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Wednesday, June 18, 2008

'Copy This! How I Turned Dyslexia, ADHD, and 100 Square Feet Into a Company Called Kinko's'


By 1983, we were doing about $70 million in sales a year with slightly more than 120 stores. We also had about 30 independent-minded partners running various corners of Kinko's. We were 30 partners—with an average age of about 28—motivated by our own value systems, ideals, and ambitions. With scant input from the head office, each person made his or her own decisions, whether they ran a single store or a string of them. The growth, even at that early point, was getting out of hand.

At the time, our head office was located on the second floor of the El Mercado shopping center in Santa Barbara. We were experiencing growing pains. The first half of the eighties was a time of furious growth and none of us had bothered to put certain fundamentals into place. I remember Dorothy Sandow, who used to do the books in our office, wondering out loud, "How will we stay the same as we grow?" Good question. I didn't have the answer. We'd grown so fast that we hadn't even bothered to secure trademark protections for ourselves nationwide. We hardly had any written agreements with anybody; most of our business was conducted on a handshake. Aside from our status as independent Subchapter S corporations, we lacked any structure to speak of.
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To get some perspective on things, I enrolled in the Owner/President Management Program at Harvard Business School, which I attended three weeks a year for three years. While sitting through classes there (and never taking a note, though I did read my case studies), I realized we needed somebody—an outsider definitely and maybe an academic—to help us continue to grow while still retaining our unique culture and not killing each other in the process. My hunt lead me to John Davis, who got his doctorate at Harvard Business School and was an assistant professor at USC at the time. I called up John to ask him to meet and talk things over with me. John agreed to, even though at the end of our first conversation I abruptly hung up on him—"I gotta go," John remembers me saying, leaving him listening to a dead phone line. I guess he understood I was busy. Somehow, he was intrigued enough to follow through.

Me, Me, Me
So many entrepreneurs are writing books about how they made it. Their books, though, aren't nearly as successful.

John's association with Kinko's would last for nearly two decades. He drove up to meet me and got a look at how our head office functioned. My partnership, Kinko's Graphics Corp., was still handling all the books for the partners for a low monthly fee. It wasn't the greatest structure. We were getting by, but we could do better. Later, John turned up at one of our partner meetings. He sat in the back, scribbling enigmatically into a small red notebook. Here's John:
California Polytechnic State University, San Luis Obispo
Paul Orfalea

"In my field we learn about organic organizations, but I think it's fair to say that I'd never seen, at that point and subsequent to that time, an organization that was quite so organic. Things just happened as they needed to happen, or maybe a little later than they needed to happen, but they happened. There didn't seem to be a plan. There didn't seem to be a structure. There didn't seem to be much of anything, but a lot of things were getting done at the right time. It was fascinating to me. I felt like an anthropologist trekking through the jungle and kind of stumbling on this tribe that I had never seen an example of before. I had never seen organic Republicans. They were really interesting creatures. They were capitalist hippies, really. It was bordering on strange. You can only be so organic without defying the public health laws, right? The growth of this company and the growth of the people was clearly managing to outstrip any reasonable attempts to provide logical, sane infrastructure to the company. There were costs to it, but it was part of the magic of the company."
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At the end of that first partners meeting that he attended, everyone was curious to know who this scholar in our midst was, taking notes and saying nothing while the rest of us argued, pontificated, and generally exercised our democratic rights. Eventually, John took the microphone and shared some of his observations about what he saw in us and in Kinko's. He told us he saw us moving toward a more formal organization, but he saw us doing it in our own "organic" way. He made us laugh. We liked him. We liked what he had to say.

Over the years, he came to play a variety of roles at the company. He started as an outside consultant and eventually became a full board member, a position he held for ten years. He also served as, variously, educator-in-chief, peacemaker, resident shrink, and company philosopher. As my partner Tim remembers it, "We had to start growing up once John Davis became involved. He realized we were struggling with late adolescence. We didn't yet realize that commitment and hard work could go a long way. He had a fabulous influence on us." A lot of our partners were somewhat like me. We got things done, but we couldn't talk about what we were doing with the sort of context and eloquence that John brought to bear in any discussion. He became our spokesman. He helped us to communicate better with each other and with the outside world.

John noticed our tendency to philosophize right off the bat. "At that first partner meeting," John says, "they were all just sitting around talking about their business not just in financial terms and marketing terms, but in philosophical terms as well. It was like being on the set of The Big Chill. These people didn't go to college together, but it was almost like they did. And even though Paul played the role of paterfamilias he was basically just the big brother. He encouraged very collegial relationships, buddy relationships."

Two years later, in 1985, John decided he would put our proclivity for debate and discussion to work for us. He made a suggestion. John felt strongly that we needed to write down a set of guiding principles to unite our far-flung factions, giving us a flag to rally around. We took John up on it. We decided we would go ahead and try to put something on paper about who we were and who we wanted to be. John drew up the first draft and derived the content from what he'd observed in us for two years. The result came to be called the "Kinko's Philosophy." Like so many of our best ideas at Kinko's, this one originated not with me, but with someone from the outside who, by virtue of being undistracted by being in the business, was able to offer some valuable insight. We spent six months hashing out the Philosophy, and then continued to revise it over the years. The final version read as follows:

Kinko's Philosophy

Our primary objective is to take care of our customers. We are proud of our ability to serve him or her in a timely and helpful manner, and to provide high quality at a reasonable price. We develop long-term relationships that promote mutual growth and prosperity. We value creativity, productivity, and loyalty, and we encourage independent thinking and teamwork.

Our co-workers are the foundation of our success. We consider ourselves part of the Kinko's family. We trust and care for each other, and treat everyone with respect. We openly communicate our accomplishments and mistakes so we can learn from each other. We strive to live balanced lives in work, love, and play. We are confident of our future and point with pride to the way we run our business, and treat each other.

We plastered the Philosophy everywhere. We printed it up on small, laminated wallet-sized cards so that people could carry it around in their pockets. Some partners hung the Philosophy on the walls of their stores. Eventually, and even though it seemed hokey at first, we started reciting it at our partner meetings and picnics as if it were the Pledge of Allegiance. But we didn't view it as fixed in stone. The tenets of the Philosophy were inherently contradictory: even though we valued "independent thinking," we also encouraged "teamwork." The Philosophy became a tool for managing ambiguity, one of the most difficult challenges in any business. It provided a ready forum for discussions about how we would continue to grow and work together as individuals who were also members of a collective. As we changed, we constantly floated ideas for how to further hone, expand, or otherwise alter it. I was forever asking people, "Do you think we should change the Philosophy? How would you rewrite the Philosophy?" It became a mechanism by which everyone became invested in the direction of the company.

In the Judeo-Christian tradition, there are the Ten Commandments. We may not abide by all of them all of the time, but they are there to guide us. Every company should take the time to write a philosophy statement. One of my favorite companies, Johnson & Johnson (also one of my longtime favorite investments), has a great one. I bought the stock after I watched a 60 Minutes piece on the infamous crisis during which eight people died from poisoned Tylenol pills back in the eighties. J&J decided that any response it made to the crisis would be true to its credo, which has guided the company through the past 60 years. The first sentence of that credo reads, "We believe our first responsibility is to the doctors, nurses, patients, to mothers and fathers and all others who use our products and services." In other words, covering their own butts is explicitly not priority number one of J&J's leadership. The company leaned on its own stated belief system in a time of need. J&J responded to the crisis quickly, with compassion and, in the process, won new loyalty from its customers.

Having a high-minded vision that we all embraced for Kinko's was immeasurably helpful. At least we knew if we failed to meet its ideals, we could get back on track and point ourselves in the right direction. As John puts it, "The Philosophy was the expression of the ideal culture. But it was our goal. It was what we wanted." The only limit to your growth as a person or a company is your imagination. When you think about it, there are only two things in life: matter (cars, sidewalks, bodies, etc.) and ideas. These are the only two things on Earth. (In fact, scientists now believe that, at the subatomic level, there is really no significant difference between matter and thought; in other words, our thoughts truly create our reality. Isn't that cool?) The way I see it, you're only as good as your dreams. If all of us at Kinko's could imagine an ideal place where we could all work together, we had a shot at achieving it and much of the time we did.

Envision Your Vision

Having a vision is beneficial in the private, not just the corporate, realm. Early in my time at Kinko's, I took a class on goal setting at the University of Virginia, but goal setting has always been in my blood. Picturing myself owning my own business one day helped me to navigate through my difficulties in the second grade. Even as Sister Sheila paddled me, I told myself that someday I would own my own business and have secretaries who would read for me. By the time Kinko's was up and running, I made a habit of setting new goals every six weeks or so. Wherever I went when I was with Kinko's, I carried a four-subject notebook. I didn't write long letters or reports, of course, but I did make lists. The notebook was full of them. I was an inveterate list maker. I set personal goals. I set play goals (every January 1, I scheduled my blocks of vacation for the year). I set business goals. I set financial goals. I worked out the cash flow for Kinko's in one section of the notebook. I always say that if you don't know your business well enough to calculate your cash flow on the back of an envelope, you've got problems. My coworkers were constantly criticizing me for having too many top-priority items to attend to. It was tough for me to stay "on" my business while addressing so many priority issues. So I classed them as Big, and then Big-Big, and, finally, Big-Big-Big. It sounds corny, but it worked for me.

At the end of our family vacations, or any business trips, I became maniacal about getting my lists in order. Before I headed back to work, I got to work on these lists. Completing them could take me the better part of the day.

I quickly learned not to be too specific in putting my goals onto paper. I remember one time in 1975 I set an arbitrary goal for myself to open three new stores between September and December. In order to open store number three, I pushed too hard. The store, in Westchester, California, turned out to be one of our worst locations ever. We constantly clashed with the landlord at that site. Eventually, we closed it. I've since learned that goal setting should be more like an impressionistic painting. As opposed to "Open three new stores by the end of the year," my goal became simply "Expand the business." Keep your goals as anchors and then wander around among them, giving yourself plenty of room for error and experimentation. I used to sketch the following illustration for my partners back in my twenties. You start with some clear goals. Here they are represented by two straight lines:

Then you allow for a little spontaneity. You wander around among them. Like this:

Ta-da! See what you end up with? Know where you're going, but don't be too wedded to the result. My friend John Davis used to say, "The best part about goal setting is going through the process. First make your plan, and then throw it out!" Remember that line from the old musical South Pacific, "If you don't have a dream, how you gonna make a dream come true?" Good question. I love to sing that line to my partners from time to time. As far as I was concerned, the Philosophy was our strategic plan. It was the expression of our collective dreaming at Kinko's. We each need to do our individual dreaming as well.

Living It

The more we recited the Philosophy and embraced it as something real, the more it became, over time, something we held very close to our hearts. Some of our former coworkers have imported modified versions of it into the new companies they started after leaving Kinko's. I carry a copy of the Philosophy around with me on one of those laminated cards and still find myself having reason to pull it out and refer to it.

At every picnic and partner meeting, someone was chosen to go to the front of the room and recite the Philosophy at the microphone for the rest of us. It could be someone who had made a pioneering change or someone who had survived hardship. One year it was our partner in Chicago, Theresa Thompson, the first of us to take her stores to a 24-hour schedule, who led us at the mike. Other times, Karen chose a partner who had recently struggled through a trying time. My partner Todd Johnson was only 30 and had been working with us for eight years when his young wife died suddenly in 1984 from an aneurysm. She was 28 years old and pregnant with their fourth child. Doctors managed to save the infant but couldn't save her. She died a month before Natalie and I were married. I'd gotten to know Todd and his family well over the years so I flew out to them after it happened. He was planning on coming out to Santa Barbara from Utah for our wedding anyhow. I told him to bring his kids and stay at our place while Natalie and I went on our honeymoon. At a partners meeting about a year later, Todd read the Philosophy out loud to everybody. In the midst of all the general zaniness and uproar that accompanied most of our company meetings, moments like these were powerful.

Todd: "Reading the Philosophy made it more than a written philosophy. It became a living philosophy. I've never been great verbally, but the first time somebody laid out the Philosophy, I thought, 'That's exactly how I feel.' You heard it all the time. When Paul picks up on something, he's relentless. It became a way of life in the stores. At first, when we recited it, I kept thinking that I felt like I was working for Amway, but I knew that Paul believed in it. When someone practices a belief system in his life, you can see it. It was Paul's own philosophy and he promoted it to the point where it became everyone else's philosophy."

If you flipped over the small laminated card that was printed with the Philosophy on one side, you would find a list of guiding principles. These are the "Kinko's Commitments to Communication."

There were 14 points, with a final add-on at the end:

1. I will recognize your value to Kinko's.
2. I will share my goals with you, and together we will develop an action plan.
3. I will respect and utilize the chain of command to resolve problems.
4. I will solicit immediate feedback to assure we understand each other.
5. I will talk with you, not at you.
6. I will listen with an open mind.
7. I will try to see the situation from all points of view.
8. I will tell you when I don't know the answer, and together we will seek the answer.
9. I will give you honest and sincere feedback.
10. I will not usurp your authority.
11. I will not confront you when I am angry.
12. I will not gossip.
13. I will not publicly embarrass you.
14. I will admit when I am wrong.
. . . and in every case, I am worthy of the same from you.

I wish I could tell you I abided by each of these tenets all the time myself, but I'm a human being and we were a company of human beings. I always figured when we hired someone, we got the whole enchilada. That applied to all of us. I plead guilty to personally violating many of these tenets. But, just because I fell short myself from time to time doesn't mean I underestimate their importance. Our partner David Vogias, who owned and ran stores in Ohio, Pennsylvania, New Jersey, and New York, was the driving force behind the Commitments to Communication. Dave felt we needed the commitments to further define how the Philosophy should be implemented—to make sure it was being implemented. The truth is, Dave and I argued so much that he proposed the commitments as an effort to lay down the rules of engagement between him and me. The commitments weren't passed by all the partners. They were passed in a committee of which Dave was a member. As Dave remembers it, "I forced the Commitments to Communication."

Looking back I should have argued more to change some of these commitments. Number 12, for example: "I will not gossip." What does that mean, really? I never understood that one. How can we function as a community and a family if we don't talk about each other? Talking and learning about each other is one of the great pleasures in life. I think that commitment should have read, "I will not engage in malicious gossip." You can see how much debate these value statements can inspire. In retrospect, I would have also instituted a values statement covering all meetings. It would have stipulated that, when it comes to meetings, everyone in attendance would (a) arrive on time, (b) understand what the purpose of the meeting is, and (c) seek together to find a conclusion so that the meeting could end—and end quickly.

Nitpicking aside, the Commitments to Communication further refined some of the practical ways we sought to live by the Philosophy.

As we grew, we came to rely on the Philosophy in more concrete ways. By the late eighties, we began circulating anonymous coworker surveys to determine whether the Philosophy was being applied in all our stores. We used the Philosophy to devise a set of criteria that we used to evaluate coworkers. As we matured as a company, our president, Dan Frederickson, instituted a program of management effectiveness surveys and, later, 360-degree reviews wherein coworkers at the head office, Kinko's Service Corp., were evaluated by their colleagues, by the people who reported to them, and by those they reported to. From all directions, coworkers evaluated each other against the principles we'd voted on and laid out together in the Philosophy.

Before coming to Kinko's, our partner Gerry Alesia had worked at Ralph's Grocery Co., General Foods, Bally's, and Ramada and he hadn't come across anything like the Philosophy. "It was very unusual," Gerry says. "It took several meetings for us to write and there was a lot of fighting about the individual words. We pretty much lived and believed what the Philosophy said. We believed that the coworkers were the foundation of our success. It wasn't just lip service."

The fact that we shared a belief in a set of fundamental principles and tenets made it, paradoxically, easier for us to tolerate conflict. I've always loved controversy and debate. I believe it's necessary for a healthy company, indeed, every healthy relationship.

Here's my partner Mark Madden, "Paul and I once met with a real estate guy in Santa Barbara. He asked us what the perfect size was for a Kinko's store. Paul said about 8,000 to 10,000 square feet and I said about 4,000 square feet. Obviously, quite a difference. We debated with each other a few minutes and then looked up, a bit embarrassed that we couldn't even agree on the size of a store. The guy got a huge kick out of seeing us debate basic business principles. He was used to seeing a boss and a bunch of yes-men and -women who would never disagree with the leader. He loved that Paul was the one pushing for a bigger, longer-term opportunity, while I was the one pushing for moderation and improved short-term profitability."

We all did business differently. Take my partners David Vogias and Tim Stancliffe. Dave, who ended up with 50 stores, admired and sought to emulate big blue-chip companies like General Electric. He ran his company with many more levels of bureaucracy than I would have. And yet, the policy manual that his company wrote up for one of our core businesses, Professor Publishing, ended up being adopted by most of the other partners. I hate policy manuals myself. Obviously, I'm never going to spend free time reading them. But, if our other partners could make use of one, I'm glad Dave got it written. He loved concocting five-year strategic plans—an activity I find pointless and unbearable. In contrast, he thought my stores were loosely and poorly run. I repeatedly told him that he could have expanded his business ten times faster were he not so wrapped up in tending to all that bureaucratic mumbo jumbo. Then there was Tim, who owned stakes in about 170 stores in Colorado and surrounding states. Tim was so frugal with his money that, in my view, he never invested enough of his profits in testing new ideas. Tim didn't protest this view of his management strategy because he liked to put new products through a lot of testing and careful consideration before using them. Tim: "No-new-products-Tim was one of my nicknames. I reveled in that kind of attention." As a result, he was never on the cutting edge of adopting our newest innovations. This meant that all the Kinko's locations in one entire corner of the country lagged behind other regions. We constantly argued about our different views of the world and of business.

Simply put, we didn't treat each other with kid gloves. We knew we didn't have to. We could stand a little controversy and trust we'd emerge the better for it. Having a shared philosophy gave us resilience.

As John Davis observed, "The Philosophy became a fundamental aspect of the Kinko's religion. When somebody stood up and recited the Philosophy at the end of each meeting, it was like a recitation of the Nicene Creed [a doctrine of Christian faith adopted in a.d. 325]. It was 'This is who we are.' People really understood that the strength of the group came from the ability to speak openly about things and to challenge each other. It was a culture of being open and honest. You could go through really turbulent meetings where there was yelling and arguing and some harsh things said, and at the end of the meeting, we would recite the Philosophy together. And it was OK."

Excerpted from "Copy This! How I Turned Dyslexia, ADHD, and 100 Square Feet Into a Company Called Kinko's" by Paul Orfalea. Copyright © 2005, 2007. Used by permission of Workman Publishing Co. Inc. All Rights Reserved.

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