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Nov 1, 2009 12:00 AM
It seems to me that the print community has a giant inferiority complex. There's a belief that the industry is so large, fragmented and segmented that the average person doesn't appreciate its contributions and difficulties, can't name five printing companies, and unfairly believes that print is a dying medium polluting the environment. Perhaps there's an element of truth in all of this. However, Chrysler and General Motors' experiences offer business lessons that graphic arts companies have — or should have — learned many years ago.
One plus one does not equal three | It might not be directly reflected in the numbers, but culture counts. Witness the vaunted merger of Chrysler and Daimler-Benz. There were turf wars about everything from expense reports to product design, even though everyone was well-intentioned. Too often, economics are the sole consideration in a merger or acquisition. Sales territories, customers, working hours, lunch breaks, employee benefits, parking spaces and other seemingly mundane issues are treated as an after-thought.
The experience of graphic arts companies that have participated in a merger or acquisition suggests that Fiat's management of Chrysler will be no long-term solution, although it can be justified on paper.
Good product doesn't necessarily win | The notion that General Motors — or a printer — manufactures products people want isn't sufficient to ensure success. Good product doesn't necessarily win the game. It simply allows a company to be a participant in the game. General Motors doesn't seem to understand that regaining good ratings in third-party customer satisfaction surveys of product performance will not, by itself, ensure financial recovery. That level of performance is the least buyers expect.
As complex as the average automobile might be, it is a commodity in the sense that buyers have many choices. The buying decision might be heavily influenced by, if not based on, factors that have little to do with the manufactured product, such as service, a painless transaction, habit, terms and referrals.
Competitive differentiation is critical | “Different” and “differentiated” are different concepts. It's relatively easy to be different. It's more difficult to be unique in a manner that is meaningful to a targeted group of customers. It isn't enough to be as good as the competition. Statements and inferences that General Motors can consistently produce a vehicle as efficient as a car manufactured by Toyota or Honda is not meaningful competitive differentiation. At the end of the day, differentiation is defined by buyers, not a manufacturer. Failure to address, not simply understand, this concept is a leading cause of mergers, acquisitions, and bankruptcies in the graphic arts industry, an industry in which no company is too large to be allowed to fail.
Success and failure are slow to materialize | Habit is a prevalent buying motive in the marketplace for both print and automobiles. A substantial portion of the buying universe in any industry is risk-averse to a fault. Printing companies find that short-term, sustainable sales improvement is slow to occur, akin to doing a 180-degree turn of an ocean liner in a narrow harbor.
It's difficult to undo a reputation, however unfair | I was associated with a printing company viewed as a “down and dirty” supplier. That perception was pervasive. Rather than addressing it, we emphasized confidentiality and secrecy as an area of competitive differentiation. The result: double digit pre-tax profits. In the automobile business, the Jaguar brand owned by Ford developed a reputation for poor product performance. That reputation remains difficult to undo even though Jaguar is now among the highest-rated of all brands, according to new car owners. Areas for improvement should be addressed quickly, but quick fixes in financial performances shouldn't be expected.
A company is defined by what it represents, as well as the product it manufactures | That sounds altruistic, but it is true. One printing company received volunteered survey comments from customers that said, “I wish I worked for your company,” a reflection of the manner in which the company treats its employees and customers. In the U.S. automobile industry, focus groups reveal that Ford Motor Co. products are favored by many buyers because it refused federal bailout funds.
Investors from outside the industry might bring cash. However, that is unlikely to assure long-term success. Hedge fund Cerberus was a major investor in Chrysler. Funding by venture capital firms, private equity and hedge funds in the printing industry do not have a stellar track record.
As an industry, we've been there and done that. It doesn't make life in the graphic arts industry any easier but perhaps being a pioneer has its benefits.
Dick Gorelick is president of Gorelick & Associates and the Graphic Arts Sales Foundation. He can be reached at firstname.lastname@example.org.
Well-constructed surveys of printing company customers reveal that every employee is in a direct position to win or lose customers. That's true of the receptionist, delivery person, estimator and machine operator, as well as the president, customer service representative and sales representative. This also is true of auto manufacturers and their dealers. Dealer service was overlooked for many years. Price negotiation was so distasteful to many would-be buyers that “no-negotiating” dealerships arose. Early versions of the Lincoln Town Car lost customers because they were designed with only one cup holder. No detail is too small to be avoided in a highly competitive, commoditized environment.