A surprising number of people have commented on LVI’s bankruptcy filing – probably because LVI has been a conspicuous leader in the industry’s shift to a largely digital sales strategy. LVI’s business failure was certainly more startling than it would have been if LVI had simply been a traditional Massachusetts-based printer.
But there’s also a larger lesson in LVI’s difficulty: It’s a sterling example of a company with the right vision, but the wrong timetable for implementing that vision.
Despite massive changes in LVI's cost structure, the company was unavoidably burdened by many of the fixed cost elements of the old litho printing business model - costs which couldn't be managed below a certain point without losing the ability to meet customer needs.
Meanwhile, the company went about selling its new model of print optimization – a solid concept that takes time to succeed. Simply put, they weren't able to keep feeding the elephants while also on a visionary quest for greener pastures. So while they were building a model for the long-term, they ran out of food.
It's a crucial lesson about pioneering - and about managing through a fundamental change in a business model - which forms the core of WhatTheyThink’s Print CEO Forum in Chicago, before PRINT 09: How can CEOs find the right balance between being forward-thinking and being realistic about implementing their plans.
With all of the new technology driving the relentless changes in our industry, we’re still burdened with the day-to-day issues of bringing in enough work to cover our costs while we’re on the way to constructing an entirely new business model. In that sense, printing’s economics remain unchanged: Highly fixed costs and highly variable sales are a recipe for unhappiness.
Maybe Goldilocks was right about managing change: not too little and not too much. Somewhere in between is just right. It’s not a simple matter of choosing between being heroic or timid. At the Print CEO Forum, we’ll be discussing how to find that balance.
Discussion
By Grover Daniels on Jul 15, 2009
As a 4th generation printer, and with the 5th generation just starting with me @ pixxlz.com, I have some perspective on leading change in the printing business. The abilty to see changes in our marketplace is very different then the abilty to manage a company that needs to change. LVI was being managed by someone new to our industry, and Hubcast was founded by the owner of LVI who has a very different view of what the role of a printer is. Not exactly a focused vision for manging LVI during very tough times.
The LVI model was progressive and right on with their implementation of web enabled POD, combined with static offset capabilies.
Their ability to generate non-print revenues with e-catalogues is clearly a direction that all of us need to embrace. However, Hubcast is very different. They claim to have a secret sauce that enable them to distribute and print, not print and distribute. Clearly, Toby's bet, (he raised millions of VC money),is...it does not matter to the customer who IS their printer,(none of them are named on the Hubcast website), as long as they ARE a Hubcast "selected" printer.
Given the recent poor financial results from LVI, one would have to question Hubcast's abilty to manage a global network of loosely affiliated printers with one or two Indigo's. If the bankruptcy court approves the sale of certain assets of LVI to Hubcast, LVI may become one of the "silent" printers in the Hubcast network. What new or approved Hubcast printer would join a network and share prices with the ultimate insider? Hubcast has a valid idea that our customers buying habits have changed, yet they have chosen to provide DIP financing and purchase a formerly well respected printer. Why? They see it as "opportunistic". My bet, look for Hubcast to take the LVI customer list, liquidate LVI hard assets, and lead their customers and current employees into darkness. This is not a vision that the collective "we" deserve. Printers are a tough group, we pride ourselves in great customer service, and providing whatever needed for our customers. LVI did that well for a long, long time. Hubcast is another approach at solving a problem that does not exist...just ask FEDX/Kinkos. The issue is not print and distribute vs. distribute and print, the issue is managing costs and growing revenues to provide new value-added communication services. That, my CEO friends, is what we are trying to accomplish at the new Daniels.
This will be a very interesting situation to observe.
By Sheldon Wermes on Jul 16, 2009
Grovers comment is well taken. From a sales/marketing perspecitve, the real innovation LVI demonstrated is that "baking" printed communications into a holistic business solution will attract new clients.
However, it seems the ship went off course after that.
By Buck Crowley on Jul 16, 2009
The way I see it … it is like the old slogan "where's the beef". Everyone who has the same equipment and similar talent are just competing for the same customers. Without a connection to engineering, that can modify/tweak your process, there is more luck than savvy. Since Return-On-Investment (ROI) engineering for printing and packaging companies is what we do, that is my view.
By Bob Rosen on Jul 16, 2009
Buck,
Thanks for your response. I think you've glossed over a critical element, which has led you to the wrong conclusion about success and failure.
Equipment will rarely make a life-or-death difference between printers, because anyone can buy it. Certainly some equipment is better-suited to certain work than other equipment, and some printers will run the same equipment better than others run it.
But to assume that everyone has the same talent is precisely wrong. It is PRECISELY talent that separates the top-performing printers from the rest. Managerial talent, sales talent, marketing talent...they're all the critical elements that differentiate the winners from the laggards.
Your conclusion that the difference is largely explained by luck is directly contradicted by our firm's work with almost 600 graphic arts firms - including almost 190 profit leaders.
In those profit-leading cases, I can assure you, luck had NOTHING to do with it.
By Buck Crowley on Jul 16, 2009
Bob,
Seems like you and I agree. Those who have better talent and better equipment are the leaders.
Buck Crowley
By Grover Daniels on Jul 19, 2009
I recently heard that the LVI bankruptcy creditors committee rejected the Hubcast initial bid.
Does anyone know if this is true, and if it is, what happens next?
By Grover Daniels on Jul 19, 2009
http://twitter.com/TobyLaVigne
Twitter post today.
By Kevin Kervick on Jul 21, 2009
In his opening post Grover Daniels speculates on why Hubcast would buy LVI:
"Hubcast has a valid idea that our customers buying habits have changed, yet they have chosen to provide DIP financing and purchase a formerly well respected printer. Why? They see it as “opportunistic”. My bet, look for Hubcast to take the LVI customer list, liquidate LVI hard assets, and lead their customers and current employees into darkness."
Perhaps the real reason isn't so sinister. Toby is already the bridge between the two companies. It may not have occurred to Grover, but as LVI's owner, Toby already has access to the customer list - and he certainly had the opportunity to lead LVI customers anywhere he wished!
As far as Hubcast's desire to acquire LVI in bankruptcy, I just assumed that LVI has been instrumental in beta testing Hubcast's technology. LVI gives Toby a way to implement new technology and to keep close to the issues affecting printers and their clients. When you have a product like Hubcast, it would certainly be very helpful to have complete and unrestricted access to a print shop. Toby probably does not want to lose this access.
The LVI bankruptcy is very unfortunate and certainly "other people" get hurt in any bankruptcy. Hubcast may or may not be a brilliant idea (I, personally, have my doubts). But I am amazed at how many people think that the current situation is all part of some evil plot on behalf of LVI's ownership.
By Harvey Halperin on Jul 22, 2009
If talent wins, please explain Anderson Litho?or does moron managment come into play at some point?
By Michael J on Jul 23, 2009
Re talent, equipment and luck.
Talent is necesary, but not sufficient.
Ever more efficient production is necessary, but not sufficient.
New equipment usually makes it easier to get to efficient production. But no guarantees.
As for luck, when you have bad luck, that's the economy, end of print blablabla. When you have good luck, that's because you are really smart.
But the wisdom of the ages, as transmitted by my mom, "If you have to choose between smart and luck. Go for luck."
Discussion
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