Stable Disruption: Repositioning NCR for a New Era

Part of a Series

This Insight is a part of the 2016 CFO of the Future Summit Report.

To see the complete report, click here.

In 2005, the National Cash Register Corporation (NCR) stood at a crossroads. Founded in the late nineteenth century and famous for having invented the mechanical cash register, the firm had become a leader in manufacturing hardware to process financial transactions and a significant player in the data warehousing market. Unfortunately, at the turn of the 21st century, the firm’s competitive advantage was eroding—quickly. The difficulty was that the market for financial transactions was increasingly moving to digital technology and platforms, while NCR remained heavily dependent on traditional hardware. Thus, if NCR did not draw on its tradition of innovation and move to a more technologically advanced business model, the firm would risk losing its market share in the short term and going out of business in the long term.

NCR therefore undertook a transformation effort that revolved around a complex and ambitious strategy: the company would acquire a series of leading software companies in the hospitality, retail, and financial sectors and then bind those technologies together to become a leader in providing “omni-channel” services. The new approach—which, as Bill Nuti, NCR CEO, said, entailed providing customers an “end-to-end” solution for carrying-out transactions via a range of mediums (e.g., online, via a mobile device, or in person)—ultimately aimed to enable customers to become more productive and agile. , As an NCR official explained, omni-channel was “all about the ability to quickly and efficiently meet consumer demands, while strategically planning ahead to quickly adapt to the market changes tomorrow will bring.”

While Nuti spearheaded the development of this vision, he relied on his C-suite colleagues to refine and implement the strategy. Chief among them was Bob Fishman, a veteran finance executive who became the company’s CFO in 2007. Fishman understood that, in order for NCR to thrive, the finance division would have to strike a balance between staying the course and innovating. As the CFO said, “It is about creating stability…[and] being disruptive at the same time.”

Thus, Nuti, Fishman, and the rest of the NCR team set out on an ambitious journey to transform the company and prove that NCR’s future was just as bright as its storied past. Along the way, they faced challenging questions: How could they leverage technology, shared services, and data? How could they effect strategic, operational, and cultural change? Where was the proper balance between stability and innovation?

“I think in today’s world, if you want to grow, you have to be willing to take on some risks…so you can’t be afraid to fail.”
Bob Fishman
Chief Financial Officer, National Cash Register Corporation

2005-2010: Stabilization

Nuti and his C-suite colleagues understood that transforming NCR would be a long-term endeavor (i.e., at least five to ten years) and that before the company could reimagine its product base, it needed to reinforce its foundation. Beginning in 2005, Nuti, Fishman, and other NCR officials therefore undertook an effort to eliminate several major vulnerabilities and prime the company’s culture for change. ,

The stabilization process began with NCR’s decision to “spin off” one of its most profitable arms, a data warehousing firm called Teradata, as well as an effort to restructure the company’s global manufacturing setup. It also involved a significant push to plug a gap in the company’s pension fund. Amid the 2008 financial crisis, NCR’s pension fund went from being overfunded by $200 million to having a $1.4 billion deficit. This made NCR one of five companies in the United States that, as Fishman explained, had an underfunded pension that was greater than 50 percent of its market cap. Even more important, the gap in the pension fund deterred investors. NCR therefore spent more than $1 billion dollars to decrease the deficit. Looking back, Fishman acknowledged that the company faced a tradeoff in investing so heavily in the pension fund but emphasized the long-term benefits of NCR’s approach. He explained:

My advice to anyone who’s making this type of decision is really to create certainty within your company. Even though it can be expensive and you might need to use your balance sheet, we boxed in that underfunded pension, we de-risked it and immunized it and it created certainty in the eyes of investors. So that’s a billion dollars that I cannot spend on acquiring a business, but it did create a platform for growth within the company.

Nuti and Fishman also strove to transform the firm’s culture. When Nuti arrived in 2005, the company had been stuck in a stagnant state. “We had bad habits,” Nuti said. “We were not fast-moving or agile or entrepreneurial enough, and we were not taking enough risks as a company. We had a culture that had simply learned how not to grow.” To catalyze change, NCR moved its headquarters from Ohio (where the company had been located since its inception in 1884) to Duluth, Georgia, a desirable Atlanta suburb. , As Fishman noted, the transition was politically contentious and time- and resource-intensive. Nonetheless, the move coincided with significant turnover at the firm; this gave NCR a rare opportunity to reshape its team and mentality. For example, in the finance division, NCR had had over 200 staff with more than 20 years’ experience, but only 10 percent of those personnel moved with the company to Georgia. Fishman therefore rebuilt his team “from the ground up” by recruiting personnel with an appetite for change. As a result, as Fishman said, NCR was able to “change the culture overnight.”

2011-2015: Transformation

By 2011, having improved the firm’s financial stability and having begun to reshape NCR’s culture, Nuti, Fishman, and the rest of the NCR team were in a better position to pursue a comprehensive business transformation and become a leader in providing omni-channel services. As the firm’s leaders had discovered as early as 2005, NCR could realize this vision by acquiring leading software companies in select industries and then binding those technologies together to become an innovative market leader.

To help the company realize this vision, the finance division had to help the company complete the acquisition of new companies; the finance division had to revise its approach as well. Fishman outlined a new vision for his team: “To become a world class finance function as NCR transforms into a leading software and services company.” He also made significant changes to the finance department’s work, one of which was playing a more active role in the development and implementation of the firm’s enterprise risk management system. NCR was entering a field that involved novel risks, both because of issues connected to IT security as well as the possibility that competitors would introduce applications and other programs that competed with NCR’s end-to-end approach. (More broadly, any rapid expansion introduces an element of uncertainty.) Fishman and his team therefore helped to create an enterprise risk management framework that identified, categorized, and quantified the company’s risks. He also played an integral role in the regular review of this framework at board and audit meetings. “We look at every risk,” the CFO said, “and we determine, ‘has it moved, has it shifted, [and] what’s the impact to the overall company’s value?’”

Another key change for the finance division was discerning ways to make better use of shared services, technology, and data. NCR had a shared services agreement with Accenture that dated to 2003, but the rapid acquisition of software companies forced NCR to adapt. For instance, to facilitate the process of incorporating acquired firms, Fishman and his team started using Oracle’s cloud-based enterprise resource management platform to capture all of their revenue in a single place. Similarly, to free more of NCR’s sales teams’ bandwidth to expand the business, the finance division began searching for ways to use shared services to complete all service renewals. Finally, the finance division started seeking out techniques to monetize the data streams that the omni-channel platform generated. As Fishman acknowledged, the company had “to walk before [it could] run,” so the CFO first established an internal “big data” engine. Nonetheless, that the CFO was thinking in these terms showed that the finance function was evolving.

Amid this innovation and change, Fishman carefully focused the finance staff’s time and energy. Specifically, he identified four imperatives: being a strong “business partner”; achieving “operational excellence”; ensuring “compliance”; and maximizing “talent and culture.” He also focused a great deal of his energy on positioning his team’s work in the company’s value chain. (This was a chart that delineated how each team member and action contributed to the company’s strategy.) This assiduous organization was valuable in part because it enabled Fishman to gauge the impact of each team member’s work. Equally important, it helped to guide the team’s energy. As Fishman explained, in the midst of a reform effort, “There’s 101 things that a finance person could be working on. We have learned over time that we’ve got to try to simplify it and work on the most important things.”

Finally, Fishman found ways to engage his team and continue to inspire a creative culture. He offered trainings on topics ranging from leadership to technical finance skills. He also created a rotation program that allowed staff to change roles periodically. This served as a way to retain talented staff when the firm, in the midst of its risky transformation effort, could not offer large bonuses. “A lot of people,” Fishman noted, “stay at NCR because of the complexity.” More broadly, it served as a way to marry the company’s overarching transformation to individual growth and reinvention. In other words, as NCR evolved, so too did Fishman and his team.

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2016 and Beyond – The Path Ahead

By 2016, the collaborative efforts of Nuti, Fishman, and the rest of the NCR management team had had a discernible, positive effect on the firm. Whereas NCR in 2005 was on a path that many believed would lead to its demise, by 2015 NCR was being lauded in the press as a firm that had reinvented itself into a “global tech leader” that “taps into contemporary trends and technology.”

Still, NCR as a whole and the finance division in particular continued to face challenges. For example, the company recently had to deal with an activist investor, and the finance division had to respond to suggestions from consultants that it needed to decrease its spending as a percentage of the firm’s revenue.

Thus, NCR is continuing to evolve. Nonetheless, a little over ten years since the transition began, NCR leaders can take comfort in the fact that NCR has taken enormous steps toward implementing its new approach. More broadly, the firm has struck a balance between having foundational financial stability and exhibiting an appetite for change that could help to propel the company forward in a digital world. As Fishman said, “I think in today’s world, if you want to grow, you have to be willing to take on some risks…so you can’t be afraid to fail.”

Nuti, Fishman, and the rest of NCR confronted that fear head on and conquered it.

“It is about creating stability…[and] being disruptive at the same time.”
Bob Fishman
Chief Financial Officer, National Cash Register Corporation

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