Designed for Innovation

PBCC used to be a big, boring division of Pitney Bowes. Now it's a new-product powerhouse. What's the secret? "No straight lines, no linear thinking," says president Matthew Kissner.

There's a striking difference between the second and third floors of the Pitney Bowes building in Shelton, Connecticut. Step off the elevator on the second floor, and you encounter blank walls, bland carpet, and a lonely potted plant - a fairly generic corporate environment. You've entered the engineering department of the TranScape division, which makes logistics software.

But step off on the third floor, the domain of Pitney Bowes Credit Corp. (PBCC), and you think you've entered an indoor theme park. The main hallway features cobblestone-patterned carpets, faux gas lamps, an ornate town-square-style clock, and green metallic street signs that identify Wall Street, Front Street, and Overlook Drive. There's a French-style café (complete with Toulouse-Lautrec posters) at one intersection and a 1950s-style diner at another. Inside the "Cranial Kitchen," employees sit in comfy booths to surf the Web or to watch training videos.

Matthew Kissner, 44, PBCC's president and CEO, calls the place his "idea factory." "We wanted a fun space that would embody our culture," he says. "No straight lines, no linear thinking. Because we're a financial-services company, our biggest advantage is the quality of our ideas."

PBCC used to be a big but boring division of Pitney Bowes Inc., a $4 billion manufacturer of postage meters, copiers, fax machines, and other office essentials. The role of Kissner's division was straightforward: to help customers finance their business with the parent company. But since Kissner's arrival in 1995, PBCC has reinvented itself as a new-product powerhouse. It no longer merely finances sales and leases of existing equipment; it also creates new services for customers to buy.

PBCC's first big innovation was Purchase Power, a revolving line of credit that helps companies finance their postage costs. PBCC also developed Business Rewards, a credit card geared toward small companies. These two services alone are expected to generate $50 million in revenues this year. The result: PBCC is a unit that leads rather than follows. It brings in annual revenues of $800 million, and last year, its 600 employees - who make up less than 2% of the total Pitney Bowes workforce - generated 36% of the parent company's net profits.

"This place wasn't broken," Kissner says. "But we knew we could make it better. I'm a builder. I thrive on creating environments where people can excel."

When Kissner arrived from Banker's Trust, in January 1995, PBCC was housed in traditional office space in Norwalk, Connecticut. He describes the company's culture at that time as "paternalistic and based on entitlement." "People expected to be rewarded for maintaining the status quo," he says. And why not? The division was humming along, much as it had been since its creation in 1977. And despite endless talk of the challenges posed by faxing, email, and Net-based postal services, Pitney Bowes still dominated its markets. Indeed, since 1995, Pitney Bowes stock has climbed from $15 per share to $50 - hardly evidence of a company in crisis.

But Kissner, a straight-talking Brooklyn native, wanted to do better. He saw that PBCC had strong connections to its customers, 90% of which are small companies. So why had the division defined its business with those companies so narrowly? "PBCC was part of a big company, and big companies are risk-averse," he says. "Our challenge was to innovate without killing our momentum."

So how do you persuade hundreds of employees who are content -- who aren't facing immediate threats -- to focus with urgency on missed opportunities? Part of the answer was to change the company's rituals. During his first week on the job, Kissner handed out buttons bearing the phrase "That's the way we've always done it" - crossed out with a red circle and a slash. He also reinvented the company's annual retreat: Instead of simply inviting the usual cast of high-ranking executives, Kissner declared that any employee might be eligible to attend. The main criterion for awarding invitations would be individual performance rather than hierarchical position. "The first year of that policy was painful for a lot of people," Kissner admits.

An even bigger part of changing people's attitudes involved changing their environment. In June 1996, PBCC moved from Norwalk to Shelton - and Kissner moved to make a radical break. PBCC's new digs, which overlook the Housatonic River, were regarded as unusual by people in other parts of Pitney Bowes. But Kissner is convinced that the change has been worth it. The friendly hallways, complete with gum-ball machines, foster impromptu conversations. "We want people to bump into each other, talk about what they're doing, and exchange information that they wouldn't otherwise exchange," Kissner says.

Everything about the new surroundings is designed to encourage teamwork. The office's oddly shaped traffic signs don't instruct employees to yield or merge. Instead, they trumpet the company's four-part strategy, dubbed "Elements of Success": Grow the customer base, build new sources of revenue, capitalize on the power of people, and work smart. Whiteboards in each department also outline goals for the quarter: Phone reps aim to handle 100 customer-service calls a day; staffers in the accounts-receivable department strive to handle bad checks within three days.

The results are difficult to argue with. Purchase Power was profitable within nine months of its launch and now boasts more than 400,000 customers. The Business Rewards credit card enjoys an unusually high activation rate, and more than half of those who have signed up for it are carrying balances - which is what generates revenue for PBCC. Several other products (insurance for lost parcels, prepaid legal services) are also in the works.

Has PBCC completed its transition? "Hardly," laughs Peggy Anson, 48, PBCC's vice president of human resources, who argues that a healthy sense of restlessness has permeated the organization. "We're doing fantastic," agrees Suzanne Kennard, 38, head of the Purchase Power program. "But we still could be doing so much more."

Scott Kirsner (kirsner@worldnet.att.net) writes on business and technology from Boston's North End.

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