`The Global Digital Future`
Colin Thompson
Managing Partner Cavendish/Author/International Speaker/Mentor/Partner
That impacts on `all` industries globally`
?The printing industry and all industries globally are currently and will continue to experience many transitions in the form of `Digital Printing and Communications`. This also impacts on all businesses globally.
The printing industry will continue to evolve into new and exciting `electronic imaging driven by digital technology`. Digital technology, economic restructuring, global competition, market changes, emerging new media and other market forces are combining to `dramatically` change the operating environment of the Printing Industry. The traditional printing industry is very mature with over capacity in the established countries and also very poor training of personnel and very few people entering the industry. We are in the `emerging information society` driven by technology, where by the very nature of the role of the printer is changing rapidly, driven by `customer demands`.
The major drivers are first, technology, particularly the digitisation of data, is reshaping the communications industries. The rapid experience of the convergence of computers, telecommunications and television, plus the use of `multimedia` and the speed of change in the `information superhighway`.
The second major driver is the changing macro environment, particularly the rapid restructuring of the world economy and global competition.
The consequence of these two major drivers is the movement in print markets worldwide. The emerging `new` countries who invest into the print/communications industries with the latest equipment are global players whom will significantly drive down prices by the economies of scale.
Print companies are redefining their business (or they should be) to one of identifying `customers 'changing communication needs brought about by the digital processing and storing of information and delivering it through the most effective distribution channel. Since printer’s are/should already well be established in `imagery`, they are well positioned to participate in new channels as they develop. If print companies do not take on board new technology, they will not survive in this rapid changing environment.
Changes to Industry Structure and Profitability
The structural changes to the industry are occurring as a result of `technology` changes and market forces on a global scale. This restructuring and the pace have quickened and the impact on profitability has been profound. Over the last 40 years industry profitability has moved in cycles roughly corresponding to industry investment cycles. With the current need to invest in `new digital technology` coinciding with a slowing of market growth world-wide, printing companies profits will be `squeezed` further in there mainder of the decade as structural change continues on a global scale.
The implications for the printing industry structure and profitability in the future are;
The number of large printing plants is declining. (costs out way benefits of net profit)
Large printing companies will become larger by acquisition, at the expense of less well-managed large companies and medium sized companies.
The less innovative companies will face serious issues in a slow growth business environment.
The rate of failure for less well managed small companies will be high. This is the majority of the industry.
Medium size companies particularly those without well-defined speciality niches will continue to be squeezed by larger companies.
The impact on the printing industry profitability will be a continuation of the pressure on overall industry profit margins.
The profit leaders will continue to make attractive profits by acquisition/cost controls/economies of scale/skilled and experienced personnel in `all` areas.
The impact of `Print Management Service` programmes on the manufacturing sector that does not participate in this customer driven environment.
Management without Vision
A lack of management commitment to change and a failure to hold a compelling vision of the future with their employees are holding back global mature print manufacturers when they attempt to make a move towards `lean manufacturing`.
But addressing the attitude and behaviour of an organisation – in addition to the operating system and management infrastructure – could boost production by at least 20%, and improve stock, lead times, quality and capacity. The organisations with skilled and experienced people of any age and training programmes with business models will be the winners.
There are at least 12 major pitfalls which companies must avoid benefiting from making the journey to lean production.
The pitfalls are;
All too often failure to make a lean transformation stems from a superficial, piecemeal approach. Lean manufacturing requires a holistic approach transforming not just the technical production system but also the organisations management systems and a comprehensive approach to change which addresses mindsets and behaviours as well as formal processes and structures.
Most common faults are a lack – lustre approach to change by a dividend or uncommitted senior management and unwillingness to properly consult and communicate with the workforce. This is why some European companies claim to have tried and failed to implement lean production systems. Communication, communication of the requirement and a `buy-in` programme by `all` people is necessary for change to be successful.
Lean manufacturing is now almost universally regarded as a panacea for European print manufacturers (also, all UK manufacturing) to improve productivity but, UK owned manufacturing companies are typically less productive than their UK-based, US - owned competitors.
A McKinsey & Company study showed that an average US manufacturing companies deliver a 22%annual return on capital. While UK companies return only 7.6%! (before the recession).
McKinsey & Company experience reveals that middle management and front-line staff are adept at spotting half-hearted support for production process improvements and adopt a `just-enough` attitude to tide them over until the effort is abandoned. Also, senior management (Directors) were complacent to act due to lack of knowledge of `management of change` process.
A typical scenario might be of an UK company undertaking a lean programme. But, sooner or later, after considerable diversion of company resources, they admit defeat and settle for a few small improvements here and they’re rather than a lasting and marked performance improvement. This type of company will not survive.
Having seen the `writing on the wall` for their business before being spurred into a lean transformation attempt, such businesses frequently joins the list of statistical failures.
A lack of a `shared` vision headed the list of failures.
Alignment around `shared` objectives must begin with the `top` team and cascade through the organisation. It must also be seen to go hand-in-hand with visible commitment by `all` Directors/Senior Management so those staff sees their `leaders` are serious about change and play a full part themselves. Middle management are very good at spotting lack of commitment and respond in kind by supplying just the amount of effort they judge expedient until the latest initiative withers and dies. People know what they are expected to say and duly say it. But, it is meaningless if they are just going through the motions. Again, this type of company will not survive.
Failing to lead by example resulted in middle managers and production staff failing to `get onside`.
This most often happens where senior management is `out of touch` with all the employees. Top management must get close to the reality of the `people` to understand the issues the frontline staff are living with, and then take the lead to resolve them as part of the `change process`.
At the same time, management need to be aware of initiative fatigue, the `been there, done that, did not work` attitude. Change targets must be precise and stretching, but realistic and some early successes will galvanise the rest of the effort.
The tendency to fire fight constantly must be stifled and while some managers thrive on fire fighting and build a successful career on it, this only deals with symptoms and not with `long-term solutions`.
Just telling employees what to do is not enough. They must be involved at all levels in solving issues in the change process. All staff expects to see their line managers directing change, so these middle managers must be engaged from the outset.
Even when a successful pilot implementation is over, there are still several more pitfalls to trap the unwary. One is stagnation following a successful pilot as the focus shifts away. Another is the failure to deploy lean manufacturing to the wider business. Never stop looking to improve.
Conclusion – Lean manufacturing requires a holistic approach transforming not just the technical production system but also the company’s management system and a `comprehensive` approach to change which addresses mindsets and behaviours as well as formal processes and structures. The `right` trained and skilled and experienced `People` manage companies and these will be the winners in the future.
Keys to Bridging to the Digital Future
The central message of technological change is the accelerating pace of digitisation. Besides basic matters of understanding emerging printing technology, then integrating it effectively into the business and using it to enable expansion into `new` businesses. Two broad issues stand out as follows;
1. All print companies will have to address the question of how their internal operations are interconnected digitally and how they are also connected to their customers and suppliers. The question involves connecting through data networks to customers and suppliers; the consideration here are productivity, profitability and customer demands for `rapid` service. It also concerns customer demands for fast turnaround and shared data.
2. In the long run, higher growth opportunities will be available in `new` rather than traditional media. Printers of all sizes should be serving specialised markets also have opportunities to experience with new media today; with minimal effort. The greater the penetration of multimedia personal computers, for instance, the greater the opportunities for some printers to move into this medium.
Beyond these general issues, a number of specific opportunities exist. These will become imperative as for future success as customers become more demanding;
Participate in inter-enterprise systems that connect suppliers, printers and end users with systems for managing activities together and communications for digital data for printing.
Participate in the development and maintenance of digital databases of text, data, images for printing and other media. Publishers have already redesigned their own front ends to send the same information to their printers and to on-line databases.
Participate in new delivery options. These include both the use of database and mailing list technologies to enable direct mail and refined targeting capabilities and connection to the cable and telephone company with broadband information directly to end users.
Non Traditional Printing Services
Non-impact, primarily electronic, printing technologies will continue to improve in speed, process colour capability and quality and prices will continue to fall rapidly. Larger and specialised printers are already integrating such technologies into their production systems; quick printer’s basic businesses are based on such technologies. But there continue to be opportunities especially for small to medium size printers to meet growing customer’s needs for non-impact work and to offer convenience as one of their services.
Customer and Printer Alliances
Alliances with groups of customers and groups of other printers will increasingly become critical for small and medium size printers. The point is to bring together different capabilities that no one printer can afford to maintain. Larger printers on the other hand are already moving to ally themselves on a long-term basis with their customers to protect their investments and market share both in printing and emerging media. The Print Management Service organisations are a prime example of meeting customer needs.
Education and Training
The rapid pace of change in printing technology in competing media and in printers markets places a `premium` on ongoing education and training. Printers must ensure that `all` of their employees are up-to-date on the latest technologies and management skills that are required for now and the future. The degree of change expected in this and the next decades also places a premium on educating customers about emerging technologies, systems, media and distribution. We must use people of `any age` to further their education and skills to compete in a global market. Also, people of `any` age with experience and skills of `management of change` will be your main asset!
Customer Needs
The most successful printers will be those who can meet rapidly changing customer needs. Inevitably, that will mean faster turnaround and lower costs in a more competitive business environment. It also means the ability to innovate rapidly either internally or by outsourcing work, provide new services both in front end and distribution areas and as stated above participate on new media. Creating and nurturing the best possible relationships with customers remains a critical success factor. A related issue will be the ability of printers to understand their customers in order to be more proactive in meeting their needs and to focus their `bottom-line` profitability.
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Other Issues
The large printers will be driven to `dominating` these they serve trying to maintain the top positions in their business. Smaller printers able to grow comfortably in general commercial printing in the past will have to focus more on `selected` product and /or service niches either alone or through alliances.
With technological and market change, competition for critically important skills will increase across the board, raising the premium on attracting, training, managing and retaining the best skilled workers and managers. Managing technology, capital and costs will continue to grow in importance. Also, age should not be a factor, but the ability to carry out the function at the highest standards, using experience and skills that are required at each sector of the business.
Above all, printers will have to strategically -oriented businesses, be aware of changing technology, markets and other external developments and able to take advantage of them profitably. Indeed, for many printers hiring or developing a `digital champion` to act as a catalyst for change within their company will be a critical step.
To help you in your pursuit for the future, please invest into the following publications;
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`Global Digital Economy - The Inside Track`
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`Document Management - Cost Savings Solutions`
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`Emerging Technologies - Embracing Change -`Get the Edge`
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`The European Printing Industry and the Impact of China on the World`
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`Challenges - Printing and Graphic Arts: Impact of Business Models`
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`What is the Global Digital Future for the Printing Industry? `
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