January 20, 2022

TPL Insights: Building Peak-Performance Cultures #103 – The Secret Ingredient of Thriving Companies: Human Magic, Part 2

By Rob Andrews

With paraphrased content from Hubert Joly’s HBR Article The Secret Ingredient of Thriving Companies: Human Magic. 01.10.2022

In last week’s post, we took a trip with Hubert Joly, former CEO of Best Buy, gleaning powerful thoughts around transformations that promote “human magic.” This is the stuff that gets us going, and these days, all our solutions are around building cultures of peak performance. Come with us as we conclude our short journey with Hubert Joly.

Autonomy

Few people enjoy being told what to do. The next ingredient that contributes to unleashing human magic is giving people the freedom and ability to shape what they do and how they do their work. At Best Buy, Joly greatly benefited from pushing decision making as far down as possible in the organization and adopting more agile ways of working.

The importance of autonomy has become even more evident as companies try to figure out their back-to-office strategies. With remote work creating new opportunities and expectations, employees have been leaving their jobs voluntarily in droves or are considering doing so (especially those working in midsize companies). As they consider their next career move, flexibility is at the top of their priorities list. This means employees want to have the autonomy to decide where they work, with some preferring a hybrid of home and office. This is the kind of autonomy that companies like Adobe are embracing.

Autonomy is not a free for all, however. It must exist within the frame of the company’s purpose and values and account for what each team and job needs. Choosing whether to work from home, for example, is off the table in many jobs; in fact, only 37% of jobs in the United States can be performed at home — a proportion that varies greatly across cities and industries. Autonomy also requires strong accountability and clarity about who is responsible for making which decisions. Autonomy isn’t one-size-fits-all, either; different people require different levels of autonomy, often depending on the nature of the work and their level of experience. For example, a new recruit is likely to need more guidance than a seasoned employee.

Learning environment

Becoming great at what we do best is fundamentally satisfying and motivates us as human beings, which is why it’s an essential ingredient of human magic. When Joly was still at Best Buy, he visited their operations in Denver to understand why sales associates in the region had been hitting it out of the park over the previous year. The wizard behind this human magic was the regional manager, who had started using associates’ individual sales data to drive highly individualized sales coaching in every store. Once a week, every associate met with their manager one on one. Together, they reviewed the associate’s numbers over the previous week, decided what to improve over the coming week and what that week’s target should be, and worked on practical skills in real-life situations. They also discussed longer-term career opportunities. The frequent and sustained personalized coaching fired up employees, boosting their skills and performance.

Besides encouraging lifelong learning through individualized coaching, fostering mastery also means eschewing the traditional top-down, bonus-linked and grading approach to performance assessment. According to Gallup, only 14% of employees feel that their performance reviews inspire them to improve; in fact, traditional performance reviews are often so bad that in about a third of cases, they make performance worse. This is hardly the way to unleash human magic. Once Joly decided to change how he would approach these reviews with his direct reports, he found that conversations based on self-assessments (informed by feedback from colleagues) that focus on developing strengths are much more likely to yield mastery and improve performance.

Growth

“Growth is the only evidence of life,” Cardinal John Henry Newman once remarked. Joly believes this to be true for business, too. Companies must grow — growth creates space for promotions, improving productivity without losing jobs, taking risks, and investing. Business growth fosters individual growth and drive, too, which in turn feeds innovation and further business expansion.

To Joly, Satya Nadella, Microsoft’s CEO, embodies this growth mindset. Every year, Microsoft organizes a summit of some 200 CEOs of the largest U.S. companies. When he attended before Nadella became CEO, the only technology in sight at the summit was Microsoft’s own. The demos of the company’s software would always be on its own hardware, even smartphones — not an area where the Microsoft star shined the brightest. Systematically focusing on how well the suite of Microsoft products worked together, which suggested that they should only operate together, narrowed the company’s perspective. When Joly attended the summit again in 2014, Nadella, who had become CEO a few months earlier, demonstrated Microsoft’s new software on an Apple iPhone. Suddenly, the company’s horizons had opened up to the universe of iOS and Android, far broader than the market share of Microsoft’s own phones. That kind of spirit has the power to transform people, and therefore companies.

But what if your company operates in a mature or shrinking market? This was the kind of headwind Best Buy was facing in 2012. Consumer electronics were becoming increasingly commoditized, and online retailers were threatening brick-and-mortar stores. Chains like Circuit City and Radio Shack were either already out of business or about to be. If the wind is not in your favor, then you must change tack. In other words, focus on your company purpose and the underlying human needs it seeks to address to rethink what your market truly is. Once Joly and his team defined Best Buy’s purpose as enriching people’s lives through technology — rather than selling TVs and computers in stores — they redefined their market and put the wind at their backs. Similarly, when faced with the significant challenges and constraints that the Covid-19 pandemic created, many companies have widened their perspective and opportunities by focusing on their company purpose and the human needs it seeks to address, using this lens to reimagine the range of products and services they have to offer.

Every company pursuing a purpose needs its own potion to create human magic; this is the environment in which its purpose can materialize. Although not in itself sufficient to turn intention into reality, an environment that ignites human magic is nonetheless vital. It provides the oxygen that allows the company purpose to come alive. Although the ingredients above are universal, it’s up to each company and team to develop the exact formula that best serves its situation, including the choice of ingredients and their sequencing.

Based on our research at Allen Austin, each organization needs to define its own recipe for human magic, and there is no quick fix. Creating an environment in which human magic can flourish starts at the very top of the organization and requires a mindset to begin a journey that never ends. Today’s post includes roughly half of Hubert Joly’s article. If you’d like to see the first half, follow this link. Please give us a call if you’re looking for a thought partner.

Warmest Regards,
Rob

Rob Andrews
Allen Austin
Consultants in Retained Search & Leadership Advisory