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May 1, 2005 12:00 AM
Changes in the graphic-arts marketplace aren’t subtle. One need not have a superior IQ to understand the industry’s strategic changes.
Instead, a manager or owner only needs to:
The buyer’s market
1. You can run, but you can’t hide from the core issue of competitive differentiation. You must provide customers with a credible, meaningful reason to buy from your company. Good product, delivered on time at a competitive price, isn’t a compelling reason. That’s the least customers expect in a commoditized environment.
One-size-fits-all differentiation might not suffice. Companies with long-time customers that have registered no problems are particularly vulnerable. Believing all is well because there are no complaints is a primary cause of account loss to a competitor who has an imaginative, appealing value proposition.
2. Buyers have the leverage when an industry becomes commoditized. The concept of partnership becomes less achievable and less credible when one party in a buyer-seller relationship gains the upper hand. The buyer has gained leverage, believing acceptable suppliers are commonly available. Are your customers or prospective customers making demands for service and turnaround times that you consider to be unreasonable? The sad truth is that things aren’t going to get any easier.
Even the world’s largest printers are unlikely to be considered indispensable by the their largest customers. The graphic arts industry is so fragmented that the majority of AMERICAN PRINTER readers’ highest-volume customers are larger than their own organizations. That intimidation factor gives many buyers leverage in relationships with printing companies. It puts a premium on account relationships characterized by mutual importance.
3. You’ll have to develop your own superior employees. This is especially true in this recovering economy. It’s always possible that the mythical five-million-dollar sales rep with a following, or your competitor’s best press operator, will walk into your office and ask for a job with your company—but don’t count on it.
New circumstances demand a new pool of industry talent. As more firms develop their cultures and successfully address the differentiation challenge, it becomes more important for a company to train and develop its own talent. That requires managing people as well as you manage jobs. It requires a serious dedication to consistent, effective employee education, even on days when the plant is busy and the accounting department is complaining about the need to increase the number of chargeable hours. Training goes beyond third-party seminars. The effectiveness of these seminars can be measured in terms of management reinforcement between classroom sessions.
4. Senior management and ownership are in sales, like it or not. Why? Because customers demand it. Print-buying organizations considering putting more eggs in a single supplier’s basket see management involvement as essential. They see the buying decision as strategic and perceive lower buyer risk through ongoing interaction with ownership and senior management.
5. Bigger isn’t always better. It can be argued that there are circumstances in which increasing profits while restraining sales volume is a sign of superior management. But not all consolidators have succeeded. Gone are the days in which a smaller, ambitious company had a mission statement with an objective to match the sales volume of R.R. Donnelley & Sons. (Yes, we’ve actually seen these.) During the past several years, we’ve seen many companies’ financial statements that would stir the envy of many larger firms. In most cases, profitability was disproportionately greater than sales growth. It’s a message: Be targeted and discriminate. A sales increase frequently is little more than industrial methadone. It relieves pain temporarily but, in the long run, doesn’t necessarily replace good management or address fundamental business issues.
6. History might be the greatest obstacle to success. The single greatest cause of failure is prior success. We develop biases, opinions, behaviors and business habits that are resistant to change. These are frequently referred to as "paradigms." Change isn’t easy and it’s fraught with risk. It’s difficult to operationally accept the fact that, in business, success never is final. Challenge will always exist and will continue to be buffeted by technology, other communication vehicles and changes print usage. The greatest, overriding challenge is the willingness to understand and respond to these challenges.
Dick Gorelick is president of Gorelick & Associates and the Graphic Arts Sales Foundation. He can be reached at email@example.com.