I keep an eye open to anything significant in the housing industry because my work with architects doing SEO/SEM/Web Analytics.
In Web Analytics ,I find, that it's important to understand what's happening and why.
Today, the NY Times article suggests Robert L. Nardelli, the chief executive of Home Depot was forced out.
"…In its statement, Home Depot said that Mr. Nardelli and the company’s board “mutually agreed that Nardelli would leave his position.”
He will receive about $210 million in compensation from the company, including the current value of retirement and other benefits he was already entitled to, the statement said. "
I don't feel sorry for the guy - he's made a ton of money and I can't imagine anyone, save Steve Jobs, entitled to make that much money - and certainly it was noticed earlier this year. In fact, Seth Godin has a pretty good explaination why "Bob" had to go.
"….
He probably got fired for insulting his investors (his annual meeting will go down in history) and for alienating employees and customers. He appeared to go out of his way to annoy customers, especially. There are very few companies that don't even bother to write back if you write to the CEO. "
Here's the thing. In addition to getting fired, Bob got two hundred and ten million dollars in severance. (Try this: $210,000,000.00)
"……..My best advice is that if you can get a severance package like that, you should go ahead and get fired. Failing that, though, I'm at a loss to figure out why you would deliberately ruin a pretty decent brand by aggressively annoying all your constituents."
The New York Times article goes on to say:
"….The unexpected departure of Mr. Nardelli caps a tumultuous year at the company, the nation’s second largest retail chain after Wal-Mart. Shareholders had begun to openly question the company’s direction and Mr. Nardelli’s leadership, and the board was under considerable pressure to make a change.
Within the past month, one activist shareholder, Relational Investors, said it would propose that an independent committee evaluate the company’s direction and management."
But the real reason, the real analytics here - is a strategy that Mr. Nardelli put in place based on an expanding housing market that's now contracting rapidly - When the market was expanding - they could not give him enough money …… the guy has money coming out of him…but the same people who gave him the money - want him to take his leave.
The Strategy was:
"…..Under Mr. Nardelli, the Home Depot shifted its focus somewhat away from selling lumber and lights to do-it-yourself consumers and more toward providing pipe and cement to contractors and professionals. During his tenure, the chain spent $7 billion beefing up Home Depot Supply, the unit that caters to the building trade.
But the strategy did not improve the retailer’s share price, frustrating investors and Wall Street analysts. In recent weeks, Home Depot’s stock has been trading at $40 a share, about where it was when Mr. Nardelli took over. (News of his departure led investors to bid it up sharply in early trading today.)
All of this is really about home builders and Do it yourself'rs not building as much.
And here's the proof:
"……A slowing housing market, which has discouraged builders from buying supplies, has compounded Home Depot’s troubles.
Mr. Nardelli has not been shy about discussing the issue. “We have a close relationship to home builders,” he said in a recent interview, “and I have never seen them so aggressive to pull back.”
The slowdown, he said, “impacts us directly.”
Yes it does. I'm seeing about 15% lower sales selling house plans than a year ago. People are not building as much. It's the same target audience - those who build their houses need piping and construction material (both industrial builders and smaller, DIY's).
From the analytics standpoint this real life example and event (Robert L. Nardelli, the chief executive of Home Depot forced out), the action (angry board that is worried their Home Depot Stock Price is stuck in the ground) and the real cause - a failing strategy that depends on housing expansion to succeed need to be represented as a chain of events, or causation.
When you notice a problem the analytics of a site uncovers - need to dig deeper to find out the real reasons - the reasons behind what's changing.
A lot of times, it's the overall strategy that's wrong. It's also clear that a strategy needs to change when circumstances change.
