Case Studies
#25-01-15-07: Nardelli Predicted
Nardelli Is Fired
“Nardelli is fired from Home Depot”
Posted by Steven Cerri on Monday, January 15, 2007
Good evening!
Well, it’s finally happened. Bob Nardelli, CEO of Home Depot has been fired.
I knew it was going to happen, I just didn’t know when. When I saw his picture on the cover of BusinessWeek a year ago, with the magazine bragging about his “tough” management style, I knew it was only a matter of time. Then I predicted he had a year or two left. Well he had a year, apparently.
Why was I so sure Nardelli would fail or at the very least have a very difficult time of it? Because he wasn’t practicing something I call “Contextual Management and Leadership"©, CML for short. Now it’s true, I’ve developed this program myself, but it’s based on what I believe leads to a better way to manage in any given situation.
My approach to this whole management/leadership choice thing is based on the idea that the best management or leadership style is tied to the situation at hand. Therefore, the manager or leader is most effective if he or she selects a management or leadership style based on the parameters of the given situation.
(Now I know that everyone “thinks” they do this. I know that most managers and leaders think they are modifying their style based on the situtation as they see it, but I don’t think so. When you read further, you’ll see that my idea of adjusting your management style to the situation is very different. By the way, the given management or leadership situation is what I call the “context”.)
Now Nardelli came from GE in large scale manufacturing and went to Home Depot, a retailer. He attempted to use the things that worked in manufacturing in a retail business. But I’m getting ahead of myself. Lets look at two ex-GE guys and look a little deeper into STCI/CML© to see exactly what I mean.
STCI/CML© is based on the idea that there is a best way to manage or lead in any given situation and that best way is based on six parameters. The parameters are the following:
1. Who has the expertise, the manager or the employees?
2. What is the project’s risk?
3. What is the project schedule?
4. What is the manner in which the employees want to be managed?
5. What and how does the manager want the employees to learn?
6. What are the complexities and interfaces of the task or project?
The current state of the project, task, or organization with respect to these six parameters will lead the manager using STCI/CML© to the best management style for the given situation.
So now lets look at two different approaches used by two different ex-GE managers who went to new companies they knew very little about. The two ex-GE employees are Robert J. Nardelli and James W. McNerney. Both were past over by Jack Welch when he selected Jeffrey R. Immelt to succeed him. Nardelli left GE and ended up as CEO of Home Depot. McNerney left GE and ended up as CEO of Boeing Co. Now lets look at how both of these men measured up with respect to the six parameters I’ve listed and how they handled their respective jobs and what the results have been so far.
With respect to Parameter #1: Who has the expertise, the manager or the employees?
In both cases the expertise lies with the employees. Nardelli had never been in a retail business and McNerney had never headed up an airplane manufacturer. Both men were on the short end of the straw when it came to understanding what they had taken over. McNerney understood this fact and spent the first six months talking to employees, building consensus, and attempting to understand the business.
Nardelli was certain he had the answer and everyone else didn’t. By his own statements, the people of Home Depot didn’t know what was going on and he was there to fix it. He was there to fix a business he had no experience in.
With respect to Parameter #2: What is the project’s risk?
In both cases the risk was relatively low. Home Depot was not in any serious trouble even though the stock price had been flat for a while. It’s probably fair to say that Nardelli had no where to go but up.
McNerney was also in a relatively stable environment. Even though, when he took over Boeing it was reeling from some ethics problems and the European airplane manufacturer was beating Boeing in sales, McNerney was also taking over a company that could probably be said to have a potentially bright future. So this parameter is not a significant one with respect to the selection of a management style in either case.
With respect to Parameter #3: What is the project schedule?
In both cases the schedule is not a serious consideration. Therefore, this parameter is not a significant one with respect to the selection of a management style in either case.
With respect to Parameter #4: What is the manner in which the employees want to be managed?
In both cases this is a big deal. Both companies, Home Depot and Boeing had a history of a unique, entrenched, and important culture. To ignore this culture or to make war with it is a huge risk. McNerney embraced the Boeing culture, giving respect to the engineers, manufactures, and to all employees for their ability to contribute.
Nardelli seems to have had contempt for the Home Depot culture he inherited and didn’t hide his feelings. Big mistake!
With respect to Parameter #5: What and how does the manager want the employees to learn?
Nardelli wanted the Home Depot employees to learn discipline, a reasonable goal. McNerney seems to have wanted the Boeing employees to learn to focus. Another reasonable goal.
However, the learning goals here are not important drivers in the selection of an optimum management and leadership style.
Finally, with respect to Parameter #6: What are the complexities and interfaces of the task or project?
In both cases this is a big deal. While Boeing had many complexities and interfaces with their products and vendors, Home Depot had many complexities and interfaces with respect to their stores and suppliers, as well. In both cases, the complexities of the interfaces coupled with the lack of knowledge of these businesses by the CEOs, leads to the conclusion that the expertise, once again, rests with the employees.
In summary of these six parameters, both men took over very similar situations. They both had very similar environments they stepped in to, at least as they relate to the six STCI/CML parameters. In looking at the six parameters, there are only two parameters that stand out as drivers for the selection of the best management style and they are:
Parameter #1: Who has the expertise, the employees or the manager?
Parameter #4: The manner in which the employees want to be managed?
These two parameters drive the preferred management processes toward a participative management style. When the knowledge rests with the employees it is foolish for a manager to pretend he or she can dictate what the “right answer” is. And with an entrenched, long standing culture, it is equally foolish for a manager to assume that he or she can turn the culture over quickly without a great deal of “blood-letting”. In both cases, Home Depot and Boeing, the STCI/CML contextual evaluation would lead to the selection of a participative, collaborative management style.
The participative, collaborative style is what McNerney picked at Boeing and we can certainly see the results of that. Boeing is doing very well indeed.
The directive, authoritative style is what Nardelli picked at Home Depot and we can certainly see the results of that. Home Depot got rid of him.
You don’t have to be tough to be successful, unless it’s called for, and in some cases it is. But in all cases you have to be smart.
It only remains now to see what Nardelli’s successor does. Stay tuned, (and drop me a comment).
Be well
Steven Cerri
Posted by Steven Cerri on 01/15 at 07:21 PM Case Studies • Leadership • Management • Inter-Personal People Skills • (0) Comments • Permalink
#17-11-13-06: Case Study #1, PII
Case Study #1 part 2
”What Should I Do In this Case?”
Posted by Steven Cerri on Monday, November 13, 2006
Good evening!
If we look at these six parameters we can quickly discount many of them as not being important in this situation and therefore, not influential in our selection of the best management style. Evaluation of these parameters leads to the following conclusions:
1. The expertise lies with the manager, not with the employee.
2. There is no big risk.
3. The timeframe is not of concern.
4. The task complexity is not significant, at least not now.
5. The management style the direct report wants the manager to use is worth considering, but not nearly as much as item #6.
6. The manager wants the employee to feel empowered and what that means is that the manager wants the employee to learn how to think and make decisions on his own.
Therefore, an analysis of these six parameters leads us to conclude that the most important parameter is #6. It forces us to conclude that we must allow the employee to exercise judgment and responsibility, even if the employee is to make some mistakes. From my perspective the only choice is for the manager to coach the employee and coaching takes the form of the following five steps, (in this case):
The Plan
1. The manager calls the employee into his office.
2. The manager asks the employee how the employee thinks he should proceed?
3. The manager continues to ask questions in an effort to guide the employee to think about topics that are important without the manager “telling” the employee what to do, what to think, or how to act.
4. The goal is for the manager to guide, coach, and question the employee and in this way point and guide the employee to the safe, effective, and successful actions.
5. By the time the tasks are completed, the employee will have successfully acted in furthering the technology, and the employee will have thought through the process as if it were all their own thinking. This is how you coach an employee to learn how to think “into” more powerful decision-making processes.
Be well
Steven Cerri
Posted by Steven Cerri on 11/13 at 08:49 PM Case Studies • (0) Comments • Permalink
#16-11-02-06: Case Study #1, PI
Case Study #1
”What Should I Do In this Case?”
Posted by Steven Cerri on Thursday, November 2, 2006
Good evening!
I want to take a moment and describe a specific case of how management style depends on the situation. I have a coaching client who asked me recently to comment on how he handled a specific situation.
Here is the set-up for the situation:
The manager had recently promoted an engineer to a management position. The engineer clearly had good thought processes. The manager trusted the engineer from years of working together. The manager felt the engineer could step up to the new position as manager of several departmental tasks and two people.
The specific case:
The engineer/new manager got an idea for a new process and sent his manager and excited email outlining the possibilities of this new approach.
The goal:
So now the question is, how should the manager handle this? What should the manager’s response be? The manager’s goal was to “empower” the employee. What exactly does that mean? What would be your goal for this employee and for this interaction?
Now many who discuss leadership would say that the leader should empower the employee. That’s fine but what does that mean? What does empowerment look like in this situation? Some would say that the manager should let the engineer/manager figure it out for themselves. Some would say that the engineer/manager should be shown how to move forward so as to not make any mistakes. There is no shortage of opinions.
What did the manager do?
As I indicated, the manager’s goal was to empower the new engineer/manager. The manager responded to the email with a list of things that they should do next. It was a nice enough email and it listed the next five things that needed to be done in order to prepare this new technology for presentation to upper management for approval.
What happened?
The result was nothing. That was the end of the technology and the end of the discussion. The engineer/manager didn’t do anything else with the topic. It died.
The manager’s perception later was that he killed the motivation of the engineer/manager by making his email too directive, too filled with “you ought to do this.” The manager’s question to me was, “What could I have done differently to keep the engineer/manager motivated?”
My answer:
I look at six parameters to decide on the most appropriate management style to select. The six parameters are:
1. Who has more expertise, the manager or the direct report?
2. What is the risk of the task?
3. What is the timeframe of the task?
4. What is the complexity of the task?
5. What management style does the direct report want the manager to use?
6. What does the manager want the direct report to learn?
I’ll pick up here on Monday
Be well
Steven Cerri
Posted by Steven Cerri on 11/02 at 10:15 PM Case Studies • (0) Comments • Permalink
