This paper examines how Bob Nardelli, hired as Home Depot's CEO in 2000 after years under Jack Welch at General Electric, restructured the company through rigorous management control strategies. Drawing on Six Sigma methodology, Nardelli introduced performance benchmarking, supply chain accountability, and a $1 billion investment in information systems that modernized daily store reporting and inventory management. The paper traces how these changes shifted Home Depot from a relationship-driven, measurement-light culture to a data-driven organization capable of capitalizing on the early 2000s building boom and gaining market share over competitors like Lowe's. It also briefly acknowledges the criticism Nardelli faced for prioritizing operational metrics over customer-facing performance.
The paper demonstrates applied case analysis — using a real corporate example to illustrate and evaluate a management theory (control and accountability). Rather than describing Six Sigma in the abstract, it anchors the methodology to specific outcomes, such as improved supply chain forecasting accuracy and increased market share over competitors, showing how theory functions in practice.
The paper opens with background on Home Depot's founding culture and the rationale for hiring Nardelli, establishing the problem the new CEO was brought in to solve. The body section covers his use of Six Sigma and technology investments in integrated fashion, linking process improvement to measurable business outcomes. A brief acknowledgment of criticism precedes the conclusion, which synthesizes the argument that accountability and measurement are powerful control strategies in organizational management.
When co-founders Bernard Marcus and Arthur Blank established Home Depot, the company's culture was laid-back and focused primarily on building customer relationships and enabling collaboration between departments through informal communication. There was a lack of precision in performance measurement and no standard analytical framework for evaluating which areas the company was excelling or struggling in. The founders made the decision in 2000 to hire Bob Nardelli from General Electric (GE), as he had reported directly to one of the most successful CEOs in the history of American business, Jack Welch.
Welch is known for his no-nonsense approach to management and his heavy reliance on Six Sigma, a methodology for optimizing performance processes in manufacturing and services, as well as for driving accountability deep into GE. He is also well known for his "Up or Out" philosophy — promoting the top 20% of performers while moving the remainder out of the company (Franke, Mento, Prumo, & Edlund, 2007). This was the corporate environment in which Bob Nardelli spent the majority of his career prior to being hired as CEO of Home Depot. The founders anticipated a higher level of performance but did not anticipate the extent to which the organization's culture would change.
Bob Nardelli has a passion for numbers and sought to measure the performance of key processes within Home Depot's supply chain and stores, often instituting Six Sigma audits of individual store performance (Reingold, 2008). He is also well known for his saying "figures are friendly" (Grow, Brady, & Arndt, 2006; Reingold, 2008), reflecting his preference for seeking accountability through Six Sigma-based benchmarking and performance measurement first. This approach worked exceptionally well throughout the supply chains that Home Depot relies on globally, as there had never previously been this level of control within their supply chain management strategies. Nardelli also found that when stores were held accountable to their supply chain forecasts, collaboration improved and planning accuracy increased (Reingold, 2008).
In addition to the process-based improvements Nardelli brought to Home Depot's supply chain management and logistics functions, he was also responsible for bringing the company into a more competitive position with respect to information technology (Reingold, 2008). These information systems were badly needed. Prior to Nardelli's arrival, Home Depot lacked the ability to communicate store results on a daily basis — performance and pricing data lagged, and as a result the company was regularly missing regional and seasonal opportunities. The company needed greater agility in responding to customer demand and far better control over inventory management.
In addressing these strategic weaknesses, Nardelli invested $1 billion in new information systems, creating entirely new platforms for the more efficient sharing of sales data between stores and with regional and worldwide headquarters in Atlanta. As a result, Home Depot was able to capitalize on the building boom of the 1990s that extended into the 21st century, soundly beating the company's financial performance estimates. These systems were also directly responsible for the company gaining market share over Lowe's and other do-it-yourself chains globally (Reingold, 2008).
The use of information technology as a strategic advantage, combined with its reporting accuracy on key metrics, allowed Nardelli to continually drive accountability throughout the organization. Fast-moving, lower-margin but highly price-competitive products became more profitable than ever. The company's higher-end services business also continued to improve, as the underlying processes had been re-architected using Six Sigma techniques.
Nardelli was criticized for not giving sufficient attention to customer-facing metrics and was frequently accused of prioritizing performance over people (Reingold, 2008). He has since been defended by his former boss, Jack Welch, who argued that Home Depot benefited from Nardelli's tough management style more than the company realized (Welch, 2007).
The fact that Bob Nardelli took a laid-back, often unfocused do-it-yourself home retail chain and transformed it into one of the most profitable chains globally is a testament to how powerful accountability and measurement can be as a control strategy in management. The reliance on continual improvement as defined by Six Sigma undoubtedly accelerated his ability to transform and grow the company over time.
You’re 87% through this paper. Sign up to read the remaining 1 section.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.