It has only been a little over two years since Joe Morgan took over the reins of 100-year-old Standard Register, bringing a new level of energy and innovation to the top spot at the venerable firm. Morgan came into the role with a firm dedication to transforming the company, and while revenues have remained relatively flat, the profit picture is quite dynamic—moving from a loss in 1Q10 to a profit in 1Q11, the third consecutive quarter of profitability and quite an achievement for the company and for Morgan. WhatTheyThink spoke with Morgan shortly after these results—and the rebranding of the company—were announced.

WTT:  Joe, congratulations on your first quarter results. With this forward movement and the rebranding of the company, where do you see yourself on the transformation continuum?

JM:  We are quite pleased with our first quarter results, and also the fact that for the past three quarters, we have been profitable and maintained positive cash flow. We are in the process of repositioning our company, and our new tagline, Advancing Your Reputation, along with our new, more modern logo, reflects that repositioning. For our three business units (Commercial, Healthcare and Industrial), it is now about aggregating the new company and aligning everything with this direction. We need to have fewer general conversations about print and more specific conversations about the print that we provide. We are looking to help our customers on a more strategic level and bringing lots of new resources and ideas to the table. For example, we are very excited about our new board member, Julie Klapstein. She is the CEO of Availity, L.L.C., a joint venture between Blue Cross and Blue Shield of Florida, Blue Cross and Blue Shield of Minnesota, Health Care Service Corporation Humana Inc., and WellPoint, Inc.

WTT:  I notice that you have also refreshed your web site along with this rebranding. The site still reflects your three core businesses, but in a more coherent fashion than in the past.

JM:  As you can imagine, we had many conversations about how to position the company.  In the end, we determined that there was significant value in leveraging the 100-year-old Standard Register brand, and that being a branded house makes more sense for a company like ours. With this rebranding, we got rid of a lot of the confusion around our various business units. We believe this will help the market view Standard Register as a whole, a whole that we believe is greater than the sum of its parts.

WTT:  Let’s talk about each of the business units individually, starting with Standard Register Industrial (formerly Industramark), your industrial label business unit, which seemed to me to be the most aggressive in moving into social media, for example.

JM:  What is notable with Standard Register Industrial is our unique approach to serving the manufacturing industry. We do an assessment of the environment where the labels are provided, and we help customers aggregate to create efficiencies.  In this way, we become an integral part of the manufacturing process. We have had this capability for a number of years, but until we focused this business specifically on the manufacturing sector, we were not taking full advantage of the power of that capability.  We have now made this business unit more profitable, and we are growing. Those are traditional business products that we brought forward, and the uniqueness lies in our consultative business model.

In addition, we took a bold step last year in buying the in-mold labeling intellectual property (IP). On some level, it is a market maker product as opposed to drafting off of an existing business.  That takes a little longer, but what we have learned has helped us advance the portfolio and gain a couple more patents. Revenue in the first quarter was substantially higher than revenue last year, and we can see a clear growth path.  We are in a position to leverage the technology to create revenue.

We also introduced an iPhone app in our Industrial business that allows customers to manage inventory in a more on-demand manner, and we are starting to move forward with that. We are seeing new opportunities emerging with our marketing solutions that are technology enabled as well.

WTT:  Are you introducing more digital capabilities into this business?

JM:  Market trends are moving more and more toward digital overall.  In-mold is more of an analog process but it does have digital aspects to it.  We have a proprietary technology that uses some fundamentals that would be more characterized as analog, but we are moving toward digital.

WTT:  Healthcare has been a focus for Standard Register for some time.  How is that business unit doing?

JM:  One of the coolest things we have done recently in healthcare is conduct a summit on the East Coast about 30 days ago around the topic of patient identification and safety. It was an industry forum to discuss this critical issue that faces the healthcare industry.  Dr. Pronovost, a world-renowned expert in patient safety, and author of the book Checklist, was part of this from, along with leading thinkers on the topic. We spent a day together, and what came from that was more clarity on what is required to provide a safer healthcare environment going forward. It gave us valuable insight that is already starting to affect our portfolio going forward.  I can’t be specific about it yet, but it has been helpful for us be able to understand what is really important to our customers in the healthcare environment.  The software solutions we are selling into healthcare are growing substantially, and we are expanding our sales force. Generally when we sell software, we are also able to sell wristbands, so the software pulls production along with it.  We are also winning a lot of deals in the traditional document space in acute care health, where we have tremendous insight into the market. We are the only company that has contracts with all of the Group Purchasing Organizations in healthcare.

That business continues to grow. We are taking share, and we have a good footprint on a national basis.

WTT:  Your Commercial business covers a broad market. What’s going on in that area?

JM:  Our work in the Commercial business unit has been fun, and we see exciting growth opportunities and future market segments starting to evolve.

Half of our Commercial business unit is focused on the financial services market and the other half is focused on all other commercial markets.

WTT:  Why the focus on Financial Services?

JM:  We work with 22 of the top 25 banks so this is an important market for us and one where we have a great deal of experience. Much of the business we have in this area has been focused on the operations side, which has really been affected over the last several years and will change even more in the future.  For example, by 2014 all Social Security checks will be eliminated and payments will be made electronically. Those types of things have a ripple effect, so now everyone is going to look at any check that is printed to determine whether it can be converted to electronic payment.  Focusing on that changed our strategy a bit, and we are expanding our portfolio of products and services.  Now we are investing in technology that will allow us to help the marketing organizations in banking and other financial institutions more effectively manage the critical communications they have with their clients. This includes marketing materials and regulatory-related materials.  Sometimes it is print, but there are so many other media now available for these communications.  We are starting to get more active with electronic bill presentment as well as email campaigns, including integration of personalized URLs.

WTT:  So you are pleased with the progress?

JM:  You will see in our results that every business unit was more profitable in the first quarter. We are changing the conversation with the customer, talking about what’s on their minds, what are their business priorities. When they talk about risk or growth, they don’t want to jump to a product discussion. They want to talk about ways to achieve an objective.  The great thing is, print has a huge role; the greater thing is that print in conjunction with other solutions produces a phenomenal conversation.

WTT:  One element we haven’t talked about is the sales force.  That can often be one of the more difficult aspects of the transformation you are undertaking.

JM:  For many of the sales people in this industry, once they get a book of business, they have a wonderful way of helping those customers expand the use of whatever they are selling.  Once the conversation moves away from that comfort level, some can get a little paralyzed.  We are training our sales force differently, defining roles in the way that produces the most success for the individual and the company.  If someone is good at operationalizing an account, applaud that. That is a great skill to have. Acquiring new business is a different skill set and you need entirely different training.  We are recognizing that people have different skills, we have different needs, and we are investing appropriately.  Also, using telesales is a huge advantage for our company. Telesales used to be a sales rep driven activity. Now it is a business unit driven channel.  Its primary goal is delivering sales. It gives us the ability to market solutions that can be sold over the phone.  We have some straightforward catalog products that are easier to sell by phone.  We are finding, especially in middle market companies, that customers are fine with talking about certain things on the phone, especially with today’s demo technology.  If you can establish yourself in a trusted position, you can make a lot of progress.  As customers get to a certain level, field sales takes over, but by then it is an established account. So Telesales gives us good access to smaller accounts that we really couldn’t effectively reach before.

WTT:  Looking ahead, what do you see in Standard Register’s future?  What are you saying to the financial analysts?

JM:  We are saying that the clarity we now have with our vision allows us to focus all of our energy on growth. We understand the decline in the legacy business. We have that controlled from the perspective of very few surprises and our cost structure is aligned to that.  We have identified market-specific solutions and are excited about being able to also leverage certain solutions across markets.

That is how I am describing our market opportunity to the investment community. Our core products are growing as our legacy products experience expected decline in the changing business landscape. Although the decline in our legacy products is still outpacing the growth in core solutions, core product sales are growing and our three business units have all improved profitability. This gives us confidence in our growth strategy.

Innovation is such a big part of our future.  In the history of our company, we have had 900 patents; there are 100 active now and more activity in our R&D area than in the last five years.  Six new patents were issued last year, and two more in the last several weeks.  In the long run, our investment in innovation and productivity will give us a high percentage chance of success. But there is still a lot of work to do.  I didn’t start with the answer. We did a lot of studying, and we came back with a growth path for the future.  Now we have to organize and focus all of our resources toward that end.  We are not done yet, but we are making progress. And the feedback from customers has been great so far.