Bob Nardelli at Home Despot: Style vs. Six Sigma

Bruce Nussbaum has a wonderful post on the recently fired Bob Nardelli at Home Depot (or "Home Despot" as some employees started calling it), on why command and control is so bad.  Bruce argues that "Autocratic top-down, command and control works great when you focus on process--cost and quality. Six Sigma measures all that stuff wonderfully. Nardelli couldn't see beyond this. He hired dozens of command-and-control military guys to manage. He shifted Home Depot away from retail to a new contracting business that could more easily be controlled and measured." 

I think Bruce is on to something, that if you want creativity and learning, command and control is bad. BUT I think his argument is right, but incomplete.  The fact is that close managerial oversight and constant criticism and feedback aren't the only ways to drive down cost and increase quality.  In fact, these systems work best when employees have lots of data about cost and quality AND they police themselves rather than are policed by some boss.  That is part of the secret sauce of the Toyota Production system and of places like Southwest Airlines, Men's Wearhouse, and DaVita -- which runs hundreds of kidney dialysis centers at low cost while delivering the best quality in the business. It is also what I saw when I visited SuccessFactors a few weeks ago -- not close supervision but people who worked to please and impress their co-workers and because they took pride in doing a good job -- in fact these norms were so strong that rank and file employees felt safe about pressuring senior management to do their jobs better and senior management felt obligated to respond! 

My message is that a numbers-based and quality focused organization need not be top down, where bosses use numbers to lord over and push around their underlings. In fact, to the extent that there is a peer culture that presses people to do the right thing and that has the right information, you don't need to waste money on managers who watch people do the work -- rather than doing it themselves.(I would love to see the numbers about the cost of management and supervision under Nardelli's leadership -- his salary alone drove these numbers way-up and paying all those people to do command and control must cost a lot of money).

So I agree with Bruce for the most part, but want to emphasize that command and control does not equal lower cost and higher quality. Systems that run on peer control and great measures will be more efficient than those that depend on close managerial oversight-- and in fact have higher quality, because it is one thing to fool a boss who comes by once in awhile, but fooling your peers every minute of the day is a lot harder.

Finally, I don't think that Nardelli's reputation for arrogance helped him keep his job and -- although I have no inside information to confirm this-- I hope that another reason he was shown the door so abruptly was that the board decided to enforce the no asshole rule. Perhaps that is just my little dream, but I do think that when leaders are known as assholes AND their organization has performance problems, people lose their jobs a lot more quickly than when they are warm and well-liked leaders.

Comments

[John]

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[Bob Sutton]

Thanks for the great comments about the military. Indeed, I had an officer in my class come up to me after class and tell me that he was TRAINED and now TRAINS other officers to not give-up on a request -- for materials, more personnel, better personnel and so on -- until the request is turned down FIVE times. I wonder if Bob at Home Depot would put up with that, or in fact, if most other CEOs would...

[Matthew Laos]

I wish to echo the comments that the misconceptions about the Military needs revamping. No where is the concept of leadership more evident then in the military where it starts from the bottom up. The military offers more opportunity for an 18 yr old to exercise creativity and responsibility then could ever be imagined. A soldier is treated as the "tip of the spear" on the international stage. The military spends more to train that person immediately then most companies will ever expend on an individual in their entire career. Unfortunately, so few people have any direct association with the American Military that the misconception is often worse then ever. The private, public, and social sector should all be reaching out to learn about the real Military and its people and break the stereotypes often spread by people who have no experience with the Military. It has been clearly documented that the "Greatest Generation" was a product of their collective Military experience and came back from WWll to build a Modern America based on their experiences of leadership, teamwork, initiative, and "can do" attitudes in the face of real hardship.

[Mark Graban]

Bob, you're absolutely right to challenge the idea that command and control is somehow best for managing cost and quality. I can't state the case any better than you did.

I can also add another data point from talking to a friend who was a West Pointer and Army officer. He really cringed at that Business Week article about the "tough as nails" military management style. It sounds like Nardelli was co-opting what he THOUGHT a military structure was supposed to be, since he was a total wannabe in that regard.

[Jason Yip]

The Lean Blog have been posting a lot about Bob Nardelli recently.

http://kanban.blogspot.com/2007/01/you-cant-s-on-your-employees.html

[robert edward cenek]

I first must admit that I have not spent significant chunks of time analyzing what went awry at Home Despot, but clearly the blind adoption of GE's Sick Sigma may have been contributing. Margins are certainly incredibly important in retail environments, but we also know that the shopping experience provided to the consumer ultimately determines the sustainability of the retail enterprise.

Last, no one needs to feel sensitive or apologetic for the equation of command and control with the military. That model is perfectly well suited for many military organizations. Soldiers do not expect to hold consensus building meetings when bullets are whizzing over their heads.

Keep up the great posts Bob. It's a treat to read a business/management oriented blog with some substance.

robert edward cenek
www.cenekreport.

[John Feland]

Bob,

Home Depot's hiring of military people does not necessarily correlate to a pervasive command and control management style. My experience in the Air Force echos what Wally said and the point of view of the Army Major you worked with years ago. The military has been doing more to push decision making, create autonomous teams, and foster entrepreneurial spirit that most any enterprise I've worked at (with notable exception of my time at IDEO). Hiring former military members and giving them the right stucture to be creative and a clear mission to achieve by creative means is actually a great way to help a corporation. I believe where Home Depot failed (from my armchair management analysis point of view) is in focusing these high potential resources on the wrong goal. You yourself have said many times that you get the behavior and performance that you measure, which may deviate extensively from the behavior you desire. Home Depot couldn't find a way to embrace a quality customer experience and simultaneously drive cost out to meet the expectations of the Street. You see the same inversion happening in the laptop industry. Dell for years has been known as the cost leader while HP has been lauded for their design and usability. Now these two giants are trying to switch roles and are in danger of doing what Home Depot did, losing the qualities that made them great in the process.
Hiring former military can and should be decoupled from the failure of an enterprise to generate the right structure and vision for its employees. Don't let Bob Nardelli's inability to focus Home Depot on the right goal, helping customers build their dreams, cloud the judgement of the quality of the talent working for him.

[Bob Sutton]

Wally,

That is a great point. One of the doctoral students that I worked with years ago was an Army major, who also taught at West Point, and she explained how modern warfare depended heavily on decentralization and as you say young people who could be trusted and who trusted each other. So "close supervision" and the "military model" is inaccurate and unfair to the military. Thanks for pointing that out.

[Wally Bock]

There's plenty here to consider, but let me pick one nit before I head off to reflect. I think it's a serious mistake to equate the military with command and control as that term is most often used in management literature. The "follow orders" part is appropriate for high risk enterprises of all kinds, military, police, fire, search and rescue. That said, the military does a far better job, in my experience, of giving those at the lowest organizational levels the ability to make significant decisions. In many cases, military service offers a person the opportunity to make the kind of decisions in their twenties that many corporations won't offer until twenty years later.