The capitalistic system as it stands has been incredibly kind to perhaps one of the very best turnaround CEOs of the last decade, former Best Buy head honcho Hubert Joly. But even he acknowledges that changes to that system are long overdue.
“Milton Friedman is dead,” Joly told Yahoo Finance in an interview.
Continued Joly, “We need companies to pursue a noble purpose and good things for other stakeholders, the customers, the suppliers, the vendors, the communities the environments. Shareholder’s profit is an outcome and that’s a revolutionary approach.”
Joly is an interesting test case on a different kind of capitalism getting the job done. Now executive chairman of Best Buy (Joly will hand the position over to former Domino’s Pizza CEO and board member Patrick Doyle in June), the French-born Joly never seemed to be the typical CEO who sits in the ivory tower and bark orders to underlings and store associates. Joly ceded the CEO role to Corie Barry in June 2019 after a seven-year run. Instead, Joly always came across — based on my knowledge of covering Best Buy and in talking with various sources — as quite engaging, a champion of hourly store workers and a deep believer in that doing things right would lead to a stock price that heads up and to the right.
Now that Joly has a touch more time on his hands (he is on the boards of Polo Ralph Lauren and Johnson & Johnson, and is writing a book), he has tossed his hat into the ring of top executives calling out capitalism as in badly need of reform.
In August 2019, the influential Business Roundtable ignited a firestorm by doing away with its “shareholder comes first” mantra. The new mantra is that companies should put shareholders on par with other stakeholders like suppliers and average employees.
"We know that many Americans are struggling. Too often hard work is not rewarded, and not enough is being done for workers to adjust to the rapid pace of change in the economy. If companies fail to recognize that the success of our system is dependent on inclusive long-term growth, many will raise legitimate questions about the role of large employers in our society," a statement from the Business Roundtable stated.
JPMorgan Chase CEO Jamie Dimon, now former chairman of the Business Roundtable (Walmart CEO Doug McMillon has taken over), threw his weight behind the statement. "The American dream is alive, but fraying," Dimon said.
A host of other big-name leaders also threw their weight behind the view capitalism must reform in Yahoo Finance’s coverage of the 2020 World Economic Forum.
To say Joly’s refreshing approach to driving shareholder returns worked is a gross understatement. So as far as I am concerned, his views are dead on the mark. Something has to change in Corporate America.
Joly’s tenure atop of Best Buy was not just marked by saving a retailer under siege from Amazon and its own internal missteps, but re-imagining the business from end to end. Some of the highlights include significantly improving customer service (adding more staff to the stores, for example), pricing matching online rivals, reducing the likelihood of broken TVs upon delivery to the store from the warehouse, adding branded shops from Samsung and driving a successful launch of a buy online, ship from store.
Towards the end of his CEO reign, Joly pulled the trigger on a transformational $800 million acquisition in Great Call that brought Best Buy into senior living care. Heck, even Geek Squad is easier to use.
Billions of dollars in expenses were slashed despite a lack of rampant store closures. Joly boosted sales, boosted profits even more and perhaps boosted employee morale even more than both of those percentage changes on a financial statement. A lot could be said for all of those achievements in an often thankless retail sector being upended by digital shopping.
Total shareholder return under Joly’s watch: +263%.
Joly tells Yahoo Finance he has no plans on having one last CEO job. Nothing wrong with going out on top. In hindsight that may be a good thing — he should be doing paid speeches each week for the entire Fortune 500 on how an employee friendly approach to doing business works for all parties involved.
No electric device needed from Best Buy to figure out that is the right way to go when it comes to capitalism.