Will Xerox reproduce its success?

The outfit that became synonymous with copiers now plans to recreate itself as 'The Document Company', says Roger Trapp

Nobody can doubt that Xerox, the US-based company that became synonymous with photocopying before losing the initiative to the Japanese, is in a process of renewal. And the European operation, Rank Xerox, is anything but immune to it.

The decision to recreate itself began more than a decade ago, when the company suddenly woke up to the fact that Japanese companies such as Canon were poised to dominate a business it had in effect created. Xerox's initial response was to become one of the early converts to the quality religion. Now it sees its future as moving away from being a pure supplier of office equipment with a little service and maintenance tacked on in the hope of distinguishing it from the competition. Instead, it aims to adopt what senior executives admit is almost a consultancy role in establishing itself as "The Document Company".

This guise is an attempt to tap into what the management sees as fundamental changes in its market. It realised that the increasing speed and diversity of technology meant companies of all types needed high-quality document creation, transmission and storage. This is a long way from having a bunch of creaky copiers operated by in-house staff; it requires professionals with the knowledge and the enthusiasm to tailor solutions to specific situations.

Vern Zelmer, UK managing director, believes the time is right for such a transformation. Not only is the information technology at the right stage of development, but there is also "a general realisation in business that it's documents that drive processes". With all the current attention on processes through the management concept of business process re-engineering, it is hardly surprising that any number of Xerox's competitors in the IT and consulting businesses want a share of the business. The US-based office products company Pitney Bowes, for instance, has recently brought its business support services division, Pitney Bowes Management Services, to Britain. Mr Zelmer's response is a confident "we've got the name".

But a company that was nearly killed off by complacency before is not about to leave it at that. Under a programme known as RX2000, Mr Zelmer and his colleagues have sought to establish a staff structure that enables them to deliver on this promise. In other words, they and their masters - Xerox's chief executive, Paul Allaire, and managing director, Benard Fournier (who were in Britain recently for the opening of the technical facility at Welwyn, Hertfordshire) - acknowledged there were organisational as well as product deficiencies that needed to be addressed.

Though it has been dressed up in a rather fancy language involving "territories", "champions" and " sponsors", basically this means the business has been restructured into nine divisions. Each has full "line-of-site" responsibilities - ie, they can be seen all the way through - from research and development, through sales to customer satisfaction. The idea is that this provides "full process ownership" and encourages employees to pull together to ensure "cross-divisional coherence" and so avoid the petty rivalries that tend to afflict large international corporations.

But just as important, says Mr Zelmer, is that it works the other way to give the customer a much quicker route back through the organisation. "If you've got a problem, you can deal with it quickly, rather than losing it in hierarchies. By that time the customer will have gone somewhere else," he says.

Not surprisingly, this reorganisation has not been achieved without a price. In the past three years, almost 10 per cent of the company's jobs have gone - 3,000 out of 27,000 in Europe and 10,000 from a total of 100,000 world-wide. But Mr Zelmer is adamant that the job reductions were necessary to ensure the future of the company, especially in the area it has targeted.

"What we're about is improving productivity in clients through improving processes driven by documents," he says. "We're trying to sell productivity to customers. Therefore, we have to be one of the most productive companies in the world. We have to improve ourselves to show customers what can be done."

To achieve this fully, the company realised it needed to change its management style. Out went the hierarchical and administrative approach and in came one centred on results, and very much focused on the market. Work was made line-driven and team-oriented. Staff were given more responsibility, so that, for example, people answering the telephone were given the authority to settle complaints up to a certain value on the grounds that anything else was unproductive. After all, a business styling itself "The Document Company is in a better position than most to understand that documents are associated with 40 per cent of labour costs but only 8 per cent of revenue.

But conscious that all this can be rather empty rhetoric unless it is linked to those two central issues of corporate life, pay and promotion, a sizeable share of managers' remuneration is linked to performance in the customer service arena, while managers are regularly assessed according to a comprehensive criteria.

Besides the nine "cultural dimensions", such as "team-oriented" and "open and honest communication", there are no fewer than 23 leadership qualities that must be satisfied. Managing equality and diversity is taken as a given, while such commonplace requirements as "business and financial perspective" and "overall technical knowledge" are close to the bottom of the list. Far more prominent are such attributes as "inspiring a shared vision", "decision-making" and "developing organisational talent". Even the likes of "openness to change" and "interpersonal empathy and understanding" are ahead of the more traditional qualifications.

Explaining that the list was compiled to "put teeth" on to what the organisation was doing, Mr Zelmer said each one could be "a knockout factor in promotion".

Even though the quality programme had amounted to a catalyst for change, and so had prepared personnel for the sort of things that are now happening, the evolution has not been entirely straightforward. Mr Zelmer and his associates acknowledge that more effort should have been directed towards this area at the start.

"In the first year we underplayed the importance of getting the management process right at the front because it's the glue that makes it smooth," he says.

Nevertheless, 18 months on, he is convinced it is a way of running the company that is "vastly superior" to anything that has been in place before. And the latest results or, as he puts it, outputs would appear to bear him out.

In the last financial year, the UK operation reported revenues up 10 per cent and profits ahead 35 per cent, with costs down 4 per cent - a picture that was much the same world-wide. Soft measures such as employee and customer satisfaction also rose.

It would appear to be a triumph for a system based around self-managed work groups. But Mr Zelmer is not about to suggest that this is an easy option. "Empowerment only works," he says, "if you've got the data and information you need to make decisions."