My Favorite Memory of IKON

I used to be employed by IKON Office Solutions. Today, both companies announced that IKON will be purchased by Ricoh. You can see Ricoh's release here and IKON's release here.

It is interesting to me. Ricoh buys IKON for $1.6 Billion or $17.25 per share. A little over a year ago Xerox bought Global Imaging for $1.5 Billion or $29 per share.

Why the big difference? Well, Global Imaging positioned itself for a sale for a long time, as such, it worked on being profitable by growth.

IKON Office Solutions seemed to have a different approach. When I worked for IKON a number of years ago, I remember year after year was the concern that sales weren't where they needed to be.

They still needed to be profitable, so the only other option was to cut. I remember thinking every year, "Oh, boy, here we go again... cutting our way to prosperity."

Here is how it would work. At the end of the fiscal year, there would be buying freezes on everything. Parts for customers' failing machines would suddenly go on "backorder." Supply sales would be "delayed." New equipment wouldn't be ordered because we had to sell the products we had in stock. Showrooms were barren and order fulfillments were difficult unless we had a product already in stock.

Then, the first day of the next fiscal year, all those supplies would suddenly be available from the manufacturer and would be in within a few days. The cycle would begin again. The costs from one year would be shifted to the next year... only to have to go through the process again in another 11 months.

It is that attitude that caused Global Imaging (a much younger company) to be worth 68% more upon sale.

In your business, do you find that you are growing or trying to cut your way to prosperity?