Francis (Frank) Blake needed more than a hammer and a few nails when he got the top job at Home Depot. Blake took over as chairman and CEO of the U.S.s fourth-largest retailer in January 2007, just as the financial crisis was starting to fester. In a surprise appointment the executive vice president replaced Robert Nardelli, who had overseen the Big Orange Boxs dramatic growth during the U.S. housing boom. Nardellis top-down management style clashed with the warmer Home Depot culture instilled by founders Arthur Blank and Bernard Marcus.
Self-effacing and candid, the 62-year-old Blake is the opposite of his predecessor and former General Electric Co. colleague. But he still had to confront some ugly economics. Seeing that the home improvement chain itself needed major repairs, he laid off 11,000 staff, sold HD Supply in 2007 and closed the Expo Design Center division in 2009.
Blake rebuilt Atlanta-based Home Depots supply chain and rethought its retail strategy. To this day he still taps Blank and Marcus for advice on how to improve customer service and stay true to the original values of the company they launched in 1978.
Today things are turning around for Home Depot, which had sales of $68 billion and earnings from continuing operations of $3.3 billion in 2010. Thanks to Blakes renovations, its performed well during this years weak housing and job market. Raymond James Financial upgraded Home Depot shares to a strong buy from market perform after a solid second quarter; net earnings were $1.4 billion, or $0.86 per share, versus $1.2 billion, or $0.72 per share, during the same period last year. Diluted earnings per share grew 19.4 percent over 2010.
To rally his 321,000 troops at the more than 2,200 Home Depot stores in the U.S., Canada, Mexico and China, Blake relies on down-home courtesy. Hes proud of his tradition of hand-writing thank-you cards to employees on Sundays.
His inspiration for this gesture: thenVice President George H. W. Bush, for whom the onetime lawyer served as deputy general counsel from 1981 to 1983. Hed spend an hour every morning writing notes to people, recalls Boston native Blake, who has a JD from Columbia Law School. As a staff member, I remember the feeling of getting a note from the vice president of the United States saying nice job on something. That makes a difference.
For much of his career, Blake moved between government and industry. He traded law for business at GE from 1991 to 2001, starting as general counsel for GE Power Systems on his way to becoming the parent companys senior vice president of corporate business development. He then returned to Washington to serve as deputy secretary of the U.S. Department of Energy, where he managed a $19 billion budget. In 2002, Home Depot recruited Blake to lead its business development and corporate operations; he was named vice chairman of the board in October 2006.
Blake recently talked with Staff Writer Julie Segal about Home Depots leadership, culture and turnaround.
Institutional Investor: You have an unusual background for a CEO.
Blake: Half of my career was spent as a lawyer. I was in and out of governmental roles, and I had a private practice. Then when I went to GE, I moved from the legal to the business side. Theres always a little bit of legal training thats relevant, maybe just in terms of how you phrase questions. I joke that law school consists of taking normal people and getting them to worry about what no sane person would worry about. Theres a level of worrying that comes with that I guess you keep.
What business leaders have informed the way you run Home Depot?
Ive been fortunate in my career to work for some extraordinary leaders, first among them [former GE chairman and CEO] Jack Welch. When I got this job, I asked Jack if hed spend some time with me. He was very gracious and spent a whole afternoon. I had in my GE career done many pitches and presentations to Jack where you needed to know everything about the business from the smallest number up. So thats what I did for him. But he didnt want any of that. He said: Take me through your organization. Describe the people what you see as their strengths and weaknesses, how you are going to develop them, how you are going to deal with the people you think arent contributing as much as they should.