by Denise Harrison, Executive Vice President and COO
In 2000, people were ready to sound the final bell for Xerox Corporation. Financially troubled, mired in shrinking market segments, the future of Xerox was bleak. Xerox had to reposition itself in order to succeed in the 21st century. To do this it had to speed its transition from analog based systems to digital systems and enhance its service based organization.
By 2006 the transition was well underway – over 25% of its business was in the services arena, and by 2011 over 50% of its business was providing services to its customers. Statistics on Xerox service offerings include:
- 900 million healthcare claims processed annually
- 50% of all toll collection processed in the US
- 66% of US insured patients are touched by Xerox services
- 60% of all US child support payments processed annually.
And many of us thought they were a company that just made copiers.
How did this transition occur? What did Xerox do between 2006 and 2011 to increase the service side of its business? First Xerox assessed its key strengths – what it could leverage as it moved into the 21st century:
- Global presence
- Xerox brand
- Xerox technology and innovation.
These strengths enabled Xerox to excel in providing document management solutions. However, this market was not big enough for Xerox to meet its growth expectations. It needed to expand into new markets in order to meet its growth target and to better leverage its strengths. Xerox identified two markets where it could leverage these strengths to provide value to the customers:
- Business process outsourcing
- Information technology outsourcing.
These markets already had formidable competitors, IBM and Accenture to name a few – how could Xerox compete? While it had many skills required by the markets to be successful, it was missing the knowledge of the actual business processes. How could it bridge this gap? It could develop the skills in-house or it could acquire the knowledge from the outside. Xerox thought that the best way to close the gap quickly was by acquiring ACS (accomplished in September of 2009). Notably, ACS had a competency in business process outsourcing with the requisite knowledge of business processes, and it also had a competency in IT outsourcing. These two competencies, when matched with Xerox’s global presence, brand and innovation capabilities, would give the combined company a leg up on the competition in the targeted markets.
In order for Xerox to make this transition, it had to:
- Understand the technology trends (analog to digital) and not deny reality
- Evaluate its current strengths and competencies
- Identify the market segments where Xerox’s strengths could be leveraged
- Assess the target market requirements
- Identify Xerox strengths that could be leveraged to create differential competitive advantage
- Identify the Xerox competency gaps
- Develop a plan to fill the gaps
- Build in-house
- Develop and execute a plan to dominate the markets that value its differential advantage
The jury is still out as to whether or not Xerox’s execution will be successful. The acquisition of ACS in 2009 and its successful integration will determine whether or not this resulting combination of skills, processes and knowledge truly results in a strategic competency. Ideally this combination of capabilities will give it a sustainable competitive advantage that:
- Provides value to Xerox customers
- Differentiates Xerox from its competitors,
- Is difficult to copy.
If Xerox succeeds in accomplishing the above, it will have a sustainable competitive advantage.
If you have questions about how to develop a strategy that positions you to compete in a changing market place, please contact me at email@example.com or visit our website www.cssp.com. In addition, if you are interested in reading more about strategy development, please read: March to a Different Drummer.
Denise Harrison is Executive Vice President and COO of the Center for Simplified Strategic Planning, Inc. She can be reached at firstname.lastname@example.org.
© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.