Harvard Business School 9-480-044

Rev. October 14, 1993

Renn Zaphiropoulos
Versatec, Inc., the world’s largest producer of electrostatic printers and plotters, was founded
in 1969 by Renn Zaphiropoulos (president), Jack Cleveland (vice president—engineering), Bill Lloyd
(vice president—research and development), Ed Pavlak (vice president—finance), and Milt Reed
(vice president—marketing). By 1978 the company employed over 650 people and was growing at a
rate of over 25% a year. Since 1975 it had been a division of Xerox. (See Exhibit 1 for general
information on the company and its products.)

In 1978, Versatec manufactured about 40 related products, ranging in price from $1,000 to
$70,000. These printing and plotting products, sold to thousands of customers all over the world,
were all based on a single technology—electrostatics. Since the company’s formation, the officers had
believed that this technology would ultimately prove to be the most inexpensive way of translating
electronic impulses (digital data from computers, for example) into human-readable information.

Versatec was organized into eight groups reporting to President Renn Zaphiropoulos:
marketing, engineering, research and development, finance, quality assurance, systems (software)
development, manufacturing, and personnel. The organization had few formal policies, procedures,
rules, or regulations. But it had many informal traditions that helped make it, in the eyes of many
employees, unique.

Versatec was housed in two modern California-Spanish style buildings in Santa Clara. Most
people in these buildings did not have private offices. What offices there were had glass windows in
the doors and no locks. In the reception area and elsewhere were paintings by Renn Zaphiropoulos.
“Be bold” signs were on every wall and door. Most offices and desk areas also had many personal
pictures, signs, or posters.

Zaphiropoulos’s office was a somewhat cluttered 12 feet by 18 feet. It had numerous pictures
of his wife, daughters, and boat. There were other pictures and signs on the walls, including one that
said, “Do not follow where the path may lead. Go instead where there is no path and leave a trail.”

Renn’s Background

Renn Zaphiropoulos was born in Port Said, Egypt, in 1926. He was the youngest of four
children. His father was a sea captain. Renn grew up in Egypt, attended a Greek high school in
Cairo, and later went to Lehigh University in the United States, where he received a B.S. in

Professor John P. Kotter prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective
handling of an administrative situation. This case is part of a set of materials that includes one other case (“Fred Henderson,”
HBS No. 480-043) and two videotapes (one on Zaphiropoulos, HBS No. 881-001 and one on Fred Henderson, HBS No. 881-
002).
Copyright © 1980 by the President and Fellows of Harvard College. To order copies or request permission to
reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No
part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in
any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the
permission of Harvard Business School.

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480-044 Renn Zaphiropoulos

engineering/physics and an M.S. in physics. Before starting Versatec he worked for Philco Research
as an engineer, Chromatic TV Labs as an assistant technical director, and for Varian Associates,
eventually as a division manager.

Renn’s Philosophy of Management

In discussing his ideas on management, Zaphiropoulos explained:

The only way you can succeed in a business is to satisfy a need at a profit. If
you satisfy a need at no profit, that’s philanthropy. If you satisfy no need at a profit,
then you’re a crook.

My job, as I see it, is to motivate people to do what I think fits in the overall
plan. I order no one to do anything. I set up the conditions under which the required
action takes place. The process is essentially an art. It involves finding out the grain
of the situation and then going with it, not against it. It is much like sailing, which I
enjoy very much. When I go sailing, I go with the wind. To achieve my goal, I have
to study the situation, set sails, and go with the wind and the water. It is much the
same in management.

I don’t make big product or market decisions. I create the right conditions
under which those decisions can be made. I think of myself as a gardener, as an
arranger, as a creator of climate.

In management you are dealing with people who are basically fixed. All you
can do is change their environment. Much of the process of management is
developing a sensitivity to where those people can grow.

People are very concerned with their image in the eyes of others. Therefore,
in relating with people, the statements that are made are often meaningless. What is
important is what they imply about a person’s self-esteem. I spend a fair amount of
my time trying to reduce contempt in the organization. It’s absolutely deadly. Not
conflict, but contempt. It’s the ultimate in desecrating people’s self-image.
Contempt, for example, can easily develop in an organization like ours between the
production and the marketing people. It is essential to keep a dialogue going
between them. Many companies fail because they do not. Marketing, engineering,
and production people often don’t understand one another. It is not unlike the Jews
and the Arabs. The key here is to build each group’s esteem in the eyes of the other
group. My role is to help make them interact with one another in a constructive
way. The general manager’s role is making sure that the dialogue happens.

Overall, a manager’s job is to affect behavior, not to leave people alone. This
requires constant and frequent contact with people. I go around and see people
every day. I’m usually not that busy. For example, we have orientation classes
downstairs for new employees, and I take part. That way, I get to see all the new
people. I also deal with crises and hold people’s hands. Nobody ever falls in love
with a manager, so I always oscillate between the role of boss and playmate. I’m also
not afraid of firing people, although that rarely happens. Many people have thanked
me for terminating them, pushing them into a verdict that is best for them. I mean,
who wants to perform poorly?

Our company is different from other companies that I have known in a

number of different ways. For example, we are very sensitive to stupid policies. We
try not to have a lot of rules. We have less structure than most companies and that

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Renn Zaphiropoulos 480-044

which we do have is understood by people. We don’t stand on formality; we don’t

try to scare people by wearing fancy suits. We make it clear that effort is not key;
results are key. We talk a lot. Some of it is frivolous, but most of it is work related.
We don’t treat people in a moralistic way; we don’t tell them what they should do.
We don’t have private parking places; I can walk as well as the next guy. Authority
should be based on competence, not awe. We care for people because it’s smart to
care for people. Very few orders are given here and virtually no punishment. We
don’t like phonies; we throw them out after they’ve been here a very short period of
time. We like the brutal truth. We don’t bullshit each other. You’ll find very little
“Fix it, Renn is coming.” We don’t accentuate status and titles. We love to see a
difficult challenge.

I get the feeling that most executives feel guilty about how much money they
make, so they work long hours to make them feel better. It’s silly. Effort doesn’t
count. Results count. I work 40 hours a week.

Employees’ Comments on Renn

Renn is the company psychiatrist. He does a great job of dealing with the
founders and the executive staff. Under a different leadership, I wonder if the basic
conflicts among these people wouldn’t be very damaging. Renn keeps this from
being a serious problem.

Renn tends to be protective of the underdog. He’s a very strong person.

He’s even willing to defy the entire group at times. He’ll defend a person in front of
the group, but if evidence gets too strong, he’ll reverse himself. He’s not afraid to
admit that he was wrong.

He’s good at spotting people problems and he’s usually right.

He has an endless amount of energy. He doesn’t need a lot of sleep. Few

people can keep up with him, including his new young wife. He’s a fabulous chef.
Watching him cook, you get a sense of his great timing.

* * *

Renn is the most talented guy I’ve ever met. He builds instruments, he sings,
he cooks, he sails, he can do almost anything.

* * *

The primary reason that we’ve been successful so far is the top group of
officers. They talk things out until they’re satisfied that they’ve got the right thing to
do. There’s no political in-fighting. The group has excellent relationships; everybody
pulls together to solve the problem.

You must remember that most of those people have been together for quite a
long time. Lloyd and Renn first developed the concept for this business. When they
decided that Varian wasn’t going anywhere with that technology, they decided to
form their own company along with the other founders.

* * *

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480-044 Renn Zaphiropoulos

Renn cannot stand leaving things unsettled; I think that’s a key trait which
makes him successful. He has to make things happen, see that things happen. He’s
very results oriented.

* * *

Renn orchestrates the atmosphere around here. He has a superior ability to

sense feelings, to know what offends people, what motivates people, etc. He’s an
amateur psychiatrist. He’s particularly good at spotting patterns. He’ll say, “You
know, six months ago, you did such and such and that’s happening again now, and it
happened once last year, so maybe there’s a pattern here.”

Renn is an anxious person by temperament. He can be emotional. He likes

to solve something now.

* * *

Renn is amazing from the standpoint of the amount of talent he seems to

have. But he can be impatient, and he can be an optimist always, sometimes even
when I wished he were more of a realist. He can also be too forgiving at times,
especially of certain people.

* * *

Renn is very personable. You get to know him as a person. You get to know
his family. It all leads you to trust him, to feel you can trust him.

The direction he gives the company is in its long-range strategy and in its
philosophy. Within that, he gives you a lot of latitude. But at the same time, he will
not tolerate incompetence. He judges entirely by results.

Renn’s only weakness, I think, is that he’s not tough enough at times. For
example, he does not insist on staying on scheduled budget, or at least with certain
individuals he doesn’t insist. And I think that hurts us.

A Visit with Renn

The casewriter spent five days with Renn over a period of four months. During those visits,
Renn usually dressed informally; he never wore a suit and tie. He generally arrived at work between
8:30 and 9:00 a.m. and left at 5:00 or 5:30 p.m. He never took a briefcase full of work when he left in
the evening. He sometimes took leisurely luncheons away from the office building.

Everyone from the receptionist to the vice presidents called Renn by his first name. When he
walked around the Versatec buildings he would usually talk to and kid around with many people.

On a typical day Renn spent little time alone in his office (perhaps 10% of the day). Instead,
he spent his time talking to people—in scheduled and unscheduled large and small meetings. Those
included, for example:

• Three meetings with his vice president of manufacturing, which sometimes

included other manufacturing managers. (Shipping and personnel problems in
manufacturing were the biggest problems at Versatec at the time.)

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Renn Zaphiropoulos 480-044

• The regular Wednesday 4:00 p.m. meeting of the office group, which lasted for
about three hours.

• Two discussions with the vice president of marketing, who was very concerned
about the manufacturing problem.

• Two discussions with the vice president of finance.

• A meeting of about 10 people on the major new product Versatec was

developing.

• A meeting of about 12 people on a new product they were just starting to

develop.

• A meeting with the vice president of personnel.

• A meeting with the vice president of systems development and two of his people
to look at a demonstration of a new product.

• A meeting with four of the officers and two others to design a presentation for
Xerox corporate.

These interactions were all characterized by lots of humor (initiated by everyone, but
especially by Renn and Milt Reed), as well as a lot of directness, warmth, and informality.

Renn also had short telephone conversations with all his vice presidents. He spoke on the
phone to Xerox corporate about three times, and gave a speech one morning to 350 high school
teachers in a nearby school district.

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480-044 Renn Zaphiropoulos

Exhibit 1 Excerpts from Inside Versatec: An Employee Handbook

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Renn Zaphiropoulos 480-044

Exhibit 1 (continued)

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480-044 Renn Zaphiropoulos

Exhibit 1 (continued)

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