Why Xerox Died

How Brand Story Can Keep a Company Alive

By Kelly Sarabyn 

Offices everywhere are at the end of an era: after 112 years as an independent company, Xerox has reached a deal to be purchased by Fujifilm. The firm’s technology has become so ubiquitous that its brand and the action of copying are inseparable. Yet, the ability to Xerox something on any copier obscures the fact that, at its roots, Xerox was a cutting-edge technology company. Their invention of xerography revolutionized photocopying. Yet, like the once great Kodak and Sun Microsystems, Xerox was eventually surpassed by companies with newer technologies.

It’s easy to see Xerox as a victim of this period of rapid technological change: digital document sharing has proliferated, and the demand for physical copies sharply declined—which resulted in plummeting sales of Xerox’s flagship product. Conventional wisdom is that Xerox fell prey to the “competency trap”—it became so good at making one product that it was incapable of developing new ones. But actually, Xerox’s core problem was that it didn’t know its own brand story, and that left them blind to the opportunities that might have led to success.

Every Copy Starts with an Original

When Xerox first burst on the scene, it was a company who used cutting-edge technology to empower businesses to communicate information more easily and affordably than ever before. This brand story was not about Xerox’s particular product (innovative new copiers) but about enabling businesses to communicate more effectively, both internally and externally. No matter how technology evolves, businesses will always value optimizing and streamlining their communications. As a result, Xerox’s gift of efficient and easy communications spoke to their business heroes in a powerful way, and propelled the company to success.

But as early as the 1980s, there were signs that Xerox didn’t understand its own story. In 1981, it released the Xerox Star, a workstation that could manage documents. The cost was 16,000 dollars – compared to 1,600 dollars for IBM’s PC for business – and businesses would need multiple stations. In addition, the workstation was notoriously slow. The high price point and inconvenient user experience contradicted Xerox’s brand story, and the product was a flop.

Next, Xerox decided to move into insurance and financial services, purchasing a casualty insurance company and an investment firm. These services had little to do with the journey the hero of the Xerox brand story was on. With nothing tying insurance or financial services to a business’s discovery of easy and efficient communications, the services floundered before being sold off a decade later.

Xerox could have used these missteps as a chance to learn. Savvy organizations look inward after such challenges, and rededicate themselves to their core brand story. Yet, instead of innovating their photocopying products, or creating a next generation digital product to make document management or business communication easier and more affordable, it tacked in a totally different direction: business services. Xerox took on the end-to-end management of an eclectic set of programs, from E-ZPass to automated traffic tickets to Medicaid.

In 2012, Xerox’s then-CEO Ursula Burns recognized that “if you don’t transform your company, you’re stuck.” But not any company transformation will be successful—just ask GE, another storied company who tried to move from inventing technologically innovative products into services it had little experience with, and paid the price. The business services in Xerox’s transformation were tangential to the company’s core purpose, and proved incapable of replacing declining revenue from Xerox’s flagship products. Worst of all, these efforts were marked by scandals suggesting Xerox didn’t know what it was doing in this new niche. In 2014, Xerox was sued for fraud by Texas for its alleged mismanagement of the state Medicaid program, and in 2016, it bungled the execution of a New York Medicaid program.

Spurred on by activist investor Carl Icahn, Xerox went through a second transition and belatedly recognized these business services had deviated too far from its core purpose. In 2016, Xerox spun off the business services division into a separate company. Yet this was too little too late, as by pouring money and resources into business services, Xerox had failed to continue to innovate how businesses communicate and manage information.

When Xerox wasn’t inserting itself into completely new arenas, it had simply been—in the words of Carl Icahn—”introducing new products that do [no] more than play catch-up to competitors.” In order to continue to thrive, companies have to transform their products in a way that aligns with their core brand story. By failing to do that, Xerox failed to survive.

How to Align Transformation with a Brand Story

Innovative companies that continue to remain at the forefront of their industry over the long haul do so because they are committed to a brand story that animates and directs their growth. It’s not enough to continue to innovate—the innovation has to serve the particular values that customers recognize as core to the company. Companies like Texas Instruments, Boeing, and IBM have stayed ahead of their competition for generations by not just transforming, but transforming in line with a coherent vision.

Consider the trajectory of IBM, a company who, decades ago, was competing head-to-head with Xerox. Unlike Xerox, IBM has managed to remain a leading technology company. Originally founded to “provide large-scale, custom-built tabulating solutions for businesses,” IBM’s core brand story is to provide cutting-edge technology for businesses and organizations to optimize their operations. From sleek typewriters in the 1940s to IBM Watson, the “AI platform for work,” in the 2010s, IBM has consistently provided businesses with the technology they need to efficiently maximize their resources.

Internally, IBM has continued to invest in research, and stay dedicated to its early tagline, “THINK.” It has obtained the highest number of US patents for the last 25 years and is continually searching for ways to “transform” how people work, seamlessly deploying AI, cloud computing, IoT and blockchain technology for use in large organizations.

Over the decades, IBM has, at times, deviated from this core brand story, but has always come back to it. IBM was a leader in developing the personal computer, which, like cell phones, was intended for both business and personal use. When the product first launched in the early eighties, IBM boasted that the PC “can make a surprising difference in the way you work” – a claim almost identical to its 2018 claim about its AI technology.

Even at the time, IBM employees questioned whether a move into a market that was both B2B and B2C aligned with IBM’s brand story. One employee asked, “Why on earth would you care about the personal PC? It has nothing at all to do with office automation.”

Eventually, this partial divergence from its brand story proved unsustainable, and IBM sold its PC group to Lenovo in 2004, in order to “refocus on the corporate server and computer services businesses.” By returning to empowering the heroes of its brand story—businesses—to seamlessly optimize their operations with innovative technology, IBM has continued to flourish.

Staying with the Story

If, over the decades, Xerox had focused on the realization of its brand story, and dedicated its vast resources to developing new tools for businesses to easily communicate information—rather than branching out into running a variety of eclectic programs, like Medicaid and E-ZPass—it would have been able to keep its core customers. Businesses trusted Xerox, and they had a relationship with the company. It’s not hard to imagine a world where Xerox had invented more innovative ways to manage business documents and workflow, and had continued to dominate against challengers like Google Docs or Dropbox by keeping hold of its loyal customer base. Instead, it’s now just a division of an imaging company.

Story is not just marketing copy, or a clever way for a business to make a point about itself. When properly understood by an organization, it functions as a “North Star,” keeping all stakeholders innovating in a consistent direction—one that customers are most likely to respond to as a continuation of an engaged relationship with the company.

Only by identifying a core brand story, and remaining dedicated to it, can innovative companies continue to prosper through the decades. Companies who once dominated in a wide variety of industries—companies like Kodak, Pan Am, Compaq, and GM—lacked this core direction, and fumbled in the face of inevitable upstarts. Companies who synthesize around a coherent brand will maintain powerful connections with their customers, even as their particular products and technologies change. This is how lauded companies like IBM, AT&T, and Boeing have prospered from the age of typewriters and tabulating machines through the age of supercomputers and artificial intelligence.

Kelly Sarabyn is a manager at Woden. Whatever your storytelling needs may be, Woden can help. Read our extensive guide on how to craft your organization’s narrative, or send us an email at connect@wodenworks.com to discuss how we can help tell your story.