M & A Execution - How not to do it? E.g. Fedex/Kinkos
Fedex recently acquired Kinko's, a private company. The original investors in Kinko's and its owners made a huge pile (and i don't envy them), so did the investment bankers who acted as consultants for the merger. While these people got away with millions, the merger seems to have been executed shabbily on the ground. A true-life account follows.
The INS (or BCIS, as it is called now. The name change doesn't seem to do much for its efficiency!) recently amended some immigration rules forcing me (and thousands of others in the same situation) to collect/send documents on a few day's notice! I decided to check out the local Kinko's, which is now Fedex/Kinko's (atleast that is what the board says). The experience that followed was traumatic! Wear your life jacket before you proceed ...
The store indicated that it handled shipping. The first hints that things were not going to be great came when i had checked the Fedex website and it had said that this particular location did NOT handle Saturday shipments. When i went in and asked they said that they do Sat shipments too. A billion dollar Wall-St darling can't seem to keep its website uptodate!
The store was manned by 3 teenagers! Again a very bad sign when i was abt to send all my immigration documents (originals). I did not feel like handing these over to a group who on a Saturday noon are probably thinking of ways to get laid that night. But i pushed ahead.
When i told them i wished to ship these docs with prepaid return envelope, they all blinked - none of them had done it before. The store manager who was trained to do this was not going to be in office that day! These 3 Kinko's kids were still undergoing Fedex training (and thankfully, they admitted it).
I was prepared for a joy ride now! I decided not to ship from that store, but i wanted to see what else could go wrong. Plenty, as explained below.
I asked them to call their manager! They did NOT have her number! There was one phone that was programmed to call her using a single button, but her phone number on it was dated. One guy had her new number on his cell phone, but he had forgotten his cell phone at home. Fun fun!
So i asked him to check online or call nearby Fedex centers to check. They were not equipped with a special Fedex directory! They did NOT have any resource except the net to get these numbers. So on we went to the Wide Wild World. Surprise surprise - the Fedex site listed all the nearby offices, but had only their addresses. Get this! - no phone numbers, no email addresses. Reminds me of the KFOG line that goes "We are going to take you back in time"!
By this time, the kids were apologising profusely and told me that they were still being trained and that the manager would come back Sunday. But no shipping is done on Sunday!
One guy finally tried to login to his Fedex work account to get more info - it failed to log him in even after multiple attempts. They were probably taking the site down for weekend maintenance!
Then he directed me to another place close by - The Container Store - a competitor, owned by UPS! I did not bother to check it out since they also were a nasty offspring of a recent takeover of Mail Boxes Etc. by UPS. Same problems were likely to show up there.
Fedex lost one customer for life, and a few more defections are bound to follow.
I finally decided to try out the Post Office, the one place i wished to avoid. After an hour of trying to explain what i wanted to get done, i got the docs shipped.
Shouldn't M&A be done more carefully ? All these honchos speak of synergy and efficiencies of scale. I have a new phrase to add to this meaningless lexicon - "inefficiencies of a botched M&A". Why cannot a store have a fully trained person, especially in a busy center, while the others are still getting trained ? While clueless teenagers are good enough for making a latte, i sure don't want to entrust my life to these guys.
I strongly believe that Greenspan is wrong when he says we have all the efficiency that can be had from this economy. Most of the productivity increase in the last few years have come solely from use of IT in more places. But the biggest increase in productivity can come when these hapless teenagers are replaced with 10-year old Germans or Japanese. For once i believe that the world will be a much better place with less humans and more machines!
Finally i admit that i really had foreseen this - a few mins before i went to Fedex i was talking to a friend abt M&A and my impending trip to Fedex. I told that person that i expect to see some problems due to the recent merger. Man, "some problems", turned out to be a gross understatement.
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