Bob Nardelli is Watching

Usually, I'm told, Nardelli works all day at such events, digging or raking alongside the associates who man the cash registers and garden centers. "Part of the importance of it for him is putting the sweat equity in," says Michelle Nunn, cofounder and CEO of the Hands On Network, an umbrella group promoting volunteerism that works closely with the company.

But today, Nardelli, arriving after keynoting the National Conference on Citizenship, is playing the role of brand ambassador. Hopping out of a chauffeured Lincoln Navigator and quickly pulling on an orange Home Depot T-shirt, he works the crowd like a politician, doling out hugs, interviewing passersby, and even signing T-shirts for excited staffers who walk away, eyes shining. He helps in the "board cutting" ceremony that's part of every Home Depot project and new store opening (a commemorative piece of lumber is sawed in half) and leads the crowd in a spirited, if cheesy, chant.

High-profile public service, of course, has long been a standard part of the CEO's Kabuki dance. But Nardelli, who has significantly boosted Home Depot's commitment to volunteerism and chairs a national service group of business leaders, sees it as both the right thing to do and smart business. It unifies employees, helps the communities Home Depot serves, and builds brand awareness. "Customers are looking for more associations," he says. "People who volunteer are usually your best associates. If they are willing to take care of their communities, they're able to take care of customers."

And even as Nardelli walks the park, he's working it. He pulls aside Congressman Tom Davis (R-Va.), who chairs the committee analyzing the government's response to Katrina, to remind him how Home Depot can help with reconstruction. And as an associate shows him the disease-resistant elm trees he is planting, the wheels start turning. "We have the largest garden club in America," he says, calling out to a regional vice president. "Let's look at broadening our offerings" to include the elms.

The Messenger

5:30 p.m. / Monday
En route to Atlanta on the corporate jet

Nardelli, having washed off the sweat from the park, settles into a leather seat, nibbles on a plate of nachos, and morphs from public image-maker to high-level strategist. Although he was a guard on his college football team, he is a bit shorter and his voice a bit higher than you'd expect, with the twang of the Pennsylvania coal-mining town where he grew up. (Nardelli followed his dad to GE after getting a BS in business, topped off by an MBA.) Rather than trying to intimidate you, he'll try to disarm you. "Turn that tape recorder off," he tells me. "I want to know more about you."

Eventually, the tape recorder goes back on, and Nardelli explains his corporate vision--one that is so simple it can be expressed on one page, and one that hasn't changed since he arrived. It consists of one goal--"To improve everything we touch"--with three objectives: Enhance the core with innovative merchandise, modern stores, and good leaders; extend the business through new services and channels; and expand the market by moving upstream and overseas. "What I love about it is the simplicity," he says. "With 325,000 associates, you want to have something that is easily communicated and actionable." Nardelli is repeating a mantra he has chanted for five years running. He is playing the role of visionary and messenger--two skills critical for any leader.

Translating that one page into reality, however, was a hell of a task. Nardelli arrived at Home Depot from GE--where he'd expanded GE Power Systems from $5 billion to $20 billion in sales--just days after Jack Welch told him that he'd chosen Jeffrey Immelt to succeed him. Shocked and disappointed, Nardelli jumped when a recruiter approached him about becoming Home Depot's CEO. After years of stunning growth and one of the best stock rides in history, the retailer looked solid. But termites were gnawing at its foundation. Home Depot, squeezed between Wal-Mart and Lowe's, saw same-store sales and profit growth start to sputter. The celebrated power given to store managers created erratic performance and sacrificed benefits of scale. Technology was so poor that Nardelli couldn't even send an email out to the stores. He resolved to impose GE-style discipline on a place that had until recently thrived in its absence.

Nardelli's changes rattled company vets, says Bernie Marcus, Home Depot's cofounder: "Many didn't like the discipline."

In his first two years, he made huge moves, such as centralizing merchandising, launching a massive $2 billion technology project, and instituting a new performance-measurement system where decisions on talent and hiring had long been made ad hoc. Naturally, there was discontent. Spooked by the rapid changes, investors sent the stock price down 50%. And the famously freewheeling store managers recoiled at Nardelli's vision of order. Says Bernie Marcus, Home Depot's cofounder and former CEO, who remains a big shareholder: "A lot of the entrepreneurs didn't stay. Many didn't like the discipline too well."