A lot has been written this past week about the pending merger between Office Depot and OfficeMax. I’ve given my fair share of quotes, but now I’m taking the opportunity to present my full point of view.

It’s way too easy to talk about the competitive landscape. Yes, you can buy office supplies at warehouse clubs, mass merchants and (here it comes) Amazon.com. But that doesn’t explain Staples continued health. So what happened? How did Office Depot and OfficeMax get to a point where they felt a need to merge to stay competitive or even survive?

There was a time when Office Depot and Staples ran neck-and-neck in the office supplies space. I remember that era, as I actually interviewed for a job in OD’s IT department as part of my quest to move to warmer climates. That was twelve years, four CIO’s and three CEO’s ago. And that might seem to be the gist of the story. As the old saying goes “A fish rots from the head down. ” But this time, I believe that saying does not apply.

At Office Depot, at least, even as C-level executives rotated in and out, the rank and file merchants stayed on. During my interview process those many years ago, I learned that office supply merchants were a lot like merchants from far more idiosyncratic segments – they thought the business was unique and really needed to be merchandised by gut feel. That was a real surprise to me. I mean, how much more of a commodity is there than paper, pens, envelopes, etc.? But that’s the way it played out. I understand that situation still exists. And while the company has brought in some solid technology, merchants still do things their own way. Executives come and go but the rank and file live on. In survey after survey, retailers tell us they need senior executives to overcome organizational inhibitors and cultural resistance. But when there’s been that much churn at the top, I think employees learn to just wait out the next change.

The lesson learned here is that management changes are not always a silver bullet. That’s a hard lesson to swallow in this age of the CEO-as-rock-star-and-savior, but it’s true. Any executive who seeks to create organizational change must engage people “on the ground. ” Create a coalition of the willing. This is true whether the change is a new system implementation or a complete shift in corporate philosophy.

OfficeMax, always the smallest of the big three, has gone through churn of its own. In researching for this piece I was surprised to learn that OfficeMax had its roots as a store-within-a-store at Kmart. A consistent money loser, the company was bought by Boise-Cascade in 2003 as part of an attempt to “go vertical. ” The paper and pulp business was spun back off in 2006 into Boise. The nation-wide delivery network of the original Boise-Cascade remained with OfficeMax. Each purchase (including the current pending merger) was valued about the same – approximately $1.3 billion.

No analysis of this situation would be complete without observations about the state of “category killers ” in general. It appears as though there is really only room for one of a kind. Mass merchants, department stores and (here it comes again) Amazon.com have killed off the need for the format. So we are left with Bed Bath and Beyond in soft home, Best Buy (for now) in consumer electronics, Barnes and Noble in books and two healthy large pet supply superstores: Petco and PetSmart. I think the pet supply segment is unique, so I’m not sure they should even be included in the list. People love their pets, and both Petco and PetSmart have interesting differentiators.

If the “one per segment ” rule holds true, does that mean even the combined entity of Office Depot and Office Max is in jeopardy? I see many problems ahead:

• The Office Depot culture issue remains for now, intractable and intransient
• The two companies have separate mélanges of technology infrastructures. While both use Oracle ATG for eCommerce, and JDA and SAS for various other functions (among others), core merchandising at Office Depot runs an old version of Oracle Retail while OfficeMax runs SAP (circa 2005).
• The competitive issues aren’t going away any time soon. Staples owns a big share of the b-2-b space, has expanded internationally, and has found creative and inventive ways of putting itself in front of consumers via stores-within-a-store at Ahold. It also boasts a stellar environmental record and a strong rewards program. Its marketing phrase “That was Easy ” has found itself into the popular lexicon, and the “Easy ” button can be found in many homes and offices.
• As of this writing, it’s not clear who the management team of the new entity will be. Apparently (according to Motley Fool), the company’s name, marketing brand and corporate headquarters will be determined after a CEO is named. Both incumbent CEO’s are under consideration, as are external candidates. Seriously? That one is a jaw dropper. Yikes! Talk about instability. Me being me, I’d say “Let’s see: Chicago or Delray Beach? Cold winters vs. hot summers? Delray! That was easy! ” (oops)

Lessons learned? Pay attention to the head and the body. Rot can start anywhere, and must be addressed systemically, not in a piecemeal way. Metaphors aside, I think the new entity is in for a tough slog, but I wish them luck.