Thursday, January 11, 2007

More on Home Depot and Bob Nardelli

Knowledge@Wharton has provided its analysis about Bob Nardelli's exit from Home Depot. Michael Useem has been quoted saying:

While GE is a great source of management talent, the style of leadership that works at GE doesn't necessarily readily carry over into a company that does not have GE's traditions or GE's riveting focus on performance.....GE has a deeply held, corporate cultural value around the idea of performance. If you don't get results, you just won't hold your position long. An executive leaving GE will attempt to bring what worked in the past, but at Home Depot the way of operating was decentralized. Managers had a lot of discretion and there was a free-flowing, exciting feel to working there. Nardelli tried to streamline some 2,000 stores to get control over them, which might have worked at GE, with its focus on performance. But at Home Depot, that approach to leading did not work well, given the history of the company.

T. Rowe Price Analyst Barry Henderson, has been quoted saying he made to mistakes: Alienated employees and angered share holder

Another comment by Wharton Professor Lawrence Hrebiniak:
  • To improve numbers, he started cutting cost, which affected customer service
  • Ignored threat from Compitition such as Lowe's and IKEA

My Take, Executives at GE are probably too busy about numbers and their own performance and promotions. Bob Nardelli carried that culture with him to Home Depot and it did not work out well. He has already thrown out a lot of good folks from Home Depot and brought too many ex-GE managers (including his replacement as identified by Home Depot) . How does Home Depot plan to take care of such leftover and cultural shift that has already been initiated by Bob is something to be seen. If Home Depot can not get rid of GE Culture, it may end up being another large corporation without a soul, something that does not work in retail (GE is not in retail anymore). It may as well be end of Home Depot then.

Click to read article from Wharton here.

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