CEO Gerry Smith is leading Office Depot through a major evolution. Here's how the company is getting ready for the future of work and retail. (ODP)

Courtesy of Office Depot

• Office Depot CEO Gerry Smith assumed leadership of the office-supply retailer in 2017.
• Since then, the company has undergone a turnaround — even surpassing expectations in the last three quarters.
• Smith spoke with Business Insider about what's next for Office Depot. 

Office Depot was in some trouble a few years back.

A planned merger with its rival Staples collapsed in 2016, after anti-trust regulators balked at the plan. The deal's unraveling prompted CEO Roland Smith to announce his resignation — as did Staples CEO Ron Sargent.

At the time, Office Depot had already endured seven quarters of falling sales, closing stores, and fierce competition from Amazon. 

Then-Lenovo executive Gerry Smith stepped up to helm the retailer in February 2017. He replaced a number of leaders within the company. And then he set about implementing his own vision about what Office Depot could be. 

Now, the company is growing, and it has beat earnings expectations for the past several quarters. Office Depot reported that same-store sales were up 5% for the third quarter on Wednesday. The company is even offering up a new business services platform called Workonomy, complete with a new coworking space in Los Gatos, California.

The following interview was edited for length and clarity.

Business Insider: Is there anything you'd like to say about Office Depot's latest earnings before we get started?

Gerry Smith: I'm very pleased with our quarterly results. We crushed cash flow. We did an outstanding job on sales and we met our profit expectations.

As the CEO, I'm very happy this morning. And the market's reacting positively as well, which is always good to see. It's been a journey. We've put three straight quarters on the board now and I'm very proud of the team for that.

BI: You joined Office Depot in February 2017. What has your experience been like so far, what have you learned, and what strategies have you developed as time has gone on?

Smith: It's been a great transformation. The first thing we focused on was hiring an outstanding, world-class team. We have an outstanding CFO in Joe Lower, who had tremendous experience at Boeing and B/E Aerospace. We've got a rockstar chief marketing and customer officer in Jerri DeVard, who has extensive experience on Madison Avenue and had experience at Verizon, ADT, and Nokia. Great chief administrative officer in David Bleisch. Our chief merchandising and supply chain officer John Gannfors.

We really built a world-class team. A lot of these people have been at much larger companies than Office Depot. My first focus was to build a world-class team, then define the strategy and really look at our key assets.

Let's go strengthen our store business, quit closing down stores, start generating better sales at the company. The company hadn't grown in years, and I walked onstage at my first town hall in front of all our employees and said, "We're going to grow this company." Now, to be honest with you, not very many people believed me. But now a year and a half later we have a lot of belief that the strategy's working. We've got a great team. Now it's really about taking it to the next level.

What I'm really excited about is the launch of our business services platform Workonomy. That's always been my vision. We talked about it in May. Jerri DeVard and I launched it in New York at our investor day. It's really about the next evolution of our business, not just as a retailer, but a true omni-channel company that sells business products and services to large companies, small companies, small offices, home offices across the country.

It's a real differentiator, because we're one of the only companies that have this omni-channel of retail, online, and B2B. We have one of the best supply chains in the country. I was the former chief operating officer at Lenovo and I ran their supply chain for a long time. I was very excited when I came on board and realized, "Wow, I've got an asset that very few people have."

It really gives me the ability to compete against some of the e-commerce companies. They have supply chains in e-commerce, but they don't have the last-mile advantage of the stores. They don't have this trifecta ability to go across three multiple channels.

That's demonstrated itself in the results we have, and we've got to continue to put the wins on the board and bring more demand and more partners on board for our Workonomy platform.

BI: Has doubling down on the omni-channel approach changed who your core customer is at all?

Smith: I think it's solidified our core customers. One of the things Jerri and her team did was build a center of analytics and excellence. We took our 14 different analytics teams and combined them into one. We had, I think, 49 different pools and we were putting that together.

We really started tracking customer retention. Are our customers growing or not? That hadn't been done before at Office Depot. The good news is our customer base is growing, and one of our biggest assets that very few people understand is we have almost 28.8 million customers.

When I go out and talk to my former tech buddies in Silicon Valley, they always go, "Wow, that's a huge asset, Gerry. How do you go off and monetize that?" Well, how we do that is through our business services platform, our Workonomy strategy.

Jerri and her digital marketing team plus our other two channels have done a really good job of going back and reactivating customers through digital marketing-type of capabilities, whether it's email, whether it's PLA, LIA, all these different types of higher returns on marketing investments that really allow us to go back to longtime Office Depot customers, and get them excited to come back to the store or, very, very importantly, online, or through our B2B segments.

They get re-engaged with us. And so on a very frequent basis I'm engaging those teams on looking at our customer trends. Are we growing? And let's deal with all the engines and vehicles we have to go off and get that business going, because the most important asset I have long-term is my customer base.

Why we have Workonomy is to really leverage that customer base and that world-class supply chain and then provide services and products to people.

My vision is that Office Depot doesn't provide just office products, or just tech services with our Compucom acquisition. I want to go partner with people who can bring an array of products to companies because we want to own that customer relationship, we want to give them a great experience, and, most importantly, we want them to grow.

We're testing a co-working space in Los Gatos, California. It's had tremendous success since we've opened I think about 90 days ago. In fact, we're going out for a grand opening next Tuesday and we're really excited about that.

What it's shown is people want a community. Smalls businesses want a community. We think that because of our unique omni-channel approach, we can be that company that provides that for people.

BI: What are your thoughts on the future of work, and how Office Depot fits into that?

Smith: I'm a tech guy by background so I'm spending a lot of my own time on AI and automation and how that will impact the workplace. Obviously, for competitive reasons I'm not going to say too much, but we're really looking into how that interaction changes.

One thing we've really looked at from doing a lot of research with our customers is that, even with automation and AI, people still want a community. They want that human interaction. They want that ability to interface with the associates in the store if they have a question or talk with colleagues in coworking spaces, which are growing rapidly across the country.

That's the unique advantage of Office Depot. We can provide all of that for people. I'm talking to companies on our Workonomy platform that can provide automation services and robotics as a service. More announcements to come, but that's the value of the big customer base of this platform.

BI: What are the leadership qualities you strive to demonstrate to attract and retain talent?

Smith: Number one to me is integrity and ethics. The people I've hired — three I did not work with before — but it's like I've worked with them forever. They have high integrity and ethics. Number two is trust. I know this sounds a little happy and soft but you have those things to have an effective team.

I think that really we all spend a lot of time making sure we're all working together and rowing in the same direction. This was a major transformation. I needed some change agents from the outside, but I also needed some of my longtime members to get on board, and they've done that.

I promoted a couple of people internally who had the ability and potential to drive the revolution and transformation that we're driving. And everyone's laser-locked in and is one cohesive team. We're going to have a challenge culture with each other. We're all focused on making sure our customer has the best experience, and has tremendous growth and potential. And very, very importantly, we've got to deliver results as well.

I have a "five C" culture that we've created as a team. It is customer, it is commitment, it is change, it is caring — which is really important — and creative.

I'm super pleased with what we call "Depot Days of Service." We've gone out and done a lot of things in our community. What was really cool is that I hired 92 interns and did a number of sessions with them in the summer.

One of the things they said was, "Gerry, we never thought we'd want to work at Office Depot until a) we came here and b) we saw what you were doing with 'Depot Days of Service' because it really is cool how much you're giving back to 12 Title 1 school districts across the country, re-gentrification of parks, redoing schools, getting involved in foster care, getting involved in education and getting involved in food drives."

Alex Price on Jerri DeVard's team does an amazing job — our engagement survey just came back yesterday and we saw that our employees are resoundingly saying, "Yes, this is important to us." I think our "five C" culture is sort of the North Star for us. That's something that we're going to continue to drive. In fact, in every town hall I talk about strategy — and in every town hall I'll talk about culture going forward.

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SEE ALSO: Office Depot just opened a coworking space inside one of its stores. Take a look inside.

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