Bob The Builder
The summers were hot in western Illinois, but for Bob Nardelli they were also a month too short. "We didn't have a lot of money in those days," says Nardelli, who went to college on a football scholarship and had to start training in August. "I only had two months to work. You had to have jobs that paid well." His solution? "I worked road construction. One year we laid concrete highways. Next summer I worked asphalt." Nardelli's road-crew summers toughened the soles of his feet and taught him a lesson he would never forget: take the most difficult work and work harder at it than anyone else.
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That strategy served him well in many jobs, from baling hay to assembling refrigerators. But in the most important test of his life, sheer doggedness wasn't enough. The son of a GE factory worker, Nardelli, 56, had spent close to 30 years at that company trying to prove himself as CEO material. In November 2000 he lost a two-year, three-way contest to succeed Jack Welch. "To say I wasn't disappointed would be lying," Nardelli says. "You don't train to come in second." Nardelli bounced back to become CEO of Home Depot, a company half the size of GE, a month later. This time his GE management style and determination are paying off. After two years of struggling, Home Depot's sales and profits have rebounded. The stock has not quite regained its luster, and as Home Depot prepares to celebrate its 25th anniversary next week, Nardelli hopes investors will validate his steady transformation of a company that had nearly lost its way. He may have left GE, but Bob Nardelli still has something to prove.
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The succession race at GE was grueling and public. Nardelli, who has the forceful bearing of an offensive lineman, has compared it to playing in the Super Bowl--"the last two minutes for two years." He lobbied Welch for the chance to run his own unit, then took GE's weakest business — making electricity-generation equipment — and quadrupled its sales. But Jeff Immelt, who was known for his polish and intellect and ran GE's cutting-edge medical-systems business, won the top job. The other contender, Jim McNerney at GE Aircraft Engines, entertained an offer from 3M before the race was even over. That's not Nardelli's style. "I was not going to be outside interviewing," he says. "I gave it everything I had."
When Nardelli moved with his wife and four children from upstate New York to Home Depot's Atlanta headquarters, the home-improvement retailer was going through a rough patch of its own. Its co-founder and second CEO, Arthur Blank, was under pressure to leave; the company had added stores more quickly than it could properly manage, and comparable-store sales, the crucial measure of a retail chain's organic growth through existing stores, had been declining for eight quarters. Home Depot was expanding so quickly that many executives saw nothing wrong. "You had people who were enormously proud of what they had accomplished," says Frank Blake, who worked with Nardelli at GE and is operations chief at Home Depot. "It was a cock-of-the-walk sort of attitude."
Home Depot's swaggering culture attracted creative managers with a passion for their work. "We were a little bit rebellious, a little bit dangerous," says Tom Taylor, a 21-year veteran of Home Depot. Stores were expected to respond quickly to changes in their local markets, and they did. But Home Depot never took advantage of its size to negotiate national purchasing deals, and there was little communication among store managers. As Home Depot's growth slowed, it became vulnerable to competition from WalMart's cost cutting on one end and Lowe's more polished, female-friendly stores on the other.
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