This article was featured in "The Times"
For Ricoh, a company best known as a market leader in printing and documentation, coping with the Covid-19 pandemic required some particularly nifty footwork. Almost overnight, all those office-based workers printing out thousands of pages every day switched to home working and digital.
But every challenge is also an opportunity – office printers may have fallen silent, but corporate and SME customers needed working-from-home systems urgently. Thanks to its digital transformation strategy – including a series of timely acquisitions: German digital documentation specialist Docuware; cybersecurity and data centre business MTI; and workplace integration outfit DataVision – the resourceful Ricoh was ready to take advantage.
“People were looking for remote working security, process automation and remote access to digital documentation – all things we realised we could help with,” says Tina Smith, senior vice-president for Ricoh Europe. “We put together a suite of offerings that customers could take advantage of really quickly. It was a real moment for us to say to your customers, ‘Hey guys, this is how we manage, it’s not difficult to get on to and it will solve some of your immediate problems.’”
It’s a great example, she says, of how Ricoh applied the lessons learned over a decade of transforming itself from a product-based company with a leading position, but in a shrinking market, into a digital services business that is agile and flexible enough to take even the most unexpected crisis in its stride.
Digital transformation is about putting yourself and your customers in a position to be able to take advantage of new technologies
Rather than arriving late to the party and rushing to make up for lost time, Ricoh’s digital journey has been pragmatic, thoughtful and customer-focused. “What is digital transformation? It’s putting yourself and your customers in a position to be able to take advantage of new technologies,” says Smith. “We try to achieve that for ourselves and to help our customers achieve it.”
A key part of its new mission – “empowering digital workplaces” – has been its mergers and acquisitions (M&A) strategy aimed at bringing in the required complementary skills and technologies more quickly and effectively than via organic growth alone.
“Our strategy is to use our acquisitions as an accelerator. It’s a recognition of the fact that we don’t know everything and that there are some very smart people out there who can really drive things forward.”
It’s a given in business that M&As that look good on paper often fail to deliver in reality. Is there a secret to getting digital acquisitions right?
“Look for a good fit culturally and strategically so that both parties will benefit, and try to be a good buyer. We don’t compete too hard and we try to find a ‘match’. When you’re buying a company, someone has to want to sell it to you. Companies can see that as part of the Ricoh family we’ll all achieve more together.”
It’s also vital to have the right internal systems in place so that newly acquired businesses can be quickly assimilated into the body corporate. To this end, Ricoh has recently introduced a single cloud tech platform for its office services business called Oscar (Office Services in the Cloud at Ricoh). “We’ve done a lot of growth through acquisition and in order to make that sustainable we do need a standard system to run that business on.”
‘We’re used to change and despite our number one position in our traditional market, we never get complacent’.
Oscar was Ricoh’s own pandemic challenge, as its launch coincided with the introduction of lockdowns across European markets. But since it was an essential part of making the firm fit for the future, work went ahead anyway. “We launched in May in the middle of this maelstrom. It was a Ricoh decision and I’m proud of it because it shows that we work for a company with a long-term vision. It would have been much easier to just batten down the hatches.”
That vision has also helped Ricoh to build on its existing strengths and assets rather than attempting to completely reinvent them. Take for example the firm’s substantial field engineer force whose original role was to install and fix printers and imaging hardware – exactly the kind of analogue asset that might fall victim to the digital drive to simplify, automate and save money. But, says Smith, being able to put real people on site is a big differentiator in an increasingly virtual world. “We have 4,500 feet on the street and those engineers are a huge asset to us. A big part of the journey has been to upskill them so they can participate in our growth.”
If there is one quality that has helped Ricoh make the switch to digital services untraumatic, it’s that the company has never been tempted to rest on its laurels. “We’ve been in the innovation business since we were founded in 1936,” says Smith. “We’ve always had a winning spirit – we’re used to change and despite our number one position in our traditional market, we never get complacent. We’ve taken all of those qualities over into what we do now. It hasn’t been as tough as you might think.”
“Fortune favours the prepared mind,” as 19th-century French chemist and polymath Louis Pasteur said. But for many successful legacy businesses, it can be a challenge to prepare them for the digital future while attempting to maximise returns from traditional markets.
To overcome this requires human skills as much as technical ones, says Mark Newton, partner at KPMG. Effective leadership for one thing. “You’ve got to have buy-in and clarity from the top – a clear and well-articulated vision, and really stick to your guns. Technology is the enabler – it can bring automation, terrific amounts of insight and a great customer experience – but it has to be underpinned by a business need.”
And a willingness to change as the needs of customers change. Successful legacy businesses can struggle to accept that however good they are at what they do now, at some point in the future that may no longer be relevant. “A culture of continuous innovation really helps. However amazing you are at what you do, you can’t just carry on doing the same thing.”
For companies with a healthy balance sheet that are looking to expand rapidly into new digital markets, M&A can seem like the quick and easy option – why grow your own skills from seed when you can buy what’s needed fully grown on the open market? But buyers must be disciplined and know what they are looking for. It’s comparable to buying a house – that fixer-upper may seem to be a steal, but do you really have the time and skills to take it on? “If you are not a turnaround specialist, don’t buy companies that are underperforming or where the management team is wrong,” says Newton.
‘Covid accelerated the digital transformation many organisations were already going through and reinforced the message that the market is changing’
So if your digital strategy requires adding new skills and technologies to the mix, then that is the basis on which acquisition targets should be assessed – don’t be derailed by the desire to grab a bargain. “In my experience that’s where people can get caught out. Doing a turnaround is completely different to bringing organisations in and helping them go from good to great.”
Integration is the other big M&A challenge. Bringing new businesses on board quickly and effectively is often harder in practice than it is in theory, because even the most strategically relevant buys can be stymied by disparate systems that work well enough in isolation, but aren’t compatible with their new corporate environment. “If you have a number of acquisitions all running different software platforms, they need harmonising. Digital transformation is at the core of that,” Newton says.
Introducing a common cloud platform is the foundation stone here, he adds – one system that the whole business can run on. The benefits of the cloud in terms of speed and agility are clear, but implementing this more streamlined approach is rarely without some pain of its own. “One of the characteristics of a cloud implementation is that you adopt more standard functionality than we did in the old days when we would customise everything. That needs genuine alignment at the executive level, particularly in the acquired businesses. There has to be a really clear understanding as to why they are being asked to do it.”
And despite all the restrictions associated with remote working and lockdown, the pandemic has in some ways made achieving that all-important alignment a little less taxing, Newton says. “Getting four or five MDs together physically in the same room, sorting out the flights and so on – that can be nigh-on impossible. But now you can get them all on a Teams call with only a week’s notice. You can make fantastic progress.’
Keeping calm and carrying on has also provided a great opportunity for leaders to demonstrate faith in the digital future, whatever the new post-vaccine world of work brings with it: “Covid has really accelerated the digital transformation that many organisations were already going through,” says Newton. So for companies like Ricoh, the value of having a prepared mind has become even more apparent. “I think it has worked positively in many ways for their growth strategy, and really reinforced some of their messaging – that the market is changing, and we’ve got to change with it.”
Head of Clients and Growth, Consulting