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Feb 1, 2003 12:00 AM
Graphic-arts managers are relentlessly bombarded with magic bullets, some of which are communicated by trade associations and other third parties who should — and, in some cases, do — know better. There are programs promising secrets to fame and success, including the almost-miraculous overnight building of million-dollar sales territories.
Let's get real! The legitimacy of “secrets of success” books and programs is unlikely to be valid in the current economic climate. The reason: Formulas, once seen as the prescription for success, are becoming anathema. More than ever, all-purpose truths lack validity, because virtually every company in every industry faces the same strategic challenge as most printing companies: competitive differentiation. Many graphic-arts executives are having difficulty accepting that silver bullets must now be tailored to specific customers and can no longer be effectively targeted at whole business markets.
This leads me to an observation about printers that are doing well since the onset of the soft economy. While few firms are finding that achieving business success is easier now, there are many that have achieved growing pre-tax profits. (But when experiencing profit growth in a soft economy, there's a reluctance to report the results to either the IRS or a trade association.)
What characterizes the companies that have done well during the past couple of years? Our survey work and anecdotal feedback from consulting leads us to conclude that an intangible human quality called balance, rather than some magic formula, is an important factor.
The first step in achieving balance is realizing that sales is not always the sole — or even major — vehicle to profits. The landscape is littered with examples of print companies that planned to grow their way into profitability. Singular emphasis was placed on sales growth, often resulting in severe price competition that, ironically, contributed to erosion of the bottom line.
Companies lacking balance view sales in strictly quantitative terms. Little or no consideration is given to the lifetime value and transaction costs of individual customers. Firms with sustained profitability, on the other hand, view sales as having a quality as well as a quantity.
The value of balance is evident in the account portfolios of many successful companies. There is less dependence upon a handful of customers: Jeopardy is reduced when a portfolio is characterized by account diversification, rather than account dominance.
Balanced management addresses costs and cash flow as conscientiously as it addresses sales. It is as likely to communicate compliments as it is to communicate complaints. It expresses appreciation to its customers for well-prepared files and on-time payment as much as it supervises the capture of alteration charges and the prompt mailing of overdue notices to slow-paying accounts.
And, after the difficult decision to cut staff and overhead, balanced management takes steps to improve and measure the morale and productivity of remaining staff. Too often, staff reduction occurs with little attention paid to such issues as speed of billing, more efficient makereadies and reduced production spoilage.
Balanced management actively participates in pricing. It avoids the one-size-fits-all approach, which usually results in overpricing of the most desirable work and underpricing of the least desirable work. Most importantly, balanced management understands that a company can do more to help or hurt itself than any competitor.
A former colleague once described a cardinal rule of bomber-pilot training: When one engine fails, resist the urge to touch the functioning engine. In the current economy, there's great temptation to respond to the urgent. Stop a moment, and consider that intense price competition and allegedly disloyal customers are symptoms of strategic issues, such as a lack of meaningful competitive differentiation and the need to better understand customers' business challenges. In many companies, increased sales simply delay the addressing of core business issues. Balance counts.