Worcester Business Journal

www.wbjournal.com February 16, 2015 • Worcester Business Journal 29 Now, Staples, based in Framingham, is about to buy Office Depot, its chief rival, and consolidate what had been three companies into one giant firm with projected annual revenue of $39 billion. That could be enough to vault Staples into the Fortune 100 and likely make it the top public company based in Central Massachusetts. How long it stays at that lofty a level will depend on how effectively Staples can expand beyond its narrow niche of office supplies. The survivors in other niche retail segments — such as Best Buy (electronics) and Barnes & Noble (books) — may not be thriving, but they have taken steps to broaden their appeal. The bottom line is all these retailers are finding their stiffest competition not only online with Amazon and others, but from massive all-purpose retailers such as Wal-Mart and Target. Staples CEO Ron Sargent, in announcing the Office Depot deal, said as much, when he said Staples will be able to "more effectively compete in a rapidly evolving competitive environment." (He also cited another benefit, one that's generally assumed when two rivals become one: finding at least $1 billion a year in cost savings within three years after the deal closes.) "This is a transformational acquisition (that) enables Staples to provide more value to customers," Sargent said. The retail landscape has transformed as well, and the road ahead will certainly have some potholes for Staples to avoid. During the week the merger was announced, many experts panned it, and others speculated the deal may not pass muster with the Federal Trade Commission because of antitrust concerns. "This merger benefits the major stockholders and Wall Street," industry analyst Frank Riso wrote on RetailWire Blog. "The only other retailers left in the segment are regional and single-store owners." That underscores the increasing power of electronic commerce and the changing habits of American consumers, who are more likely to let their fingers do the shopping from the convenience of their couch or, crunched for time, buy everything they can at the likes of Wal-Mart, Target or Costco. To be fair, Staples already holds a strong position on the Web. The website Internet Retailer ranks it third among U.S. firms in Web sales, behind only Amazon and Apple. Office Depot ranks ninth. Cathy Hotka, another retail industry analyst, summed up the Staples-Office Depot deal on RetailWire Blog with this: "I'm not certain that we need even one office supply chain with physical stores. 2015 is certainly going to be the year that multiple brands drop from view. How long will the new Staples be viable?" That, indeed, is a good question. The advantage for Central Massachusetts is that it stands to emerge as the home of the surviving entity, which is important for the thousands of employees at the Framingham headquarters and their families, as well as the many other area businesses who serve as vendors. How Staples continues to transform itself will be interesting to watch, and of great importance to this region and the retail industry. n Staples, Office Depot and the changing face of retail E D I T O R I A L The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Rick Saia, editor, at rsaia@wbjournal.com. Letters can also be faxed to 508-755-8860. R emember CompUSA and Circuit City? How about Borders or Office Max? They're names out of the not-so-distant retail past; "big box" stores that focused their business model on delivering goods in a particular niche. CompUSA and Circuit City, which sold computers and consumer electronics, are now part of online and catalog retailer TigerDirect. Borders, which had hundreds of bookstores across the United States, filed for Chapter 11 bankruptcy protection in 2011, and Office Max was a competitor to both Staples and Office Depot before the latter bought it in 2013. Take a walk through your local mall this summer and you'll be unlikely to see that Radio Shack store now that the long- time retail chain, founded in 1921, has filed for Chapter 11 bankruptcy protection and announced an aggressive shuttering of many of its stores. B usinesses need more progressive leadership. But how do today's leaders become progressive? More than ever, the business world is in dire need of progressive leaders to help develop cultures that encourage openness and authenticity among its people, while developing consistent communication forums that provide feedback and support inside and outside the organization. It starts with knowing yourself and using that as a starting point. Progressive leaders work from the inside out. When they're faced with business challenges, they look at their own capacities and assess where they need to change, and develop their own inner qualities. They view problems as opportunities to expand their own inner development to further their own purposes and the purposes of others in and beyond their organizations. Progressive leaders, such as Cisco Systems CEO John Chambers, consider the welfare of their workers and their customers first. While Chambers is a self-proclaimed "command-and-control person," able to have 67,000 employees turn right or left, he also knows that style is passé, choosing instead to foster a progressive leadership style, with more collaboration and teamwork. He realizes that caring for his team members' well-being enables them to develop a sense of purpose and meaning that surpasses the quarterly earnings reports. Progressive leaders such as Chambers have nothing to prove. They're only interested in creating an environment where their people and customers can access and develop their own dreams and inner potential. Emanating a sense of confidence and strength that arises from being settled with themselves, progressive leaders have poise. They convert into collaborators, teachers, leaders, friends and mentors. They become examples of warm heartedness amid a cold business world, operating from a stance of wisdom, developed from accessing their own, and others', struggles in business and life. They're well rounded, curious about how problems become problems and how people can overcome them from transforming themselves. Progressive leaders seek out mentors to act as thinking partners assisting them and their organizations on their path by conducting visioning and planning processes, auditing and appraising culture and resources, assessing non-winning mindsets that contribute to losing strategies, managing change, training in "how thinking works," and in becoming their own coach. It is only through genuine communication that leaders can articulate the nuances of the future and invite others to participate in achieving their goals. Progressive leaders are able to look outside their immediate workplace challenges and encompass a greater view where the benefits are broadened far beyond the leader or company. By acquiring progressive leadership one creates more than profits, bringing forth change and immeasurable returns, as Chambers has. To become a progressive leader you must push yourself to be creative in your thinking and introspective within your organization, striving to see how your passions in your work can create greater value for the world. Profits and growth are about performance, and performance is about people, and successful people care about a good greater than themselves. n Marcus Goncalves, associate professor of management at Nichols College in Dudley, is chair of the school's International Business Program. Progressive leaders see beyond themselves BY MARCUS GONCALVES Special to the Worcester Business Journal V I E W P O I N T Marcus Goncalves Staples and Office Depot * - Staples revenue based on 12 months ending Nov. 1, 2014; Office Depot based on 12 months ending Sept. 27, 2014. Source: Staples Inc. Staples $22.7 billion 116 2,024 Office Depot $16.2 billion 127 1,996 Annual Distribution revenue* facilities Stores How the two office-supply chains stack up now that Staples has agreed to buy Office Depot for $6.3 billion.

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