The Authentic Eccentric

Back in 1984, just after I’d relocated to the Burlington VT Kinko’s, Federal Express announced a new service called ZapMail, which guaranteed document delivery in 2 hours via fax. The concept was that businesses would use FedEx fax service instead of shipping overnight, cutting cost all around.

ZapMail should have been a resounding success - instead, two years and hundreds of millions of dollars later, FedEx unplugged ZapMail, allowing it to vanish from the business horizon.

In 1987, fax services were added to the product mix at the Kinko’s in Burlington, VT. By 1990, fax sales contributed millions to branch operating margins.

Yesterday, I was reading this month’s Quick Printing when I came across a blurb stating that FedEx Kinko’s saw a 56% drop in operating income for the 4th quarter 2005 with operating margins of 3.3%, down from 7.4% in 2004. They attributed it to a decrease in copy sales. There is another possibility for this decrease. Any business facing a 60% turnover rate surely would feel such effects, especially when it has crept into the front-line leadership of the organization.

At the same time revenue and profits are dropping, FedEx Kinko’s has a bold new growth plan: launching 200 new stores in ‘07 with a smaller footprint, staff and services mix, including FedEx pack & ship stations.

While it is true that profits will improve for smaller footprint branches, the reality is that until the problems at FedEx Kinko’s are addressed at the root cause, the organization (and the people it employs) will continue to founder. This isn’t unique to Kinko’s, either - the lessons to be learned from the situation they are presently in can be leveraged by nearly any organization.

If I were Ken May, the new CEO of FedEx Kinko’s, here are the first four things I’d tackle:

Address field compensation. Adding FedEx to the brand mix has only increased the complexity of the job; the present cap on highly skilled and front facing management team wages is unrealistic in the present economy. It’s great that you brought back entry-level training, but if new co-workers don’t see an advantage in advancing within the organization, building a bench will be difficult.

Launch a national mentoring program for tenured co-workers. As I suggested in my post on Human Capital, use technology to capture best practices and share them widely. If you’re willing to seriously invest in the concept, include coaching and partnering on the local level so that spoke and hub teams grow stronger together.

Get back to the basics of what made Kinko’s a great brand. It wasn’t putting ink on paper - it was helping people realize their dreams. A resume was way more than copies on linen paper; it was the time talking with the customers and showing them how professional presentations helped improve their stature.

Increase the amount, type and frequency of your communication with customers. Consider launching a monthly email newsletter (using all of the known best practices) that educates consumers about how they can use FedEx Kinko’s to accomplish their goals.

Turning around FedEx Kinko’s is entirely possible, but one man can’t do it all. To be successful, Mr. May will have to leverage the strengths and assets already available to him while using them in new ways to excite customers and co-workers alike.

Additional Resources: Clay Shirky’s Customer-owned Networks: ZapMail and the Telecommunications Industry has an excellent discussion on the market forces that led to the failure of the ZapMail concept.