May 20 2009

Part of my occasional series, How to Destroy a Company

You've just taken the reins of a successful company. It doesn't matter whether it was a merger or a purchase or you simply bested other candidates for the top spot after the founder retired. Now you wonder, "what is the easiest way to destroy this company?" The answer is simple. Since we know it is management's job to remove obstacles that interfere with workers' productivity, the easiest way to derail a company is to invent new obstacles, and lots of them! We see this technique all the time.

For example, as a newcomer, you'll want to know every detail of the company's business. But you're much too important to spend time with coworkers in the field, so require THEM to neglect their regular responsibilities while collecting meaningless data for you.

This is what Clayton, Dubilier and Rice did when they took over Kinko's. Rather than spend time in the stores, working side-by-side with coworkers and customers, as Kinko's executives had done for the prior twenty-five years, the new heads of finance, operations, marketing and other departments inundated the store managers with demands for audits and surveys.

At the same time, they created loads of new policies and procedures that required even more audits to ensure compliance. The CEO, CFO and other newcomers believed that the company's business was conducted at the corporate offices, not at the stores, so those stores must serve the executives. This is the exact opposite of the model we created with Kinko's Service Corporation, the original corporate office owned by the stores.

The company had been successful because store managers' and coworkers' primary objective was to take care of the customer. Kinko's Service Corporation, as led for a decade by Dan Frederickson, was aligned with this primary objective and saw its duty as the removal of obstacles between coworker and customer. The new leadership invented impediments that changed the workers' focus. Now their primary objective was to demonstrate obedience to their corporate masters.  Who has time for customers?

The thing is, people come to work every day to do a good job. So whatever obstacles CD&R put before the store coworkers, those coworkers strove to overcome them. In the years following CD&R's takeover of Kinko's, a generation of high performing managers had their spirits broken by an endless parade of new obstacles between them and their customer service ideals. CD&R achieved their ulterior goal - the removal of highly paid coworkers - and proceeded to "strip and flip" the company to FedEx.

So if you want to destroy a successful company, you only need to ask one question of your workers: "How can I make your job harder?"

Comments

larry prodehl wrote on 05/20/09 10:43 AM

Paul,
you sound so bitter. look at what you have done for so many of us.
we understand that removing obstacles is the only way to increase our productivity.
Simply put;
What is more important. The bottom line or the spreadsheet that tells you so?

casual observer wrote on 05/21/09 11:37 AM

Good heavens, haven't you buried the CD&R issue? Talk about dwelling on the past. Come on Paul/Dean, you guys are better than this, aren't you?

M.J. wrote on 05/22/09 11:48 AM

Why not dwell on CC&R they took a company that was a household name, and look in 15 years it is no more.

Melissa Ganus wrote on 05/25/09 9:23 AM

I appreciate the candor. I miss Kinko's. No one else out there has ever come close.

sean wrote on 06/02/09 1:25 PM

The first time I met Paul his first words to me were, "what can I do to make your job easier?" After CD&R the annual interaction with the powers that be was, "we need to adjust for bonus structure." (it always resulted in less money)

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