Exceptional, July - December 2014

CompuCom

Comeback king

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Jim Dixon has tried to leave CompuCom, but he never seems to get far. He tells us why he’s been CEO twice over and is now relishing his role as Executive Chairman.

Jim Dixon isn’t one to shy away from a challenge. The garrulous Louisianan has led CompuCom Systems not once, but twice through reinvention phases that helped transform the former hardware reseller into an IT outsourcing leader with revenue of more than US$2b. It’s a big leap considering he started out selling mainframes for IBM in the 1970s.

Dixon, 67, has seen and spearheaded much of CompuCom’s development. His tenure there spans two decades, first as CEO from 1988 to 1996 and again from 2004 to 2013, when he passed the torch to Tony Doye, the former President and CEO of Fujitsu North America. Dixon now serves as Executive Chairman.

He joined the company as CEO when Safeguard Scientifics purchased CompuShop, which was at the time a chain of retail computer stores and a division of Bell Atlantic. After turning it around and transforming it from a retail organization into a large account reseller, he led the merger of CompuShop and two other companies and was appointed head of the integrated business, named CompuCom.

For the next eight years, he helped the public company grow from a regional product reseller to a national product reseller and IT services integrator, which resulted in annual compound growth of more than 30%.

In 1996, Dixon left the company to pursue his own ventures, including Broadreach Consulting Inc., an IT staffing company, and Executive Consultants Inc., which specialized in management consulting to IT service providers and to investment firms involved in the acquisition of IT service providers.

Some eight years after he left, in 2004, private equity firm Platinum Equity took CompuCom from public to private and asked Dixon to lead the company as CEO once more. “They just called out of the blue and asked me if I would come back,” he says. “I had exited my business, so I wasn’t doing much, and my wife said, ‘He’d love to.’”

At the time, Rob Joubran, Chief Operating Officer of Platinum Equity, said his firm chose Dixon because “he led this company through a period of unprecedented growth in the 1990s, and we are confident he will launch a whole new stage of growth and development for the company.”

The discussion quickly changed to “we’re not interested in just being 100% hardware resellers,” Dixon says. “The business had changed and become more competitive. Growth margins were down, and it was getting hard to make the same level of profit. We had to reinvent ourselves.”

The veteran leader was under the gun to turn around a company he says was “maybe a little late” to embrace change. “It helps, and hurts, to be in business for a long time,” he says.

He set to work transforming CompuCom from hardware reseller and system integrator to IT outsourcing services provider. CompuCom already had a good set of customers that trusted the company and liked its service, and it had a small call center, but it needed to offer a broader set of service capabilities and a wider base.

Expansion plans

Platinum and CompuCom’s first move was therefore to acquire GE IT Solutions, picking up some hardware business and, more importantly, US$200m in outsourcing services that added contracts and a means to build on them. Next came a new call center in India that now employs more than 500 people.

In 2007, Dixon directed the sale of CompuCom to private equity firm Court Square Capital. A year later, he led the acquisition and integration of Gentronics North America, which was CompuCom’s foray into outsourcing for retail businesses, and opened doors in Canada and Mexico City through building global service centers there.

“We started piecing things together and morphed ourselves into IT outsourcing,” he says. “We still resell hardware, but today about 75% of our profit margins come from outsourcing services. We haven’t done any more acquisitions since then — not that we aren’t looking.”

Not every CEO has the chance to work at a company in both its public and private incarnations. Dixon says once CompuCom went private, he still approached the business as if it were public.

“Once a quarter, we have a conference call and communicate to all the creditors how we’re doing,” he says. “We run an open book. We used things that worked for us before. We like to keep our investors informed and happy.” But he concedes it’s easier to make decisions as a private company without the public scrutiny.

CompuCom is vying for its share of a US$288b worldwide IT outsourcing market and has stiff competition from Tier 1 players like HP and IBM. But Dixon contends that, since it only focuses on the infrastructure part of IT outsourcing, which is its core business, CompuCom can do it better — and at a more competitive price.

“We provide IT services better than a Tier 1, and we do it at the value of a Tier 2 because we are more responsive and customer-centric, and we also don’t have the overhead costs that others do,” he says.

If a customer contacts CompuCom’s call center with a shrink-wrapped software problem, it’s typically solved 90% to 92% of the time on the first call, a record that’s well ahead of the industry standard, he says.

In 2013, Gartner ranked CompuCom number 1 out of 30 companies in its Magic Quadrant for end-user outsourcing and its ability to execute. CompuCom operates 15 service centers globally and supports more than 4 million end users and 400,000 mobile devices in North America.

“It’s our business; it’s what we do,” Dixon says. “We know how to take costs out for our clients and maximize their level of customer service.”

The trend has moved away from mega outsourcing — where large players such as IBM or HP/EDS would do it all, from application development to business process outsourcing (BPO) to infrastructure outsourcing — to what is now known as best-in-breed in a specialized area or “tower.”

“When you put customers first, what makes it work is a strong people culture.” Jim Dixon, CompuCom

“It’s who’s best at delivering a particular line of business, and that helps us because that’s where we play,” Dixon says. “We only focus on IT infrastructure outsourcing and are not trying to be all things to all people. We just strive to be the best in the areas in which we deliver.”

A well-defined business model has helped CompuCom remain profitable, but Dixon says if the company doesn’t “deliver the best customer ‘sat’ in the world, there is no other reason for us to be here.”

He’s a big believer in the inverted pyramid, which puts customers at the top, followed by the associates who touch the customer, corporate support staff and, lastly, company leaders. “When you put customers first, what makes it work is a strong people culture,” he says. “The people are the ones who make it happen.”

Every two weeks, associates see the words printed in the middle of their electronic pay stub: “This check made possible by our good customers.”

“We like to remind them that the only reason we’re in business is because of our customers,” says Dixon. He doesn’t just talk the talk.

During his stints as CEO, the Louisiana native estimates he helped serve up about 35,000 pounds of shrimp on his cross-country shrimp boils with associates. Despite tremendous growth in that time — the company had about 400 associates, most of whom he knew by name, in the 1980s and now has more than 12,000 — Dixon strives to stay ahead of the curve on issues that affect both CompuCom’s associates and its customers.

He still meets with a minimum of two customers a week on average to learn about their top concerns and challenges. “You’ve got to talk to customers and find out what they’re doing and where their challenges are,” he says. “If you listen, they will tell you. They are the people in the know.”

This customer contact is present at all levels of the organization. In CompuCom’s sales division, it doesn’t take long to make a decision because leaders delegate authority to those who work directly with customers.

CompuCom also relies heavily on customer surveys to determine satisfaction and whether they would refer the company to others. Each month, customers receive a Stoplight Report, where they rank their service red, yellow or green.

Every manager who services the account receives a copy on his or her smartphone the next morning. If there is a red or yellow rating, it’s sent up the chain of command. This way, everyone is immediately involved in fixing the customer’s issue.

“I used to ask [the managers] what they’re doing about fixing the problem, but today I get five or six emails saying ‘I’m on top of it,’” he says.

Dixon’s job as CEO was to build the company’s culture and help enforce it, using the core values of win–win, integrity, excellence and respect — all with a sense of urgency. “Couple that with the inverted pyramid’s customer on the top and the word ‘associate,’ and you’ll understand our culture,” he says.

On-the-job training

While Dixon has a bachelor’s degree in Mechanical Engineering from Louisiana Tech University, he credits IBM and his early business experiences with setting the tone for an illustrious career.

“When I graduated from Louisiana Tech University, IBM came to the school,” he says.

“I was infatuated with computers and what they did, and luckily I was hired. IBM, at least back then, put you through a yearlong training program, almost like a master’s degree in Computer Science. I’ve never been through such rigorous training, which included the business side as well as computers.”

After five decades in the industry, Dixon’s plan was to transition Tony Doye into the CEO role. In May 2013, Dixon become Chairman and retired a year later.

Doye spent his first days transitioning the sale of the company to private equity firm Thomas H. Lee Partners, which purchased it in April 2014, and assembling his management team.

When Dixon was asked to assume the newly created role of Executive Chairman, his wife accused him of “skipping down the driveway” to a car waiting to pick him up.

“I still plan on being Chairman for a while [once his current role winds down],” he says. “I thought for a long time [I would retire at] 60, but I’m having too much fun, so why retire? I get paid and enjoy what I’m doing every day, and I love the people and our customers.”

When he does finally retire, he plans to do some consulting with private equity firms, work with the industry trade association CompTIA, travel, play golf, spend time with his grandchildren and write a book. “I might start another business,” he says. “You never know.”


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