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What's your five-year plan?

Dec 1, 2000 12:00 AM


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May be you've heard this one. A preacher is urging his flock to change their ways before it's too late. "Everyone here is going to die!" he admonishes the congregation. To his great surprise, one man breaks out in a huge grin. "What's so funny?" the preacher demands. "I'm not from here," responds the man. "I'm just visiting."

Unfortunately, the scenario is much the same in the printing industry. Faced with dire prospects for growth, many graphic arts service providers prefer to ignore the facts rather than change their ways.

Although growth prospects for the overall economic picture look bright, the same cannot be said for the commercial printing industry. In this issue, Andrew Paparozzi, chief economist, National Assn. for Printing Leadership (NAPL), observes that the industry is no longer growing as fast as the economy. This year print sales grew 2.5 percent to 3 percent, versus gross domestic product growth of 4.5 percent to 5 percent. Moreover, the nation's unprecedented economic expansion will eventually slow down.

While it might be comforting to think that tough times will ease with the flip of each calendar page, this is not going to happen. "As a result of the rapid change of pace over the next three to six years, the printing industry's bottom-line profitability will come under increased pressures," warns the Printing Industries of America's (PIA) Vision 21 study. It further indicates that "profitability should be similar to that of the last few years with average before-tax profits rates on sales of around 3 percent."

Sounds pretty good, doesn't it? What's not to like about staying similar to last year? Nothing - if you don't mind barely keeping your head above water. Here's how PIA's chief economist Dr. Ron Davis put it when presenting the results of the study: "YOU'D BETTER FOCUS OR YOU'LL DIE!" He wasn't kidding.

REDIRECT YOUR EFFORTS Management guru Peter Drucker puts it this way: "Any business or activity that has reached its objective is heading into a period of major change," writes Drucker. "But most people in the business or the activity will continue for a long time to achieve the objective that has already been gained. During that period there is a future that has already happened, an opportunity to anticipate... The company that sees an objective has been reached and acts to redirect its efforts - while its competitors still strain to get to where they already are - will emerge as tomorrow's leader."

So what should you do? Start by having a panic attack. You may as well get it over with. When you have calmed down, take stock of your situation. The management guide accompanying the Vision study outlines a four-step process. First, define your business. Sample questions include: Who are your customers? What are their needs? What products and services do you provide to meet those needs? What specific value do you add?

Second, assess your situation. How well has your current strategy been working? How do your profits stack up against your peers? (PIA Ratios and NAPL's Profit Leaders are two useful sources for comparison.)

Third, evaluate the potential impact of new technology on your business. Identify the innovations that could boost your competitive edge and those that could disrupt it (for example, a printed newsletter that switches exclusively to e-mail or Internet distribution). Armed with this information, weigh your options: Do you want to be a leader, a challenger or a follower?

It is easy to find excuses to avoid changing the status quo. Maybe these economists don't know what they're talking about. Maybe you are a special case - immune from a changing marketplace. Maybe you will win the lottery tonight and quit this industry tomorrow.

Or you can face the facts. What do you want to be doing five years from now? If you want to be a profitable communications solutions provider, now is the time to do it.

As one industry pundit has observed, "It's better to invent the future than to predict it." Have you successfully re-invented your business? Do you regularly beat the industry's annual sales growth of 4.7 percent? We're looking for some good stories.