Bill Ackman isn’t the only vulture capitalist on the prowl these days.
Bill Ackman is not the only vulture capitalist on the prowl these days. So is Hubert Joly, the French CEO of Best Buy, who is also the former CEO of Carlson, the HR consulting company that acquired Radianz.
When Joly arrived at Best Buy in June 2012, it was on the ropes. The company had destroyed its reputation for smart merchandising, and customers were deserting in droves. In addition, the reputation of the hardware category, a pillar of Best Buy’s business model, was shot.
In its heyday, Best Buy was part of a retail club, with hardware departments that focused on repairing and selling smaller appliances (that nobody wanted to buy). But customers like gadgets, and now that they can take tablets into stores, they don’t feel like they need to go to a Best Buy. Joly had to begin a pivot: His goal was to show people that Best Buy was a place to do more than just buy a gadget. The idea was that it could become the Netflix of products, with a proprietary content engine that was also big on services.
And he did! He shook up the board, and made it clear that he intended to work long hours, rather than doing ten-hour days. After 18 months at Best Buy, he had turned it around. In its fiscal year ended in January, the company’s net income soared from a $17 million loss to $419 million. (That year, it also reported net income of $24 million in its home-improvement segment, which was dominated by tile, home-improvement and home decor. This business, of course, has been obliterated in the face of online shopping, which has become easier and faster.) Joly also demonstrated a deft touch for rolling out innovative high-margin services, like leasing shopping carts, and adding new apps and easy ways to buy products and get service.
This year, Joly would be added to Fortune magazine’s list of America’s 50 Greatest Leaders — a nod to his skills as an operational turnaround artist.
This is a business article, but what are successful turnaround artists like Bill Ackman and Hubert Joly on the prowl for?
Joly and Mr. Ackman are not alone: They have found a new cause: capitalism. At times this is hard to understand — how do they help revive capitalism, since capitalism has been in an irreversible tailspin? The private-equity industry, whose instinctive response to this environment is to sell and get out, is increasingly looking to Joly and Ackman for guidance. An ill-defined insecurity seems to be driving them.
Societies flourish when large segments of society benefit — when everybody is better off. The prospects of most of the world’s population are far from that. Today, 1.2 billion people, half the world’s population, live on less than a dollar a day, and 1.7 billion of the poorest people are children. That’s when it occurs to Joly and Ackman, who are driven by this kind of transformative thought, that the world has become a bleaker place. That’s when it occurs to them that they can come to play a role in the creation of a better world.
When they do that, they begin to act as vultures, circling around the carcass of capitalism, bringing their skills and resources to the table. And the more they play, the more they succeed. Mr. Joly’s strategy has been to play where they can make a difference.