Office Depot CEO Gerry Smith has seen the future and it is more than desk chairs, toner cartridges, and break-room supplies. Under the leadership of Smith, who joined the company in 2017, Office Depot has launched Workonomy Hub, a co-working space at its Los Gatos, California, location. In addition to the requisite couch, desk, and high-speed internet, Workonomy spaces feature dedicated business services and IT support, which the company hopes will appeal to small-business owners and freelancers, given that 43% of today’s labor force works autonomously in some capacity.
Smith, a tech-focused executive who has held leadership positions at Dell and, most recently, Lenovo, recognized the need for operational change, and the shift has generated three consecutive quarters of sustained growth, providing the retail-is-dead naysayers something to ponder. “People thought the e-tail giants were going to put us out of business, and that’s not the case,” Smith says. “Our results this year demonstrate that our transformation from old-school retailer to omnichannel business platform is starting to take hold.”
The following is an edited excerpt from a conversation with Smith, in which he touched on reaching untapped markets, relying on data analysis, and the challenges facing the company.
When you started at Office Depot, how did you approach the business, given the dire picture for retail?
Gerry Smith: I really took a tech approach to the business. In tech, you have to move fast or you die. Office Depot was on a downward trajectory, but when I looked at the assets of the company, I asked, “Is it recoverable? Can we reverse this trend?” We built a whole new leadership team, put a very defined and clear strategy in place, and created a customer-oriented culture. I have a motto that’s called “Win every day,” and I’m always pushing us to go faster. Those are the two things I’m known for in the company—really putting in a speed culture, as well as a commitment culture that when you commit to a number, you must go deliver, you must go win, and always with the utmost integrity.
When a new CEO takes over, often times an early focus is changing the culture of the company. How have you succeeded in remaking the culture of Office Depot?
GS: Establishing the right culture is critical to our success and a journey that we’ve fully embraced. With my leadership team, I developed and launched the 5Cs of Office Depot’s culture—customer, commitment, caring, change, and creativity—and customers are at the top of that. We weren’t tracking customers; we didn’t think we needed to. Now we do that on a daily basis. We have 29 million customers and one of the reasons I took the role is I knew we had a lot of customers and people buy lots of office supplies for their business. But now we’re going to leverage that in a much broader scale going forward. That was the first hallmark of the culture.
Then I went to commitment because we had to start delivering results. In the past, the company used store closings and other things to drive non-structural types of earnings, and it was important that we started getting sustainable earnings through margin and sales growth. That’s why the “Win every day” motto matters.
Caring is our third, and that’s important. I think there’s a synergistic effect—when we give back to the community, we become part of the community. We want our general managers of our stores to be out in that community. We think it’s going to make an impact long term. We do have a responsibility to give back. And we’ve made it one of our key tenets.
Then I brought in what I call the change culture. We needed to embrace change as an organization and drive that change fast. We know who our competitors are, and we needed to reposition the business quickly to best leverage our assets because our only options were either change or die.
And the last one is being creative. You must be innovative. We must deliver innovative products and solutions for our customers and also innovate in our business model. Retail is a massively important part of our business, and we are not abandoning it, but we are not just a retailer. Instead we’re transforming our retail footprint and experience to win in a digital age. We are an omnichannel distribution platform focused on serving businesses of all sizes and anyone with a dream to succeed. I’m going faster in B2B, I’m going faster in e-commerce—I want to drive all three channels to sustainable, profitable growth.
Was the plan always to target people in the suburban or exurban market who may not have access to a WeWork or other co-working spaces?
GS: Our strategy is to go where our customers are—into markets where people value community and the convenience that our unique omnichannel operations provide. Customers must have the ability to shop online, but the data shows that the majority of people still want the ability to go into a store. They want the local support our friendly associates provide for both the products we sell and the Workonomy services that support their business. To deliver on that promise, we’re investing heavily in training for our associates so they will better understand how these new service offerings can support our customers’ needs.
In middle America and suburbia, where we’ve always done well, there’s still more small businesses than there are big businesses. And of our 29 million customers, a big chunk of those are in college towns or mid-size towns across the U.S. that use Office Depot for products and services that support their business or education goals. Why in the world can’t they use the whole Workonomy Hub? We have a lot of parking spaces and bathrooms. Those can be hard to find, right? How many times have you gone to that national coffee chain where many people work out of and it’s packed, yet it’s hard to park, and there’s only one bathroom? Workonomy Hub will provide everything you need to get the job done in one location.
Your focus on customer service feels like it’s been instilled in you from day one.
GS: I grew up in the Northwest, and Nordstrom [the Seattle-based department store chain] does a great job at customer service. That’s always been ingrained in me: How do I give that type of experience to our customers? Because I want them saying, “I’ll go back to Office Depot because someone took great care of me and I got my print job done in record time.” Or: “They found that component I needed.” Or: “They helped me de-bug my PC.”
What do you see as Office Depot’s biggest challenge going forward?
GS: I think our biggest challenge is execution. We are undertaking a massive pivot. We know it’s hard, but we must execute now. When we do make mistakes we learn from them and we recover quickly. All our analytics are now centrally managed, and we look at all of our marketing dollars on a very strict ROI type of methodology. We’re using AI and machine learning to solve complex problems. We’re spending fewer dollars to obtain larger returns by using data. And anywhere I can find the ability to automate and drive efficiency we’re doing it. That’s really where I think the challenge is: There are all kinds of pressures economically out there and we’ve just got to keep automating, keep scaling, and keep innovating and focus on our day-to-day execution.
This article was created for and commissioned by Office Depot.