The Leadership Model and Vital Skill that Turned Around Home Depot

I have some idea how Frank Blake felt when he took over as chairman of Home Depot eight years ago. Employees, the board and investors were all unhappy with the previous chairman, Bob Nardelli, who had downplayed the importance of customer service and expanded in inadvisable directions.

Blake inherited a whole mess of problems to deal with when he took over. That’s pretty much what I do for a living as the Turnaround Authority. In fact, I’ve referred to myself as a janitor. I clean up messes.

Blake recently stepped down as CEO although he will continue as chairman for several months. He is credited with turning the troubled company around, and putting the focus back on customer service. He even kept his cool when the company suffered a massive security breach this September, immediately taking responsibility for the breach and issuing two apologies in five days, one from him personally.

He obviously did a lot of things right to get the $78 billion-dollar company back on track. He sold stores in China. He changed the bonus system to reward customer service and greatly increased the bonus pool even as earnings were collapsing. Last year he increased profits by $5 billion, without adding new stores, and during his tenure the company’s share price increased 127%.

I believe a major key to his success was reinstituting a leadership model that the co-founders Bernie Marcus and Arthur Blank had used – the inverted pyramid. According to an article on Fortune.com, less than a week after he took over, he said, “The right way to look at this is me on the bottom. My job here is to clear away the things that get in your way.”

And how did he clear the way? By not shying away from conflict and listening to people to determine where the problems were. As Carol Tomé, the CFO, said, “He invited conflict into our decision-making. We were conflict-hesitant. Frank asks a ton of questions that make you say what is working and not working.”

He was interviewed in the AJC this week in the column “5 Questions for the Boss” and said, “one of the toughest things in the job is having people speak candidly to you, telling you what’s going wrong.”

He learned the right way to ask a question — by assuming there is a problem, “which gives license for people to be more forthright. You can start the question with, ‘Gee, I understand we’re having real problems with the new process we’re rolling out.’ If you ask it that way, you can start to understand the issue.”

You have to give people a license to say what is going wrong. Otherwise, everyone is smart enough to realize that their career isn’t made by identifying problems. Listening is an active process and requires effort. Follow-up questions are important.”

When Blake took over Home Depot, he had little retail experience. I often become interim CEO of businesses and industries I have just passing familiarity with. But I do as Blake did, as pointed out in the Fortune article. “What Blake lacked in experience, he made up for by listening.”

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