Etsy, the online seller of handmade and vintage goods, was founded as an alternative to mass-manufactured products. The company grew substantially in its first decade but remained unprofitable.

When Etsy went public, stakeholders demanded a new level of financial returns and accountability. But the company continued to struggle to contain costs—until a new CEO arrived with a plan for a purpose-driven turnaround.

In this episode, Harvard Business School professor Ranjay Gulati discusses his case, “Etsy: Crafting a Turnaround to Save the Business and Its Soul,” which explores how CEO Josh Silverman made Etsy profitable by rediscovering the company’s commitment to social and environmental sustainability.

Gulati discusses the difficult choices Silverman made in the early days of his tenure, like laying off employees for the first time ever at Etsy, and how he worked to regain trust with employees. He also explains why Silverman prioritized improving the user experience for buyers on Etsy’s website.

Gulati is the author of the book Deep Purpose: The Heart and Soul of High-Performance Companies.

Key episode topics include: leadership, change management, organizational culture, organizational transformation, strategy, retail and consumer goods, online retail, purpose, sustainability.

HBR On Leadership curates the best case studies and conversations with the world’s top business and management experts, to help you unlock the best in those around you. New episodes every week.