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Stivison--Are the Barbarians at the Gates?

April 2000

Folks are scrambling for explanations and there are no comfortable answers. The firms "right-sized" and redesigned processes years ago. They achieved "critical mass" through acquisitions. They put in new technology infrastructure and enterprise management systems. They rationalized their supply chains. Why, then, aren't the stocks of more commercial printers doing better? It can't all be attributed to the individual CEOs, because the pattern cuts across so many firms as to qualify as an industry-wide trend.

In many cases, the problem is not lack of sales. Generally, sales are up. Could the problem be as simple as unrealistic expectations? Could it be that the profit projections based on assumptions of new critical mass, economies of scale and new technologies were simply unrealistically optimistic? Could it be that if a few major competitors all go on an acquisition spree—or all adopt new technology—at the same time, that no single firm leapfrogs the competitors? Could it be that all the process redesign and new technology have only bought a new, albeit higher, level of competitive parity?

There is a genuine risk that rather than acknowledging which expectations might have been unrealistic and simply need to be adjusted, that too much effort will be squandered looking to lay blame. Worse yet, effort and money will be squandered trying to fix something that isn't really broken. Often, the easiest and most visible fix is a new CEO.

This, however, actually leads to some real problems. The upheaval of changing CEOs diverts the attention of the organization away from the job of putting ink on paper, profitably. It drains the energy that should be going into customer service. Speculation replaces action. More time is spent protecting careers than nurturing the business. Turnover increases. What started out as a relatively simple problem—overly optimistic projections—actually begets genuine problems as quality slips, schedules are missed, skilled and experienced people choose to leave.

The months ahead will be very uncomfortable. The investors will be demanding better profits. More CEOs will come and go. If managers and executives did not already have enough on their plates, they will have the added burden of turning around the company's finances.

The irony of the CEO upheaval, of course, is that a printing company's financial performance ultimately does not depend on the business strategy-of-the-month. Rather, it depends on a lot of dedicated people being allowed to do what they do best: Get jobs off the loading dock, on time, error free.

—Douglas Stivison

About the Author
Douglas Stivison is a consultant at PricewaterhouseCoopers, the world's largest professional services organization. He welcomes your comments via e-mail at or (973) 236-4908.



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