Reflections about Pitney Bowes

At this time of year, I reflect most about Pitney Bowes, since I regularly attend the Oval Club event, which is held on a Friday night in November at close to the anniversary date of the company’s beginning of operations in November 16, 1920, and which honors long-service employees and retirees. This is the 80^th Oval Club dinner.I continue to love the Company and its people, since I spent almost half my adult life at the Company, and was privileged to lead it.

Pitney Bowes has gone through difficult times during much of the last nine years and at other times in its history (including the mid-1970’s), and many people have asked my opinion on why it has happened since 2008.  I have no special insight, having been away for almost nine years, and would not pretend to know how best to address the challenges the company now faces, since it is a very different company from what it was at the end of 2008, when I stepped down from the Executive Chairman role.

However, I would offer the following observations:

• The annual volume of US physical mail, the lifeblood for Pitney Bowes’ core business for many decades, has dropped from 213 billion in fiscal 2008 to around 150 billion in the most recently concluded fiscal year. The highest percentage of that decline happened as a result of the financial crisis and the severe contraction of consumer credit that the crisis triggered. No business can easily withstand this big and rapid a drop in the volume of items produced in its end market.

• As a result, any company in Pitney Bowes’ situation finds itself having to reinvent itself on the fly when its core business market conditions are in a long-term secular decline. The Company has rebranded itself as a “digital commerce” company, which is a very reasonable path to take. However, successful reinvention and diversification is difficult to do in any company at any time or in any form.

• There is no “cookie cutter” formula for successful diversification or reinvention. The Thomson Group went private in 1997, reinvesting in faster-growing information services businesses, doing a successful public stock offering in 2002. Intel Corporation stayed public and eventually successfully migrated from being a memory chip business in the early 1980’s to being a successful microprocessor business in the late 1980’s and beyond.

• Outsiders who think they know how to make better decisions than incumbent boards and management teams generally do not understand the businesses they criticize. The record of shareholder activists successfully changing the fortunes of companies they attack from the outside has been mixed, across a broad range of industries and companies.

• My second CFO Bruce Nolop once said that there are two types of adverse outcomes: those caused by “bad decisions” and those caused by “reasonable decisions that have bad outcomes.” I made my share of “bad decisions” and experienced my share of “bad outcomes.” All have humbled me.

Success depends on having a great strategy and great execution, but it also depends a lot on luck.  Great business acumen increases the odds of success, but it does not guarantee that success.  I feel comfortable saying that if a company took a different path, it might have increased its odds of success, but I would never say that taking that different path would likely have worked.

Back in the early 1980’s, Tom Peters and Robert Waterman wrote a great book called In Search of Excellence, which attempted to extract business lessons from the success of what were then considered great companies. The lessons were compelling (I adhered to many of them) and the companies were great, but many of the companies eventually failed anyway.

I was blessed to be a leader at a great company and at a time when my skills matched what the organization needed and when the team we assembled was also well matched to marketplace needs.  Too many successful people delude themselves into believing that past successes make them invulnerable to future failures. Inevitably, they overreach and fail.

It is easy to forget that most of Steve Jobs’ brilliant success began 12 years after he was fired for failing the first time he led Apple.  Microsoft went through a long dry spell from which it is only recently recovering. GE, a great company, is going through a very difficult time now, as it did in various points in its long history.

I hope and expect to continue to celebrate the great work of Pitney Bowes people in this and future Oval Club events, because the Company has a foundation of great leaders, great people and great values.

I wish Pitney Bowes all the best as it grapples with exceptionally difficult market conditions.