Commentary & Analysis
Blending Tradition and Transformation
By Barbara Pellow What is critical to understand in turbulent times is that tradition and transformation typically come together to create opportunity June 6,
By WhatTheyThink Staff
Published: June 6, 2005
By Barbara Pellow What is critical to understand in turbulent times is that tradition and transformation typically come together to create opportunity June 6, 2005 -- A few weeks ago, like many of you, I had the opportunity to attend the AIIM/On Demand Printing and Publishing Conference. The overriding theme of the conference was that we are all part of an industry that is steeped in tradition, but rapidly transforming. What is critical to understand in turbulent times is that tradition and transformation typically come together to create opportunity--opportunity you can leverage for your businesses, and most importantly, for your customers. Print service providers are seeing more and more new technology; changes in customer preferences, habits, lifestyles; and shifts in regulatory environments. All of these factors are sparking change. But what really causes the industry to transform is people -- individuals who can foresee new opportunities on the horizon, make the hard choices, and put money at risk to drive their businesses in new directions. As a print service provider you are making bets with your investor's money or the capital that you've spent your life acquiring for your business. This ability to anticipate what's coming down the road and the related structural change is not for the faint of heart. As a print service provider in this situation, you are making bets with your investor's money or the capital that you've spent your life acquiring for your business. You are dealing with the lives and livelihoods of loyal, hardworking employees, and you are upending traditions, cultures and established practices right and left. Talking with Visionaries Over the past several weeks, Kodak has interviewed several visionaries that are transforming their businesses. Twenty years ago, these industry leaders said that they were in the printing business. Today, they tell their customers that they are in the business of marketing, data management, statement processing, outsourced solutions, communications, inventory management, customer relationship management and data mining. Most importantly, their firms are blending tradition and transformation to grow their businesses. Perfect Image Marietta, Georgia-based Perfect Image was founded in 1982 as a traditional commercial printing establishment. In the past two decades, the company developed a reputation for the highest levels of quality and service as evidenced by the fact that more than half of its clients are Fortune 500 companies. In talking with owner Ira Jackson, though, I learned that it wasn't always easy. Most importantly, he understood that making the transformation is linked to listening to the customer. Ira started out his career as a sales rep for Digital Equipment. But he'd grown up in a family of entrepreneurs and ultimately wanted to have his own business. He looked at a number of opportunities, and in 1991, when he walked into Perfect Image, he decided that this printing company was the place for him. It was where he could make his fortune. He borrowed money from the bank to buy Perfect Image, and he was off and running with the enthusiasm of a high-energy twenty-six-year-old entrepreneur. It didn't take long for reality to set in. The economy was dipping. Ira didn't know a great deal about printing. He had never managed people. And to make matters worse, he lost the firm's largest client that accounted for more than fifty percent of the business. Ira commented, "The harder I worked, the worse it got. The honeymoon was truly over." Ira attributes the ultimate turnaround for the business to "Divine providence." While that surely played a role, so did Ira. He built a tremendous business model that serves him well even today. He made investments in both digital technology and traditional technology. And every day he focuses on delivering the highest levels of customer service. But most importantly, he understood that making the transformation is linked to listening to the customer. According to Ira, "When you look at the market today, it is kind of a good news/bad news scenario. The good news is that the customer is much more involved in the business; it's faster; you have got more technology. The bad news is that the customer is much more involved in the business; it's faster; it's higher technology. But the reality is, it ain't gonna change. It's here to stay. The turnarounds are going to continue to tighten; and the involvement, the collaboration that takes place between us and the client is going to become much more intimate. If we fight that as a supplier, we're not going to be around. But if we embrace that, then I think that we have the opportunity for much more long-standing relationships with our customers, and that is where we are at Perfect Image. I think fundamentally that is what changed our business. We went from being this craft-oriented business to being much more consultative, much more collaborative with our clients." Padgett Printing Dave Tauroc, President and CEO of Dallas-based Padgett Printing, acknowledged the need to change early on and started transitioning his business model. Padgett is a full-service print provider and is working on "turning vision into visual communications." Last years' sales were in excess of $24 million--the best year ever for both revenue and profitability in the company's 102-year history. Padgett has made a significant investment in digital printing. According to Tauroc, "In 1997, we had our best year ever in terms of sales and profits, but we realized that the business was changing. Offset printing was becoming a commodity. We were fighting stronger to protect price and margins than we ever had to before. The world was going digital and our customers were doing a lot of personalization. We needed to add value to our business. As a result, we made the decision to get into the digital side of the business. We had learned through our history that if we were still doing things like we did in 1903, we wouldn't be in business. Print service providers need to understand where technology is going." While the term "solutions sale" is frequently overused, there is a real requirement to sell more than print in the market today. Tauroc said, "Today, it's not the design of the printed piece. It is also the database working in conjunction with that. By marrying your design and your database, it allows the customer to get superior results. We are truly selling solutions to our customer…and we have to sell the solution all the way through to their customer and give them success." "We are selling solutions to our customer--and we have to sell the solution all the way through to their customer and give them success." --Dave Tauroc, Padgett Printing This is a dramatically different model than the traditional world of offset printing, but for Padgett it is yielding results. Their digital customers are driving both offset and digital business. In fact, their digital customers generated an incremental $2 million in offset business last year. Most importantly, their overall business volumes are exceeding expectations. Tauroc indicated that Padgett targets a growth rate of five to seven percent annually. He went on to say, "Last year, our growth rate was 18 ½ percent. Through the first quarter of this year we were at 10 ½. We are exceeding our planned growth rate, but as they say in Texas, when you have a horse to ride, you ride as long as you can." The Johnson Group The Johnson Group, founded in 1957, is a family-owned printing enterprise located in Rockford, Ill. Over the years, this organization has retained the vision of its founder, Harry C. Johnson. His commitment to serve the customer with superior quality, service and fairness has held up to the test of time. And while that original vision has now grown to include multiple locations and clients across the nation, the family still has a renowned passion for quality. Sons Dale and Dennis followed in their father's footsteps. Today, there are seven members of the Johnson family on the executive management team. The firm has a staff of more than 150 people focused on evolving and embracing new technologies and enhancing partnerships to accomplish a simple objective -- becoming a full service provider to its customer base. Revenues have climbed to in excess of $25 million dollars. The Johnson Group has a varied customer base that includes high tech manufacturers, consumer products firms, retailers, advertising agencies, associations and professional services organizations, and the company has made a concerted effort to diversify to withstand economic downturns in specific market segments. The Johnson Group formed a subsidiary called Red Leaf Digital to specifically focus on the digital side of the business. According to VP of Sales, Rynn Johnson, "We started to hear from our customers two years before we launched Red Leaf Digital about their need for shorter print runs and doing personalization. We did a survey with some of our key customers to understand requirements for digital printing and variable data. Out of that we determined that Red Leaf Digital was a viable business for us." Red Leaf Digital identifies specific vertical markets; and when they have a successful case study, they build on it. The Johnson Group's approach is to productize what they are good at. Red Leaf Digital identifies specific vertical markets; and when they have a successful case study, they build on it. According to Johnson, "We target specific companies in those vertical markets that we want to go after. They may be an existing customer or they may not be. If they are not, they are assigned a sales person and that sales person goes after the customer." This approach and the business transformation at The Johnson Group is resulting in an improved bottom line. Johnson said, "We continue to grow the Red Leaf Digital business and have far exceeded our budgetary expectations. We'll continue to build upon the products that have been successful in the marketplace. Bottom line, the digital business has probably contributed about 25 percent to the growth of our offset business." Tradition. . .Transformation In new world of graphic communications, we need to recognize on behalf of customers the things that can change and the things that don't change. As evidenced by the stories about Perfect Image, Padgett Printing, and the Johnson Group, their customers have come to believe in digital production techniques that link to higher levels of personalization. These same customers are demanding that the service provider let them communicate with impact and project the right image. They are looking for convenience, advice and ease of use. They are looking for a full service provider who can offer them a range of services based on digital and offset technologies. The mission in the world of graphic communications is to use the best digital technology in conjunction with conventional offset printing to transform your business while being that trusted advisor that helps translate customers' ideas and aspirations into reality.