Harvard Business School 9-400-065 Rev. July 24, 2000 Jeanne Lewis at Staples, Inc. (A) (Abridged) op YO INC Six months from now, on February 1, 1998, Jeanne Lewis (HBS ’92) would become the senior vice president of marketing at Staples, Inc. (Staples), a nationwide office supplies superstore. After 10 months working side by side with Todd Krasnow, the current executive vice president of marketing, Lewis was becoming familiar with the department. Her initial assessment led her to wonder if the department’s operating style was suited to evolving competitive realities.
As KrasnoWs heir apparent, Lewis anted to be involved in shaping the department’s priorities for the upcoming year. The strategic planning process traditionally began around this time in August, and Lewis wondered if the time to start taking action had arrived. Thus far, 1997 had been a trying year for the company: the Federal Trade Commission had challenged Staples’ proposed merger with Office Depot, and the two companies had recently abandoned 10 months of merger efforts.
At that time, Chairman and CEO Tom Stemberg reaffirmed his commitment that Staples would grow from a $5 billion company to a $10 billion company by the turn of the century. Staples not only had to grow bigger, it also had to grow better, as analysts had become accustomed to the company’s 14 consecutive quarters of earnings-per-share growth in excess of 30%. The theme of the upcoming year was twofold: strong growth and more effective execution. c Lewis believed that Stembergs pronouncement to look for the “silver lining” in the failed merger and to take to heart the lessons of the merger could serve as a call to action for the marketing department. Marketing, which served as both an architect and driver of the brand, would play a critical role in Staples’ continued success. Lewis knew that Staples could survive only if it was prepared to get rid of outmoded ideas and replace them with new ones”a philosophy shared by Krasnow. But Lewis also knew that it could be trigntening to give up the ideas that nad made the company successful.
Furthermore, the marketing staff was understandably apprehensive about KrasnoWs planned departure, and many were already mourning his loss. Lewis explained: No While the merger distractions were going on, things that maybe should have been dealt with, weren’t. Now, I wanted to make it clear that a new person was coming on oard in this area, and fgure out how we could get back to business. We needed to refocus on building our business, because it was as competitive as ever, and we had lost a couple of beats in a few marketing areas while busy with the merger.
We were at a turning point in the marketing department, as opposed to being long past it. Because of the confluence of external events as well as our own internal complexity, if we didn’t change, then I was concerned it would start to show eventually in sales. Research Associate Jennifer M. Suesse prepared this case under the supervision of Professor Linda A. Hill as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. It is an abridged version of an earlier case, “Jeanne Lewis at Staples, Inc. (A),” HBS No. 499-041, prepared by Research Associate Kristin C.
Doughty under the supervision of Professor Linda A. Hill. Some names have been disguised. Copyright 2000 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www. hbsp. harvard. edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means”electronic, mechanical, photocopying, recording, or otherwise”without the permission of Harvard Business School. This document is authorized for use only by Harutyun Gevorgyan at HE OTHER until November 2014. Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617. 783. 7860. 400-065 Lewis knew the marketing department’s role in ensuring success was twofold: maintaining the delicate balance between meeting short-term financial objectives ith appropriate promotional tactics and building customer loyalty and retention witn an ettective marketing strategy; and investigating ways to leverage Staples’ brand and broaden its franchise.
She also had specific questions about some of the department’s structures, systems, and staffing. She was eager to get started, but recognized the risks of doing too much, too fast: My style is that I want things to happen quickly. When I see things”either a new problem someone has never had to fgure out before, or where theyVe Just had a different sense of timing”I Jump in and say, “here’s the way to do it,” and that makes hange happen quickly. But that could limit my ability to work across and with the organization.
I could end up spending too much time managing down and not enough time making broader, more expansive impact by managing across the organization as well. Staples’ Background (1985-1991)1 In 1985, Tom Stemberg (HBS ’73), known for his marketing sa’. n. y and innovations in the staid supermarket industry (as vice president of sales at Star Market, and president of First National Supermarket), pioneered the concept of the office supplies superstore. A “Toys ‘R’ Us” of office supplies, “Staples, the Office Superstore” would provide completeness, convenience, informed assistance as well as attractive prices… overing everything from coffee to computer software” for the small-business customer. 2 Initial customer research indicated that most small businesses did not track their total expenditures for office products closely, nor were they aware that they were paying on average 40% more for them than large corporations. To communicate the savings and increased convenience of its new way of procuring office supplies, Staples’ management was prepared to invest heavily in marketing. Staples’ message would emphasize discounts and convenience, leaving customers free from the hassles” of dealing with long lines, order forms, and multiple suppliers.
For the pivotal role of director of marketing, Stemberg hired Todd Krasnow, a 28-year- old HBS graduate who had worked in marketing at Star Market with Stembergs new VP of operations. In the early days, Stembergs team of five (himself, Krasnow, CFO, VP of operations, VP of merchandising) each had their own primary spheres of responsibility, but they all worked very closely together, doing whatever it took to get the Job done. They began the mornings with a 7:00 0’clock meeting, reconvened for a orking lunch, and generally worked through the evening until 10:00 0’clock.
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