Checks and Balances

Heidi Gesell, president and CEO of BankCherokee in St. Paul, says that “for a long time, Deluxe was all about providing checks and related products to banks. Over the past few years, Deluxe has grown to become a trusted partner.” Gesell adds that while some of the research Deluxe generates through its collaboratives might be available in banking manuals and through trade organizations, it isn’t necessarily easily accessible. What’s more, the products Deluxe develops out of its research aren’t obtainable elsewhere.

While Deluxe’s turnaround began before he came, new CEO Lee Schram is getting much of the credit for getting investors to look at Deluxe in a new light.

The New Guy

The son of an Ohio dentist and a graduate of Miami (Ohio) University, Schram believed that he was headed for a CEO slot as he moved his way up the executive ranks of Ohio-based NCR Corporation, where he worked from 1983 to 2006. During his last few years at NCR, Schram helped strengthen the company’s heritage business in cash registers and point-of-sale scanners, from one that was posting 8 percent operating losses as a percent of revenue to showing a 4 percent gain.

“We fixed the core retail point-of-sale business and got into a new area that we called the non-ATM self-service space,” Schram recalls. (NCR also sells ATMs.) This expansion took NCR into self-checkout retail registers and ticketing machines. His moves into new product platforms (self-checkout machines), as well as cost-reduction measures he introduced, foreshadowed the strategies he’d pursue at Deluxe.

In early 2006, Schram got the call from a headhunter about the CEO position at Deluxe. “I wasn’t anxious to leave NCR, but I thought this really feels like a good opportunity from a professional standpoint,” Schram says. He already knew a little bit about Deluxe, having lived in Vadnais Heights from 1992 to 1994 while at NCR. “My neighbor right next door was a Deluxe gentleman who was in marketing,” Schram recalls. “So I knew a little about the company. I knew my neighbor had liked the company.”

The similarities between NCR and Deluxe when Schram arrived on the scene at both companies are striking. Both companies’ heritage businesses—NCR’s point-of-sale scanner segment and Deluxe’s check-printing business—had gone through a long period of commoditization, and both were being displaced by newer technologies. And both companies needed to adjust to these new realities.