Small Business

Copying Kinko's Success


Kinko's founder Paul Orfalea talks about motivating employees, managing customers' emotions, and maintaining tidy bathrooms

Paul Orfalea started Kinko's in 1970 near the University of California at Santa Barbara. Today it has grown to more than 1,700 locations. Although its owner, Fed-Ex (FDX), is eliminating the Kinko's name (BusinessWeek.com, 6/9/08)—replacing it with "FedEx Office"—the Kinko's story contains lessons for small business owners and entrepreneurs. On July 2, I had a wide-ranging conversation with Orfalea, who offered a bunch of ideas to help businesses stand out. I've synthesized them into three practices you can put in place in your own shop.

Get aggravated. A key part of the Kinko's philosophy was to communicate both accomplishments and mistakes openly so employees could learn from each other, Orfalea explained. He conceded that the philosophy became harder to implement as the company grew. "By nature, as a company gets bigger, people manage their career and they don't manage their business. It becomes very hard to get candor. As much as we strived for open communication, we were never as good at it as I wanted us to be," Orfalea says.

The lesson: Encourage candor. Orfalea told me a story about his dad, who owned a factory. His father would surround himself with people who were so committed to improvement that they would "aggravate him" on a regular basis. Orfalea recommends building a healthy level of conflict in an organization by making people feel comfortable enough to express themselves. When everyone tries to get along, says Orfalea, you only hear what's going right and not the stuff that needs fixing.

But once you solicit feedback, it's important to follow up on the input you receive. According to the new annual survey from Princeton (N.J.)-based Opinion Research of companies that carry out employee surveys, nearly half (46%) fail to make any changes as a result of the feedback. The findings also show a strong correlation between an organization's responsiveness to employee survey feedback and positive employee engagement. This echoes a recent Jack and Suzy Welch column in BusinessWeek titled, "The Connected Leader." (BusinessWeek.com, 6/12/08) According to the Welches, "Once employees engage you by speaking out, albeit electronically, they expect to hear back. We would suggest that it can be just as damaging for a leader not to respond to feedback as it is not to ask for it all." If you want candor, solicit it. But once you get it, do something with it.

Manage emotions. Orfalea says his business was always much more than copy machines and toner cartridges. Whether customers came to Kinko's to produce posters, make copies of their dissertations, or create sales presentations, Orfalea always wanted his staff to remember they were in the business of managing people's emotions. "At Kinko's our customers were anxious and confused—and whatever they wanted, they needed it yesterday," says Orfalea. "What really helped our business is that the workers saw the relationship of their work to the planet earth. They helped people get jobs, scientists discover new things, families celebrate life events. All I had to do was remove obstacles that got in the way of that relationship." As a business owner, remember that you should be managing customers' emotions. Reinforce that goal with your team.

For Orfalea, managing emotions extended to the colors that welcomed customers to Kinko's. He spent a lot of time improving the decor, replacing tangled messes of wires and equipment with more orderly work spaces, even replacing loud colors with more smoothing tones—all in an effort to convey competence and, as a result, to make more money. According to Orfalea, "I told people: 'Once we manage the emotions of our customers, we can raise prices.' Think about it. When you walk into a fancy hotel, what does it convey in the lobby? A feeling of competence. If the staff looks disheveled, you won't want to pay as much. It's all about managing emotions."

Shortly after my interview with Orfalea, I finished reading a new book, Sway: The Irresistible Pull of Irrational Behavior, by brothers Ori and Rom Brafman. Orfalea and I had been discussing the concept of value attribution. According to the Brafmans, "When we encounter a new object, person, or situation, the value we assign to it shapes our further perception of it." The Brafmans tell of a research study with a world-class violinist playing a $3.5 million Stradivarius in a Washington subway station. Hardly anyone stopped to watch because, according to the authors, the violinist was not dressed in formal attire and looked like your average street performer. "Even though he didn't sound like a mediocre violinist, he looked the part."

Your customers' expectations influence their perception of your organization. Orfalea's instincts told him that if Kinko's communicated a sense of calm and competence, its customers would feel better about doing business with the company.

Pay attention to break rooms and bathrooms. When Orfalea visited branches, he would check out the break room to see how management communicated with employees. He looked for clean, orderly bulletin boards. "Order and cleanliness are important symbols," said Orfalea. "It communicates respect." The same goes for bathrooms. "A clean bathroom says that the co-workers take pride in their workplace. A well-appointed bathroom tells you that the managers and owners care about their workers."

Try this. Change your perspective. Instead of sitting at your desk and looking out, walk through the front door and look at the workplace from the perspective of your customer. According to Orfalea, "Most people see their customers from the cash register out. I tried like hell to get our staff to see our customers from the front door in."


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