Lexmark`s change management

“Doing an acquisition of an external partner which has to go through a change of operations – from a partner to a vendor, going from one tier to two tiers, and doing that 9 000 kilometres from headquarters` influence… In our opinion that was quite a lot of change in a short period of time.

“That`s why from a Lexmark culture point of view it was most necessary to have an experienced country manager from one of the other subsidiaries come down here and re-engineer and manage the whole process,” says Horn.

Culture shock

The purchase of the subsidiary happened late 2001, with the deal rubber-stamped on the memorable day of 11 September. Lexmark already owned ten percent of Venture Computer, which had been established in 1996, a year after the printing division of IBM was spun off as Lexmark and went public.

“The culture is changing,” says Horn. “We are becoming a different animal. Being an independent distributor, 100 percent owned by an international corporation, brings change in ways of working, ways of reporting; it brings change to the long-term strategy.”

The company says evolution has been fairly natural, and its background offers it something of an advantage when dealing with the likes of ACT, Axiz and Sahara. “We can empathise with our distributors and the challenges they face and are able to pre-empt a lot of them. We understand them and can hopefully provide them with the facilities that they require.”

The company still holds stock for distribution, but now it defines itself as a “hub” rather than a distribution point, and does price protection for its other distributors.

Black economic empowerment and social upliftment are big themes at Lexmark`s new subsidiary. The previously disadvantaged ratio of staff is fairly high in the company, with 24 percent of management from disadvantaged backgrounds, and 45 percent of the staff female. The company`s goal is a 50/50 split in management by 2006, through developing key people identified as having management potential.

It doesn`t stop with management. The lower echelons are also receiving attention, with an adult basic education, training, reading and writing skills programme already in place.

Where the company has discretionary spend, 50 percent of the money gets channelled through black economic empowerment companies, with the goal being to kick that up to 70 percent by 2005.

On the social front, is an initiative called Crib (Cotlands Recycle Initiative for Babies).

Every recycled Lexmark ink cartridge results in money being donated to Cotlands under the subsidiary`s broader Siyaphambili programme [Zulu: Together moving forward]. While this is a nice boon for charity, Lexmark hopes it will also encourage Joe Public to buy original Lexmark ink cartridges, instead of indulging his penchant for refilling and buying generic replacements.

Since printing companies – Lexmark included – make much of their profit from the cartridge rather than the printer, cartridge refilling has the potential to eat into profit.

Horn argues that refilling cartridges affects the print quality of printers dramatically, since 85 percent of the printer`s technology is embedded in the cartridge. He says a lot of the problems that hit the service desk stem from incorrect consumables.

“For the customer we`re aiming at, who looks for quality, continuity and professionalism, it`s not the road to go. But it`s a fact of life,” he warns. “I think it could be more serious here than overseas, but I haven`t seen concrete numbers yet to be quite honest.”

While generic consumables are a headache for Horn, the company has seen less of it than some other IT vendors over the last tumultuous years. “This makes the business less risk-orientated in terms of the IT industry. We remained consistent in terms of ongoing growth over the years.”

Document consultants

If one includes consumables, the company has three main horizontal markets: desktops, high-end and consumables. It approaches each one slightly differently, with the likes of Waltons selling consumables, Game and Dion flogging desktop printers, and First Technologies and Lechebele in the high-end business printing solutions game.

Selling solutions to corporate and enterprise environments means Lexmark now has to do a little more than just shift boxes. It offers consultancy as part of its solution from its Randburg office.

“Besides the specs of the hardware, the real printing solution for an organisation is in looking at document processing and document flow within the organisation. The solution should be a complete concept, including hardware, software, supplies, ink and consultancy, which we do more and more. There`s a strong growth, especially in that area.”