Home Depot Case

Home Depot’s Blue Print to Culture Change

Group 2

Home Depot’s Blue Print to Culture Change

Summary

Home Depot is currently the biggest retailer of home improvement products in the US. The company was also well known for its entrepreneurial and laissez-faire culture which fostered by its co-founders Bernie Marcus and Arthur Blank, who led the company from 1978 to 2000. In late 2000, the board appointed Robert Nardelli, who previously worked at GE as CEO, who also has no retail work experience. Nardelli was given the task of solving the problems that the company ran into in the late 1990s. He also introduced a fair amount of centralization and managed to link the various departments and regions of the company together. The implementation of the change was regarded as successful.

Reason for change

Over the past five years, Home Depot’s performance has indeed been put on a stable footing. It had a low-value corporate paperwork, also it lacked of strong career development programs, which led Home Depot to run short of the talented store managers. At that time, Home depot also had poor inventory turns, low margins and weak cash flow. When facing competition challenged by Lowe’s, Home Depot did not benefit from economies of scale due to its inflexible structure. Changes in the business would not happen without a real and observable change in the culture. In Home Depot, its decentralized culture would be the restraining force to implement the changes. It once reflected a customer-focused ethos so that managers were allowed to run their store relatively freely. However, Nardelli recognized that to secure ongoing growth, the company would need a more standardized business practice that was controlled by head office. But employees were not ready for a culture shock: top executives were used to a freewheeling but tightly knit environment and store staff got away with ignoring directives from above.

Resistance to change

There were...