|Renovating Home Depot | |By Brian Grow, with Diane Brady in New York and Michael Arndt | | | |Adapted from Business Week, March 2006 | |Skip the touchy-feely stuff. The big-box store is thriving under CEO Bob Nardelli's military-style rule |
Five years after his December, 2000, arrival, Chief Executive Robert L. Nardelli is putting his stamp on what was long a decentralized, entrepreneurial business under founders Bernie Marcus and Arthur Blank. And if his company starts to look and feel like an army, that's the point. Nardelli loves to hire soldiers. In fact, he seems to love almost everything about the armed services. The military, to a large extent, has become the management model for his entire enterprise. Of the 1,142 people hired into Home Depot's store leadership program, a two-year training regimen for future store managers launched in 2002, almost half, 528 are junior military officers. More than 100 of them now run Home Depots.” It’s one thing to have faced a tough customer. It's another to face the enemy shooting at you. So they probably will be pretty calm under fire."
Nardelli is a detail-obsessed, diamond-cut-precise manager who, in 2000, lost his shot at the top job at General Electric Co. Overall, some 13% of Home Depot's 345,000 employees have military experience, vs. 4% at Wal-Mart Stores Inc.
Importing ideas, people, and platitudes from the military is a key part of Nardelli's sweeping move to reshape Home Depot, the world's third-largest retailer, into a more centralized organization. That may be an untrendy idea in management circles, but Nardelli couldn't care less. It's a critical element of his strategy to rein in an unwieldy 2,048-store chain and prepare for its next leg of growth. "The kind of discipline and maturity that you get out of the military is something that can be very, very useful in an organization where basically you have 2,100 colonels running things,"
Rivals such as Wal-Mart are plunging deeper into home improvement products, while archenemy No. 1, Lowe's Cos. is luring Home Depot customers to its 1,237 bright, airy stores. Even as other companies seek to stoke creativity and break down hierarchies, Nardelli is trying to build a disciplined corps, one predisposed to following orders, operating in high-pressure environments, and executing with high standards.
The cultural overhaul is taking Home Depot in a markedly different direction from Lowe's, where managers describe the atmosphere as demanding but low-profile, collaborative, and collegial. Lowe's does not have formal military-hiring programs, nor does it track the number of military veterans in its ranks. Observes Goldman, Sachs & Co. analyst: "Bob believes in a command-and-control organization."
In Nardelli's eyes, it's a necessary step in Home Depot's corporate evolution. Even though founders Marcus and Blank were hardly a pair of teddy bears, they allowed store managers immense autonomy. "Whether it was an aisle, department, or store, you were truly in charge of it," says former store operations manager and Navy mechanic Bryce G. Church, who now oversees 30 Ace Hardware stores. And the two relied more on instincts than analytics to build the youngest company ever to hit $40 billion in revenue, just 20 years after its 1979 founding. In the waning years of their leadership in the late 1990s, however, sales stagnated. The company "grew so fast the wheels were starting to come off,” These days every major decision and goal at Home Depot flows down from Nardelli's office. "There's no question; Bob's the general,"...
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