Friday, May 13, 2011

Leo Kahn, Tom Stemberg, and Staples

Leo Kahn, a co-founder and former Chairman of Staples, died this week.  I worked at the firm back in the mid-1990s.  Tom Stemberg transformed the office supply industry with Kahn's help and guidance.  Before Staples, the industry was highly fragmented.  Stemberg brought the big-box concept to the industry, and in the process, created a much more efficient value chain which enabled customers to have a broad offering at low prices.

Kahn's death reminds me of some key lessons I learned about how Staples developed its business.  For starters, when Stemberg and Kahn began the firm, each new employee, regardless of their position in the organizational hierarchy, spent their first week at the company working in a retail store.  They would stock shelves, operate a cash register, unload incoming shipments, and assist shoppers.    Even the most senior hires took part in these activities in their first few weeks at the company.   Stemberg too spent a great deal of time in the chain’s stores, and he perused his competitors’ locations on a regular basis.    I love the idea of how Stemberg and Kahn wanted every manager and executive to understand the work going on at the store level.

In addition, Stemberg spent a great deal of time observing retailers, such as Costco, that did not compete directly with Staples.    He spent time visiting firms in other industries too.  For instance, he once set out to learn about customer service at Mobil, focusing on their Speed Pass Program, which was relatively new at the time.  He sought to make Staples as successful as possible by opening up to the possibility of learning from as many sources as possible.   

All leaders should try to learn from companies beyond their industry boundaries.  If you simply stay within your industry when benchmarking, it's likely you will end up engaging in me-too strategies, rather than truly innovating and differentiating.  Going outside your industry for ideas can help firms truly be distinctive. 

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