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The Once and Future C&F - Xerox, the Accidental Savior
“We have one focus in mind — to identify clear, prudent, and credible plans to achieve a 15% ROE on average over time in each of these businesses or withdraw from underperforming operations. You can expect Xerox to have a smaller, more profitable portfolio of financial services businesses.” While C&F was showing positive net income, a 15% ROE target sets the bar much higher. Bigger changes were on the horizon. Again, what to do? T o really pull off a turnaround at this scale, you need a very
My first stint at C&F was at Coregis - one of the seven realigned operating companies, so I had the opportunity to see Jay in action. He was an intense guy. The Coregis team used to sit me next to Jay at dinners. Jay is an actuary; I am an actuary. Jay grew up in suburban Chicago; I grew up in suburban Chicago. I was 27 years old and expendable — and they were afraid of Jay. That’s how I learned some of his origin story. As a young person, Jay worked as a garbage man and raced motorcycles in his free time. Someone suggested he take the actuarial exams. He whipped through the Casualty Actuarial Society exams and the Chartered Property Casualty Underwriter series. He moved to California to work at Fireman’s Fund Insurance Company (then owned by American Express), where he rotated through many of the functional areas of the company. He was made President of Fireman’s Fund at a young age and worked with CEO Jack Byrne (who famously led the turnaround of GEICO) to improve performance and then sell the company to Allianz. When Xerox found him, he was planning to focus on investing the money he made from the Fireman’s Fund deal into the burgeoning Silicon Valley technology scene. He was not sure he wanted to take the C&F job, but Byrne convinced him that if it went well, he would become a legend. And if it went poorly? Well, it was already a disaster. As a young and impressionable actuary, I had an image of Jay. Have you ever seen one of those nature movies where the lion is chasing a herd of wildebeest? You see one wildebeest stumble, then the lion pounces and it is all over quickly. Jay was like that in meetings. Because he really had a broad and deep understanding of all the inner workings of the business, if someone started stumbling around a topic, Jay would get them refocused in a hurry. (Thirty years later — and after a few turnarounds of my own — I
specific type of person. You need an outsider from the company’s point of view. You need the quintessential insurance guy. You need someone who is smart, creative, focused — and maybe a little ruthless. Xerox found Jay Brown. In the 1992 Xerox annual report, Paul Allaire announced that the company had “a clear strategy and workable plan to exit from our
Jay Brown.
Insurance and Other Financial Services Businesses.” He went on to say that a number of steps had been taken to strengthen C&F’s operations, “which will, in turn, facilitate the sale of all or parts of the company.” Joseph (Jay) W. Brown, Jr., who became CEO of C&F in January 1992, was given the task of realigning operations into a holding company and “seven clearly focused operating units, each specializing in a specific segment of the market.” C&F was going to be sold for parts.
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