The success Home Depot built

As part of Arthur Blank’s mentoring role as Goizueta’s first Distinguished Executive in Residence, the co-founder and recently retired co-chairman of The Home Depot shared his management philosophy during a down-to-earth talk this semester with more than 100 Goizueta students.

Reminding his audience that retailing is a highly competitive arena, Blank revealed he had only one saying in his office, and he looked at it every day: “There is no finish line.” In retailing, “you have to get up every morning and run scared.” To outsiders observing a Home Depot management meeting, “it might look like the company wasn’t doing well,” Blank said, but he believes retailers should spend “ninety percent of their time solving problems,” not patting themselves on the back.

Blank is certain that one thing above all others led The Home Depot to become the fourth largest retailer in the world: Creating a strong relationship of trust with customers, associates, and shareholders. For instance, he maintains, “eight-five to ninety percent of our best ideas came from our sales associates. We subordinated our [management] ideas to theirs.”

Blank also contends that The Home Depot “isn’t in the transaction business—we’re in the relationship business. Solve a customer’s problem for fifty cents rather than with some fancy, expensive product, and you’ve created trust. Sales associates began to be proud when they could solve problems for less.”

Ending with a piece of hindsight financial advice for his young audience, Blank shared that if someone had invested $12,000 in The Home Depot during its 1981 IPO, that stock today would be worth approximately $17 million.—Perry Mitchell