C’est la fin
by Steve Hilleard and Heike Dieckmann
As the office products industry bids farewell to one of its longest-serving – not to mention most charismatic – executives, OPI catches up one last time with Eric Bigeard, the man who turned Lyreco into a much envied truly global operator. We have talked to Bigeard many times over the years, but with the shackles of discretion perhaps thrown off a little more than usual, here’s the chance to enjoy a frank and free interview with the Frenchman who says (to quote Edith Piaf), "Je ne regrette rien". Well, almost nothing…
OPI: Let’s start with your successor. What can you tell us about Philippe Martinez?
Eric Bigeard: Philippe has a very strong sales and marketing background and a very strong international background as well. He’s also been working for Xerox for the last 26 years, and this shows that he’s pretty stable. He started out as an account manager, so it’s a fairly typical Xerox profile. He headed Italy and had a couple of assignments in Xerox’s headquarters in London, one being in charge of European customer service, one as Director of Strategy for Europe. Most recently, he’s been Managing Director of Xerox France.
OPI: What were you looking for in Lyreco’s new leader?
EB: Other than the prerequisite business-oriented qualities I’ve just mentioned, I think the company needs a new pair of eyes. Philippe will bring change, but what he also brings, I believe, is that he shares a very similar culture to the culture of Lyreco. We need to maintain the very strong company culture.
OPI: Philippe’s experience seems largely confined to Europe. Is that a signal of Lyreco’s focus moving forward?
EB: Not necessarily. The vast majority of our business is in Europe – that’s a reality. And, to be honest, it is fairly difficult to find people who’ve got true global experience. We were very keen when searching for the future CEO to find someone with a true international background and I really think that, in Philippe, we’ve found that.
OPI: Did it disappoint you that none of your senior management team stepped forward to apply for the role?
EB: As the date of my departure was getting closer, the question of my successor was clearly very high on the agenda and I talked a lot with Georges about the qualities of this individual.
And yes, in principal it disappoints me. Lyreco has always favoured internal candidates. We have a stable management team and, at the end of the day, the fact that they have worked closely with me for a long period of time probably worked to their disadvantage in the succession process. We have become used to the same processes, principles and habits and I think that we really need a fresh perspective on how we do things. I didn’t realise that early on in the process.
OPI: Do you think your departure and the external appointment will inevitably lead to some members of your senior team deciding it is the right time to move on?
EB: It’s no secret that Anders [Kristiansen] left for this reason. Other than that, I don’t think anyone is going to leave suddenly.
OPI: Did you have Anders in mind as a replacement then?
EB: He was a potential replacement and he has the abilities to do it, but I think the supervisory board decided that an outside candidate would be a better option at this stage. So Anders not being chosen most probably led him to go outside and that didn’t come as a surprise.
OPI: Did his destination come as a surprise?
EB: His destination came as an utter disappointment and surprise. But that’s life.
OPI: We’ll skip off Lyreco for a moment. What are your impressions of the new OfficeMax CEO?
EB: I met Ravi in November at the OPI Global Forum in Chicago for the first time. Ravi is a very nice individual. We share the same international interest. Our companies are working very closely together to service our global customers. Ravi and myself both know how crucial this partnership is for our customers and we are ready to keep working on it.
OPI: Do you think he’s the right person to grow that business?
EB: I think so. He is probably going to bring a new dimension to the company. OfficeMax’s business was shaken up quite dramatically about seven or eight years ago and rebuilding a company [after Boise Cascade bought ‘Max] takes time.
I am obviously far more familiar with the contract side of the business, and I think Jim Durkin and his team have done fantastic work in the last five years.
OPI: Steve Odland has finally left Depot. Did that surprise you?
EB: On a personal level, Steve and I have always had a very good relationship. But, of course, he’s had many critics, about himself and about his attitude.
To be quite blunt, I think the shareholders of Office Depot have been pretty patient so no, Steve leaving didn’t come as a surprise. If anything it’s surprising that it took so long. But then again, we’ve seen other people in the business survive a long time.
OPI: So you’ve not had a call yet from the head hunters?
EB: (laughs) No, I haven’t. I’m not sure they would be interested in me and I am certainly not interested in them. If I had wanted to stay in an executive role I would have stayed at Lyreco.
OPI: Whoever comes in now has got quite a job to do at Depot. Do you think the company can regain the ground it has lost or is Staples too far ahead?
EB: My personal analysis has been the same for the last two years about Office Depot. I think from a shareholders’ perspective, they need to dismantle that company – the individual assets would have more value if they were sold off independently.
OPI: The sum of the parts is greater than the whole?
EB: Sure. I don’t know when the board is going to announce the new CEO and what type of operator it will be, but I can only imagine that taking the company apart has been a big part of their thoughts. If I were on that board, that’s certainly what I would demand.
OPI: When I last interviewed you in 2007, you had a fairly strong relationship with Staples. Now they’ve become your primary competitor. Is that a regret?
EB: Corporately, the relationship has changed big time. The relationship with Ron Sargent is still a very friendly one as we’ve known each other for many years.
OPI: Even though he’s just stolen your Russian ally?
EB: Again, this is corporate stuff. We take customers from each other on a daily basis. In fact, most recently, they have taken some of our executives too, which seems to be the new Staples trend (smiles). As far as the partnership in Russia is concerned, contrary to what the press release said, we had already stopped our partnership in August, so there was nothing "funny" going on with Staples moving in.
The partnership with Pragmatic had been in place for many years, however, and we really tried to find a way forward. Like most companies, we have some pretty strong ethical guidelines and I personally find it very difficult to recommend to our trusted customers a company that does not necessarily meet these prerequisite ethical standards, even in a difficult market.
OPI: Surely the standards of Staples must be even higher than those of a privately-owned French company.
EB: I’m sure the standards of Staples are very high. I am not convinced at this point in time, however, that they are aware of what’s happening.
OPI: You’ve certainly alerted them now! Is there a fear that Staples will try to pick off some of your other partners?
EB: We’ve had a very smooth run with all our partnerships (including Staples when it was a partner), with the exception of Pragmatic, which has always been a "troubled child". We even added a new partnership with Askul in Japan. This is far more strategic and has far more meaning for our customers than Russia.
OPI: Let’s talk a bit more about you and your company. Three years ago, your sales were €2.3 billion ($3.1 billion) roughly, growing at a high single-digit rate.
EB: Yes, 2007 was a good year.
OPI: We’ve come through a nasty recession – how has that affected Lyreco?
EB: I have been with the company for 30 years and I have never experienced a year like 2009 in terms of this challenging economic environment. Business for us decreased 10 percent in 2009. Over the first six months of this year, we’ve been slowly improving – revenues are still down, but we’re on the up again in the last months of 2010.
OPI: So your ‘go go grow’ strategy this year got off to a bad start.
EB: Well, it certainly started slowly but I think we should have a pretty good end of the year of ‘go go grow’ for Lyreco and there will also be the impact of our recent acquisitions in Finland and in Spain.
OPI: Where’s the growth coming from? Some of your more established markets such as France and the UK seem to have ground to a halt.
EB: France is close to flat. We’re growing in Germany, in Central Europe, in Italy and in Benelux. All those combined represent a big chunk of our sales.
OPI: Do you think that flatness in France will result in further consolidation among some of the larger French dealers?
EB: I think the economic environment in general is favourable to further consolidation – in France and beyond. We’ve seen many operators disappear in the last 18 months. I’m pretty convinced that ten years ago these companies would not have disappeared; they would have been acquired.
But we’re going to see more disappear and we are going to see more consolidation with the acquisition of good-sized local players in the various markets where we are present.
OPI: You’ve been very quiet in that area. Is Lyreco going to be a part of this trend?
EB: I indicated to our teams in October 2008 that we would refocus our development strategy in the markets where we are already present for as long as the economic environment is challenging.
That said, we announced the acquisition of Officeday in Finland in August. It’s small in the overall scheme of things, but significant on a local level as it took place in one of the European markets where we weren’t strong. This deal puts us in a leading position in that country.
We have also just entered an agreement to purchase Antalis Office Supplies in Spain and Portugal. This will give our global customers access to an extra market in Europe when the deal is closed, most probably in early 2011. So for sure, we are part and will continue to be part of this trend.
OPI: So what is your acquisition strategy now?
EB: We’re going to look at every potential acquisition that makes sense in the markets where we are. It’s quite simple. This business is very much volume related. The more volume we generate, the higher the profits. We have lost volume and need to re-establish it. The quickest way of doing that is through acquisitions.
Lyreco is in a fortunate position. We have no integration in progress, we’ve got cash in the bank and no debts. So overall, the timing for acquisitions is right.
OPI: Which of your markets would you say requires the most attention?
EB: If we look at Europe – and I’m not necessarily talking about acquisitions here, just the need for more volume – it’s Italy. It’s one of the markets with the lowest market share now. Central Europe also has a fairly low market share for us because it’s a recent greenfield operation.
OPI: Let’s move on to look at your time at Lyreco – 30 years in total, 21 as CEO. If you had to summarise in a couple of sentences how the market has fundamentally changed, what would you say?
EB: I think I worked in a Mom ‘n’ Pop type industry to begin with. Lyreco was not even a national player in France. In fact, there weren’t any national players in France, nor in any other countries for that matter. It was regional and local.
Secondly, buyers weren’t very professional, to be honest. Consolidation in the reseller channel also resulted in a lot of consolidation in purchasing. As such, the level of professionalism of the buyers has changed significantly as well, as has their power.
OPI: Unlike your US-based competitors, you’ve never really ventured into the retail arena. In hindsight, do you think that was a mistake?
EB: No, it was the right strategy. If I were going to state a strategic regret, it would be mail order. It targets a different segment in terms of size and that would have been a very complementary fit for us.
OPI: So you think you missed an opportunity when the likes of JM Bruneau were up for grabs?
EB: Yes, we may have. We were a very strong contender to acquire JPG before it was sold to Boise. Considering what happened with that company afterwards, I really regret not having achieved that.
Later on, Jean-Paul Guisset came to us because he knew we were interested in buying the company when Boise divested to Guilbert but, again, we weren’t successful. Then came a point in time when it was just too late in this particular market, because of the concentration of operators we already had.
OPI: OK. So what have been the highlights of your career in this industry?
EB: What I am most proud of is the international development of this company. When I joined Lyreco I never thought we would achieve that. I am really proud of how the team has built a strong and leading operator in Europe with a global coverage – financed with our own cash.
It’s like the Asterix story: a small French private company with a family background fighting with what are now three American-quoted competitors.
I remember some of the big names from years back. Jon Ledecky could say "I did 50 acquisitions this year". Lyreco could never ever match that. But I remember talking to Jirka Rysavy about the company he had just acquired in Germany. I knew that company far better than he did because Corporate Express at the time had probably done hardly any due diligence. They were just interested in acquiring as many companies as possible. We all know what happened later…
We’ve built Lyreco very solidly, step by step, no big fuss, no big flash, and I’m really proud of that.
OPI: Which industry personalities have you really enjoyed working with?
EB: There are three individuals in the distribution side of this industry that I’ve been lucky to meet and work with in some instances over the last 30 years, and I regard them as outstanding compared to the rest.
Although he’s a competitor, Ron Sargent is one of them. He’s a very strong leader and a great human being.
Irwin Helford is another one. A fantastic character with a huge heart – a truly humble person and really impressive with what he has achieved professionally as well.
But also Iwata-San [Shoichiro Iwata], the founder of Japanese company Askul. He’s a very genuine person, humble and – like Ron and Irwin – the creator of a fantastic company.
All three are – or in Irwin’s case, were – great leaders.
OPI: I’m going to switch back to Lyreco for a bit. When the deal with Corporate Express failed you hooked up with OfficeMax. Many said it was just a marriage of convenience. How would you respond to that?
EB: We knew that the potential merger with Corporate Express was a big risk but I fiercely believed it was going to happen. It didn’t, but we had another option – OfficeMax.
I contacted Sam [Duncan] and went to Chicago pretty soon afterwards. And, to be honest, I rediscovered that company. My previous contacts with ‘Max – Boise in those days – were with Pete Danis and those crowds of a long time ago, before our alliance with Staples. ‘Max’s reaction was fairly simple. They were happy to be offered a real solution for their global customers in Europe.
OPI: Has the alliance been a success?
EB: What surprised me when we started working operationally with the team is their eagerness to make it work with us; that was very different to what we had experienced with our previous partner. The attitude of the individuals has been excellent – professional, eager to succeed, very determined to make it work. We also have a stronger link between the operational managers than we had built with Staples. There’s a far more genuine relationship between the teams.
OPI: That could all come undone if ‘Max and Depot ever get together, of course…
EB: Who knows? I personally don’t see it happening, but I might be proven wrong tomorrow. I don’t think the board of Office Depot would have taken the recent Steve Odland decision if they were in the middle of a merger negotiation.
OPI: Talking of the US, you’ve never established your own business in North America, Canada excepted – is that a regret?
EB: No regret there at all. We once had the chance to buy Bill Pichler’s company Eastman in California. This was over 15 years ago. Bill and I had a fantastic personal relationship, but I think such a move would probably have killed the international growth of Lyreco. It would have absorbed so much cash and energy that it would have been to the detriment of the rest of the business.
I think what’s been tactically clever is for Lyreco to build a very solid network of operations around the globe without touching what still is today – judging by the results of all three operators in the US – a pretty tough market.
OPI: The number four player in the market is storming along though.
EB: Yes, but WB Mason has the advantage of being local, they understand the market and they have the culture – all great assets.
It would have been far more challenging for us. Take a look at Staples and Office Depot in Europe. They have the same challenges that we would have had in the US. I genuinely think Lyreco would have disappeared if we’d made a move there.
OPI: But did you ever seriously consider making a play for WB Mason?
EB: We can’t replace a solid national partnership with a regional player.
OPI: So the international and national element of your alliance with Staples and, more latterly, OfficeMax outweighs the additional $700-$800 million that would come with an acquisition?
EB: At this stage, yes. But who knows what the future will bring.
OPI: Let’s talk about that future. What do you think will be Philippe’s first priorities?
EB: Operationally, all our companies work pretty neatly and at a high standard. Consequently, his challenge will be to grow the company to the next stage.
OPI: Do you think that will mean tweaking your business model?
EB: Adding to it. I think our business model is one of the strengths of the company. Our customers – especially the biggest ones – are looking very seriously at giving more responsibility to fewer suppliers within their operations. Lyreco has received strong recognition from our customers on that front and you can always build on your existing product and service portfolio.
OPI: Is anyone in the Gaspard family still involved in the business?
EB: Georges has two daughters. One is working in the group and Georges is clearly grooming her to be able to replace him one day on the board of shareholders.
OPI: Do you think in your lifetime that the business will ever be sold?
EB: (Long pause) It might. What can happen in a company is very dependent on a whole set of criteria. I believe that in the mid term – the next five years or so – Lyreco has some fantastic opportunities to grow and develop itself. Georges is aware of that and I’m pretty sure that, if he’s got the physical and mental capacity, he’ll let Lyreco do that.
This company depends on a shareholder that controls 84 percent of it. If he wasn’t here anymore tomorrow, the answer would be different, but at the moment I don’t think Georges would sell.
OPI: You’ve been somewhat disparaging of the prospects for smaller independent dealers over the years. Where do you currently stand on that subject?
EB: Dealers are never going to disappear, but their influence is reduced and will continue to reduce in my opinion. They will never vanish altogether, however. There will be winners, but winners at their particular level.
We talked earlier about Lyreco’s interest in acquisitions. Well, some independent players have grown and developed into interesting propositions for us. But even if we acquire those, others will reappear.
OPI: Dealer groups – are they still dinosaurs?
EB: I was talking about German dealer groups when I said that years ago and yes, they were and they still are. Again, I think their influence over the last ten years has diminished because the influence of their members has lessened.
OPI: What about EOSA?
EB: The alliance still exists, but what does it represent today? Nothing. Sorry Peter.
OPI: About eight years ago I asked you "what do you see yourself doing in five years’ time- You replied: "As long as I keep having fun at Lyreco I will be here". Did you stop having fun?
EB: No, I still have fun and I still very much like the people I work with.
OPI: But you’re leaving…
EB: I truly think it’s time for a new guy to lead the company. I have seen too many CEOs staying too long – it’s easy to do.
OPI: But staying on the supervisory board, does that not contradict what you’ve just said?
EB: I believe I can help in the transition period – 30 years in the business, a good network of potential acquisition candidates…I feel there’s some value in that.
OPI: So what is next for Eric Bigeard? You have previously mentioned to me that you might like to be a business angel, and also get involved in charity work. Is that really going to fill your days?
EB: I don’t want an executive role at this point. I want to go back to managing my time myself rather than relying on my charming assistant. That’s the beauty. Being a business angel is a challenge too, because it’s an active shareholding role. But it’s without having the executive duties of being there five+ days a week and X number of hours a day.
OPI: You haven’t said that you want to spend more time with your wife, kick back on a beach, learn to play golf…
EB: (Smiles) I know I look older, but I’m only 55 and I just can’t see myself on a beach 360-odd days a year. I would get very bored. It’s just not me.
I consider myself lucky to have some investments that I can use. I’ve got a bit of experience and I’ve still got a bit of energy, so I just want to give it a go. Maybe it won’t work, but at the moment I’m very excited about what lies ahead.
OPI: So have we seen the last of Eric Bigeard in the office products industry?
EB: Sure. No more executive role in the office supplies or any other industry. I’d be happy to have non-exec roles if need be because, again, I’ve got a network and I’ve got lots of contacts. But as far as executive roles are concerned, this is the end. n