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Industry leadership redefined

Feb 1, 2010 12:00 AM

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All credibility disappears when I read or hear the term “industry leader.” The term is defensible only in the case of a handful of individuals — and if I were to mention them, it would invite a firestorm of disagreement.

If Congress wanted to learn about standard practices in the graphic arts industry, whom would it call upon to testify? What criteria would you use? No industry is entirely homogeneous, but don't ink-on-paper companies share certain policies and procedures regarding workflow, job descriptions, pricing, customer communication, sales compensation and organizational/reporting structure? Would you invite the CEOs of RR Donnelley & Sons, Consolidated Graphics, Cenveo, Worldcolor and Quad/Graphics on the theory that the largest companies in terms of sales and employment are the most successful and, as in other industries, set the standards that other firms usually emulate?

Would the real printers please stand up?

Let's continue this hypothetical scenario to extending invitations. You might arrive at the realization that not all printing is alike and that you need to accurately define printing.

Should the output of office copiers at tens of thousands of businesses be classified as “printing”? Is the printed output of personal and mainframe computers to be counted as “printing”? If the industry is to be defined as the output of companies classified as “printers,” as is indeed the case, we know very little statistically about the graphic arts industry and industry economists are building a skyscraper on a foundation of gelatin.

There appears to be an inherent urge to find out how the rest of the industry is doing. Some are making a living at supplying answers. Those answers might be misguided, but they are answers. Industry ratio studies fail to distinguish between printers that made high profit figures one year and companies that have had a consistent pattern of profitability. What can be gained from very positive financial feedback if one doesn't have information about the steps that led to the above-average performance? And what can be learned from a company's comparison with industry averages when the latter classifies customer service as general factory overhead?

Despite consolidation, bankruptcies and name changes that have led to shrinkage in the number of commercial print business units during recent years, this remains a remarkably segmented, fragmented, and diverse industry. That condition is going to accelerate in the coming years as graphic arts companies realize that addressing the competitive differentiation question is a matter of survival.

Strictly commercial

My opinion is that there's no known profile of the industry that is even close to being accurate. In part, it is due to a phenomenon called “luxury shame” that most often occurs in consumer markets. When companies begin to do well, then very well, they report it neither to trade associations nor (if legal and possible) to the Internal Revenue Service. This is not conjecture; I could fill a page with the names of companies with profits that are double the threshold to qualify as a PIA “profit leader.” Executives of these firms are naturally uncomfortable attending industry events at which most of the dialogue comes from their counterparts at companies in crisis.

Every company's ownership and management ignores the question of meaningful competitive differentiation at its own peril. Addressing this issue begins with developing an ongoing program to gather information from, and communicate information to, customers and prospective customers. This doesn't mean “satisfaction surveys” — instead, I'm speaking about management's involvement in determining and understanding individual customers' needs, justifying organizational changes and equipment purchases based on those needs, and de-emphasizing the focus on competitors' activities.

I am intimately familiar with companies that were very profitable in 2008, not based on a bonanza from one account. It can be done. It requires a dose of cynicism about standard industry practices and a gut-level belief that success lies in development of a customer base that perceives a unique selling proposition.

No one represents your company in this industry. The joy and the pain is that you can succeed alone, whatever the size, age, location or type of company.

Dick Gorelick is president of Gorelick & Associates and the Graphic Arts Sales Foundation. He can be reached at