A Home Depot Analysis

Final Exam Questions 1a. The way that Nardelli laid out his plan for change was one of the reasons I think it was so successful. He came in and addressed the problems that were easy to point out and also the ones that weren’t apparent to other employees. Nardelli needed to rebuild an organization that could easily compete with other big names, and this was relatively easy because the people at Home Depot knew the importance of taking advantage of its growing size. Nardelli did this by implementing a three strategy plan that involved enhancing the core, extending the business, and expanding the market. Nardelli’s first step in the process was enhancing the core. This involved improving the profitability of current and future stores, as well as in existing markets. From the article Heart of Change, I think that Kotter’s first step, increase urgency, relates the most to Nardelli’s first step. Kotter describes his first step like this; “A sense of urgency, sometimes developed by very creative means, gets people off the couch, out of the bunker, and ready to move” (Cohen and Kotter 690). I think that this is what Nardelli was trying to make happen in his first step for change. He needed the people of the company to see what the issues were, and make a point to say that if we stay where are now, we will fall behind in a few years. This sense of urgency and improvement was the right step to getting Home Depot employees to care and start to make the best change for the company. The first step leads right into Nardelli’s second step which was, extend the business. Nardelli’s purpose with this step was to get employees to come up with ways to better serve the customers. This was to not only enhance customer service, but to become a standout figure among competitors. This was probably one of the most important steps and I think that Nardelli implemented it very well. I related this step to Kotter’s fifth step of empowering action. I chose this because Kotter outlines this step as “Key obstacles that stop people from acting on the vision are removed” (Cohen and Kotter 697). The obstacle that Nardelli needed to remove was the similarities between his company and competitors. He did this by offering related home improvement services such as tool rental and home installation of products. This set them apart and allowed them to overcome that “obstacle” and continue to move forward. I think that this was the most important step because it represents the major ‘bump in the road’ that Home Depot needed to overcome in order to continue to keep growing. The final step in Nardelli’s plan was expanding the market. This was one of the easiest steps to correlate to Kotter because I think that it made the most sense, without specifically saying that same thing. Kotter’s seventh step of don’t let up is described as this; “a change effort will have direction and momentum...build on this momentum and make a vision a reality”. (Cohen and Kotter 700). The whole point of Nardelli’s third step is to take what they have learned and implemented in the company thus far and expand geographically, even serve new kinds of customers. This was his way of carrying the momentum of success out as far as it could go, and making sure that Home Depot didn’t let their success slip through their fingers. This a very good move on Nardelli’s part, and attracting new customers such as commercial contractors and even women, made a huge impact on the overall morale, and success of the store. The only thing that I would have suggested Kotter adds to his plan, was the implementation of metrics. The Home Depot article talks about how in the beginning there was some harsh resistance to the change, “Resistance to the changes was fierce, particularly from managers: Much of the top executive team left during Nardelli’s first year” (Charan 64). Nardelli did use metrics, and they did make a difference. However, I think that if he had made them a part of his plan and used them earlier in the process they would have made an impression on the executives that did end up leaving. If Nardelli had used metrics I think that they would have correlated with Kotter’s fourth step, communicate for buy-in. This is described as “simple heartfelt messages sent through many unclogged channels” (Cohen and Kotter 697). Those metrics were the heartfelt messages that needed to be expressed to get people motivated even sooner. With my suggestion Nardelli’s plan should have looked like the following: Enhance the Core, Express Metrics, Extend the Business and Expand the market. Overall, I think that Nardelli did an excellent job, and that taking my advice, would have only yielded better results. 1b. When Nardelli first arrived at Home Depot, the culture was one that was very close-knit and family oriented. I chose this term to describe the culture because the former CEO and chairman were often thought of as father figures by other employees; “Many employees simply couldn’t picture this company without these father figures” (Charan 63). When reading the article about Home Depot, there was one specific sentence that stood out to me because it described the pre-Nardelli culture very well, “It was marked by and entrepreneurial high-spiritedness, a willingness to take risks; a passionate commitment to customers, colleagues, the company, and to the community; and an aversion to anything that felt bureaucratic or hierarchical” (Charan 62-63). Looking specifically at this description of the culture, I can find characteristics that relate directly to low-context cultures, as well as to O’Reily, Chatman and Caldwell’s Cultural Characteristics. I came to the conclusion that the culture at Home Depot was a low-context culture specifically because high-context cultures are based largely on hierarchy. According to our class notes on culture low-context cultures are described as “cultures that focus on that which is explicit. People are specific and clear in their communication” (Culture Notes 1). This description fits the culture of Home Depot, not only because it strays away from hierarchy, but also because it was very much based on entrepreneurship; which requires specific and clear communication. I believe that the entrepreneurial high-spiritedness that is described above contributes to the feeling of a family oriented and close knit company. Relating the culture to the cultural characteristics of O’Reily, Chatman and Caldwell was relatively easy as well. Specifically there were three characteristics that stood out to me: innovation and risk taking, attention to detail, and people orientation. I chose these because of the way the culture is described. Innovation and risk taking is described as the degree to which employees are encouraged to be innovative and take risks. Not only was it said outright that this was a characteristic of the company, but I feel as though the close-knit environment promoted this kind of thinking; making everyone feel comfortable and open to sharing their ideas. Attention to detail was not as direct as the previous example, but I related this to the description of entrepreneurial high-spiritedness. Attention to detail is described as the degree to which employees are expected to exhibit precision, analysis and attention to detail. This definition drew me to lean towards entrepreneurship because I thought that all of the qualities listed are qualities that would be necessary to be a successful entrepreneur. Again, these are all characteristics that thrive in a close-knit family style culture. Finally, I chose people orientation. This is described as the degree to which management decisions take into consideration the effect of outcomes on people within the organization. This definition not only relates to the passionate commitment to customers, colleagues, the company, and to the community part of the description, but it also relates to the definition of low context culture. I know that specifically people orientation talks about people within the company, but I think that part of the reason Home Depot was so successful was that it reached outside of the company to impact people’s lives. Lastly, a major part of the low-context culture definition is that people are specific and clear in their communication, and I believe that people orientation would not be successful if this were not a major factor. The pre-Nardelli culture was very easy to define, and point out specific aspects that made it easy to describe and compare. When talking about the post-Nardelli culture, the only thing that really stood out to me was a difference in the feel of the culture. By this I mean specifically it went from a close-knit, family style culture, to a big corporation style that is highly focused on building the organization to take advantage of its outrageous growth. Instead of focusing specifically on the people in and outside of the community, this post culture was a focus on merchandising and collaboration between regional and store operators. Everything was on a larger scale, and even little thinks such as shelf organization and signage were standardized and enhanced, so they were able to stay on the playing field with competitors such as Wal-Mart. While I think that this doesn’t change the fact that it is a low-context culture, because there is still a focus on people and communication and an avoidance of hierarchy, I do think that it changes some of the relatable characteristics of O’Reily, Chatman, and Caldwell’s cultural characteristics. I do not think that they lost innovation and risk taking, attention to detail and people orientation, but simply that the focus was significantly diminished. Instead a focus on team orientation and aggressiveness was emphasized. Team orientation is defined in our notes as the degree to which work activities are organized around teams rather than individuals. While the pre culture wasn’t so individually focused that it was everyman for himself, it’s that the post culture needed teams to make sure that all of the new projects like, merchandizing and reevaluation of the store environment, were successful. Finally for the post culture, there was a definite lean toward aggressiveness, which is defined in our notes as the degree to which people are aggressive and competitive rather than easygoing. I do not think that in the pre culture that they were quite on the level of stability from our culture notes, but that Nardelli promoted an environment that allowed people to be assertive and aggressive towards achieving more growth. For the most part I thought that pre- and post-Nardelli cultures were very similar, minus the shift in focus from family business, to large corporation.