Great Strategy: But Don't Xerox It

Great Strategy: but don't Xerox it

In the 1950's, Xerox took a punt on a fledgling technology and developed a great strategy that quickly conquered the market. Unfortunately, the market shifted and Xerox didn't. As a result, the name Xerox fell from a synonym for copy to an historic also-ran in a thriving industry.

Xerox started with a disruptive technology when existing technologies (mimeo, carbon paper, etc) were so far inferior that they had no real competitors, new entrants were blocked by strong patent protection, materials were simple commodities rendering suppliers powerless, and customers were naive and not price sensitive. This combination pointed Xerox to focus on high-value products with a sales model that roped customers in for greater expenditures.

Big ticket product with extensive service fit well with the mainframe paradigm of the 1960s to 1970s, but by 1980 the introduction of the PC shifted the paradigm. A new paradigm of small office machines emerged. Investment in Xerox Data Systems was a great idea lost in the wrong paradigm. Investment in NASA management systems was another push back to encumbered mainframe mindsets in a world shifting to more nimble entrepreneurial methods. Xerox needed to review their strategy to keep up with the times.

When Savin entered the market with a viable substitute, Xerox should have reviewed their strategy to address the emerging competition. There are many ways an established brand like Xerox could have neutralised Savin, but sticking to the precise approach that Savin designed their strategy to conquer was not a good move.

When Canon entered the market with small low cost copiers, consumers gained significant power and became more price sensitive. Xerox could easily have adopted a strategy to confront this threat, but sticking with a comfortable margin in what once was a secure market was not a credible option.

Xerox should have recognised that when Kodak entered the market with a strong focus on quality, the paradigm of the big complicated machine with extensive support was over; it was time to review strategy. Unfortunately, they stuck with their old strategy from the 1950's and the market moved on without them.

Xerox started with a brilliant strategy, but the market moved on and they failed to adapt. What was once a winning strategy became a liability and Xerox got left behind. Exactly what the Xerox strategy should be is not for me to say; the key is they must continually review that strategy, particularly as markets change, in order to remain competitive.