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Commentary & Analysis

Managing Consolidation

By Susan A.

By WhatTheyThink Staff
Published: May 3, 2005

By Susan A. McLaughlin of Presstek The increasing pace of consolidation is driven by the vast amount of change in our industry. May 3, 2005 -- Since I joined Presstek in January of this year as President of ABDick North America, we have been working hard to restructure the company within the context of the new Presstek. We are just one of many consolidation instances in a business environment in which there appears to be an emerging re-emphasis on consolidation. Kodak has made a number of acquisitions in the last year; Adobe recently announced the acquisition of Macromedia. And there are many more examples, both inside and outside of the industry. This is taking place in both the supplier and service provider aspects of the printing industry. And there is even talk of consolidation among the associations serving the industry. This increasing pace of consolidation is largely driven by the vast amount of change our industry is undergoing. Looking Back During my career, I have been involved in a number of restructuring efforts along the lines of what we have been undergoing at Presstek and its ABDick business unit. This is what I like to do, and I have been very excited about applying that learning to the opportunities we have before us at ABDick. Over those years and across those companies, I have been able to distill the process down to a few critical factors that are major contributors to the success of these initiatives. First, a little background. For 14 years, I was a banker with Citibank, and for many of those years, Kodak was one of my key customers. Ultimately, I joined Kodak, spending ten years there in eight different positions. In each case, my task was to go into organizations within Kodak that had a need for some sort of turnaround or jump start. In one assignment, I went into an organization that was a bit larger than ABDick, $180 million, growing rapidly and not making money. We needed to get the business profitable, keep it growing, and ultimately get it sold. By leveraging existing talents you preserve an important knowledge base and do less damage to employee morale. I then joined Bell South as the President of Consumer Services. This was a much larger organization with $7 billion in revenue and 10,000 employees, but it had many of the same issues--including a situation where the level of customer service had declined, resulting in very high bandwidth rates into the call center, employees working a mandatory six-day work week, and huge overtime expenses. We worked hard to bring our costs in line and to improve that customer service experience. And just prior to joining ABDick, I spent two years working with startup organizations ranging from a financial services organization serving the Hispanic community to a company that was using GSI in vehicles for insurance purposes, helping them to ramp up their businesses. In all of these cases, as diverse as they are, the recipe is virtually always the same--you get your team in place, you uncover the top things that need to be done to get the organization in shape, and then you move with great speed and decisiveness. Assembling the Team Of the three, getting the team in place is probably the easiest, and an important part of assembling that team is assessing the existing skill sets within the organization. While a natural reaction might be to bring in an entirely new team, there are downsides to that approach, assuming the appropriate mix of skills exists in the organization. It doesn't always. But to the extent you can leverage existing talents, you preserve an important knowledge base and you do less damage to employee morale. Assessing the Infrastructure The next step, uncovering the top things required to get the organization in shape, is very financially driven. It is a combination of elements: a thorough review of cost structure and what is driving the costs, soliciting input from people in the organization at all levels, and listening to what they say needs to be done, and an analysis of how we are serving the customers we want to serve. One of the beauties of this particular consolidation effort--the marriage of Presstek and ABDick--is that we have been able to distill and purify two very different business models within the company such that Presstek now is the technology, R&D, engineering and manufacturing arm of the organization, and all of the customer facing parts of Presstek have been moved to ABDick to form the sales, service and distribution arm. With that in place, there are a number of significant activities that we initiated at ABDick to accomplish our objectives. One is the transformation of our service organization. This required some cost reductions, but more importantly, it required technology and training to more effectively serve our customers. And to a large extent, we have been able to leverage technology resources from Presstek to accomplish this. Customer focus is a valuable asset that must be leveraged in a restructuring situation to maintain continuity and customer loyalty. We have also taken a close look at the number of SKUs we handle, how effectively we are using our e-commerce capabilities, and the number of vendors we are dealing with in the course of doing business. Broadly speaking, then, it is looking at the structural costs, the number of customers, the number of SKUs, the number of vendors, and how we must effectively interact, maintaining the relationships but leveraging the technology. Certainly, in any situation like this, there is a sense among the employees of being a bit unsettled, but they are really rallying, as I have found to be true in most of the efforts I have led. The ABDick team consists of hardworking, dedicated people that would like to see this business grow back to a billion dollar business. When we launched the project to look at structural costs, we made it very visible and asked for employee input, and we got terrific suggestions coming from all levels of the organization. We also initiated customer satisfaction surveys, starting with the service organization, and have been pleased with the results. The employees really want to serve our customers well. This customer focus is a valuable asset that must be leveraged in a restructuring situation to maintain continuity and customer loyalty. Speed and Decisiveness And finally, the lesson that is always learned in these types of situations is that you can't act fast enough. I remember hearing that Jack Welch once said that there is nothing bad about speed. It is invigorating, it is exhilarating. In a situation like this, you simply cannot act fast enough. If you don't, inertia settles in and you don't set the tone that things must be different. You must immediately set the tone that you are on a different course. If you don't, you lose an opportunity to send that signal, and to exhilarate and inspire the organization. Looking Ahead Whether you are involved in banking, telecommunications, manufacturing and distribution of graphic arts solutions or the manufacture of print, the principles are the same. Though we have really just begun this journey at ABDick, applying the lessons learned from the past has, I believe, been a significant contributor to the pace at which we have been able to move. On the surface, it may seem to be a simplistic approach, but it works. Whether you are involved in banking, telecommunications, manufacturing and distribution of graphic arts solutions or the manufacture of print, the principles are the same. It's a lot of hard work, but the rewards are there to be reaped. A strong team, an efficient cost structure, and a speedy and decisive implementation. More mergers, acquisitions and restructuring efforts would deliver successful results if these three principles formed the core implementation strategy. In next month's Presstek Perspective, I will share with you more of the specific changes we are making at ABDick as we further integrate the two companies. Please offer your feedback to Susan. She can be reached at: smclaughlin@abdick.com

 

 

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