Company profile

Pitney Bowes Inc. is a manufacturer of software and hardware and a provider of services related to documents, packaging ,mailing and shipping, collectively referred to as mailstream.

• Pitney Bowes believes innovation and growth go hand-in-hand with long-held ideals such as collaboration, integrity and accountability to deliver value for their customers.

• Pitney Bowes has one goal : to help their customers achieve their goals.

Recent Acquisitions 

MapInfo (2007) - location intelligence solutionsDigital Cement (2007) - customer relationship managementPrint, Inc. (2006) - print management solutionsAAS and PMH (2006) - web-based custom marketing toolsIbis Consulting (2006) - electronic discovery servicesEmtex (2006) - document production softwareImagitas (2005) - mail-based marketing servicesCompulit (2005) - litigation support in legal professionInternational Mail Express (2004) - mail servicesGroup 1 Software (2004) - customer intelligence software

• Pitney Bowes, there is threat of obsolescence because of “snail mail”

• It was only a single product : the postage meter, but 85 years after Arthur Pitney and Walter Bowes the core changed into processing of physical mail for its core business.

• In a world that changes so fast into e-mail and other electronic communications, Will Pitney Bowes destined to be like Pony Express?

Prologue

• At early 1960s think that the company future lay in broad diversification.

• The company had taken at least 6 different tacks, venture capital equipment leasing, mortgage servicing, and retail supply chain systems

• But those plans is already shed and back to core business of helping companies manage their mail and documents more effectively.

Prologue

the journey

diversifiedcross industry

Core business:Physical

mail

Capital equipment

leasingMortgage service

Retail supply chain

system

1920-1960

1960-2000

diversifiedcross industry

the journey

diversified

Geographic

expand

Product expand

diversified

2000-present

Danbury

New york

Maryland

etc

hardwaresoftware

mailstream

Core business:Physical

mail

Pitney’s quadrant

broad

narrow

OUTPUT

I N P U T

broadnarrow

1920-2000

2000-now

Diversification through acquisition and merger

• Purpose: For growth instead of risk management(align with new purpose of diversification)

strategy to success

1. foreseeing change overtime2. keeping an ear to the ground3. reframing the questions4. thinking in terms of solution5. pulling together6. striking a balance

• The company sweet spots such as first class transaction mail – consumer originated mail, bills statements, correspondence – is declining in recent years ( overall mail volumes in U.S. grew 1.9% between 2001 and 2003 but Pitney Bowes participate a little )

• The expected decline of Pitney Bowes :1. If experience 1% decline per year, the mail stream would decrease to half its size in 72 years.2. If experience 6% decline per year, the mail stream would decrease to half its size in just 12 years.

Strategy #1: Foreseeing Change over Time

• Pitney Bowes also think about the future of government postal services :1. U.S. Postal Services

2. European Union3. Deutsche Post

• Pitney Bowes happily sees fast rising demand for the company ‘s broader portfolio : mail & document management hardware, software, and professional services.

Strategy #1: Foreseeing Change over Time

Michael Critelli performs:1. Hiring strategic thinkers2. Revisiting the issues constantly

Strategy #2: Keeping an Ear to the Ground

1. Critelli hires strategic thinkers…

Strategy officer to focus on anticipating the future

Full time professional to look at factors that could influence the future of mail

Scenario planning to understand how the factors will evolve

Postal policy council to monitor the data and environment for changing conditions

…to monitor present and future conditions

2. Critelli revisits the issues constantly…

Take notice on:1. Surprising piece of news, to find the possible

implications for the business,e.g. Terrorism->crisis management task force

2. More subtle changes, to find immediate customer service opportunity and broader strategic implications,e.g. Electronic check clearing->Fulfillment activities.

…to find possible implications and opportunities

• Grove’s inflection point

A time in the life of a business when its fundamentals are about to change.

• Insights:

- A tremendous amount of value is added in the fulfillment process.e.g: making sure documents look just right, get to the right people, and in interesting format

- The company can go further in standardizing and marketing the fulfillment offering.

• Conclusion:The mail market will be even bigger and more valuable.

“How much influence do we have over the outcome?”

“How can we reshape the context to our advantage?”

Strategy #3: Reframing the Questions

Innovation!

Dialogue with market forces

To be able to create the innovation and be success in performing the diversification, Critelli’s strategy was:

Change the way of thinking:

Think differently!

•what percentage of the mail are we participating in? •how are we participating in it?•how many pennies do we get per piece?

Actual: 30 bio pieces of mail /year $8.7 cents per piece on average continues to rise

Target: reach $9 cents for every piece posted by a midsize mailer

Strategy #3: Reframing the Questions

• analyzed mailing value chain and focus on “presort”

• ancillary professional service

Looking aggressively for

profit zones

able to find several areas in which people are

willing to pay premiums for what we offer.

Strategy #3: Reframing the Questions

Aim in formulating a solution : Realize the full potential of strategic goal to provide solutions for customers and generate superior shareholder returns.

Customer

Satisfaction

If the company want to be profitable

Strategy #4: Thinking in Terms of Solutions

The Solution :•Set of standardized regulation •Highly cost-effecitve offerings•Culture Change

Acting entrepreneurially and customizing the service.

Very standardized and in disciplined way

Example :Pitney Bowes provide mailroom and copy-center services to scores of banks and law firms in New York City. It used to be that an individual site with a backlog of work would send that backlog to whatever third-party copy shop was down the street .Now they have opened their own centrally located service center;it has high-speed capacity to support all their New York sites and can generate its own business as well

Final output solution objective :

“ refocusing core business and provide a more toward a more integrated business

model”

The company already used a high freedom in work for 35 years and now the have to change it...

It’s not easy to change it because the freedom concept was implemented agressively in almost every division

There is a conflict among employees because they were more loyal to their division then the overall company

At that time freedom concept was a workable strategy because there was not as much as overlap in customer based of their various business

Strategy #5: Pulling Together

The shifting strategy has a deep implications for an organization.

The company required unity in form and spirit to supports the strategy

Realigned the organization to make costumer servis more seamlessly, move toward a more itegrated business model, and executed growth strategy more agressively

Why the company need to pull together?

There is gap between CEO ambitious vision and the capacity of the industry.

What happen? the employee are not used to work

in groups, focused merely on the budget instead of

company’s benefit and executive culture (cannot

work multitasking)Lesson learned: change agent should be more patience

Strategy: have an executive transformation committee

Strategy #6 : Striking to Balance

• Transformation in Pitney Bowes means become focus on

CORE business and OPERATING as one company

Strategy :

• - formulating plan of attack rather than blaming the troops

• - help people see things differently and reach the same vision

Conclusion

Important points from Pitney Bowes’ case:

Recognize company’s strategic asset

Market Diversification

Understanding competitive context

Alignation of all resources: capital, human

Change agent is needed