It’s amazing what great management can do with some deceptively simple-sounding strategic ideas.
In the 1990’s, when digital printing came of age, traditional printers had a pretty bad time of it; the industry was transformed as technology moved the goal posts yet again. That shouldn’t have been too surprising though as there have been many similar changes in the history of printing, but it is often unexpected and always painful for the incumbents. At the time I had a customer who was not only a printer, but also something of an optimist, who saw the change as an opportunity. He managed very skilfully to not only survive but to flourish, in the face of the carnage that destroyed so many similar businesses, by differentiating his offering in a market that had been rapidly commoditised.
My client decided that as he could no longer compete as a printer he would have to do something else so he began to sell training manuals instead. He sold them to a large European market sector that required quite a lot of printed manuals delivered regularly, to various locations around Europe, in relatively small quantities and at short notice. He changed his customer proposition from simple printing to that of a logistics specialist in the delivery of training manuals which, of course, he also printed. He added value and differentiated his business by both focussing and evolving his offering into a Solution.
I was reminded of this company the other day when I read about a similar thing happening to a much bigger and more established printer, St Ives, that when faced with the next technological tsunami to hit the industry, the internet, it did something very similar. Over the past five years Patrick Martell has transformed the fortunes of St Ives by slashing costs and focusing on core printing activities, turning them into “service propositions” rather then “manufacturing propositions”. Interestingly, he also majored on logistics, just like my client, allowing publishers to get small batches of books into bookshops at high speed and so eliminating stock holdings.
Not content with such a smart move into solution selling Mr Martell also decided to jump a few technological hurdles too. A big part of St Ives’ problems in 2009 was that the marketing leaflets and flyers they printed were being replaced by online executions of one sort or another. In response to this Mr Martell set about selling-off the magazine and direct mail businesses and buying-up digital marketing services businesses. This move towards greater control of execution, both online and in the field, seems to me to have also been a move towards solutions and away from products.
Mr Martel talks in terms of the group’s survival being at stake in 2009 but now its market capitalisation has quadrupled as his new strategic focus, on digital marketing execution and solution selling online, and in the traditional book market, has paid off. The success of the move into digital marketing has been particularly impressive as Martell used cash flow that would have traditionally replaced capital equipment in the printing business to buy much less capitally intensive services businesses. He plans to continue to acquire similar businesses so that in a few years the group will have at least half of its underlying operating profit from this source and be well placed for the next technological shock to hit the industry.
What I like about all this is that here we have a great example of a business faced with serious pressure to change that has been transformed by applying a few simple strategic ideas across the board. The ideas are pretty simple: act quickly; focus; sell solutions rather than products (which will help you focus anyway); and stick as close as possible to what you know, even if that means a radical change in technology and skills. The ideas are transferrable to any business, so if you find yourself in a similar position you could do a lot worse than use them too.
Oh, of course, whilst the ideas are pretty simple doing this stuff is tough so well done Mr Martell and team; I think it’s a very impressive story.