Darren [00:00:02]:

Hi, everyone. Welcome to another episode of One of One. I’m your host, Darren Gold, CEO of the Trium Group. My guest today is Frank Blake, former chairman and CEO of the Home Depot. Frank stepped into the CEO role at Home Depot at a moment of profound uncertainty. It was early 2007. The housing market was beginning to unravel. The company was facing activist pressure, and culturally, Home Depot had lost touch with the values that once defined it. Frank had never aspired to be a CEO, and yet he was asked to lead one of the largest retailers in the world through one of the most turbulent periods in its history. Over the next eight years, Frank delivered a remarkable turnaround. He restored Home Depot’s customer first culture, paused new store openings to reallocate capital toward improving the customer experience, and led with a deeply unconventional philosophy that the CEO belongs at the bottom of the organization, pushing purpose upward rather than letting authority cascade down. What makes Frank’s story so compelling is not just what he accomplished, but how he did it. With humility, clarity, moral courage, and an unwavering belief that the CEO’s highest obligation is to create a successful employment experience for the people who serve customers every day. This is a conversation about leadership in crisis, the truth revealed by capital allocation, the discipline of focus, and what it really means to serve an organization. Please enjoy my wonderful conversation with Frank Blake. 

 

Frank, it’s so great to see you and so great to have you on the show. I really appreciate you agreeing to spend the time.

 

Frank [00:01:41]:

No, thank you, Darren. It’s great, Great talking with you.

 

Darren [00:01:44]:

Yeah, I’ve been looking forward to this conversation for a number of reasons. One of them is just to reconnect with you and catch up through the conversation itself. But most importantly, I started this podcast, really, with the intention to have really deep conversations with CEOs I respect immensely, and I put you at the, you know, at the very top of that list. So I’d love to start our conversation and probably focus our conversation on the seven years you were CEO at Home Depot. There’s so much more to you, Frank Blake, than those seven years. But it was a seminal moment. Of course.

 

Frank [00:02:23]:

Actually, eight.

 

Darren [00:02:24]:

Yeah, eight. Okay. 2007 to 2014. So if you include the eight years. Good.

 

Frank [00:02:30]:

No, we count those dog years.

 

Darren [00:02:33]:

So eight years. Let’s focus on that period or at least start there and bring to life you as a leader through that experience. And in some ways, as I understand it, and I hope we can bring to life in our conversation, I would call it a bit of a. A masterclass on CEO effectiveness. So I’D love to jump in there and maybe have you take us back to that moment in time when you were asked to step into the role.

 

Frank [00:02:59]:

Well, first off, it’s great being on your show, Darren. We’ve had the opportunity to work in the past. I always enjoy your thought processes and insights. And so I very honored to be included in this. I am probably unique amongst your guests in that I never had an aspiration to be CEO, nor really an expectation to be CEO. In fact, when the board called me at the very end of 2006 and told me they were parting ways with the then CEO of Home Depot and asked me to be the incoming CEO, I can genuinely say that I’d never given a thought to being a CEO. I had never thought, what would I do if I were running this company? What would I do if I were in charge? And I didn’t expect anybody to ever offer me the job and I wasn’t angling for it. So it was a surprise. It was a surprise to me, frankly. It was a surprise to the entire organization. And. And in fact, my first comment to the board was, I need to spend a day to think about this, to think about whether this is something I can do. And you should spend a day thinking about whether I’m the right person to do this. Because, you know, Home Depot is one of the largest retailers in the world. While I’d been at Home Depot for a little over five years, my area that where I’ve been working was in acquiring companies, largely doing real estate and not being operationally involved in the retail business. So it was both a new area for me to go into and my background was in leading smaller teams. So I’ve been in business for a while. I’m a lawyer by training. I transitioned from being a lawyer to basically being someone who acquires businesses. I did that at ge. I did that for Jack Welch while I was at ge. I did that at Home Depot before becoming CEO. But that’s a very different job, right? You’re managing small groups of highly motivated people to go out and do an action that has a finite beginning, a finite end. There’s not a lot you don’t have to worry a lot about motivating people and all the rest. It’s very different. And so there were a lot of challenges right off the bat in thinking about what would it mean to be this, what does it mean to be the CEO of a company? And again, as I said, probably unlike most of your guests, that wasn’t a topic I’d given any Thought to, yeah.

 

Darren [00:05:46]:

So I imagine the board obviously saw something in you, given the context of the time and where the company was. So what do you think they saw and maybe describe what was the context? Back we’re now in 2007 for people.

 

Frank [00:06:01]:

Right at the very end of 2006 and then I started right in the first days of January. One thing I know is that the board saw a lot of me because I was in front of the board frequently to pitch acquisitions for the company. So I assume that they were relatively comfortable in the way I approached that job and the way I answer questions, the thought process that I approach issues with. But honestly, it was a big jump for them. I know this in retrospect, I’m glad I didn’t know it at the time, but I know that they debated a lot whether the right approach was to put me in on an interim basis, see how it works, works out, and then decide whether, do a search and then decide whether I should be CEO or not. And I think the point of view that prevailed was, well, he’s never going to work. This is never going to work if he’s interim. So they took the plunge. And the timeframe was also an interesting one because for the housing market. The housing market had started to significantly soften in mid-2006 and by 2007 was in a full on reversal. And Home Depot, While it’s not 100% correlated with housing, there’s obviously a lot of correlation with housing turnover in particular. So the market was starting to go down significantly. And we also had an activist investor who was interested in getting in on the stock and getting a seat on the board. So there was a lot going on. Right. Right from the start. Yeah.

 

Darren [00:07:54]:

If you read the sort of as an outsider, the, the accounts of Home Depot at the time, there was also something culturally going on at, you know, the way I’ve heard it described, and I’d love yours, of course, was sort of Home Depot had lost its way, lost its soul, lost sort of the original culture. Is that a fair description or what was the state of the company culturally, at least at that time?

 

Frank [00:08:16]:

Yeah, I think there was a lot of cultural turmoil, I think would be a fair way to put it. There was my predecessor, Bob Nardelli, for whom I had worked at GE and had been in the succession process for Jack was very, very highly thought of within Georgia brought with him a lot of the GE frame of mind and business practices. And there were a lot of clashes between that and the Home Depot culture. And so that was also A major issue. And we’d been, you know, we had another competitor who was gaining share. So there were a lot of dynamics going on.

 

Darren [00:09:01]:

Yeah. So you’re obviously aware of all of this and you take this 24 hour period to make the decision. I’m curious what was going through your head and what ultimately led you to a yes.

 

Frank [00:09:12]:

So the most important comment that was made to me in this literally last day of 2006, the most important comment was made to me by my wife who said, don’t think if this decision is about you. And that was actually a really helpful framing for me to say, do I think I know what needs to be done? I think I had in my mind, while I hadn’t been operationally engaged in the business, I’d been strategically engaged in the business. I thought I knew what needed to be done and there were lots of other people that I could rely on to help me do it, and that it’s best to approach that job as understanding that it’s not all about you.

 

Darren [00:09:56]:

And just so I understand that, because I know there’s a threat of public service in your background as well. Is there some connection there to that sort of servant orientation? Or when you say think of it not just about you, what did that really mean to you?

 

Frank [00:10:15]:

Not a public service. This was not, oh, I can sacrifice myself for others on this. That wasn’t the framework. It was more the framework of this. Being successful at this job was not going to be simply a function of how good am I Being successful in the job would be measured by how thoughtful I am about the business and how I can get a great group of people aligned around what the business needed to do. And I know you’ve had as a prior guest Carol Tomei, who is now the CEO of ups. Carol was my cfo. I’m very proud of the fact that there are a lot of folks from Home Depot who work for me at Home Depot who are now or have been CEOs of very significant public companies. So I had a very skilled team helping me. Yeah.

 

Darren [00:11:14]:

Well, it says a lot about your leadership as well, I’m sure. So I’d love to jump into that. So you say, yes, you take on the role. What was the vision as you entered the role? What actually started to transpire?

 

Frank [00:11:29]:

So, such a great question. So I’ll start with a cultural point. I tell this story because it’s not a story, it’s true. I pick up the phone and I call my son. My son happened to have served in Iraq and Home Depot Had a program for returning military veterans working in the store. And he had done that, I mean, since when he got back from Iraq. And by that time he had been assistant store manager, store manager in Colorado. At that time, he was a store manager in Wilmington, North Carolina. And I called and I said, hey, interesting news. I gotta be the CEO. And he burst out laughing. And I said, no, no, no, no, really, I’m going to be the CEO. And he laughed some more. And I said, no, no, I’m really going to be the CEO. This is serious. And he said, well, good luck, dad. Good luck. And I said, well, I. You know, we have large retailers have break rooms in the store, and most retailers have a TV in there that beams in the company message. And the associates figure out a way to watch TV on it. But there’s this back and forth. But I was supposed to get on the network and speak to what was then 350,000 people about just what you said, darren, okay, so what are you going to be about? What’s the vision here? And I said to my son, I said, what do you think the associates want to hear? What would they be interested in? And he said, I have no idea, but I will tell you how I start my weekly store meetings. I said, great. What do you do? He said, I take the book that was written by Bernie Marcus and Arthur Blank, two of the Home Depot founders, and it’s called Built from Scratch, if your listeners get a chance. Still available. It’s just one of the iconic books about entrepreneurial success in America. Cause Bernie and Arthur were fired from their prior job before they started Home Depot. I mean, it’s just a great story. Anybody said, I start my weekly store meetings by reading something from Built from Scratch. So I said, great idea. I’m gonna do the same thing. So I pick up the book and I’m kind of flipping through what would be an appropriate thing to start with. And I started as my initial message, the inverted pyramid, which was very much part of the Home Depot culture, where think about the leader being on the bottom of the pyramid rather than on the top of the pyramid. And I didn’t talk a lot about that, but I said, this is what we’re going to go back to, where I visualize my job as trying to help you do your job in terms of customer service and that we become the best customer service retailer in the world, which was very much in the culture of the company. And that not only connected well, because I think again, it referenced back to something in the culture of the Business. But I also, for the next eight years, I tried to figure out what does that actually mean? What does it mean to lead an organization where you think of yourself as at the bottom of the organization rather than at the top? And my conclusion is most people look at that and say, oh, that’s a nice statement of humility, and you’re on the bottom. And that’s element. But actually what I think is it’s one of the truest and most profound business concepts because actually how organizations work. And I find so frequently that CEOs first, I mean, I could go on and on just about this topic, but CEOs often, if they’re mentally putting themselves at the top of the pyramid, they think that gravity is their friend. They think that what they say falls naturally down through the organization to thousands of attentive years. And that just is not true. Most people in most companies there isn’t. We’ll let that message cascade down. People are, yeah, okay, that’s fascinating. I’m going to keep doing whatever I view my job as and that it’s much more useful as the CEO to be thinking structurally. I have a message, I have a vision that I need to push up through the organization. And I have to think about what are the strategies that is going to drive that so that the layers above me in the organization actually internalize my message as their message and move it on through the organization as well. Very, very different thought process. I’d like to say both a more demanding thought process but also a more accurate thought process because leaders, organizations have a way of. Organizations are not just sitting there waiting to hear what their CEO has to say to them.

 

Darren [00:17:02]:

Yeah, this is such a fascinating point. So I want to just press on it a little bit. Is this notion of thinking yourself at the bottom of the organization and having to push consistent messages upwards is a really different one for most CEOs, I think. So what did you do specifically as you thought through that harder question of. Of cascading up instead. Instead of just having gravity naturally pull it down.

 

Frank [00:17:28]:

So again, I. This is, to me, I’m passionate about this topic because I believe, I mean, I. First off, I would take as a proof point someone who really did not have leadership at scale experience into this job and having this as a singularly helpful way of thinking about things. And in fact, it’s the case that the guy I worked for initially at GE bet my lead director 10 grand that I wouldn’t make it six months. So there was a lot of skepticism about whether I could do this job and I think a lot of the ability to do it came from this framework. So let me give. I’ll do my quick five minute. So if you reframe it and you think you’re at the bottom of the organization, at the top, rather than at the top, there are a couple of things that I wish your audience could have a visual, but there are a couple of things that come immediately from just looking at the visual. The first is it’s sort of a humble statement, but is it really because you’ve put the whole weight of the organization on yourself. So understand that you have the weight bearing job in the company and then from that you understand, boy, I better have other people that next block above me, they better be weight bearing capable also. Because if the whole thing’s on my shoulders, this is going to be tough. And so you’re into a different kind of. I always say, if you’re choosing leaders in that supporting you, whether you’re a CEO or the leader of any organization, you want people who take what you want to get done, your vision and move that to the organization, rather than viewing themselves as people who take what the organization wants and tell you very, very different framework gets you much more oriented to people who radiate out and who are capable of radiating out through an organization, because that’s what you need. Secondly, again, visually, everything’s uphill. These are tough goddamn jobs. You gotta be ready to work hard, you’ve gotta be ready to push something uphill all the time. And as I said, as a CEO, gravity is not your friend. And you’re pushing the weight. And particularly if you want to change things, you’re pushing against the weight of organizational inertia every single day. Next thing is you realize, okay, so how do I start doing that? You need to engage everyone in the layers above you in whatever you’ve defined as your mission. If you think seriously about that, the first thing that you immediately trip across is, I can’t have a lot of those things. I can’t have a lot of things that I’m trying to push. Cause I won’t remotely be successful. I’ve got to have four or five things at most that I am consistently moving so that everybody’s hearing the same message every day. And we’re investing that way and we’re thinking, communicating that way. Consistency and limited focus are hugely important. Then you think about communicating. Communicating is really interesting. It’s just really interesting. I’m always amused by long corporate memos and all the rest of that. The best way you communicate, and I think this applies to any scale above 10 people. The best way you communicate is engage people’s storytelling. What are the stories you’re telling? And the best way to tell the stories that engage people that understand where you’re going is through recognition and celebration. You take the people in your organization who are doing great things, who are doing what you want, you take them literally or figuratively on the stage and say, this is it. This is what great looks like. You want to know who we are, this is what it is. And people start to understand that. And you get kind of a flywheel effect as people understand where you’re going. And then you got to think about a different way of listening. So every. Bernie Marcus, one of the founders of Depot, when I took the job, he had a great statement to me that every single CEO understands, and if they don’t understand, boy, they got big problems. But he said, look, you’re going to go into your office and have your team around the table and you’re going to tell a joke. He said, they’re all going to laugh. Just remember you aren’t funny. And that is the most profound truth. So organizations start to adapt to their CEO, to put their CEO in a bubble of information that represents either they learn what the CEO likes to hear, but they don’t necessarily want to give the CEO what the CEO needs to hear. It’s not what the organization does. Nobody in any organization over 10, and maybe it’s over 2 thinks that the path to success is telling the CEO what’s actually going wrong. No one thinks that. I used to joke if I walk the store and ask the store manager, how’s everything going? There is only one right, intelligent response from every store manager. And the response is, everything is going great, sir, you are amazing, and please leave. That is the right response. So you have to actively listen and listen both at the. You know, who are the people interacting with your customers, understand your associates who are interacting with your customers, understand their frustrations, what literally you can do to make their job better in dealing with the customer. But you have to listen to every single part of the organization, and you have to find your own distinct ways of creating enough trust so that people will tell you where you’re screwing up.

 

Darren [00:23:57]:

So I have so many questions. I want to start with the techniques or maybe an example or a moment that stands out to you where you. You didn’t feel like you were getting the truth and how did you disrupt that pattern, or was it something that you were just doing, sort of Consistently.

 

Frank [00:24:14]:

No, no. So, first off, I’ll give you the hacks because I learned my. I had two hacks. I’m sure there are others. One of my board members, we were having this conversation and he actually suggested it, and I saw him do it all the time, and it was brilliant. He would ask if you take Project X, his question to somebody would be, why isn’t this project working well? Now he would say, I have no idea whether it’s working well or not, but if I ask that question, odds are somebody’s going to tell me something because they think, look, he knows it’s not working well, so I might as well be honest. And it’s absolutely true. And every once in a while somebody says, hey, it’s going great. What are you talking about? But that’s pretty rare. So, you know, just assume an openness by saying, I know it’s not working. Tell me why. The second is asking questions on a scale. So I would always say whatever the topic is on a scale of 1 to 10. And you think of something fancifully bad as 1, something fancifully great as 10. In between 1 and 10, where are we? And people will answer, you’ll get the six and sevens and eights. But that’s an opportunity to say every single time. That’s an opportunity to say, okay, if it’s six, how can it be seven? If it’s seven, how can it be eight? So you’re actually engaging in conversation to try to find out where you can improve things. And then the most important thing in the end is acting on stuff. Take the things that aren’t working and do something, and people start seeing it. So you say a pivotal event. There were lots of things that I was told we were doing wrong that needed to. But my favorite was early on. Must have been within the first six weeks. I don’t know. Somebody had complained to me, and rightly so, that we hadn’t replaced our shopping carts and they were getting worn and wheels were busted and everything. So we put in a program to buy a lot of shopping carts. And I get this email from a store manager saying, you know, when they announced that you were the CEO, I was really depressed because you’re a lawyer, you’re from ge, you really didn’t know retail. And I thought, God, this is just going to be horrible for us. And you may still be horrible, but at least you fixed our cart. And so I go, okay, you know, that’s a little bit. Part of. Part of developing a pattern of communication is to show you Actually listen and respond.

 

Darren [00:26:59]:

I was just going to connect that to communication because that decision is a form of communication. It’s a form of communication that says, I’m taking something seriously and I’m doing something about it. These small but powerful signals that can communicate the message you want to communicate. I’m interested. First of all, do you agree with that statement? And second, other examples that you could point to where you made a decision, you took an action that communicated something very powerfully to the organization and had a kind of an amplifying effect.

 

Frank [00:27:28]:

Totally. So I think, and again, apologize for. First, apologize for the language, but second, apologize for the simplicity of the thought. The most powerful tool that a CEO can use, particularly at the start, is to stop doing stupid shit. And people will tell you the stupid shit they’re doing, but usually nothing happens. Stop it, take a couple of them and don’t do it. And everybody goes, oh, okay, this is different. People will listen. So another example was we had a program of granting stores, Our stores would get a certain amount, what was called a fun, fun that they could use for celebration, particularly after, you know, our year would end of January. And so you’d have it in February or March. And early on decided, okay, we’re going to increase the fund fund, but most importantly, it’s going out to store managers with no restrictions. So the usual way it would go out would go out with a list of do’s and don’ts. You need to do this, you can’t do this. Da da da da da. And I said, we’re not going to have any don’ts. And we’re not going to have. You got to put bunting around or any. You can do whatever you want. And no one believed it. Everybody kept saying, okay, no, okay, we saw the menu, we saw the memo, but what really can’t we do? I mean, can we have alcohol if we want to have alcohol? Yeah, you can have alcohol if you want to have alcohol. Now, no one did it because they were smart enough, but it was that, you know, companies. One of my expressions about bureaucracy is the biggest problems of bureaucracy are people wanting to add more value than is really helpful. It’s not that people aren’t hardworking and well meaning. There’s just more value than an organization can sustain. And so there’s an example. Look, just relax. I mean, maybe a few things will go wrong, but it’s okay. It’s okay. We don’t need to spend a lot of time worrying about the rules and compliance on a celebratory event.

 

Darren [00:29:42]:

Yeah, and what an incredible way to communicate trust in the front line than to do something like that. And just another great example of communicating this big initiative you had, which is like, let’s return authority to our store associates and make customer success kind of the very center of what we’re trying to do. You said, keep it to a minimum. Three, four, five things. Were there other things that were in this funnel of what you really wanted to communicate that you had? In these early days?

 

Frank [00:30:19]:

There were a set of things that we needed to change in the business. We needed to change our supply chain. We needed to change our merchandising systems. We needed to change. I mean, there were. We had five things we needed to improve, and they weren’t, you know, customer service was one of them. We had others. And some of those engaged all 350,000 associates, some of them didn’t. But it was the consistency of this is what we’re at least. I mean, I know a lot of other people in the company had other objectives, but for me, those were the five things that mattered. And early on, I get mixed metaphors here a little bit, but early on, one of the leaders of the company came into my office and said, look, he asked a question. He said, how are you? And it wasn’t directly critical, but you could tell that there was a criticism underneath it. He said, how are you conceiving of your job? And I said, well, you know, the CEO’s job is to make a lot of decisions, and I want to make good decisions, and I want to make them efficiently, effectively, you know, and not, you know, be straight and quick. And he said, well, can I offer you a different perspective? And I said, yeah, absolutely. And that was it. I thought, you know, look, I’m going to be judged by how many good decisions I make and how quickly I can make. He said, well, let me offer you a different perspective. And then he had the pyramid the way it normally is with the CEO at the top. And he said, look, imagine all these gears where the CEO is the biggest Top Gear, and imagine that Gear, that Top Gear is spinning madly, making a lot of decisions and moving fast. He said, look at what happens to all the bottom gears. They’re just spinning out of control. They got more stuff to do than they can possibly. They’re spinning out of control. Said, imagine that your job is to feel when the smallest gear at the bottom moves. Imagine that’s your job. And while that isn’t the full picture of what a CEO’s job is, I do believe that that’s Part of the job. And part of the job, part of the reason for the focus is to keep the churn and to as you, as the leader, you know, keep your antennae out so that you understand what’s happening through the rest of your organization. Because it’s so easy to get caught up in your own world and your own to dos and all your meetings and your Monday meetings and your. Your Friday meetings, and you’re in between Mondays and Fridays. I mean, it’s really easy to kind of step into a river and just disappear instead of kind of keeping yourself engaged at a quieter level and trying to figure out what’s happening.

 

Darren [00:33:28]:

How often were you in the store just given that comment? Yeah, I imagine a lot. Like, what would describe. Like, what was the frequency and how did you do that?

 

Frank [00:33:37]:

So I would try to spend three out of three out of five working days in the store. Every Saturday morning I would try to try. Is operative word, I’m not sure. I was always there. Schedule would intervene. And then every Saturday morning, I would try to spend early Saturday morning before customers would come in, like between six and seven, I would go into a store with a merchant and just go through her or his BAE in the store and just go, what’s happening here? Tell me, what’s this product doing? Why is the product displayed the way it is? What’s called a planogram in retail? What’s this planogram? How does it work? What’s working well? What’s not working well? Partly I did that. I mean, not partly I did that because I needed to learn a lot quickly. And I figured that was going to be an effective way of learning, but it was also a way of seeing, okay, who in this organization can really explain what their strategy is and what they’re trying to do and who can’t.

 

Darren [00:34:42]:

Do you remember an insight you got from a store visit or a number of store visits that fundamentally changed the way you thought about the business or a decision you made?

 

Frank [00:34:52]:

There was a lot of that. I would say some of them we effectively changed, some of them we didn’t. If we ended up having a hard time changing the overarching vision was that. So if you’re in a store, I mean, the phrase for working in retail is if you work in retail, you gotta like to smile. Because customers, we love them, but they’re very difficult. And if you give. Not everyone, but a lot of times, if you give people a choice between tasking, kind of going off somewhere and putting stuff on shelves or dealing with customers, there’s not an insignificant subset that will go. I far prefer to just go task and not deal with these folks. And so we had a very defined plan over time to just turn more and more hours in the store into customer facing hours and remove tasking. And part of that was an effort to say, this used to be important, it’s not going to be important anymore. Part of it was an effort in automating things, making things that had been manual, making them automatic. Part of them was the introduction of new technology in terms of merchandising fulfillment within. Just that one thing of we’re spending too much time in the store tasking. Just that one thing generated an enormous amount of work effort to deliver on. And there were lots of lots and lots of others like that in how you receive, in how you had outside parties interact with you. Endless, endless numbers of opportunities to improve.

 

Darren [00:36:45]:

You mentioned one other thing about powerfully communicating a message around storytelling, in particular celebrating and recognition. I’m interested in the inverse, which is the decisions to let people go that aren’t on the ride, aren’t up for what you’re asking them to do. How important is that aspect of rebuilding a culture or transforming a business in your mind?

 

Frank [00:37:13]:

Yeah, and I would say this is true even if you’re not rebuilding a culture and even if you’re not transforming, it is. I always, whenever I talk to a group of CEOs, I say, I will bet you $100 that when you retire, three years after you retire, if I ask you, what’s your biggest regret? I will be able to name what your biggest regret is. And it will always be, I move too slowly on people. I guarantee you. And everybody has always agreed with that. And we know, every CEO, every leader knows that. It’s true. But we also have a culture of respecting people. You want to give people chances and all the rest, but we do. We move too slowly. And overcoming that, but overcoming that in a thoughtful and reasonable way is probably one of the. It, is it not? Probably it is the hardest part of being a leader.

 

Darren [00:38:11]:

So do you answer that question the same if I were to ask you your biggest regret? It was moving too slowly.

 

Frank [00:38:16]:

Yeah, totally. Totally. No. So that’s the fascinating thing. I knew it. I knew it going in. I came from a culture. I mean, the GE culture was. We were required, I mean, required to lay off 10% of our team every year. So there was no hemming and hawing about it. That was something you had to do. And I didn’t think that was a good idea. But I understand the forcing function and why it’s necessary to have a forcing function. Because. And look, it’s true for all of us, right? We’re good at a job until we’re not. And the things that made me really good at the job 10 years ago May not sustain me for being good at the job over the next five years. And it’s really hard to say to someone, you’ve been a big part of our success. You’ve done a terrific job, you’re great, but you don’t have the skill sets that are going to be needed for the next five years or 10 years or whatever it is. I mean, that’s a. That. And everybody every. I mean, when you hear that conversation and you kind of think, well, that’s bullshit. That’s sort of the, you know, that’s a typical breakup kind of comment. But it’s not you, it’s me. Right? It’s not you, it’s me. And yet that’s. That’s why it doesn’t happen. Yeah, but it needs. You need to be constantly pushing yourself for that.

 

Darren [00:39:52]:

And so advice to yourself, if you were to go back in time, or advice to a CEO that knows this is true, but it’s going to inevitably fall into the same trap. Do you have any.

 

Frank [00:40:03]:

So the number one advice I would give to myself was always. It was within the depot context. What I would ask myself is, I would sometimes challenge store managers, district managers, if they had a bad store manager and they knew the person was a bad store manager, but they were arguing for another year for the store manager, I would occasionally say to the district manager, I’m okay with that. We’ll leave the store manager in place. If you’re okay with standing up in front of your other store managers and saying, we will not bonus. Because this person isn’t very good, but we need to give him or her the time. If you’re okay with doing that, then I’m okay with it. And of course, everybody said no, then am I doing that? If I’m honest, do I owe a conversation with my team on, we’re leaving this person in place, but we’re not gonna get to where we’re gonna go where we need to go because of that. And look, I’m not gonna say I was honest with myself 100% of the time. The brain is an incredibly effective tool at convincing us that what’s good is what’s the easiest thing for us to do. But that accountability structure is really important. And when I think about people who externally help CEOs the best value add I got were from external folks who would call bullshit on me when I was saying my team is. I’ve got the team that I need, period, full stop.

 

Darren [00:41:44]:

Yeah, you just described part of my job description, I bet.

 

Frank [00:41:49]:

No, I bet, Darren, that’s it exactly. Because no one around you is going to say that, or if they do say that, everybody’s going to have their institutional reason for saying it. And it may or may not be right. But you come in with a fresh set of eyes and you say, look, I look at this dynamic and really, why are you doing this? It’s incredibly powerful and needed.

 

Darren [00:42:13]:

So I think if all we got out of this conversation was your initial theory of bottoms up, you know, the inverted pyramid and how effective that was and how central it was, we’ve had mined a lot of gold. I’m curious if there are any other big principles or unique ways that you led that you would say, yeah, these were also instrumental to my time there.

 

Frank [00:42:40]:

So the other two big ones, the first, they’re both. I mean, again, I apologize for their being pretty obvious, but it’s interesting how often they’re ignored, which is, don’t tell me that you’re transforming and changing your business if you’re not transforming or changing the way you allocate capital and the way you allocate people. And the number of times I see companies say, oh God, we’re in this big transformation mode. And then you go, well, have they changed where their capex is going or where their expense is going? And you go, nah, that’s changed plus or minus 3%. Not much, but we really transform our mindsets. Well, no, you need to change where the dollars are going and you need to change it more than plus or minus 5%. When you start doing that, the organization first starts paying attention and second, you start getting results because you’re doing something significant. You have to be doing something outside of plus or minus 5%. The same is true with people. So I anthropomorphize organizations a lot and I think most organizations internally know who the real stars are and who the hangers on are. And back to that point of the hard decisions and the hard discussions, that discussion that seems really tough for you as the CEO and the decision that’s really hard on the human resource allocation, the organization’s already ahead of you and you just need to understand they’re already ahead of you. So keep up with your own organization, keep up with who’s really, really delivering and who’s not. But in the End you achieve your results by wise allocation of financial resources and wise allocation of human resources. Not a hell of a lot more complicated than that. But it’s amazing to me how people think they can ignore those two basic facts and still do something significant. They’re not that good for you at Home Depot.

 

Darren [00:44:58]:

What was the. The significant movement? Reallocation of capital or people?

 

Frank [00:45:04]:

So the number one change on reallocation of capital was we stopped building new stores. So before I was CEO we would open 200 stores a year, spend about $2 billion in capex. That was core to how we made money. Cause every new store would generate new sales and you’d have to worry about cannibalization. But that was the economic flywheel of the business was opening new stores. What was apparent was at some point, and it’s funny, I was just talking today with someone who had just been coming from a town in Louisiana called Opelousas, Louisiana. I know Opelousas, Louisiana because that was one of the last store siting decisions we made before I became CEO. And, and you look and you go, there’s no way that there should be a Home Depot in Olusis, Louisiana. We’re just trying to keep building new stores, but it can’t support it. It’s not going to make economic sense. So you had to reallocate capital away from building new stores and into investing in your existing stores into investing in online. And that was probably the most significant decision that we made. In addition to we sold all the businesses that I had spent five years acquiring, which is itself also an interesting discussion with the board. But anyway, so big changes on capital allocation and the similar thing goes with people. We did the same thing on the people side in terms of skill sets we were trying to add with our merchants and supply chain people, but you can’t. That goes back to the it’s not about you part of being a CEO, whatever you think and your intentionality, if you are not communicating that financially through your two big resources, money and people, if you’re not communicating those things, your intelligence and your energy level and your power and all the rest of that, not going to make a difference.

 

Darren [00:47:25]:

You’re doing this in the midst of one of the biggest financial crises in history, I imagine. But I’d love to hear from you. That made it both harder, but perhaps made it easier. There’s always some huge value in crisis and so lessons learned about the difficulties and benefits of making these big choices in the midst of a crisis.

 

Frank [00:47:48]:

I mean I biased on this one, but Much easier in a crisis. Yeah. I mean, you know, organizations resist change for understandable reasons. I, you know, my job is only part of my life. I’d like it to keep muddling along the same way it has year over year over year. When the knife is falling, everybody understands. Yeah, it’s got to change. I may not like the change, I may not want the change, but I understand the need for change. It was the same. I was non executive chair of the board at Delta during COVID but Ed Bastian did. I mean, it’s the same thing. It’s the, I mean, an enormous crisis that I believe that airline met with incredible, incredible thoughtfulness and a lot of things that are easier to do in the middle of a crisis.

 

Darren [00:48:43]:

Yeah, I mean, there’s huge opportunity cost if you don’t do that. I’ve always been fascinated with the question, and it’s a bit of a hypothetical, but in the absence of a crisis, let’s imagine you stepped into this role in 2005, maybe 2004. Right. Two years before the market’s residential construction market starts to soften. Is it feasible to pull something like this often?

 

Frank [00:49:04]:

Absolutely.

 

Darren [00:49:05]:

Okay.

 

Frank [00:49:06]:

We’re always in crisis. They’re just the crises we don’t see.

 

Darren [00:49:09]:

Okay.

 

Frank [00:49:09]:

Right. Yeah, yeah, yeah. It’s always something. I mean, in my mind, every great business is a great business because it comes up, because it has the best solution for a customer problem. That is always a crisis because customer tastes shift, execution capabilities shift, your own skill sets shift. I mean, it’s such a great question, Darren, because my belief is the full commitment to excellence is itself a commitment to a constant series of crises.

 

Darren [00:49:47]:

That’s a great. That might be the tagline for summarizing this. You mentioned one other thing. Terms of like big leadership principles or unique ways of leading. The bottoms up was one. Capital and people need to match if you want to transform. And then there was another one you were alluding to. You said there were a couple more.

 

Frank [00:50:08]:

On principles of leading. Yeah, I mean, I think leaders, and this goes a little bit to leading from the bottom, but it’s true. Just generally, I think leaders undervalue the significance of their interactions with the team. And I mean, throughout the entire organization and presence is a big. There are leaders who’ve been successful who. If you ask the floor of the store or the floor of the factory who the CEO is, they’d have no clue. But I don’t think that’s a. I think that’s an exception rather than the rule. I think the rule is the Rule is as a leader, if your organization believes that you’re invested in its success and I as an individual believe that my CEO is invested in my success, as the phrase goes, I will invest in his or her success. But it’s a contract in effect. And before you get to all your other grand visions as a CEO or grand purposes as a CEO, in my belief, your first and highest purpose is to deliver a successful employment experience for your employees. You want to be invested in their success and you want to be invested in their success not only because that’s the right thing kind of structurally to do, but because it’s in your self interest. This isn’t just a feel good thing to do, it’s a bedrock principle. You want your employees thinking, boy, this person’s going to fight for me and cares about me.

 

Darren [00:51:59]:

Yeah. This idea of a contract that we’re implicitly making with every employee is such a powerful one that there’s got to be a mutual exchange of value. We’re offering you an extraordinary experience or career development or whatever it is and we have an expectation in return. I think it’s just something so important for leaders to embrace. You said visiting stores was one way of demonstrating your commitment. Were there any other things that you did where people are like you’re really invested?

 

Frank [00:52:32]:

So partly, I think it’s. Again, I don’t want to be saying too many obvious things, but partly it’s compensation. Right. I mean we very proud of the fact. I mean the way I look at it, I could visit stores 24 hours a day, but if I don’t have a way of expressing why this is financially good for the people on the floor of the store to work at Home Depot, I mean really, that goes back to the. It’s not about me. Yes, there’s a symbolic significance, but far more important is, I mean hugely proud of the fact that, that we made assistant store managers, which I mean just recently Walmart joined us on this assistant store manager. Our assistant store manager at Home Depot get stock. They get paid in an investment in the company that has been a great investment over and above their salary. That’s a big deal. We do success sharing, we look at stores and as stores succeed, they get more money. We want to pay our people well and we want them to progress within the structure of the company to be the most successful people in their families. And that’s a. I mean, I think without that you can get too enamored with the theater of it. There’s just the. Can you look yourself in the face as the leader and say, for all those people working in your organization, is this the best use of their blood, sweat and tears in terms of what’s going to pay off for them and their family in this industry? Period, Full stop. And I felt like I could say that to the people at Home Depot and that was important.

 

Darren [00:54:21]:

Some of these things were they changes you made when you became CEO of the day. Okay. And it sounds like they were unique in your industry. Some people are catching up to that at the time.

 

Frank [00:54:30]:

Yeah, yeah, People are catching up. Yeah, yeah.

 

Darren [00:54:33]:

Amazing. And I couldn’t agree more. I want to bring us home and maybe turn to the question of, I don’t know, legacy may be a strong, too strong a word for you, but you’ve now had a decade plus to look back at these eight years of being CEO. I wonder, you know, anything that we haven’t already talked about that would be like a big learning for you. And then also, what do you hold as the thing that you’re most proud of?

 

Frank [00:55:04]:

So the big learnings for me, incredibly difficult jobs, but actually pretty basic principles. I mean, it’s pretty straightforward principles. I love the Jim Collins good to great. He said every company needs to be able to answer three things. What’s it passionate about, what’s it best in the world at? And what drives its economic engine. And I honestly believe that if you give enough thought to that and really connect yourself with those three concepts, things tend to go well and on the pride. So for me and Home Depot is a little unusual in this way. Not every company has this kind of an opportunity. So people don’t start in retail with the idea of making retail a career. So the average entry employee at Home Depot who’s working in a lot or a cashier or something like that is not saying, oh, I found my life’s work there. Lots of different stories on how they ended up doing that. But for the people who like it and invest themselves in it, the opportunities are amazing. So the most fun part, and this plays itself out all the time, is someone who started as an hourly associated Home Depot and is now the single most successful person in his or her family by a large margin because they work themselves up from being a regular store associate, to being a department head, to being assistant store manager, to being a store manager. And there’s just an enormous. I mean, it is the American story that plays out. It’s the American dream that plays out, honestly, every week in a store at Home Depot and in other retailers. It’s so fun. It’s so amazing and so humbling because you just get people who work their asses off and then get success. And that’s great. You just go, that is phenomenal.

 

Darren [00:57:18]:

It’s a great way to wrap us up. And I always ask the question, and I want to offer this to you. Anything that we haven’t covered that you want to close with or you’re great.

 

Frank [00:57:30]:

Okay? No, you’re great, Darren. As I say, we’ve had. For your listeners, Darren and I have had the opportunity to work, work together on some things. And you’re smart and insightful and thoughtful and, and, you know, just profound person. So thank you for the opportunity to talk with you.

 

Darren [00:57:48]:

Very kind of you. This was exceeded my already very, very high expectations. I couldn’t be more appreciative, Frank, and for this conversation, but for your contributions to what it means to be a CEO. So thank you for the time. It’s been great to catch up, a lot of fun.

 

Frank [00:58:04]:

Darren, thank you.

 

Darren [00:58:10]:

What a wonderful conversation. Frank’s leadership challenges one of the most deeply held assumptions about the CEO role. That authority flows downward and that gravity does the work for you. Instead, Frank offers a far more demanding and far more honest frame that the CEO sits at the bottom of the organization, bearing the weight, pushing purpose upward and earning influence through service rather than position. I look forward to being with you on the next episode of one of one. Until then, I hope you live and lead with courage, wisdom, and above all, with love.