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Instant

Best Buy Case Study: How does Purposeful Leadership Impact Performance?

Leadership
3 minutes

The case study “Purposeful Leadership at Best Buy” written by Rodolphe Durand, HEC Paris Professor of Strategy and holder of the Joly Family Purposeful Leadership Chair, has just been released on the Case Centre platform. This case study aims to better understand the characteristics of “Purposeful Leadership” and to identify the conditions of success to impact positively the performance of a company.

best buy montain view - adobe stock

Best Buy shop in Mountain View, California. ©Sundry Photography on Adobe Stock

Best Buy, American multinational consumer electronics retailer, was on the brink of bankruptcy in 2012. In contrast, the aggressive online retailer Amazon did not have the expenses associated with brick-and-mortar stores and less overhead. However, Best Buy was able to fend off Amazon successfully. To do so, Best Buy’s CEO, Hubert Joly introduced ‘purposeful leadership’ at the company and in the process, it strived to become an omnichannel retailer. 

 

A company’s purpose must contribute to the common good. This philosophy has profound implications on how leaders should lead, their role as a leader and who they serve. - Hubert Joly, Best Buy’s CEO

 

In Joly’s own words on Purposeful Leadership: “I believe that a company is a human organization where individuals collaborate on a project, and that linking the search for meaning of a company’s team members with the purpose of the company is a key priority for the said company and the individuals who work there. Finally, I am convinced that a company’s purpose must contribute to the common good. This philosophy has profound implications on how leaders should lead, their role as a leader and who they serve.” Infusing the organization with purpose also means shifting the perspectives on employees and values. In fact, Purposeful Leadership was pivotal in the turnaround of the company.

Why this case?

The case introduces the principles of Purposerful Leadership and differentiates it from a mission statement. It deepens the reflection on how to translate purpose into actions and how to articulate it with corporate social responsibility (CSR) practices but also with traditional corporate goals (e.g. shareholders’ profit maximization). Traditional tools of management need to be rethought to align the organization with the purpose it intends to pursue. 

A shift of mindset

The case also offers the opportunity to reflect critically on the conditions of success of a turnaround. What are the mechanisms by which purpose may or may not impact performance? Therefore, the case talks to experienced students, who may have known turnarounds and restructuring processes and are in the best position to conduct this analysis. 

 

What are the mechanisms by which purpose may or may not impact performance?

 

Both CEOs and lower-rank managers have to overcome organizational resistance or avoid triggering defiance when they can. They have to set the organization into motion while ensuring that Purposeful Leadership is not misinterpreted. For Best Buy, they had to do so, despite the company losing so much money. Leaders at Best Buy had very narrow margins of maneuver and needed to balance short-term survival with long-term prospects. While the actions taken may seem natural, many of them were actually very bold and artful (e.g. resisting the pressure of shareholders) and infused with Joly’s unrelentless optimism.

 

Find the case and the teaching note on the Case Centre.

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