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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.
___________________________________________________________________

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.


_______________________________________________________________________

BTW - August Red Herring also has a small piece on XRX (concerns robot development at Parc.)
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Author: gotadde Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1287 of 3604
Subject: Re: Red Herring Date: 7/21/2000 2:02 PM
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Tektronix's former color printer workers . . . . live and die by email, while some of their Xerox counterparts go a week without checking.
- - - - - - - - - - -

*&%#$!!
I wish I had known this before. If accurate, that statement pretty much sums up the problems with XRX's culture. (E.g., they resist regionalization and centralization in favor of continued decentralization but cannot even bother to read their email?!?)

Sounds like what is needed is a few good hachetmen/women at the top to change the culture (and, as the French said during World War I, to shoot a few folks "to encourage the others"). After all, shareholders are already feeling the pain (as are clients), so why not take the bull by the horns now?

Steve (who is now really glad that he "forgot" to tel his wife that he bought more)
P.S. And Bruno, sorry for the delayed response, but my copy of _Barron's_ got pitched and I've not been able to get another copy of the article. Xerox's a heckuva mess, though.


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Author: EnoughAlready Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1288 of 3604
Subject: Re: Red Herring Date: 7/21/2000 10:41 PM
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I must disagree with you that "Xerox people can go a week without checking it [email]" The Tektronix/Xerox merger established a great alliance for Xerox to confront HP. The result of this action was a 30%+ marketshare in that arena with the Tektronix products being focused (very well, I might add) on the Graphics Arts industry. I believe that you'll find that any potential culture clash between the two entities will be short-lived and inconsequential. Tektronix allows us a foothold and additional product/research capability to move more forcefully into the "point of need" printer market than previously. And Xerox people really do check email, voicemail and vpn enabled accounts on a daily basis. Hope this helps the discussion a bit.

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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: 1290 of 3604
Subject: Re: Red Herring Date: 7/22/2000 2:02 AM
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EnoughAlready notes - I must disagree with you that "Xerox people can go a week without checking it [email]"

The statement was a quote (not made by me). Ref. Red Herring Magazine, July 2000, Page 364. Do you mean to state that I misquoted the article, or that the quote was incorrect?

Here's the quote in question "They live and die by email, while some of their Xerox counterparts go a week without checking."

The Article didn't state that no one at Xerox checked their Email. It just stated that some Xerox Counterparts did. Are you, EnoughAlready, in a position to dispute that?
____________________________________________________________________________

EnoughAlready notes - I believe that you'll find that any potential culture clash between the two entities will be short-lived and inconsequential.

Please elaborate! There are several assumptions we can make:

1.) The culture clash will be short-lived and inconsequential because the two cultures are really quite similar. There is no clash, and the Red Herring Article is wrong.

2.) The culture clash will be short-lived and inconsequential because integration will occur quickly.

a.) Tektronics culture will quickly be assimulated.
b.) Or, Xerox culture will change to Tektronics.
c.) Or, Xerox supports multiple cultures.

The point of the Red Herring Article was basically that Xerox was working hard to achieve 2.c. Tektronics Culture is different, but Xerox had asolution: 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.

Is this Red Herring Article factual on this point?

Did circumstances change since the Article was published (and since Thoman has left)?

_______________________________________________________________________

I really hope we continue with this discussion.

Bruno the Meateater

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Author: phoolphancy One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1291 of 3604
Subject: Re: Red Herring Date: 7/22/2000 8:34 AM
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Xerox continues to lead in the most important areas.

Much is made of "Top management" as being the reason for the current Xerox condition, however the culture of XRX is changing all the way from top to bottom.

"Xerox has been named by Fortune Magazine and the Council of Economic Priority (CEP) as one the top 50 companies for Asians, African Americans and Hispanics. This is the third consecutive year that Xerox has achieved a Top 50 ranking.

Xerox placed 11th on the list, up from last year's ranking of 19th.

CEP & Fortune analyzed data from 148 companies in 15 different quantitative and qualitative categories such as what percentage of new hires are minorities, whether the company ties performance reviews and bonuses to diversity goals and how many minorities are in leadership roles."

This type of change will require some time before the full powerful and positive effects of a diverse workforce ushers Xerox back to it's former greatness. I'm holding a good portion of my retirement funds in XRX in anticipation.

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Author: EnoughAlready Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1292 of 3604
Subject: Re: Red Herring Date: 7/22/2000 4:57 PM
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Frankly yes, I am (disagreeing with the article). I've worked for Xerox for 20 years and during that time we used technology (much of it proprietary) to communicate between branches and countries long before email became a standard tool. I presently work in international operations and can send email to almost anyone doing the same (much harder to hook up on the road) and get a reply within 24hrs.

Now...onto the Tektronix discussion. I believe that Xerox is doing the right thing by not actively trying to change the Tektronix culture. They have a good organization and properly coupled with some of the work being done in PARC we can expect some good products to emerge. I've yet to see Xerox trying to assimilate the Tektronix organization (although I won't say that we haven't done that in the past). Rather, I see a "hands off" approach that I welcome, in this case. In conclusion, I think Xerox can, as you mentioned, support multiple cultures. The largest issue we are dealing with right now is the reorganization and many of the lasting effects of those actions.

I don't know what (if any) other "surprises" may lie ahead, but despite the dreary present I do believe that the proper leadership can quickly harnass the many good things occurring at Xerox and increase the value to the customers, stockholders and employees.



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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: 1293 of 3604
Subject: Re: Red Herring Date: 7/22/2000 5:41 PM
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EnoughAlready - much better post thanks for the info.



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Author: 1unafraidbull One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1294 of 3604
Subject: Re: Red Herring Date: 7/23/2000 10:10 PM
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phoolphancy, let me first commend you on offering the full title of your abbreviation following its first usage (a courtesy some of the best Fools often neglect).

As for your comment applauding XRX for their long-term standing and progression in various categories of the lastest Fortune 500 diversity study such as "whether the company ties performance reviews and bonuses to diversity goals"...although it may not be the most popular opinion, I disagree with a company tieing "bonuses" to diversity goals. Bonuses should without exception be performance-related; not governed by some internal corporate bureaucracy to offer some percentage of bonuses to minorities.

Furthermore...regarding XRX's top notch efforts to be diverse and minority-friendly, you wrote "this type of change will require some time before the full powerful and positive effects of a diverse workforce ushers Xerox back to it's former greatness." Well, first of all, I wish their problems were that simple. I could attach many links citing the shortcomings of XRX mgt but no doubt the studious Fools on this board have already read them. Besides, XRX has been in high standing in this diversity study for over 3 years now...just how long before you expect the "powerful and positive effects" of these efforts to pay off?

-still unafraid

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Author: xeebo One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1304 of 3604
Subject: Re: Red Herring Date: 7/26/2000 9:34 AM
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Forced Diversity in the workplace.


To me these are warning signals that the company is burdened with yet another form of cancer. When people are assigned to jobs because of what they are as oppposed to who they are the outcome is usually far from stellar benefits to the company. Xerox is forced to keep track of diversification in the workplace because they have government contracts. Not a fitting way to spend the net income which it was anounced today has dropped fiftey percent.

If the bad news keeps coming from this dog and pony show of a company I will have to change my name from Xeebo to Broko.

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