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Author: themeateater Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3604  
Subject: Red Herring Date: 7/20/2000 10:56 PM
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FYI - Article on integration after mergers. Highlights integration of XRX and Tektronics.

IMO - It also gives some interesting insights into XRX culture.
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The integration game

Most mergers tank for one not-so-simple reason: too little effort toward company integration.

By Joan Indiana Rigdon; From the July 2000 issue; Red Herring Magazine


http://www.redherring.com/mag/issue80/mag-integration-80.html

LEADING QUESTIONS

Last year, when Xerox announced its intention to buy the color printing business of Tektronix (NYSE: TEK), it also said that the acquired unit's chief, Gerry Perkel, would become the head of Xerox (NYSE: XRX)'s newly combined printing business. The release also named Mr. Perkel's boss, and his boss's boss. By making all this clear early on, Xerox was hoping to remove uncertainty. According to KPMG's study, merging companies who clearly outline the new management team right away are 26 percent more likely to increase shareholder value. ..............

ENCOUNTERING CULTURES

To that end, when Xerox acquired the Tektronix unit, it announced that the merger wasn't just about expanding its copier business, but learning some new, nimbler business practices. And Xerox could use some: ........

"We were acquired for our DNA," says Duane Schulz, a former Tektronix executive who is currently vice president of new business ventures for OPB. "And part of the frustration is making sure not to let our employees copy the Xerox DNA."

That cultural transfusion will be extremely difficult. While Xerox likes to think of itself as a cornerstone of the new economy -- its press releases say Xerox invented the first personal computer and the graphical user interface -- its culture definitely hails from the old school. Suits and ties are de rigueur in Stamford, and casual Friday means you get to wear a sports coat. Tektronix, at age 53, is no startup. But its culture is decidedly left coast. In Wilsonville, Tektronix's former color printer workers wear Dockers and even jeans with holes. They live and die by email, while some of their Xerox counterparts go a week without checking.


MEET GRINDERS

As Xerox and Tektronix worked on combining their businesses, they learned just how different their cultures were. Sometimes it manifested in small ways, like on January 3, when Mr. Vester arrived in Wilsonville to celebrate the merger's close. He had met three of the Tektronix division's executives several times before, and they were wearing suits each time. So Mr. Vester wore his, only to discover that everyone else was dressed casual. He wanted to change, but his casual clothes were in his luggage, which had been delayed in Seattle.

That was easy to fix, but it's the clashing business habits that really strain patience. Xerox favors large meetings, both in person and over the phone. Tektronix prefers email. It's not unheard of for someone from Xerox headquarters to ask a Tektronix alumni to take a 10-hour round-trip plane ride in order to attend a two-hour meeting, says Mr. Schulz. It's not uncommon for the Tektronix alum to say No.

Mr. Vester hears both sides of it. "Why can't I get three guys to get on a plane and fly to Rochester?" he says, echoing a headquarters complaint. "And then I had an email (from the Tektronix side): 'This drives me bananas. I solved this problem three times. Why do I still have to talk to this guy?'"


BUBBLE WRAP

The solution: since one of the Tektronix division's biggest assets is its business culture, Xerox, working with KPMG, has taken great pains to build a "bubble" around OPB. To that end, Xerox tapped some of its executives to serve as coaches (it won't call them that). These are people from the Xerox side whose job is to run interference between Wilsonville and headquarters. They help the people in Wilsonville figure out what Mr. Vester calls Xerox's "process-laden" culture. Among other things, they tell OPB employees which meetings really are important and which can be missed.

Mr. Vester has tried to get both Wilsonville and headquarters to funnel all communications through his integration team. But they don't always listen. In that case, Mr. Vester wants OPB workers to defend themselves. When someone from Stamford calls to explain the "Xerox way," he tells OPB workers to remember that they aren't necessarily supposed to snap to it. At first they did, and bogged down OPB's business because they wanted to please their masters. Now they have orders from the top to stand up for themselves and follow guidelines that Xerox's upper echelon has established for OPB.

Among other things, the guidelines call for efficiency. Against that test, the email-versus-meeting question looked like this: "What's more efficient, sending 784 bytes over the Web or spending a bunch of money on a plane ride for a meeting?" asks Mr. Schulz. Email won.

Mr. Vester had to loosen requirements for his own meetings, too. He used to host large, three-hour conference calls once a week. After many complaints, he has whittled them down to just one hour, once or twice a month, with only half the people..........

It's much harder to track how well two cultures are meshing. Most companies rely on meetings and internal Web sites with email links for this. But that assumes that employees will always speak up about what's bothering them. Xerox and the Tektronix unit went one better: during talks, Tektronix employees spontaneously started their own Yahoo chat board, a kind of anonymous online bitch session. Mr. Vester and others on the integration team didn't formally monitor it, but they did look in often enough to get a feel for how the merger was going. The integration team posted some of the chat board's comments, with answers, on Xerox's internal Web sites -- unless the comments were "nasty or snotty," Mr. Vester says. He didn't actually mind those. "Over time, if they were getting nastier and snottier we knew we weren't doing something right," he says. These days, he says, the snottiness index is way down. "Not many people use it anymore," Mr. Vester says. "People are past the integration. They're back to running their business." He hopes.


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BTW - August Red Herring also has a small piece on XRX (concerns robot development at Parc.)
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