X Forever

How Xerox true believers have reshaped Hawaii businesses

March, 2005

One of the first things that Joe Haas did when he took over as managing director of the commercial real estate company CB Richard Ellis nearly four years ago was to buy a new Xerox copying machine. The old one worked fine, but Haas felt that it was time for an upgrade, both for the machine and his company. The same was true for the office’s phone system, which was replaced with one that played music for customers on hold. He even bought a new coffee-table book for the reception area in the front of the office.

Besides the big and little office upgrades, Haas also instituted a series of contests designed to raise morale and keep the atmosphere light and lively. For salespeople, who brought additional business to the company, he presented special umbrellas, his “rainmaker” awards. For others, who made both small and significant improvements to the way the company did business, he handed out dashboard hula dolls, “mover and shaker” awards.

“I tried to make positive improvements in everything we did all throughout the office,” says Haas. “It was so many little things, but mostly, it was about instilling a sense of optimism and excitement into the staff. Eventually that enthusiasm filtered through to our clients. I had customers call me up and ask: ‘Joe, what did you do to your office?'”

Although gregarious and garrulous by nature, Haas had been a reluctant manager. However, once he started running the show, he realized something curious was happening. Almost as if by instinct, he was formulating policy and instituting programs based on sales and marketing training that he had received more than 30 years before, while a sales representative at the Xerox Corp.

“I really didn’t think I had any management skills. Back at Xerox, I was a sort of a rebel and bomb thrower. I loved the company, but didn’t care for management too much,” says Haas. “Then in 2001, when I was asked to manage CB Richard Ellis, all these Xerox principles about how to manage people came back to me – how to motivate people, how to do sales training. It’s hard to describe. It was a million things that I had learned, but didn’t realize I had learned.”

Selling Snow to an Eskimo

Haas worked for Xerox (NYSE:XRX) from 1969 to 1980, first as a technician repairing machines in New York City before transferring to Honolulu in 1977 as a sales representative. His 11-year tenure encompassed much of what many people believe was the innovative document company’s golden years (early ’60s through the mid-’70s), a decade-and-a-half of high-tech market dominance that hadn’t been seen before. From 1960 to 1975, Xerox’s revenues grew from $33 million to $3.6 billion, while its work force held steady at approximately 100,000. Not only was the company a favorite on Main Street, it was also the darling of Wall Street. During that same period, the price of Xerox stock skyrocketed, from $2 to $172 a share. Think of a company that combined the product penetration of a Microsoft with the technological savvy and marketing panache of an Apple Computer.

Locally, the high-flying company became an incubator for some of the Islands’ most successful executives and entrepreneurs. High energy, hungry and well compensated, these young lions were relentlessly schooled in a sales strategy system that was almost as innovative as the products they sold.

“When I came to Honolulu, I sat in a sales room with eight to 10 people, who were very competitive,” says Rich Kalbrener, former CEO of high-tech companies Pihana Pacific and Long Distance USA and a Xerox sales rep from 1972 to 1978. “I worked alongside guys like [Rich Dad, Poor Dad author and entrepreneur guru] Bob Kiyosaki, Joe Haas and [CEO and president of Easter Seals Hawaii] John Howell. They just flat out knew how to sell. We’d all stick together, sort of like a fraternity. Everyone worked late into the night and played hard on the weekends.”

“Back in the old days, they trained the daylights out of you. Xerox taught me how to communicate, what tone of voice to use, how to read facial expressions and to never interrupt a customer,” says Howell, who joined the company in 1972, after leaving the U.S. Army as a captain in the infantry. “I learned how to compete, and I prospered. By 33, I had a home in Kahala, with a Mercedes in the driveway and a hot tub out back.”

With the money good and competition fierce both inside and outside the company, Xerox sales reps and managers often moved up before moving on, armed with time-tested sales skills and a Rolodex full of contacts.

“Not only did they teach you a process, they introduced you to a whole company culture,” says Craig Watase, president of affordable home builder Mark Development and Xerox sales rep and finance manager from 1985 to 1992. “They took great pride in being very good at what they did and, as a result, you wanted to be the very best at what you did. You wanted to be able to sell snow to an Eskimo.”

Coloring the World in Black and White

In 1959, Xerox brought high technology into the workplace, when it introduced the Xerox 914 copying machine, the first automatic plain-paper office copier. With a decade head start, the machine would revolutionize the carbon-paper business world. Xerox would manufacture more than 200,000 of the machines over a 17-year span, making the device the top-selling industrial product of all time. Today, a Xerox 914 sits in the Smithsonian Institution.

Xerox’s innovation didn’t stop at duplicating documents. Its legendary Palo Alto Research Center (PARC) opened in 1970 and churned out technological marvels like, well, so many Xerox copies. PARC researchers have been credited with inventing devices and processes that would change the way people worked and lived. Some of PARC’s wonders include the fax machine, laser printer, Ethernet, computer mouse and, most significantly, the first personal computer, the Alto. It also developed the GUI, or graphic user interface, the user-friendly, point-and-click computer operating system that was the precursor to Apple Computer’s Macintosh operating system in 1984 and Microsoft’s Windows years later.

Xerox’s inability to bring its high-tech innovations to market is a well-known chapter of American business lore. However, the company never lost its ability to sell copiers and related products, even though the marketplace would become crowded with both upstart competitors and old foes.

In 1974, Xerox opened Document University, a 1.2 million-square-foot training facility on 2,300 sprawling acres near Leesburg, Va. The campus was comprised of four interconnected buildings that housed 250 classrooms and 863 residence rooms for students and guests. At its peak, Xerox trained 12,000 employees a year at Document University, which had a staff of 500.

“Leesburg was kind of out in the boonies, a self-contained, multiwinged facility that had no windows,” says Nonie Toledo, vice president and general manager of Sprint Hawaii and Xerox sales rep and manager from 1980 to 1991. “To get from classroom to classroom, you’d have to walk through these underground tunnels and follow color-coded directions. It was like being a rat in a maze, and you literally wouldn’t see the light of day. It was designed so that you could focus on one thing, Xerox.”

After a brief orientation period in their respective home offices, new hires were shipped off to Virginia for six weeks of intensive sales and technical training and “indoctrination.” Inside Leesburg’s windowless classrooms, new sales reps would be introduced to Professional Selling Skills (PSS), the company’s famous sales training method, which emphasized listening over talking and asking the right questions rather than quickly offering a slew of answers and products. The PSS system, which would evolve into a slightly more comprehensive approaches, known by such acronyms as SPIN (Situational, Problems, Implications, Needs payoff) and FAB (Features, Advantages, Benefits), among others, was eventually packaged and sold to other companies. Real estate companies, auto dealerships and even some competitors were among many other organizations that purchased PSS.

At Leesburg, students were taught through a combination of book learning and role-playing. Many of the exercises were extensively videotaped, a rare (and expensive) undertaking in the mid-’70s. But schooling at Document University wasn’t a one-time affair. Sales staff would have to return on at least a yearly basis for refresher courses. They would also make the trek to the East Coast when a new product was introduced. For Xerox technicians, the visits to Leesburg were often longer and more frequent.

“I added it up once and, in my six years at Xerox, I spent six months in training,” says Kalbrener. “That’s 10 percent of my tenure at the company. Pretty amazing. As one who has owned and run companies, it’s hard to justify spending that much time and money. But at Xerox, that is just the way it was.”

Back home at the office, sales reps, or “marketing representatives,” as they called each other, were assembled into small sales teams. Individuals competed with each other, teams with other teams, districts with other districts. And, of course, everyone competed against the IBMs, Kodaks and Canons of the world. The system fostered both individual achievement and teamwork.

The result was not only a knowledgeable, capable sales force, but one populated by true believers, many who bought into a culture of excellence, high achievement and, maybe most important, winning. “The work and the training were very stressful and competitive, but everyone got through it together,” says Jeanne Schultz, business advocate for the Chamber of Commerce of Hawaii and a Xerox sales rep and manager from 1968 to 1980. “It was like the military. We all went to basic training together and then did battle. Many of us still keep in touch after all these years, kind of like war veterans.”

“When you are part of a winning team, it’s not something that you forget very easily,” says Glenn Sexton, Xerox Hawaii’s current general manager. “Many people believe that successful salespeople are money motivated, but money is just a way of keeping score. When we hire, we are looking for people who just don’t enjoy losing.”

During the ’60s and ’70s, Xerox was on one of the business world’s longest winning streaks, and, as a result, many of its employees possessed a certain cache, a confidence with being associated with a company at the top of its game. Many also developed a fierce loyalty to Xerox, which had invested generously in their training and development as well as pioneered progressive hiring, compensation and benefits practices. For Xerox Hawaii, that loyalty would help it weather both the financial and emotional turmoil to come.

On November 2, 1999, Xerox technician Byran Uyesugi shot and killed seven of his co-workers in the company’s Nimitz Hwy. warehouse. It was the state’s worst mass murder. Instead of circling the wagons, the company, with Sexton as its very public face, provided frank and frequent updates to anxious employees and residents. Xerox also offered counseling to employees early and often. In addition, it opened a new warehouse, continuing to pay the lease on the old facility for years. Most significantly, the company provided the seven families with benefits and financial packages with full knowledge that it would be sued anyway. Earlier this year, Xerox and the victims’ families came to a settlement.

Thanks to the company’s progressive and proactive actions, Xerox Hawaii shut down operations for only one day during the crisis.

“Xerox was responsible for many innovations, not just inventions. It was one of the first companies to offer medical benefits and one of the first to hire women sales reps,” says Haas. “Xerox takes care of its people. The way that that company responded to the shooting was amazing. Most companies couldn’t handle that kind of crisis. But Xerox pulled together and pulled through.”

Copied Right Out of the Entrepreneur’s Handbook

While Xerox culture may have cultivated a loyal staff, its sales training also created reps who had valuable and portable skills. Many Xerox sales reps became hot commodities, poached by competitors and other industries, particularly pharmaceutical companies. In addition, PSS, SPIN and FAB taught students to communicate effectively, operate independently and think on their feet-concepts right out of the entrepreneur’s handbook. Many former employees, such as Toledo and Kalbrener, who now manage and/or own businesses, point directly to their classroom and real-world education at Xerox as the basis for their sales and management philosophies. Whether they worked at Xerox 30 years, 20 years or 10 years ago, their stories are similar.

“Xerox taught me to take chances and push the envelope,” says Easter Seal’s Howell. “But it also helped me become a better communicator, to sell to someone who doesn’t want to talk to you.”

When Howell arrived at Easter Seals in 1993, he found an organization that had an operating budget of less than $2 million, a staff of 40 and a sizeable debt. He cut down the organization’s service programs from eight to four, focusing on its strengths, early intervention programs. Twelve years later, Easter Seals has a budget of $11 million and a staff of 300, who operate 10 different service centers on four islands.

“So many of the skills I learned at Xerox applied when I had to run a company of my own,” says Watase, whose first Xerox sales territory stretched from Northern Iowa and into both South and North Dakota. “When you think about it, everything in business comes down to negotiation. If you want people to come along with you, whether you are a sales rep or a CEO, they have to buy into it. They have to be sold on your ideas. You gotta make them believe.”

“I learned organizational skills that helped me run my business. I also learned how to have fun. We had a hell of a good time,” says Allan Dowsett, owner and president of the Blueprint Co. and Xerox sales rep from 1978 to 1982. “But the key is that they taught me how to listen. Success in sales, or in business or in any aspect in life is based on how well you listen, not how well you talk.”

Xerox sold its Leesburg facilities in 1999 and leased back training space shortly thereafter. In 2001, it suspended introductory training at Leesburg altogether, but it was quickly reinstated a year later. Today, Xerox sales reps spend about three weeks in Leesburg during their initial training period. The rest of their training is provided at their home offices, some of it outsourced. Sexton estimates that the company still spends approximately $50,000 for training and development during a rep’s first six months of employment. Even though the company’s market dominance has waned significantly since its golden years, Xerox still fosters a culture of achievement. “I’m a big believer in certain principles that are unchanging,” says Sexton. “It’s not just about money or advancement or benefits. If you properly challenge people, they will rise to the occasion.”

Xerox’s training methods and culture building were as far ahead of their time as were its fax machines and personal computers developed in the ’70s and ’80s. Surprisingly, even in the age of downsizing, outsourcing and interchangeable work forces, significant investment in training and development of employees is on the rise. As was Xerox’s experience, not only does it result in a more capable work force, but a more loyal one as well. According to Dr. Hank Hennessy, chair of the business administration department at the University of Hawaii at Hilo’s College of Business and Economics and also chair of the Society of Human Resource Management Foundation, management development is one of the hottest topics in human resource circles as managers fight what they call the “war for talent.”

“It is very difficult to get and hold onto really qualified people, so one of the great strategies in keeping people is to provide them with development experiences in the hope that it will create some sort of loyalty,” says Hennessy. “Of course, the risk is that they develop desirable and portable skills that they can take to other places. But it’s necessary, so you bite the bullet and do it.”

Hennessy says that progressive companies build sustainable competitive advantages by doing something that is very difficult to imitate, almost always something that technology can’t provide: They build belief systems and cultures that permeate throughout their staff and their customers, similar to what Xerox began cultivating more than 40 years ago. “That advantage is usually achieved through the attitudes of people and the processes of what your organization uses,” says Hennessy. “The products come and go, but the culture survives.”

Management by Walking

Haas isn’t an academic, but he does know quite a bit about business culture. He just never realized he knew it until recently. During Haas’ tenure, CB Richard Ellis has doubled revenues and increased staffing more than 30 percent, from 59 to 85. The company has also opened offices on all the major Hawaiian Islands.

Haas practices what he calls “management by walking,” never e-mailing or calling a person in his office when he can easily walk over to his or her desk to chat. He also always tries to be polite and never misses an opportunity to create a company-wide contest, no matter how silly. It’s all about being a team with a singular focus.

“What happened at Xerox 30 years ago just can’t be duplicated. That was a different place and time,” says Haas. “But there are some concepts that are timeless. Xerox was growing tremendously and there was a sense of excitement and belonging. We are going through some similar growth here at CB Richard Ellis, so it’s all about getting our very talented people to believe that they are participating in something that is exciting, dynamic and really fun.”


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