Source | www.fastcompany.com | STEPHANIE MEHTA
Hubert Joly, who served as CEO of Best Buy from 2012 to 2019, has written a book for what he deems a new era of capitalism, one that puts employees, customers, vendors, communities, and others on equal footing with owners. The book, released this week, comes almost two years after the Business Roundtable said the purpose of a corporation is to deliver value to a range of stakeholders, instead the shareholder-first approach championed by the economist Milton Friedman. Joly spoke with Fast Company about the experiences that led to his book. Edited excerpts of the conversation—and an excerpt of The Heart of Business: Leadership Principles for the Next Era of Capitalism—follow.
Fast Company: Best Buy is a signatory to the Business Roundtable’s statement of purpose, which embraces stakeholder capitalism over shareholder primacy. Does it go far enough and have we seen real progress?
Hubert Joly: Pursuing a noble purpose, putting people at the center, embracing all stakeholders, and creating an environment where human magic can be unleashed . . . this is the way to create the most value for all stakeholders, including shareholders. I was thrilled when the Business Roundtable statement in August 2019 was written and published. We’ve had 40 years of Milton Friedman’s folly, but the idea of doing something good in the world and being a good corporate citizen, if you go back to the 19th century, this was prevalent. We’ve just had a 40-year hiatus where some people embraced [shareholder primacy] but that was sheer folly.
It’s not just folly. The conventional wisdom in business and on Wall Street is that the job of the CEO is to maximize shareholder value.
That’s been the training in the back half of the 20th century. We need to rewire our brains. Part of the book is my story of moving from a hard-charging, deeply analytical consultant to somebody who believes in human magic.