At the turn of this century, Xerox was in trouble. The competition was offering cheaper products and new technology was eroding customer demand for its products. Stock prices skid more than 90% from June 1999 to December 2000.
But then Xerox began reviving itself, aggressively reconfiguring its core business, simplifying product lines and outsourcing core functions. Cash flow became positive and stable.
But Xerox wasn’t done making changes. At the same time it was repositioning its core business, the company began experimenting with new service lines and bought Affiliated Computer Services for more than $6 billion.
By 2012, Xerox was hitting $21 billion in revenue.
Scott D. Anthony shares this story in his new book, “Dual Transformation: How to Reposition Today’s Business While Creating the Future,” which he wrote with Clark Gilbert and Mark W. Johnson.
Anthony says Xerox is an important example of what companies can do to thrive when their industry is being disrupted. But perhaps the real kicker to this story is this: Xerox is going to need to do it all over again.
That’s the lesson for any business wanting to survive in today’s fast-paced environment, Anthony says. Survival depends not only on repositioning the core business while also creating a new separate growth engine – but also being prepared to do it over and over again.
“That’s the new normal,” he says.
Those who don’t follow such a strategy will end up like businesses such as Kodak and RIM that were buried by disruption, Anthony says.
While Anthony says the book addresses many of the steps leaders need to take, he says it’s also important that employees “in every nook and cranny” of an organization been seen as a critical piece in helping such a strategy be successful. Their input, he says, is important for spotting signs that companies may need to change.
“Employees can be a great early warning system for disruption. You tell them to keep their eyes open and ears tuned, and they can pick up on faint signals that new competitors are emerging or customer preferences are shifting,” Anthony says.
At the same time, these workers must be educated that change will be an ongoing requirement in order for a company to be successful, and be kept abreast of those shifts as they take place.
“You tell employees it’s sort of like an inoculation,” Anthony says of the need for ongoing change. “It may sting a bit at first, but then it’s not so bad.”
The authors write that the “hastening pace of disruptive change means that leaders have precious little time to respond” and they need to be the most prepared for change “right at the moment when they feel they’re at the very top of their game.”
How to make such a shift? They point to a formula they say that Xerox followed:
A + B + C = change
Anthony warns companies not to fall into the trap of listening to their best customers in determining their strategy, “because then you set yourself up to be disrupted” because customers can have very different ideas about what they need. The key, he says, is to be more “purposeful” and figure out what’s plaguing customers.
“The way you really have an impact is to help them solve their problem,” Anthony says.
The authors point out that while disruption nearly always grows markets,it has destroyed many established companies. They offer some lessons on how to avoid a similar fate:
The authors stress that dual transformation is difficult, because “changing the status quo is difficult.” But once leaders and teams embrace the idea and move ahead, they will create more customer and employee value – and be thanked by shareholders who will reap the benefits, they write.
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