March 01, 2006

Hardball in the hardware aisle

Home Depot, says USC business professor Ed Lawler, “grew so fast the wheels were starting to come off.” Customers who once loved its great selection and incredibly helpful sales staff have been fleeing in droves for competitors such as Lowe’s. Some Home Depot managers feel their service ethic has been corroded by an atmosphere of fear that has accompanied the “hardball” approach to management associated with CEO-since-2000, Robert Nardelli.

Business Week’s March 6 issue includes a cover story praising Home Depot’s new military-style of management. It quotes one Home Depot store manager, an ex-Army squad commander who once hunted terrorists, as saying:

“In the military we win battles and conquer the enemy. At Home Depot, we do that with customers.”

I don’t know if I want to be one of the customers caught in his cross hairs. And it’s not just me. A customer satisfaction index released last week by the University of Michigan showed Home Depot in last place among major American retailers.

Hardball is an aggressive approach to management popularized by management consultant George Stalk. It’s a tempting fallback for a growth challenged business: do what you’ve been doing before, just harder. Play rough (with customers, suppliers, competitors, regulators) and never apologize. I took a hard look at it when I wrote Bigger Isn’t Always Better, and found research shows the harder a business strives to grow along these lines, the more likely it is to undermine its chances of achieving real growth. Hardball invariably melts into softball.

Business Week thinks Home Depot is thriving. I’m not so sure.


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