Las Vegas; Thursday 19 Jan. 12.00
Are you ready for the Trump upturn? The stimulus policies flagged by the incoming Trump administration will drive an upturn in the US economy that will see print get back to 3% growth by 2018. But not every printer will benefit, only those who are “prepared to participate.”
According to Andy Paparozzi, chief economist of the US-based Idea Alliance, the final keynote speaker at the EFI Connect, the upturn in economic activity will accelerate through the next two to three years due to proposed tax cuts, infrastructure spending and market stimulation through initiatives such as rescinding business regulations. It will restore the US economy to something like it’s long-term growth rate, which has been missing in action since the recession of 2008.
Delegates at Connect were treated to the rare phenomenon of a fairly optimistic economist, as Paparozzi laid out his belief in the creative impact of the Third Great Economic Revolution and how printers need to change in order to survive and thrive. He began with some sobering statistics as to how printing sales, although growing by an average of 1.4 % for the past five years, are still down 16% from pre-recession days.
This tough economic environment, combined with external pressures from digital communications, means a lot of printers have gone out of business. Since 2007, there are 6,600 or 21.5% fewer commercial printing companies in the US and nearly 11,000 (31.2%) less since the start of the century.
In a typically energetic and forthright delivery, Paparozzi took the assembled delegates through a state of the industry address. He made no bones about the impact the digital revolution has had on the industry since 2000 with a $23.5 billion decline to $35.8 billion in offset printing, only partially made up by a $7.7 billion increase in digital. This has led printers to diversify their businesses. More than half of the respondents to an Idea Alliance survey expect something other than lithography to account for nearly 58% of their revenue by the end of 2018.
After pointing out that the highest 20% of companies increased sales by 11.9% last year as opposed to the lowest 20% who declined by 6.8%, he went through a number of ‘must dos’ for printers to remain successful and get a piece of the upcoming growth. “The upturn is not inclusive. It is exclusive, reserved for those with superior knowledge and abilities,” he said.
He believes printers will succeed in retaining their competitive advantages by regularly replenishing it with:
- Superior knowledge of what clients and prospects value most and superior ability to consistently deliver that value.
- Superior knowledge of how their client’s communications, needs, options and preferences are changing.
- Superior knowledge not just what works today or what worked yesterday but what will work tomorrow.
Among the survive and thrive strategies he introduced an ‘opportunity evaluation matrix,’ to help printers decide what to do. He maintains that with margins for error so thin it is essential to rigorously evaluate each option in light of unique resources, capabilities and circumstances. “We have to treat the evaluation as if our future depended on getting it right – because it does.”
He cautioned about joining the rush into the latest cool thing, rather advising printers to ask what are their customer’s pressing needs. Elements such as whether the proposed service is easy for customers to use, the state of general business conditions, the degree of commoditisation in the market and what efficiencies and service will distinguish us must all be weighed up.
He advised printers to take particular note of ‘weak signals.’ These he identified as early evidence of emerging trends in clients’ preferences, communication habits, technology and demographics. Some examples of weak signals being missed by many in the printing industry 20 years ago include the dismissal of digital printing as ‘quick and dirty work that wasn’t real printing’ as well as the assumption that the internet would have limited impact on reading.
Printers are also encouraged to challenge their business assumptions otherwise they can miss out, like Blockbuster did when it knocked back the opportunity to buy Netflix in favour of continuing to build retail stores. Nokia’s leaders dissed their engineers who proposed a smart phone three years before the iPhone was released.
In general terms he advised printers to pay as much attention to customer retention as acquisition. “Knowledge and courtesy are more important than speed in customer service,” he said.
As always Paparozzi concluded by quoting his hero Peter Drucker who, when asked what business leaders never seem to learn. “They never learn that in business one does not begin with answers. One begins by asking ‘What are the questions?’”