What Happened to Kinko's?

How did one of the most interesting entrepreneurial adventures of the 20th century become little more than a tax write-off before disappearing completely?
 
Aug. 4, 2010 - PRLog -- FedEx announced in 2008 that it would be removing the Kinko’s name from it’s copy and ship centers, but the signs did not come down until recently, leaving many longtime customers wondering, what happened to Kinko’s?

Dean Zatkowsky, a Kinko’s marketing executive from 1986 through 1999, thinks he knows the answer. His book, E Pluribus Kinko’s: A Story of Business, Democracy, and Freaky Smart People (available in paperback and Kindle format at Amazon.com), claims that Kinko’s was done in by the loss of its innovative, democratic culture.

“We had a very American structure,” says Zatkowsky, “with our own version of the constitution, a very vocal citizenry, and leadership dedicated to the preservation of individual liberty. Democracy was our key success factor for thirty years.”

However, after thirty years of continuous growth and profitability, the founding partners had no exit strategy. To create one, they had to consolidate 126 separate partnerships into a single company. Along the way, the democratic culture suffered.

“We brought in some Wall Street professionals to help us take the company public, but no one was prepared for the culture shock. Reorganizing the company for an IPO, the experts demanded a more top-down management structure, sapping our energy and creativity. I’m not sure anyone realized how important the culture was to our success.”

Eventually, the Wall Street firm bought out the founding partners, and later sold the rolled-up company to FedEx, which has since written down nearly the entire purchase price. “That’s how one of the most interesting entrepreneurial adventures of the twentieth century became little more than a tax write-off before disappearing completely,” says Zatkowsky.

Paul Orfalea founded Kinko’s in 1970 with a single copier and a small loan cosigned by his father. That single shop – 100 square feet annexed to a burger joint – eventually grew to an empire of over 1,000 branches with over $2 billion in annual sales. Orfalea says in his foreword to E Pluribus Kinko’s, “Dean’s focus on the democratic structure captures the key success factors as well as any analysis I’ve heard.”

Zatkowsky describes three pillars of Kinko’s democracy. “The Philosophy was like a constitution that clearly articulated stakeholder rights and expectations; our Partnership Ethos included profit sharing and broad participation to spread the benefits and responsibilities of citizenship; and our habit of Pot-Stirring, led by a troublemaker of epic ability, produced the frequent revolutions Thomas Jefferson believed were necessary in a healthy democracy. It was very messy – and very profitable.”

Organizational democracy champion Traci Fenton, of WorldBlu, Inc. (www.worldblu.com), calls E Pluribus Kinko’s “A spell-binding, must-read story that deftly illustrates the power of democracy to give any company a powerful competitive advantage – and a bit of magic.”

Most chapters of E Pluribus Kinko’s contain sections called “The Coworker’s Voice,” in which former Kinkoids describe the company culture in their own words. Zatkowsky notes that organizational democracy is more about voices than votes: “The really powerful democratizing factor at Kinko’s was coworker participation. If we erected a tombstone to the Kinko’s brand, I would carve an epitaph that reads: ‘Where every coworker had a voice.’

“In a democracy, freedom of speech is as much a duty as a right. When the coworkers lost their voice, the company lost its most valuable asset: the fire in their eyes. That’s what happened to Kinko’s.”
***
E Pluribus Kinko’s is available from Amazon.com in paperback and Kindle formats. Author and ghostwriter Dean Zatkowsky is Managing Partner of Dizzy One Ventures LLC. His co-author credits include Kinko’s founder Paul Orfalea’s Two Billion Dollars in Nickels: Reflections on the Entrepreneurial Life (BookSurge, 2008), and The Entrepreneurial Investor: The Art, Science, and Business of Value Investing (Wiley, 2007).
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Tags:Kinko S, Orfalea, Entrepreneur, Management, Leadership, Ownership, Business, Democracy, Company Culture
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