A clearly defined business strategy makes tactical decision-making easier. Let’s take the case of Home Depot, one of the major US-based home improvement big box retailers. Home Depot competes aggressively head-to-head with the Lowes brand. Home Depot’s story is well-told in the 1999 book Built from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion. In the book, Bernie Marcus and Arthur Blank, cofounders of the Home Depot, share how they built the first national chain in their industry by concentrating on three things 1) low prices, 2)customer service, and 3) strong leadership values.
Many might argue that service, pricing and values at Home Depot all hit a low in January of 2007 when its chairman, president and CEO Bob Nardelli resigned from the company. During Nardelli’s time atop Home Depot the company lost market share to Lowe’s and Home Depot stock fell 8 percent. Despite that poor performance, Nardelli left Home Depot with a $210 million severance package involving cash payments, stocks awards, and deferred stock options.
In the transition period that followed Nardelli’s departure, I had an interesting happen stance meeting with a senior leader at Home Depot. The meeting occurred in an airplane (a location I lovingly refer to as “my second office”). While sitting next to this leader, he shared the new strategic vision for enriched customer-experiences at Home Depot in the post-Nardelli era. In a “small world” moment and to my delight he talked about how leadership was reading my book The Starbucks Experience.
During the flight we discussed how and what Home Depot sought to do to return to the core service values that created the company in the first place. Our conversation focused on how leadership could decrease the cavernous warehouse feel of their stores, how they could get their sales staff engaged with customers to ease the shopping experience and to offer the customer “do-it-yourself” knowledge and guidance. Most importantly we talked about how they could increase friendliness and decrease wait times in Home Depot checkout lines.
Through the intervening years, I’ve personally watched the positive transformation of the Home Depot Experience including having employees more consistently go out of their way to ask me if I need help and personally assist me locate items in the vastness of their warehouse stores. From my perspective, checkout wait times have also vastly improved.
So let me use Home Depot to support my initial assertion, namely that a clearly defined business strategy makes tactical decision-making much easier. With a strategy to elevate “customer experience” as a business differentiator, Home Depot can make tactical decisions through the filter of “how much will the tactic enhance the customer experience.” As such, Home Depot recently prioritized a large investment to purchase 10,000 handheld devices at a cost of 60 million dollars in an effort to further improve the customer experience. The devices will enable Home Depot employees to check inventory, stock shelves, find items for customers at other Home Depot stores and even check out customer purchases.
While technology is not the experience, the investment in this technological infrastructure follows directly from Home Depot’s business strategy. If Home Depot’s strategy had been to compete exclusively on price or products alone the tactical decision to deploy the handheld device technology would likely not be justified.
Here are a couple of things for you to consider in your business based on the Home Depot’s handheld device decision:
How consistently do you and your business resist taking on tactical initiatives because they are inconsistent with your defined business strategy?
What tactical choices should your business be making to truly “walk the talk” of your defined strategy?
I’ll be watching Home Depot closely to see how well they execute the desired strategic benefits to the customer from their intensive tactical investment in experience-enhancing handheld devices. I suspect you might be watching too.