Pitney Bowes built a wonderful set of businesses that have served it well for 92 years.
The Company is challenged now because a major growth driver for physical mail, the expansion of consumer credit, declined in 2008, and probably will not return to its pre-2008 levels for at least a decade. This means that the Company will need to reinvent itself in ways that drive growth that are not dependent on mail volume levels.
There are failed and successful reinventions at other iconic companies as well. Eastman Kodak is a sad case of a company that attempted on numerous occasions to reinvent itself. It could not free itself from being dominated by the profitable camera film business until it was too late.
On the other hand, companies like Intel Corporation, which shifted from memory chips to microprocessors in the 1980’s, and the Thomson Group, which changed from being a newspaper company to an information services and software company in the late 1990’s, were successful at their reinvention.
There are many different stories and paths to successful reinventions. Great leadership is always needed. Xerox and IBM would either be gone or be like Eastman Kodak today if Anne Mulcahy and Lew Gerstner had not come at the right time and begun to lead them down new paths. However, there are additional common themes of successful reinventions:
▪ Although the execution phase of a reinvention takes many years, the decision process has to be clear, crisp and efficient. When it becomes clear that reinvention is needed, waiting until the perfect path becomes available is suicidal.
▪ The CEO and the Board have to be aligned on the reinvention path, and, then, they have to communicate clearly and frequently to all stakeholders: employees, customers, shareholders and other investors, the media, and the broader community.
▪ Successful reinventions are much harder to achieve with big, transformative acquisitions or mergers, than with a combination of organic changes, combined with many small, focused acquisitions.
▪ The movement from an existing, dying business to a new growth platform has to be done by acquiring or growing businesses complementary to what the company already has in place.
▪ The company going through a reinvention has to accept the fact that it may lose shareholders. It is very difficult to keep the momentum going on a business with shareholders who expect quarterly results to be stable or growing when a company is trying to reinvent itself.
▪ Reinvention is easier to do in a situation in which the company’s survival is at stake, like the situation faced by Xerox or IBM, when there is a “burning platform.”
▪ Finally, reinvention is extremely difficult. Many, if not most, companies fail at it, either because they make the wrong decisions or wait too long to make the right ones.
See Mike’s full blog here.