Carl Icahn is having a good 2014.

In the past ten months, he has managed to fight for — and win — the PayPal spin-off from eBay and the merger of Family Dollar with a yet-to-be-determined​ rival. He has also needled Apple several times to buy back stock, something the company did earlier this year. 

Shortly after making his play, Icahn sold his stake in Family Dollar and made a mint. Meanwhile, the retailer is left to negotiate two competing offers with differing antitrust concerns that, if not handled well, could hurt the company in the long run. 

Investor activism like Icahn’s disrupts the plans and management of retail companies because it often can get in the way of thoughtful strategy and corporate governance. That's what led former eBay director Marc Andreessen to compare him to "evil Captain Kirk" earlier this month.

But that kind of disruption has its upsides, so is sometimes actually good.

When investor activism is good

In many, if not most cases, the aims of an activist investor are parallel to the investors of a company — to ensure that a company’s value is reflected in its stock price. And, although activist investors have a reputation for making moves that garner them quick profits at the expense of the company — and many do — a study released last year by Duke University’s Fuqua School of Business found that on average, companies’ performance improves after activists make and get their demands. 

More importantly, these investors are often on to something: That there are issues at a company that should be addressed by management, like inflated executive compensation or a lagging e-commerce strategy. Boards of directors should be nimble enough to get ahead of any issues that activist investors might seize on.

When it’s bad

Other experts disagree with the conclusions of the Duke researchers, and say that the rise of activist investors meddling in companies has robbed management of the ability to think and strategize long term. That can be especially true for retail companies, who must deal with a broad range of market pressures not always understood by the busy-body investors.

In a recent and notorious case of retail activism gone bad, billionaire Bill Ackman acquired a huge stake in J.C. Penney in 2010, and with it a seat on the retailer's board. That set in motion a saga whereby Ackman maneuvered to replace CEO Mike Ullman with former Apple retail guru Ron Johnson. 

We know how that went. Although J.C. Penney was in need of a turnaround strategy, Johnson’s changes were seen as too much, too soon, and a misreading of J.C. Penney's customers. Ullman was back within 18 months to undo most of what Johnson wrought, and even Ron Johnson himself eventually said he never should have been there.

Ackman in August of 2013 sold his entire share in the retailer and acknowledged that retail investing was not his forte. And for many retailers, that lack of retail experience and expertise on the part of activist investors leads to a serious lapse in judgment by the board of directors.

Even with Ackman's good intentions — some activists are in it more for short-term gains than he was— the saga is an example of how retail companies can get saddled with costs, management struggles, and distractions from sober strategy development. 

What to do

Retailers can no longer ignore activist investors as readily as, say, 10 years ago — the game has become too intense. But rather than spending energy and money on fighting them off, a company would be well advised to work to anticipate the kinds of issues such investors might pounce upon. 

“Most activist investors are smart, motivated people who often notice things that boards and managers overlook. It is generally worth listening to their recommendations and implementing the ones that make sense,” writes Bill George, professor of management practice at Harvard Business Review, and Jay W. Lorsch, professor of Human Relations at Harvard Business School, in their report, “How to Outsmart Activist Investors.” 

“In the interest of their corporations," the report states, "CEOs and boards should be preparing for activist interventions rather than complaining about them.”