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Management in Practice

How Do You Change a Successful Company?

Every company needs to be ready to embrace change to keep pace with the modern economy. The prospect is particularly fraught for a company with a long history of success. Ursula Burns, former CEO of Xerox, talks with Yale Insights about how a company can build its legacy by transforming its identity. She says that to drive change, leaders have to communicate, communicate, and communicate.

When Ursula Burns took over as CEO of Xerox in 2009, one might have expected her to be a champion of tradition. After all, she’d started at the company in 1981 and had worked up through the ranks. Furthermore, the company had a huge stock of goodwill, having created “the most successful product of all time” and become an indispensable part of office work in the late 20th century.

Instead, Burns saw an imperative for change. She knew that what had worked for the company up to that point wouldn’t carry it through coming decades. By the time she stepped down as CEO in 2016, Xerox had dramatically grown its services business and split into two separate companies.

Yale Insights talked with Burns, who is now the executive chairman of VEON, about her efforts to usher in change and some of the lessons she drew from the experience.

She pointed to the challenge of building alignment within the company for such a radical change. “The biggest issue is people’s ability to change with the times and generally to buy in. Or for the leaders to lead them to do so. There’s a lot more need to communicate effectively with people.”

This is an issue for any company or organization that wants to stay nimble and up to date. Burns suggests that it’s key to not let little inefficiencies slide and become the accepted norm. “The small forgiveness for inefficiencies, for the status quo, is what, I think, gucks up everything,” she says. “So, if you can get rid of these small little gritty things, they will help you be a better company.”

Xerox is more than just a company or even an icon—it’s a verb in our daily lexicon. How did that create barriers to re-conceiving the company?

It’s an interesting challenge when the place that you work is a foundation of society, right? The good part is that there’s a huge amount of positive feeling toward the company from employees, customers, government officials, etc. Everybody knows Xerox. It’s been around for a long time, they kind of like it.

But the problem is it’s also fixed in a certain place and time in those people’s minds. It’s fixed around a set of technologies and their grandfathers or grandmothers owning a share of stock.

What we have to do, particularly the leadership team, is remember the things that were really great about the company but be willing to throw it all out and create a new self. And the people inside the company have as much difficulty with that as the people outside do. This is where leadership comes in. It’s a delicate balance to try to tear down good things.

How do you convince people that change is the right move?

The change is usually easier to articulate outside the company, because it’s centered around financial value creation or market position strength, and shareholders generally like that. The bigger challenges are internal, with employees in the company and with the communities where you do business. Three things help with these: one is to get thought leaders within the company to back the move. These are not always the managers, or the CFO, GC, or even the CEO. They are the strong, thoughtful people that others generally follow—union leaders for example. You have to get these men and women aligned with the change. Secondly, show facts. The more that you can give people information, real facts and data, about what’s happening—the financial viability of an operation, changing skill sets, things like that—the more they buy into the idea. Those data are the foundation that compels a change. And third, communicate, communicate, communicate.

What did Xerox look like when you became CEO?

At the time, Xerox was a document technology company with a very small services business. What I mean by technology is printing, copying, faxing, scanning—we knew everything about putting images on pages, electronically and in paper form. Seven or eight billion of our approximately 10 billion dollars of revenue came from the technology.

When I took over, we were still in the throes of this idea of a paperless office. People said things like, “Pages are going to go away—this business is going to hell in a hand basket because no one will be printing anymore.” That wasn’t true. But what we found was that the value of the printed page, the way that it was loved, coveted, and archived, had fundamentally changed.

Now, it’s more of a throwaway tool. You print something and toss it out, and if you need it again you just print it again. And therefore, the requirement or the desire that we had for very high-quality printing became lower and lower. We had to make a fundamental change to that side of our business.

What was the change you ended up making?

We had already started a very small services business, which was a document management business, because we knew that people were not printing as much as before. Anne Mulcahy, the CEO before me, had already built that business up to about $3 billion of our revenue.

We had started down that road because we found that customers wanted us to manage not just their printing, but their entire document structure. Just as we managed their filing systems, they wanted our help with managing and retrieving documents that had been scanned and archived.

That’s where we needed to create value. We began with getting to be really good at meeting basic copy and printing needs. Secondly, we were growing our services business. And third, we started identifying specialty markets, like photography, as potential new markets. Could we make a copier that could make a great photograph? The answer is yes, and we did. We replaced a lot of photography with what we call dry xerography photography.

So, we basically took that first thing, which was us making prints, copies, faxes, etc. and expanded into specialty areas, and then we also grew out our services business.

What led to the decision to split the company and spin the services part off?

The question at the time was, we should probably change fundamentally, but what could we change to? There wasn’t much more to be done with the printing and copying side of the business, so we took a step back and looked at our assets. We had a great brand and equity that was really important to take advantage of. We also had a great set of technologists in our company. We made these massive machines and when they broke we sent people out to fix them, and clients asked us to manage other problems for them. That led to the idea to start a services business for document management. It was also well-aligned with the Xerox founder’s original idea of managing whole business processes.

We identified document-intensive businesses, like the mortgage industry or legal services, where we could offer an integrated package—the technology and the document management service. We bought small companies that did business process management, as well as ACS, and put the pieces together gradually. By the time I left, we had built out and perfected, to a large extent, the services business and we had also resized and re-structured the tech business.

Along the way we found their growth patterns, investment needs, and customer types, particularly outside the United States, were diverging. And it turned out it was better for us, at that time, to separate the businesses.

“You have to make sure that you have a team of people that can actually see each other’s blind spots.”

What are the biggest challenges in that kind of change?

People. There are always technical things, and there are always global economic headwinds, sometimes some tailwinds, policy issues. Those generally happen evenly across an industry or a group, so I don’t call them either bad or good.

But the biggest issue is people’s ability to change with the times and generally to buy in. Or for the leaders to lead them to do so. There’s a lot more need to communicate effectively with people. It’s also a very big need to hire correctly, so that you are finding missionaries and not mercenaries. Often you don’t even have that option, because you come into a company and 60,000 people are already there. So, the question is, how do you get people aligned? People are the biggest challenge, I think. The biggest opportunity, as well.

If you were asked to talk to other leaders who were trying to make big changes, what lessons do you think you’d be able to tell them about?

Firstly, in any business—from office cleaning to NASA—the people make the biggest difference, particularly the leadership team. You have to make sure that you have a team of people that, when they work together, can actually see each other’s blind spots.

The second lesson is that fast is better than slow. I don’t mean move recklessly fast. But change is like peeling a Band-Aid off: the slower you go, the more painful it is. Somewhere in between too fast and too slow is ideal, and I think it’s important that we don’t operate too slowly.

Thirdly, people who have been in a company—or in the world—too long sometimes look at problems and say, “Well, that’s just the way it is. And it’s always going to be that way.” I’m maniacally impatient to find solutions. And my approach is to begin by acknowledging the problem. Maybe Einstein is needed to solve it, but let’s just start by noticing the issue. If we looked at it every single day, we’d probably have to talk about it once a month. And one day we’re going to get so annoyed with it that we’ll fix it. And it will probably happen sooner than you’d think.

The small forgiveness for inefficiencies, for the status quo, is what, I think, gucks up everything. So, if you can get rid of these small little gritty things, they will help you be a better company.

Are there specific lessons for legacy companies?

I’m on the board of two legacy companies, and also on the board of two brand new ones. I find that averaging the lessons from the two is better than either of them alone.

Legacy companies are such a pillar to learn from, but many new companies are trying so hard to not repeat anything legacy firms do. That’s the biggest mistake in the world. For example, these guys will say, “Why do we need an audit committee? Why do we need all this stuff that feels like bureaucracy?” And I say it all the time, “You’re playing with people’s money—they deserve the bureaucracy.” I also find the opposite is true. You’ll find people at legacy companies saying, “We can never use data or new methods of management or organizing because we’ve always done it this way.” That’s a problem too. Both sides have things to learn from each other, and it’s really important that we don’t throw out the baby with the bath water on either side.