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An explanation of my business philosophy

Apr 1, 2003 12:00 AM

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I have spent more than 40 years in the printing and publishing industries, and am in my 20th year of consulting, writing and training. For 20 years, I have stressed the critical nature of a differentiated strategy, without which business planning and management skills lack meaning. And during the past 20 years, my ideas and counsel have been called everything from iconoclastic and off-the-wall to interesting, even visionary. I have been called na├»ve for questioning the actions of consolidators, who believe that corporate size is inherently virtuous; the conventional wisdom that the midsize company is an endangered species; and the notion that effective sales generation can be embodied in a handful of “secrets.”

This month's column is an attempt to coherently explain where I'm coming from. I share the philosophy of Peter Drucker, who has written about 35 books and is now in his 90s. Later in life, he became frustrated at his inability to swim upstream against the tides of business fads du jour, the preoccupation with shareholder value in publicly held companies and the short-term orientation of American business. He now devotes much of his attention to not-for-profit organizations — he calls the Girl Scouts of America the nation's best-run corporation.

According to Drucker, the objective of any organization is to positively change the lives of those with whom it has direct contact. This encompasses employees, customers, suppliers and the community in which it operates. In his view, management is not a science, art, program or some gimmick; it is a practice based on a fundamental belief. He argues that the mark of a successful organization is the elevated competence of those with whom it has direct contact. In the shorter term, a company's business is customer formation.

No such thing as selling

I subscribe to this philosophy, and have written ad nauseam that there is no such thing as selling or sales management. There is only the creation of conditions that lead to sales and profits. Especially in an industry such as printing, which is dominated by the creation, manufacture and distribution of customized products and services, there are no formulas. The strategic objective is to be differentiated from competition, not necessarily to approximate industry aggregate benchmarks.

This suggests that inside-out information, such as financial ratio studies or feedback about competitors' equipment and operations, are relatively inconsequential compared to information about customers' needs, experiences, perceptions, plans and attitudes. Don't mentally stand in your company and try to apply some allegedly magical technique to increase sales from the marketplace. Instead, mentally put yourself in a prospect's shoes, look back at your organization and ask, “Why should I do business with that company?” Make the answer to that question the point of departure for all business planning. The question “What do we do best?” is irrelevant — it ignores customers' needs.

Another appropriate question for organizational strategy is “What is our goal?” A proper response for a graphic-arts firm is not “Sell more product” or “Increase sales.” I contend the proper response is: “To make our customer more successful.” That answer suggests the printer should be interested in understanding how successfully a printed piece achieved its intended result.

Definition of the corporation

Stephen Covey portrays the challenge as the need for ownership and management to recognize, then act upon, the differences between “the urgent” and “the important.” That's correct as far as it goes — but it doesn't go far enough. The fundamental issue is the definition of the corporation and its objectives. In too many cases, that definition is expressed in terms of the outcome (i.e., increased sales and profits) — not the differentiated mission.

Success in life is largely the function of correctly defining the problem or challenge. In the current business environment, that definition must be based upon an understanding of the customer and its business challenges. I wholeheartedly subscribe to the notion that selling is little more than commercial social work.

Let me add that, in this environment, bad research is dangerous — in many cases worse than no research. The notion of formulaic solutions and explanations, no matter what the author's credentials, can be a disservice to the industry when the buying community honors differentiated products and services. Business planning that is not based on empirical feedback from customers runs the risk of irrelevance, at best. Salespeople are little more than industrial kamikaze pilots when sent into a price-competitive marketplace, unless they are equipped to express a well-defined, differentiated corporate strategy.

And that is where I'm coming from.

For more on the subject, read any of Peter Drucker's books. The ideas are nothing new; they date back to about l950. The only thing that's new is the urgency of implementation in today's marketplace.