentives, and the business processes is helpful, but it's not sufficient to create the right culture. You also have to look at what will drive the kind of behaviors that will create exceptional outcomes. Joly says, "Creating a culture that truly supports the company’s purpose and unleashes human magic in support of that purpose depends on six key ingredients, or key drivers, of human behaviors." These are:
Meaning. Meaning is critical for people to thrive in their life and in their job. Leaders must enable people to find meaning in their work by helping connect what drives them and what they do at work.
Authentic Human Connections. Leaders need to connect with employees (and employees with each other) in ways that enable them to feel seen, respected, appreciated, valued, and that they belong.
Psychological Safety. HBS professor Amy Edmondson is widely recognized for her work on this topic and has laid out how leaders must learn to set the right framework for psychological safety, invite participation, and respond productively when people speak up.
Autonomy. No one likes being told what to do. Leaders need to create freedom within a frame, so employees can use their unique genius to create extraordinary outcomes.
Learning. Becoming great at what we do best is fundamentally satisfying and motivates us as human beings. Leaders need to create an environment in which personal development is expected, supported, and valued.
Growth. Whatever the organization's stage, it needs to develop a growth mindset and encourage individuals at all levels to see new possibilities.
Based on his work studying companies seeking to center their organization on a higher purpose, Joly notes that connecting the employees to a company's purpose and creating an environment where they can flourish is a journey rather than an event. On this journey, leaders need to remember that actions speak louder than words, and that they'll need to work hard to make things real for their employees. At the same time, they should keep in mind that employees will connect to purpose from the inside-out more than they will from top-down communication.
Joly has found his own purpose in unleashing human magic in himself and the people around him. He says, "One thing I've learned over my career is that all leaders were born but no one was born a leader. We can all learn and grow, and the best leaders keep doing so throughout their lives."