Pitney Bowes began almost 100 years ago. It was principally focused on mailing, mail meters, if you will. And that really anchored the business and the strategy up into the 90s. In the 90s, for a host of different reasons the business became, I would say, equally focused on financial services. So, there was for sure a aspect of financial services around the core mailing business. So, part of the mailing equipment needed to be leased, and then there's also a bank that goes along with our core mailing business, because many customers will actually want to prepay mail. So, you needed some function, some capability to actually take deposits and then make loans. So, if you look at Pitney Bowes up until I would say 2000, it was kind of those two pillars. And I would say around the year 2000, and I think it's worth noting at least I find it interesting, that in 1999 Jim Collins book, Good to Great, one of my favorite management books. He talked about 12 companies. And Pitney Bowes was one of those 12 companies. And I'll come back to that in a moment because I think it's interesting. Around 2000 the company realized that with digital technologies that the traditional mail market was going to come under pressure. So, they went on a fairly aggressive acquisition spree. They spent almost $3 billion on 100 acquisitions over the next 8 or 9 years, and they were kind of all over the place. It wasn't really a list coming into it after the fact a level of coherency that you could really discern. But what happened, and I would say a little bit of good luck, so the financial services aspect to the business got out of kind of I would say the peripheral businesses in 2005,2006, 2007. So they were into jet engines, they were into all kinds of different leasing vehicles, but they got out of that before the financial crisis. But come 2008 when the economy really hit the skids, Pitney Bowes began to have problems, and it was even more acute because of the acquisitions had really kind of put a lot of pressure on the balance sheet. And in about 2008 the financial crisis, companies just stopped mailing. So they had kind of a perfect storm if you will. So, at the outset we were pretty limited that it had to be in-house. So, we had these businesses and we settled on a handful of markets that we thought were markets that were logical for us to be in, we had brand promotion. We had some type of competitive edge and there were growth markets. So, the markets that we settled on were location intelligence, customer information management, content management. We still kept the digital mailbox although that was a little bit beleaguered at that point. And then this very small business which we called global e-commerce at the time which was a $5 or $10 million business that was really a single relationship with eBay. So, those were the growth bets, those half dozen businesses were the growth bets. So we worked hard to begin to innovate in those spaces. But at the same time we were also trying to innovate in our core. And the way I've always thought about innovation is in three dimensions: There's business model innovation, there's product innovation, and there's process innovation. And we used all three. So from a process innovation perspective, partially because the company had acquired so much different stuff and was run as a federated group of businesses, we had 37 different general ledgers. We had five different CRM systems, we had multiple service systems, we had multiple proprietary leasing systems which very few people in the company understood. So, the first really important point of innovation for us was what could you do on business process. So, the intent was pretty simple and that was to consolidate all of your business processes. You had single processes for the entire company that were supported by contemporary technologies. So, that was the first aspect of innovation. It was important for all kinds of reasons, some of which we understood at the time, some of which we've understood subsequently. But one of the key reasons it was important was its provided $150 or $200 million of expense savings, that we could begin to redeploy into innovation of products, in innovation, and other innovation in other places. From a business product perspective we began to innovate hard on those 5 or 6 areas. And I would say one of the interesting things about our digital businesses or software businesses is we have great customers. So, there were $400 million worth of revenue, so it wasn't a huge business, but if you look at the client list underneath it, we had 90% of the Fortune 500. So, we didn't at that point have a great marketing function. So, we went to our key clients and we said, "How can we help you innovate? What problems around the products and the domains that we're participating with, can we begin to innovate for you?" And that really began to kind of anchor the product innovation. And then we started on two business model innovations; one which yielded pretty quick results and one that took a while. But in a global e-commerce business, that was really kind of a platform business in the sense that it is a business platform that has all the attributes of a business platform. And that is if you can get enough volume through it, it scales nicely. So, it happened that I had a good relationship with eBay from my previous career at IBM and I knew the CEO well. So I went out there and I asked John, "What can we do to really take this to another level?" And that began the growth of global e-commerce which to some extent has been the engine for growth of the company over the last 4 or 5 years. In parallel, we began this kind of crazy development project in our core. So, you remember we had three pillars of strategy. The first was to stabilize our core business. So, all of a sudden we called that reinvent our core. So, if you think about what the mail meter was, it was a monolithic single application analog device that really mechanical engineering hadn't changed too much in the last 100 years. So we said, what if you could evolve that business to a platform business of its own? So that the device would become a utility, but a multi application utility that would certainly do the evidence, eBay would shipping and do lots of other applications as well. So we began to create all new sets of possibilities and value propositions for these million clients that you had, that they along with us were experiencing this melting iceberg because the value of that was going down. So that began 2013. And those two aspects of innovation around business model are the most exciting aspects of innovation going forward. As you think about challenges you start with the deck is kind of stacked against you. We had some intrinsic advantages which helped. But as you get into it I think there's a couple of things I think about a lot. First of all, as you evolve the strategy you need to evolve the culture. And I think if you look at the history of transformations and particularly Bowes successful transformations, those transformations that are able to evolve the culture to support the strategy, are the ones that succeed. And culture is a funny thing, because it's in some ways not as tangible as other assets on the balance sheet. I mean it's not like cash or customers that you can. There are buildings that you can touch. But I would suggest with the benefit of experience as perhaps the most powerful one. My old boss at IBM, Louis Gerstner had a different definition for culture. It's not one that you'd find in the textbooks, but it's one that I think it's rung true to me. And his definition for culture was, it's the collective capability of the organization to create value. The collective capability of the organization to create value. And if you think about companies that are trying to transform themselves, that's what it's all about, right? Because you've got this great legacy business or this legacy business if not great, but you've got to be able to move forward into the future and to create value, and you need the culture underneath that that supports it. So, I think job one of any leadership team is how you evolve the culture to support the strategy. The second thing is these are hard, by definition, they're not straight line. So when we started our stock was 10, the stock went to 27 in 18 months. We're now little over 14. So we've got it going up and down which, that takes a lot out of the team. So you think you're there and then all of a sudden you're not there. And that requires a degree of resilience and patience. I'm not by nature a patient person and I don't know many chief executive officers that are. But for sure as you're going through something like this you need to be patient. But resilience is the one that's the most important, because you take so many shots at different point in the transformation. And the first job is you got to brush yourself off, because there's 14,000 of my colleagues that are looking to see how I respond to different moments in time, or different setbacks. And if I look despondent, or if I look unsure then they'll feel unsure. So, job one is, if you have your own moments of doubt that you've got to deal with those, and you've got to deal with those pretty quickly, because people are paying attention. At the same time you can't be pollyannic. People respond to leadership that's authentic. So, you got to level with people that, you know, this is going to be tough. And I use a quote with him all the time it's from Napoleon. Napoleon's definition of leadership is leaders define reality, but provide hope. And I think that's the tricky balance. You can't be pollyannic, you can't ignore reality because denial will get you in more trouble. But if you don't provide hope, then you lose the team. So, it tends to be those kind of softer characteristics as opposed to financial or business characteristics that end up being these positive attributes, in terms of what you need in order to work your way through a transformation.
