The Direction of Development
Preparing your company for sale can be a complex task, but everything you do will aim at the same objective: increasing value to make what you have as attractive as possible to potential buyers. Even if you aren’t in a selling frame of mind, increasing value is still a basic management necessity—something you naturally will want to do to keep your company growing and prosperous.
How to go about it? I urge our New Direction Partners clients to focus on two value-increasing strategies, business development and infrastructure development. Each has its own set of rules to follow and disciplines to adopt. Make them standard operating procedure at your company, and they will help you add the business value that buyers and stakeholders are looking for.
For printers, the key to business development is to stop functioning strictly as a printer and to start operating as a marketing services provider. This means thinking in terms of the entire value chain of business communications, not just the hard-copy part of it.
Why? Because that’s where the real revenues and profits are. It’s been estimated that for every $1 spent on printing, another $6 is spent on content and fulfillment in activities like data storage and management, design, distribution, and response tracking.
All told, the content value chain represents a $1 trillion market—and printing is the least profitable piece of it. If the bulk of your revenue comes from printing, you have a major incentive to find new sources in areas of the value chain you are not currently addressing. With the right guidance and the appropriate systems and equipment, you can learn to leverage these lucrative opportunities.
Another pillar of business development is targeting specific vertical markets: the educational, financial, legal, and pharmaceutical industries are examples. The advantage here is that when you have built a product portfolio and a service model for one customer in a niche market, you can scale them up or down for others in the category. Avoid jumping around from sector to sector; select a few good ones and concentrate on excelling in them.
By all means, let your technology vendors help you to learn how to do this. Most of the digital systems providers employ experts who specialize in building content and production solutions for the value chains that exist in the vertical markets you may have your eye on. These experts know what the verticals want and who their key players are. Your vendors, knowing that they succeed when you do, will share this inside information with you—usually for free.
Infrastructure development is mostly about process improvement, and there are many aspects of running a printing business in which process improvement can occur. A good place to begin is at the customer-facing front end: the Web-based interface where your customers transact business with you (assuming that your company offers them this convenience).
When the best-managed plants in the industry reach out to new customers, they always bring a sophisticated front end with them. Take a close look at your front end and ask yourself how it could be improved to make your customers’ experience of using it as satisfying as possible. If you don’t have front-end capability, put a priority on acquiring it. Today, it’s hard to be competitive without maintaining this kind of 24/7/365 connection to your customer base.
Internally, do whatever needs to be done to take bottlenecks and excess cost out of your production workflow. Profit leaders use Lean Six Sigma methodology to optimize quality and minimize waste at all stages of manufacturing. They also set clear numerical targets: for example, specifying that labor cost will represent no more than 15% of total cost.
Measurement and accountability furnish the benchmarks that keep infrastructure development on track. In my days at Xerox overseeing the launch of the DocuTech production system, we operated out of a "war room" where everyone’s goals and performance metrics were continuously on display. Falling short of a target in one of our monthly reviews meant getting a visible red flag on your record—a dubious distinction that nobody on our team wanted to be known for.
The discipline doesn’t have to be draconian, but it does have to be in place. It also can be applied to sales, the activity that drives the growth of your entire infrastructure. At Xerox, selling a DocuTech was a 10-step process through which our sales specialists were expected to steadily move each of their prospects. They also were expected to bring new prospects into the selling cycle.
Everything was reviewed weekly, and if a prospect was found to be stuck at a step instead of advancing to the next one, the specialist risked losing the account. The system kept everyone highly focused, and that focus ultimately was what made the launch of DocuTech such a groundbreaking success for Xerox.
Too many of the printers I speak with don’t have a "war room" mentality or a structured approach to sales. The good news is that there are techniques for achieving them that almost any printing firm can learn and use to good advantage. As an owner, you already have business development and infrastructure development on your agenda. Now is the moment to take them to the next level as you prepare for a sale or for whatever else is to come in your strategic plan.
Frank D. Steenburgh, partner at New Direction Partners, brings over 45 years of industry experience, including the past 30 years in digital and is internationally recognized as an expert in digital printing and publishing. His experience includes corporate officer at Xerox and president of Indigo’s Americas operations. Frank’s value includes a wealth of global industry contacts, a proven track record in development and implementation of business strategies that drive revenue/profit growth and a deep understanding of horizontal and vertical markets. Contact him at (610) 230-0635, ext. 709.