Janet Santos, general manager at XBS-Seattle, is one powerful reason why XBS headquarters in Rochester chose the Northwest as a learning laboratory for its change strategy. Sharp, articulate, and intensely focused, Santos was an early devotee of the XBS change strategy. “Technology is allowing business to move at an incredible pace,” she says. “Our customers know that. Our competitors know that. If we can’t keep up, we will not stay in business.”
Thus far, XBS-Seattle is doing more than just keeping up. Revenues at the Northwest operation, which encompasses Oregon, Washington, and Alaska, stood at $11 million in 1993; they’re projected to reach $42 million in 1996. The time it takes to implement service for a new customer has dropped from 30 to 45 days in 1994 to only 7 to 14 days this year. Where the Seattle office used to sign roughly 6 contracts a year, it now pulls in 30 to 35 — with clients like Microsoft and Boeing.
So what is XBS-Seattle doing to turn learning talk into profitable walk?
1. Tell people everything. Even entry-level XBS employees know a lot about how the business works and what its goals are. Entry-level workers get “P&L training” — many of them learning for the first time just how XBS makes or loses money. Managers and account executives are encouraged to be as open as possible with financial data. “It used to be, ‘Are you in a need-to-know’ position?” says Ralph Fragale, the 31-year-old manager of XBS’s Microsoft account. “Now it’s ‘Everybody needs to know.'”
2. Pay all your people to think like managers. One reason the change strategy succeeds is a reward system, known as Value Share. Unlike standard profit-sharing plans, Value Share payouts are based, in part, on the regional office meeting its targets for revenue, profit, and customer satisfaction. In Seattle last year the XBS performance meant a bonus of 11%. Kathy Garcia, a 28-year-old high-school graduate who watches over Xerox copiers in one of Seattle’s biggest law firms, says what really matters is the personal understanding that “every little thing we do makes a difference.”
3. Cross-functionality, not cross-purposes. In the old days, sales, operations, and administration at XBS were organized and rewarded in a way that all but guaranteed internal rivalry. One of the biggest improvements under the change strategy has been a realignment of company functions to reduce that friction. XBS moved to a new team-based approach : Integrated Solution Teams, or ISTs, with representatives from sales and operations now jointly assess whether and how all parts of XBS can respond to a customer, working out their proposal together.
4. Define goals, set guidelines, get out of the way. The people best positioned to sense and respond to customer concerns are those on the front line — which at an outsourcing company like XBS, means 80% to 90% of the workforce. Consider the way XBS management let members of the Boeing work group deal with potential disaster. In early 1994, XBS-Seattle took over Xerox’s contract for Boeing’s several hundred copiers — making it the office’s largest account. In late 1995, Boeing took issue with the quality of machines installed at some of its out-of-state offices and then gave XBS 30 days fix the problem.
Over the next four weeks, recalls account coordinator Kathy Sanchez, the XBS “self-directed” Boeing work group “sweated bullets.” Sanchez, two site coordinators, an account manager, and a copier technician worked nights and weekends to identify problems and develop alternative solutions. XBS-Seattle’s upper management, meanwhile, met constantly with the work group to review the team’s progress and reassure upper management at Boeing. The plan rewrote how XBS dealt with Boeing, rescued the existing contract, and grew the business considerably. Perhaps more to the point, Santos says, is that other parts of the company are already benefiting from the lessons learned by the Boeing team. The team’s success, for example, has become XBS-Seattle’s new benchmark for self-directed work groups. “It’s called ‘shared learnings,'” says Santos. “What worked with Boeing can be applied to many other projects.”
Paul Roberts (firstname.lastname@example.org) is a Seattle-based writer specializing in resource and technology issues.