How UPS CEO Carol Tomé Helped Home Depot Grow 450%

My husband and I moved to Atlanta, Georgia in 1992 as a result of my work. I had just completed an IPO for a paper and packaging company called Riverwood International at the time, now known as Graphic Packaging. And as a result of the IPO, they asked me to come down and join the company. And I did, and my husband Ramon followed me in the early 90s. I had never heard of Home Depot at that time. Home Depot did not exist out in Colorado where we were living and my husband didn't move with me originally. So I would commute between Atlanta and Denver, and that's a long commute. So I wouldn't go home every weekend. And on the weekends where I didn't go home, I would drive around Atlanta getting to know the city. One day I was driving down the street and I saw out of the corner of my eye a parking lot filled with cars and a store with a bright orange awning. I'm like, I wonder what that is. And I love to shop. So I drove into the parking lot and walked into my first Home Depot store and I was blown away. The merchandise was piled high, the associates had aprons on and they were having fun with the customers and I'm like, this is just way cool. So I walked the store for about two hours. Just loved the retail experience. That night I called my husband Ramon, said, you know, there's this company. It's called The Home Depot. I don't know much about it, but we should buy stock. So we did. And then he moved to Atlanta. We bought our first house and we're home DIYers, you know, we love to do it ourselves. So we were in the stores every weekend. We loved Home Depot. Then one day, I'm happy at work and I got a telephone call from a search firm who said, you know, Home Depot is thinking about going outside of the United States. And they've never done that before. The company I was working for had a global presence. They said they'd really like to talk to you about joining their team and helping them grow globally. I'm like, me? You know, I love the store. I'm a shareholder. As happy as I was in my existing job, I'm like, okay, I'll go over, I'll talk to them. So here's the true story. I had my first interview and after my first interview, I'm like, I don't think this is for me. I mean, I love the company, but I don't know if I'm going to be challenged enough. The cash pours out of the stores. It's got a great credit quality. I was working for a company that was junk rated at the time. I'm like, I just don't know if I'm going to be challenged enough. So they said, do you want to take a minute before you tell the company no? I said, well, I probably should take a minute. So they said, why don't you go meet with one of the founders, Arthur Blank? I'm like, all right, I'll go meet with Arthur. And so Arthur is another retail icon, and he said to me, Carol, we don't know how high is up for you. That's for you to show us, but we will give you every opportunity to reach your highest potential. I'm like, oh, every opportunity to reach my highest potential — sold. And so I joined in 1995 when the company had like just 400 stores and revenues of just $14 billion. And I'm so very glad that I didn't say no because it's an incredible company and I had an amazing experience there.

So they hired me for a particular purpose. They wanted to grow outside of the United States and they wanted to actually increase their financial acumen because for so long everything that Home Depot touched just turned to gold. But the company was maturing and they wanted to increase their financial acumen. And every time I would open my mouth and talk about things like economic value added or return on invested capital or we should be hedging the Mexican peso, they would just look at me like, who are you and what are you talking about? So I'm like, oh dear, this isn't going to work. And Arthur really had such a big impression on me. He's like, Carol, you got to decide if you really like retail. And I'm like, I'm an amazing consumer. I shop all the time. I need to learn retail from the other side, from the merchandising side, from the supply chain side, from the customer service side. So I would put on an apron and in my free time, evenings, weekends, I would work in the store. And I learned so much about the business and fell just in love with the business. Now, I'll tell you the truth. I tended to stay out of the electrical and the plumbing aisle because I didn't want to have anyone burn down their house or flood their house because of advice I gave them. But I was really, really good in the gardening aisle. I was great in the gardening aisle.

My learning is that the best finance people are business people first and finance people second. I knew the business inside and out. All the dials that you could turn to create value was really focused on capital allocation and appropriate capital allocation because there can be strategic adventurism that doesn't create any value and we see that happening at lots of companies. I was laser focused on how we allocated capital. And one thing that Frank Blake did when he became our CEO is he added strategy to my portfolio and I think that makes so much sense to have strategy and finance aligned because it's so much about how you allocate capital. So I think that helped. I also walked in the shoes of our associates. Home Depot's leadership construct is an inverted pyramid where the leaders of the company are at the bottom of the pyramid because they bear the weight for the actions that they take and the decisions that they make. They bear the weight to free up the associates to take care of the customers, because Bernie Marcus said if you take care of the customers everything will take care of itself. And I actually believe that to my core. What Peter Drucker said — culture eats strategy for breakfast — I think that's right. If you've got a culture where you put people first, you're serving them right, leaders second, people first, it makes a huge difference on the customer experience and the financial results.