Dr. Joe is off this week.  For the newsletter, we are resurrecting a column that was originally published on WhatTheyThink on June 16, 2006.  It has as much relevance today as it did then.  Enjoy!  Dr. Joe will be back next week.

This month marks twenty-five years since I walked into Chemco Photoproducts in Glen Cove, Long Island, New York. Most people in the industry barely remember the company, which became part of Konica since late 1987, not long after I left.

I joined the company after its heyday in the 1970s when it played an important role in assisting newspapers in the switch from letterpress to offset. In the early 1980s, it was still doing quite well as third-generation family companies can do, but problems were starting to emerge. There was a time when the company sold almost 75% of the film used in camera rooms in the U.S. newspaper industry; by the time I was there, it was down to about 55%, as best as I could estimate. That strong share in that important niche made it the third largest graphic arts photographic materials manufacturer in the U.S., behind Kodak and DuPont. When I joined, the economy was in the throes of a recession, with high inflation, low growth, and low investment, the three elements of stagflation. Silver prices were still playing a large role in company decisions, with product prices changing every month.

Yet, there was still a dynamism to the industry and the company. A rash of new products (for them) were in the pipeline, including materials like phototypesetting paper (Kodak had more than half of the market), diffusion transfer materials (Agfa had more than half of that market), as well as roomlight handling contact and duplicating films (Dupont was the leading marketer of those products).

The industry was growing because of imaging technology innovations in color scanning (sold by companies like Hell Graphic Systems and Crosfield Electronics) and color manipulation (pioneered by Scitex). This equipment was expensive: a color scanner was more than $200,000, and that was in 1980 dollars.

Here's my point: all of these innovations were stimulating the conversion of printing from predominately black & white to process color. Despite high interest rates, printers were buying these products and also investing in multicolor presses. At the same time, marketing innovations like free -standing newspaper inserts were becoming popular, and catalog marketers were enjoying the combination of lower-cost process color and the emerging capabilities of data base mining and market segmentation to which they previously did not have cost-effective access. All of this stimulated the web offset press business.

There are many lessons to be learned from that period of the industry's history, much of which I saw in my six years in Glen Cove.

First, technological change can be a far more powerful force in changing industries than economic conditions. There is such a preoccupation with economic issues; yet technology and demographics can have a much more significant impact on market direction and opportunities. In those days, lease rates were 15% and beyond, yet companies were able to justify their purchases because digital color was changing the rules of engagement.

Second, marketplaces need to be ready to accept the technology into the workflow of the time. The color scanner didn't change the entire workflow; it only changed a portion of it. Direct-to-plate, however, required workflow to change dramatically, and the pieces to implement it were just not there. A critical piece, digital printing plates, are only recently fully applicable to newspaper and commercial printing industry needs, two decades “late.” Not all technological change is accepted or even needed. How many decades has it been since we were told that flexography would be the dominant commercial printing process?

Third, dominant companies remain dominant only for a time. It is rare for companies to hold on to their market position without convincing themselves that small, incremental competitive encroachments are meaningless, when in fact, those encroachments compound or accelerate over time. There's nothing worse than giving an emerging competitor some market momentum.

Fourth, there is common “wisdom” within companies that frequently goes unchallenged. There are baseline assumptions that every company has in its culture, and they are essential for the smooth operation of the business. Inability to review or challenge corporate views leaves companies open to being blindsided. That is, blindsided if you're inside, even though everyone outside can see the accident before it happens.

Fifth, sales people are often the front line that prevents companies from doing really dumb things. As long as a person has to stand in front of a customer and say what your company wants them to say, and still look at themselves in the mirror, you have a fighting chance of doing the right things. Of course, if they have no guilt about saying dumb things and just doing exactly as they are told, then there is no front line that protects against companies trying to implement nonsensical things. Sure, there are salespeople who will only call on pet customers, and others who will always complain about product quality no matter what. But there are always those few whose professionalism leads them to do what's right for customers within the context of loyal representation of the company name that's on their paycheck. Salespeople can't always articulate what they learn in their day-to-day field work in a grand corporate perspective, but well-trained sales people with a curious nature can add important input that the managers who “fly their desks” back at the home office should take more seriously.

Sixth, for some reason, there are always executives who place the greatest weight of trust on the last thing they heard, without fact checking or assembly with other relevant data. The opposite end of this spectrum is the indecisive manager who always waits for consensus to form before doing anything.

Finally, joining the various bandwagons of managerial fads should be avoided. Not that many management “fashions” don't have an element of truth to them; of course, they do. But they need to be in context. The early 1980s saw Peters and Waterman's In Search of Excellence become a favorite of managers. So many of the companies cited there would fall precipitously soon thereafter. People Express and Delta come to mind, but there are others. Peters and Waterman would neglect key elements of competitive advantage, such as patents, and create mantras that managers would take out of context at great peril, such as “stick to your knitting.”

Companies were urged to get close to their customers, and became so close that they became myopic, missing market changes and competitor actions. It's easy to forget that companies attract certain customers at particular periods of time because there is the right mix of benefits for that relationship at that time. By waiting for customers to detect market changes, competitors with a full view of the environment can start finding undefended niches, culminating in the creation of nightmares for others. As one ex-CEO of a supplier told me: “We don't need research. We have our users’ group for that.” Five years later, the CEO and the company were gone.

Being an effective executive requires that you be a sponge, soaking up information from everywhere, especially the qualitative kind that is found informally, and not just by reviewing structured reports of research projects. Bad executives believe the last thing they heard; great executives have a way of putting things in context. If companies could have non-user groups, they'd get a fuller picture. If they could go to the “five years from now users’ group” that would be good too. Next time it's “too expensive” to go to a trade event because only a couple of current customers will be there, keep that in mind.