Renovating Home Depot
Question 1. Organizations as Complex Systems. (16 points). Using the 7S model, please identify two S’s that Mr. Nardelli has changed successfully, and two S’s that he has not changed successfully or is having trouble changing successfully (in that he is needing to replace a large number of people, etc. to accomplish the changes). For each, please name the “S” and in 2-3 sentences explain why you say that he has or has not changed the “S” successfully.
Home Depot had an enormous growth of achieving $40 billion in revenue in 20 years. However its sales started to stagnate, unable to cope up with the fast growth. Mr Nardelli identified some of the problems, key being appropriate structure and systems to support a strategic growth platform.
Mr Nardelli believed that a sustainable growth in any business will need discipline, rigor in handling pressure from clients and meeting high standards, irrespective of the nature of the business – manufacturing, retail or service. He missed the finer nuances of specific strategy, competency and skill requirement specific to each industry.
Mr Nardelli planned several transformation initiatives that needed bold changes. Due to the competition, he hastened to make these changes. While most of the changes required - “what” - were valid, some of the initiatives were not appropriate vehicles to drive change in Home Depot’s existing culture.
The communication of the changes was sufficient, tending to over sufficient. At the same time, not sufficient time was spent in articulating the need for changes and influencing a mindset shift and gaining consent from executives and managers and helping them transform the culture at Home Depot while preserving the core strengths.
This caused a strategic failure through declining employee morale and customer service level.
Changed Successfully 1: Name of the S: Structure
Explanation:
Home Depot had a culture of high empowerment and execution built on past knowledge of “what worked”.
Home Depot had an enormous growth of achieving $40 billion in revenue in 20 years. However its sales started to stagnate, unable to cope up with the fast growth. Mr Nardelli identified some of the problems, key being appropriate structure and systems to support a strategic growth platform.
Mr Nardelli believed that a sustainable growth in any business will need discipline, rigor in handling pressure from clients and meeting high standards, irrespective of the nature of the business – manufacturing, retail or service. He missed the finer nuances of specific strategy, competency and skill requirement specific to each industry.
Mr Nardelli planned several transformation initiatives that needed bold changes. Due to the competition, he hastened to make these changes. While most of the changes required - “what” - were valid, some of the initiatives were not appropriate vehicles to drive change in Home Depot’s existing culture.
The communication of the changes was sufficient, tending to over sufficient. At the same time, not sufficient time was spent in articulating the need for changes and influencing a mindset shift and gaining consent from executives and managers and helping them transform the culture at Home Depot while preserving the core strengths.
This caused a strategic failure through declining employee morale and customer service level.
Changed Successfully 1: Name of the S: Structure
Explanation:
Home Depot had a culture of high empowerment and execution built on past knowledge of “what worked”.