Tuesday, May 12, 2009

(Xerox, Konica Minolta, Danka, Ricoh, IKON, Oce, Imagistics, Lanier, Global) How good companies alienate great people – A story of bloodletting and corporate ignorance.

I have wondered how companies let such great talent walk out the door and end up at the competition to do nothing short of shut them down in a particular marketplace. I have watched so many people change hands over the last 4-5 years that it is truly amazing how fast the strength of a company can change. I have noticed that companies lose employees in 5 distinct ways.

1.Through lack of leadership.
2.Through lack of promotional opportunities, and poor positioning of their resources.
3.Through changing of the compensation plan or not insuring that the employees get paid as they should.
4.Through the changing of an established employees territory or constant switching of roles.
5.Through the lack of respect, recognition or pure disregard for the employees goals and dreams/desires.

I have survived now 2 distinctly different combining's, the merger between Konica and Minolta and the acquisition of IKON by Ricoh. Both were very different but had many of the same elements in them. I have witnessed several other acquisitions and mergers from the acquisitions of the Ricoh family companies like Lanier to the acquisition of Global by Xerox and Danka by Konica Minolta and Imagistics by Oce. One thing that they all have in common there was always a mass exodus of many great people during these troubling times. And in which affects the company's strength and positions the company for greater failures.

During Konica and Minolta's merger I witnessed many events that I wish would have ended up differently. One thing that Minolta and the later Konica Minolta were very good about is making sure that their employees got paid what was due to them and identifying what the employees dreams were and addressing their work to accomplish that dream/desire. Managers took special care to see that the sale reps got paid and that their livelihood was preserved at all costs. Although it seemed as if the sales people were spared the initial cuts, pay plans took dramatic cuts. Leadership was there to manage focus and readdress employee concerns. Konica and Minolta had their failures with processes and support structures. The companies were brought together without a good supply chain methodology. There were very few things that actually happened that made business any easier. In fact many of the processes that were solid become more flimsy as the companies came together. Research and new product lines were coming out quickly giving their people some great products to sell but there was no internal support structure to get them to where they wanted to be. The frustration had always been tolerated as salesmen knew that they were "paid the big bucks" to deal with it themselves. Now that the financial incentive had left the big hitters left also for a more fertile hunting ground.

There was very little emphasis that anyone was very important. In fact the exact opposite was quite true, we like you but we can replace you tomorrow with someone that wasn't here when we paid them properly was definitely the attitude. Promotional opportunities were available but limited to the local leadership's ability to keep you pinned down to what they needed you to do (sell if that was what you were good at). The branch I was at had probably 8-10 of the companies top 20 reps nationally and they all were gone within eighteen months of the formal merge. Territories didn't change for the Minolta employees but that isn't true of most of the Konica employees that ended up in menial jobs and eventually quit to find somewhere else to graze. Minolta had a strong culture of respect and that was only broken by raping the compensation plan to the point that one could see the writing on the wall (you are not getting paid the way you used to so just get over it). It was obvious that Konica Minolta didn't want a huge changeover but really did want to slowly change out all of their employees to new ones that would only remember Konica Minolta and not one or the other. The legacy employees were not good for morale and only brought strife and improper expectations. The original expectation was that if you don't make a six figure income we will fire you. The new expectation was be lucky to have a job and hope you make 65-80k.

IKON and Ricoh's situation was quite different. Ricoh tried to preserve the unique identity of IKONITES. They were very keen on putting value on their individuality and importance. Great steps were taken to try to keep key employees put until the changeover was complete. Leadership was lacking though as IKON had become weak and instable. How can the largest independent distributor of office products in the world get taken over? Who would let this happen? Hedge fund operators that were looking to plunder gold at any cost, that effectively were nothing but corporate pirates. These raiders and marauders slowly and methodically purchased stock and held it for ransom till they were able to manipulate the books till IKON looked like an attractive buy. Leadership had lost the desire to fight and had become fat, slow and lost the entrepreneurial spirit. IKON's growth pattern was like a dwarfed child with no way to grow into the fulfillment of the promise that it had once offered. As a result she became a victim of greatness. Her size and distribution model soon became the desire of others that didn't want to create their own but saw IKON as a cheap alternative since she had become so weak and unprofitable.

IKON was built on the conquering spirit and had become a fierce competitor to do battle with. Over time their success had created greed and sloth. (See the 7 deadly sins of a copier salesmen to fully understand this dynamic) IKON became vain and without potency. Something like 21 companies bid for IKON; Canon, HP, Samsung are some of the ones that I heard of. (If you know where I can find documentation on whom bid for IKON and how that went down please let me know) Now after the acquisition there is much restructuring being done to become the new Ricoh; the new one world leader.

One would have thought that promotional opportunities would have been wide spread as many of IKON's people did leave to places far off. But as the people left the leadership found it more attractive to place "new" talent in place that did not know of the IKON way. The compensation plan was very slowly adapted to a new way of thinking. This new "manufacturers" view of box placement and aftermarket preservation took a while to settle in and is still being implemented now as we speak. Territories have not changed that much as they really have tried to preserve IKON's identity and run it as a "wholly owned" subsidiary for the mean time. People were viewed as an asset and respect was placed on maintaining the integrity of the local branch and employees. But IKON really expects you to take care of yourself, they do not see the value in "getting you paid." If you cannot figure it out for yourself you are surely out of luck. They still believe in the "only the strong survive," and do expect that everyone that comes aboard has a sharp sword and is ready to use it. (Even if it means cutting a few throats in the initial onboarding) I almost find it funny sometimes as I have almost become accustomed to it.

Other employers love to hire IKON employees as they bring the "blood lust" to their people. We revitalize their troops in a way that we will never fully understand, but it is why we get so many phone calls. If you survive you are a "keeper." Leadership at IKON is much more methodical than Konica Minolta but the leadership at Konica Minolta was much more visionary. I can still remember seeing the President of Konica Minolta come to the local branch and taking time to meet and inspire the local people. IKON is the exact opposite they do not have time to be bothered. I have seen people I didn't know walk to the corner office and leave within an hour to only find out that it was the National VP of Sales or some other high powered title to watch them gather their things and leave as quickly as they came. They would rather do a "focus" group then actually meet the people and refocus the troops. This is the mistake that Konica Minolta did in the acquisition of Danka; they did not reach down and pull everyone up this time as they did in the merger.

But I have decided that "acquisitions" are much different that "mergers." In a merger everyone is more hey we are a team that is now stronger to take on bigger foes, in an acquisition you are more the conquered one and must be subservient. People look down but they do not reach down to pull you up. They look at their new purchase in a fish bowl and see how neat their new pet is. In a merger you look over at your new comrade in arms and hope he is carrying a big stick and extra ammunition as you go to slay goliath. Konica Minolta was a 'small' company that had 'big' dreams. Their dream was to become a tier 1 player in the game of office equipment and imaging/document services. Ricoh's dream is to be the 'one world leader.'

So in this I have seen many different approaches and cadences. I have seen good management and poor management, good leadership and poor leadership. I cannot tell you exactly what good leadership is but I know it when I see it. I can 'feel' it. It is the love – hate relationship that you have with overcoming your fears and taking new ground. It is the fear of taking the hill then rejoicing as the hill falls to your power. Good leaders empower their people to conquer and do not hold them back but send them out as berserkers. For those of you that do not understand the reference and its importance; "Berserkers (or Berserks) were Norse warriors who wore coats of wolf or bear skin and were commonly understood to have fought in an uncontrollable rage or trance of fury, hence the modern word berserk."

We now more than ever must come to grips with our fears, overcome our call reluctance and go forth with frenzy. We must take our market share by force and win friends and influence people with the sharp edge of the sword and the tactical advantage of a calculator and well worked spreadsheet. Some days I love the challenge and other days I wish I was dead. Today I was up for the challenge. I will probably reword this blog many times over so you can read it every day and it will change as the season and circumstances change. One thing that you will find out about Pirate Mike is that I am not stubborn in my knowledge. I fully bend and flow as my understanding changes. I hope to evolve my understanding of my circumstances and the events around me and hope to be a survivor and a thriver in this harsh economy and time in our industry.


Pirate Mike

Here is to good hunting… May you kill everything that falls into your sights…

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  1. Well it's not truly the end of the Danka legacy. From the way the idiots left in charge are running the show you would have to believe that Danka bought KMBS. As one of the 500 that got the boot I was apart of the restructuring that went on at the end. Our new regional vp is a Danka guy as are many of them. In his own words the only thing Danka was good at is crisis management. Well they have a huge crisis now.

  2. Well I might agree with you, we have 10 of the 500 now in our office. From the people that I have talked with it sounds like Crisis is their middle name. I worked and believed in (Minolta) and then (Konica Minolta) and their products, and have sold them ever since I left just not working directly for them anymore. Now I am no longer connected in anyway other than the relationships that were forged fighting the good fight. Now it look like the only fight they are going to wage is the battle to stay in business.