June 13, 2003 -- (WhatTheyThink.com) -- In March, Anne M. Mulcahy, Chairman and Chief Executive Officer of Xerox was named the recipient of the 2003 Prism Award. The award is presented by New York University in recognition of distinguished leadership in the graphic arts and communications industry. The formal luncheon was held yesterday at The Plaza Hotel in New York City. Proceeds from the Prism Award Luncheon are used to fund scholarships for New York University’s internationally renowned Graphic Communications Program, which offers graduate and undergraduate courses to prepare the next generation of industry leaders. Late yesterday, we received a copy of the speech given by Anne Mulcahy and determined that her comments would be of interest to others in the industry. Mulcahy comments on customers like Banta, Royal Impressions and Global Document Solutions. She discusses recent research and provides her perspective of the opportunities for Xerox and the industry in general. ==== RIGHT BUSINESS MODEL, RIGHT TECHNOLOGY, RIGHT WORKFLOW Anne Mulcahy, Chairman and CEO, Xerox Corporation 18th Annual Prism Award Luncheon, New York City June 12, 2003 It’s a real honor to accept this award on behalf of the people of Xerox and our customers who are transforming the way this industry works – for the better – each and every day. And I’m delighted to be part of an event that brings together publishers … printers … suppliers … and manufacturers … along with the educators who are preparing the next generation of leaders in graphic communications. One of the things I admire most about the printing industry is its long and rich history. Xerox is a relative newcomer. And we are all standing on the shoulders of a man who preceded us by more than half a millennium. Johannes Gutenberg began working on his printing press in 1436. Almost 20 years later, he published his first product -- The Gutenberg Bible. Coincidentally, that same year his creditor foreclosed on him and Gutenberg lost his press and all his other equipment. And so, it is said, in addition to giving us this incredible history and technology … Gutenberg also gave us the essential maxim of the graphic communications industry: stay on the good side of your creditors! ..... We've taken that advice to heart at Xerox. You may have seen some news this morning about our financing effort, which is why I need to leave a bit early this afternoon. To be successful in this industry, it's important to get your financing right, but there are three other rules that are even more important 1. Get your business model right. 2. Get your technology right. 3. Get your workflow right. When I say, "Get your business model right," I’m talking from experience. That’s exactly what Xerox has had to do over the past three years. And we’re not alone. We’ve all needed to re-tool, re-think and re-define the way we work. The key is going where the growth is … and organizing your enterprise around The New Business of Printing. How do you do that? Here’s what the chief economist for the National Association for Printing Leadership suggests. And I quote … "Enduring success will be reserved not for companies of a particular size, but for those who understand that they are in the communications business, not the ink-on-paper business, and who are able to meet their customers' growing demand for new communications options and preferences." (Source: 3/10/03 NAPL release) I like that quote. It’s about companies that understand they are in the communications business. We just heard from Stephanie Streeter who heads up one of these companies. Banta is in the New Business of Printing. In fact, they are so far in it, that the word "printing" never even appears in their vision statement: "Banta will become a recognized global leader in the capture, management and distribution of our customers’ information." (Banta Corp. Vision Statement, Source: Banta Corporation). Banta's opportunity obviously goes way beyond traditional offset printing. Now, let me share another company’s description of its services and you decide whether they are in the communications business … or the ink-on-paper business. This is what they say to their potential customers: "Our digital printing services ensure that your company is more responsive to the marketplace and a more competitive player in today's business environment." What do you think? Communications business … or ink-on-paper? If you’re not sure, here’s a little more: "We develop digital workflows that ensure your documents have much faster production and fulfillment cycles. Make last-second updates and guarantee your audience has the most up-to-date information they need. "Custom-tailor and personalize content to be relevant, unique and specific to the needs of your audience." (Source: Royal Impressions Web site) If you’re a customer, in those few sentences, you learn that by working with this company you can be more responsive to your marketplace … more competitive in your category … more up-to-date and personalized in communicating with your customers … while greatly reducing your hidden costs. That’s a company you want to do business with. Their name is Royal Impressions. They’re based here in New York and their president and co-founder is Chris DeSantis. I saw first-hand their commitment to innovation … to new services and breakthrough technology. Royal Impressions is one of the first commercial printers using not one but two DocuColor iGen3s to grow their digital production color business. When you see and hear the way Royal Impressions approaches its business, you say, of course, that’s the way to do it. But TrendWatch, a graphic arts think tank, says what we just heard is the exception, rather than the rule. In a report last year TrendWatch said: "Most printers still see their businesses as manufacturing processes driven by the economy … rather than as service businesses driven by their customers." Getting the business model right is largely a matter of seeing your company as "a service business driven by your customers." That’s how we see Xerox today, and it has led us to a business model that is heavily focused on high-end digital systems, solutions and services. That puts us in the same camp as a number of printing companies that took part in the 2003 Future of Print Survey, by NAPL [National Association for Printing Leadership]. Success in the future, respondents said, depends on: - A continuing move to digital processes … - Integration of workflow and services… - Employee training, and… - A commitment to continuous improvement. According to the survey… - Digital printing will jump from 5.6% of sales to 12.6% in 2007, and… - Value-added/communications support services will rise from 7.8% of revenue to 14.5% in 2005. The average sales growth forecast for the 145 printers who took part in the survey was 9.3% per year over the next five years. Nine-point-three! If that sounds high, it’s because the printing industry as a whole is expected to grow at 3.5 to 5% over that same period. (Source: 3/10/03 NAPL release) For anyone who hasn’t experienced it, the difference between 3.5% growth and 9.3% growth is the difference… Between dodging the future … and attacking it… Between defending print … and reinventing it… Between pleading with investors … and celebrating with them. 9.3% growth would have allowed Gutenberg not only to keep his printing press, but also to add a binding line and a fulfillment center. Getting the business model right can put you on that growth trajectory. Then, you have to get your technology right. Roger Gimbel of Global Document Solutions, another local New York company, knows the technology game as well as anyone in the business. Roger’s company was an alpha site for our DocuTech product in 1990 … and more recently for the DocuColor iGen3. Like Chris DeSantis at Royal Impressions, Roger is using the iGen3 to fuel his on-demand color business. But that’s not all. He has discovered that he can also migrate business from his large commercial print division onto the iGen3, which can produce customized, short run jobs with the look and feel of offset. Major players in variable-data printing around the world are discovering that the iGen3 ups the ante. It gives them speed, flexibility, cost effectiveness and expandability in producing personalized communications that incorporate variable images and text … data-driven charts … and continuous tone images. That means they can produce a 64-page booklet … personalized to your own stock portfolio … showing you how every stock you own is performing … in full color and black-and-white. Similarly, since they went online with the iGen3 production press, Royal Impressions has added several high-volume clients, enhanced their revenues, and entered a new market for short-run offset projects. They too have moved some traditionally offset projects to the iGen3. They have increased their on-demand printing horsepower by 200%, enabling them to take on the tightest customer deadlines … and the most demanding color print projects. Chris DeSantis and Roger Gimbel are always working not just to get the technology right … but to get it first … and to influence where it goes next. When you have your business model right, and your technology right, you put yourself in position to be part of that 9.3% growth. And the same convergence of computing, communications, print and color technologies that leads us into enhanced services … also makes it possible to develop more profitable digital workflows. Which brings us to the third rule: getting the workflow right. The secret is to provide faster turnarounds … shorter run lengths … and a wider range of services that include mixed print and electronic output, personalized printing and fulfillment services. And what that requires is a fully-integrated, end-to-end digital workflow that simplifies operations, reduces costs, supports growth, adapts to change and enables new applications. Yes, the quality and speed of digital technology is fast approaching – and in some cases even exceeding -- traditional offset processes. The issue now is how to improve and integrate the digital path through the print shop … to create one seamless process for start-to-finish management of print jobs. For some time at Xerox, we have offered an array of workflow products and services. At On Demand 2003, we announced that we’re integrating those offerings under one umbrella … working with partners … to address every production printing workflow step, from creating the job to getting paid for it. It’s called the Xerox FreeFlow Digital Workflow Collection. It commits us to a strategic direction of open systems and industry standards that will enable us and our development partners to integrate FreeFlow offerings into existing workflow systems and software tools. The result of all that will be more efficient, flexible workflow for our customers -- delivering more productivity on the one hand … and more profit on the other. Is it too dramatic to say we’re at a turning point? I don’t think so. Forecasts predict one in every four traditional printing firms could disappear in the next few years. (TrendWatch) One in four, wiped off the map. Here’s what I believe: the other three will be somewhere along the path of getting their business model right, getting their technology right, and getting their workflow right. In the end, as we transform the way the printing industry works, we are doing something that is much bigger than the ups and downs of any one business. We are redefining an industry. There’s a book by Dr. Michael H. Hart called The 100: A Ranking of the Most Influential Persons in History. Dr. Hart ranked Gutenberg Number 8, just ahead of Christopher Columbus and Albert Einstein. He based his rankings on the total amount of influence each person had on human history … and on the everyday lives of other human beings. Some say the printing press made possible… - Capitalism as we know it… - Scientific thought as we know it… - Western culture as we know it… - And social and intellectual life as we know it. We are involved in important work at an important time in our industry. On behalf of all the people at Xerox, thank you for recognizing our contributions. We are truly honored to have your respect and your confidence – and we will work hard to continue to earn it every day.