Mr Smith goes to Boston

    Those who underestimate Starboard CEO Jeff Smith do so at their peril, argues Rick Marlette.

    Just a few short years ago, hardly anyone in our industry had heard of Jeffrey Smith. Today he is arguably the most influential person our industry has ever seen. You have to give him credit for cleaning up Office Depot, a feat many would have thought impossible. Then he pulled off one of the most successful mergers of two rivals ever, with little to none of the fallout many predicted, at least so far. Now Mr Smith is headed to Boston to take on Staples, which guarantees the second half of the 20-teens is going to be very interesting.

    I’ve read, watched and studied everything I can get my hands on about Jeffrey Smith, and I can tell you he’s different. You will make a big mistake if you dismiss Jeff Smith as just another get-rich-quick Wall Streeter who only wants to line his own pockets. He may be getting rich and he may be Wall Street elite, but that’s not why he’s doing it. He’s doing it for two reasons: he likes it, and he believes it needs to be done. It’s that hugely powerful and simple pairing that makes him so very different. The bad news for those opposing him is, he’s right.

    Jeff Smith has the reputation of being a ‘slash-and-burn’ corporate raider, but that’s inevitable. He’s actively looking for companies that are poorly run, in a rut and with way too much fat. The trick is slashing the right fat and Jeff Smith is apparently an expert at it.

    Watching Jeff Smith work on the companies he targets is hugely entertaining. Practically everything he asks for makes perfect sense to everyone except the often delusional management he encounters. Get rid of the corporate jets – they don’t add value. Boost employee morale – that adds value. Duh! Cut out the nonsense, focus on your core values, and be the best you can be. Wow, what a radical!

    Here’s something else that’s important to remember: Jeffrey Smith does not target well-run companies that are operating lean and mean.

    You may think I am just a Jeffery Smith fan, but you would be missing the point. I am a fan of people who do it right. There is so much we can learn from Jeff Smith, both from his mistakes and successes. Would your business be a Smith target? Is your business running as efficiently as possible? As an owner/manager are you providing the best value for those that depend on your performance? These ridiculously simple Jeff Smith questions need to be continually asked and answered with openness and honesty regarding our own businesses.

    Will Staples and Depot merge? I can’t say, but Jeff Smith will get his way. If that sounds contradictory, then you haven’t been paying attention. One way or the other, Staples will be forced to change. That may be a merger with Office Depot; that may be a regime change at Staples; a completely different Staples may emerge. But in the end, it will be what Jeff Smith wanted all along: a leaner, meaner, laser-focused Staples that is providing optimum value to its stakeholders – which now include Jeff Smith.

    As independents, we need to be ready no matter what happens. I wouldn’t bank on yet-to-materialise merger train-wrecks or opportunities simply falling through the cracks either. The best approach is to have a plan, and it’s really tough to argue with what Mr Smith has already drawn out for us.

    Disclaimer: I do not own any stock in Staples, Office Depot or any Starboard company and have never met or personally spoken to Jeffrey Smith.

    Designer and creator of Item411, Market Xpert, Supply411, GOPD, DB2/DBx, OPSoftware and the Phone Order Entry (P O E) System, Rick Marlette has worked independently for over 30 years in various facets of the Office Products Industry developing specialized programs and databases for OP Dealers.