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
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
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
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
You were in government for a long time. What did you
learn from that?
Not to go back into government! Government is just
completely different. We had a group of senior government
executives who were in and working on best practices for
business. I was here at Home Depot, and they heard from lots of
our executives. But then I talked to them and I said,
Now, in honesty, dont we all know this is a little
bit beside the point, because your life is ruled by a
25-year-old staffer who works on the Hill, who controls your
appropriations budget, and what he or she wants to do is what
youre going to end up doing. They all just broke up
like, Oh, my gosh. Hes actually been there. He
You havent wanted to be a CEO since you were
five, like many stereotypical leaders. How does that inform
what you do?
I didnt anticipate being in this position within a
second of being in this position. Id say it probably
makes it more obvious that you need help. It makes you say,
Okay, Ive got to have a great team around me,
because theres too much I dont know.
You were the natural person to take over the CEO
role when you did, but your appointment surprised a lot of
If I were doing my own self-assessment, Id say not a
lot of deep retail experience. The first thing I said when I
sat down with our investor and analyst community, and the first
thing I said internally, was, Im not looking for a
team of people that look like me. I was looking for a
team with really deep expertise and leadership capabilities in
our retail space.
Youve just come off this great quarter. Tell
me about what youve put in place to make that
We set some pretty aggressive goals. If you go back a few
years, we knew we had two big competitive shortcomings. One was
our supply chain, and the other was our retail systems.
Weve rebuilt our supply chain in three years, which for a
company of our size is a significant undertaking, and we did it
pretty much without a hitch. New systems that have been put in
place for our merchandising and store operations teams have
made a real difference.
Customer service had been a shortcoming for Home
Were not there. We do over a billion transactions a
year. It seems like every customer has figured out my e-mail
address. I know we still have opportunities, but I think
weve made a lot of progress. Weve made a lot of
progress on our merchandising side as well. This one is maybe
less immediately apparent, but its important to us that
weve been reducing the promotional activity in the
business and getting more to an everyday pricing.
Youve rebuilt the culture of Home Depot,
getting it back to its roots.
My dominant comment there would be that I didnt
rebuild the culture. The culture was always here. If somebody
had said, Okay, Frank, here blank sheet of paper.
Go create a customer-focused culture in a company of 300,000
people, that would have been pretty difficult. We just
went back to some foundational statements from Bernie Marcus
and Arthur Blank in terms of our company values and what we
stand for. People go: Got it. I remember that. I know
what that felt like. If you take care of your associates
and take care of your customers, everything else takes care of
You like to walk the aisles of your stores. Tell me
about that experience and what it gives you.
Being in the stores is really important, and acknowledging
how core to the company the stores are is critical. Each time
Im in the store, my hope and expectation is that
its an opportunity for the store manager to recognize
So its about recognition?
It really is. I cant spend enough time recognizing our
associates for the hard work theyre putting in.
And what do you learn?
My son, who works for the company, says to me all the time,
Im sure that briefed well in Atlanta, but . . .
Then you get, Heres the reality of how this
thing unspools when youre actually implementing it in the
store. So I get to talk to customers, and the customers
give me another dose of reality. Understanding the frustrations
of our associates and understanding the frustrations of our
customers again, Id say thats pretty central
to my job.