Best Buy CEO Hubert Joly gave a very Unconventional Hour talk at the CNBC Institutional Investor Delivering Alpha Conference, in which he explains how a turnaround at a big-box electronics chain is the best economic training in the world.
“You need to know all the cycles.” In tech, there’s an underlying “arms race” of innovation, including device newness, integration of screens, mobile, and artificial intelligence.
Predicting tech’s arrival is a fool’s errand, he said, even though he knew it was coming.
“This same event last year, the same people said [Apple’s] 5-inch iPhones are long gone.” Then Apple came out with an 8-inch model, he said. Joly told attendees on Thursday that he has a 27-inch Apple TV in his living room, and it’s a great present. “It’s good business. And I think this shows that we are playing in the latest cycle …
“Do we understand all the cycles? You better. Because if you don’t, you’re on the operating table!”
He believes transforming a business is a marathon not a sprint. Innovation happens in fits and starts, not in two years. Technology advances in bursts, not a steady cadence.
He is careful to emphasize that retail isn’t just tech, but in retail, “You can’t delay the onset of technology.”
“It’s a great process for us to have. We’ve been agile and able to learn on the fly.”
Joly also said that while Walmart is probably the strongest competitor now, Amazon is likely to have a $1tn market cap by 2050.
In summary: Joly was fortunate to grow up with an authoritarian family that forced tough decisions at home. He studied economics and finance in France, then came to the US as an economics professor. Returning to school in the US and earning the MBA, he attracted business practices from universities like Stanford and Yale, but less so from retailers, and not immediately for them. He already had his MBA in business, and then economics at Oxford. He saw what tech companies were doing, and said he wanted to do that.
Best Buy isn’t Joly’s first turnaround — when he was at Carlson, it was a troubled business: an underperforming hotel company and a country club.
It wasn’t an easy time, says Joly. But management skills were growing in America. When he was running DreamWorks Animation in 2011, Steve Jobs sent him an email offering his encouragement. At Carlson, he learned to listen — to all sides, from employees to partners and from investors to creditors.
Joly sent the person he sent that email to Best Buy on Thursday.