Some Things Ought to be Copied: Lessons from Kinko's, Part I
My mother thought that I was nuts. "It’s a copy shop and it’s called Kinko’s? What is a Kinko?" She said. So started my 20-year career as a "Kinkoid."
I left the company in 2000 and Kinko’s was eventually acquired by Federal Express. Kinko’s founder, Paul Orfalea (aka Kinko), has a book out that captures some of the magic that I encountered, but there are some very tangible business lessons that should be shared as the Kinko’s blue signs turn to FedEx purple.
Lesson Number One: You get what you deserve from your people. We did not talk about employees at Kinko’s. Paul mused that the root word "employ" meant to bend (as in bend to the will of) and that it was archaic. Paul used to frequently say that, when you hire a pair of hands, you also get a brain. Translation: Treat people with respect and don’t think that mahogany row produces all of the good ideas.
Lesson Number Two: If you want people to act like owners, make them owners. Until 1997, Kinko’s was not one company but rather over 120 "partnerships" (most actually S-Corporations). They were not structured like a typical franchise. Paul was literally your business partner and made money only if you did. He did not make money from franchise fees and thus avoided much of the divisiveness that exists between the "ees" and "ors" of the franchise world. It was a very chaotic structure with little central authority—though Paul could be a very persuasive partner. The partners had the right to vote on many issues and had a great deal of autonomy. There was also a great deal of internal sharing as well as healthy competition—for bragging rights in growth and profits—that led to better results. Field management was paid a percentage of the income they produced in their store or area every month. Many store managers made 6-figure incomes. It is amazing what people can accomplish when you incent them to act like owners. Great ideas came from everywhere and were shared by everyone. We reviewed income statements with them and got their opinions on how to best make more money. While some managers were better than others at making use of this environment, the good ones got their entire team pulling in the same direction and reaped the rewards.
Lesson Number Three: Steal from the best. We spent millions of dollars in travel expense so that managers at all levels could learn from their peers. We had company conclaves with 1,000 people who would tour a city or region that was performing well so that everyone could steal their ideas. This had the added benefit of reinforcing the cult-like environment that existed. We had a company "Picnic" (most would call it an annual meeting) that was all about sun ‘n fun, beer gardens and I’ll be darned if people didn’t talk about business for the whole week and go back home with great ideas.
Lesson Number Four: As leaders, you must provide meaning to the work of the organization. Believe it or not, we thought we were changing the world! C’mon, you say, "You were only making copies!" True, but every heroic act by a co-worker was very well publicized through our internal voicemail and newsletters. Paul truly had everyone believing that we were making a better society. (We were!) They weren’t just copies; they were business proposals so that people could be employed. They were bound thesis that furthered education. They were lost child posters so that families could be reunited.
Lesson Number Five: Sometimes the very behavior that made you successful must change. This is a tough one for entrepreneurs to deal with. While Kinko’s ended up a multi-billion dollar enterprise (a nickel at a time!), the structure that led us to that point started to cause problems. Some partners started to dividend out all of their earnings and were not reinvesting in their business. The digital age required much more investment spending, training and a change in products that was not happening. The business was heading toward irrelevancy and we did not have the organization to deal with it. In addition, there was no exit vehicle for the partners. In 1997 we "rolled-up" the partnerships into a corporate entity and took a large investment from a well known equity group. While some bemoaned the changes from the "old days," I took with me many valuable lessons that have helped me run several other organizations. In fact, my mother finally believes that it was a real job.
(c)2005 by Tood Ordal. You are welcome to share this informational article with others.
Todd Ordal is a business consultant helping executives struggling with execution. Prior to founding the consulting firm Applied Strategy LLC, Todd spent over 25 years in management and executive roles such as President and CEO. You can contact Todd at todd@appliedstrategy.info