Published Articles

If It “Lights Your Fire,” Do It. If Not, Don’t.

A couple of months ago, business guru, Tom Peters, gave the keynote address at the Binding Industries of America’s International Convention.  “Failing your way to success” was among the many topics he touched upon.  We all make mistakes.  The trick is to recognize them promptly, analyze their causes and take decisive corrective action.  Sometimes, the best solution is to exit, lick your wounds, and develop new strategies based upon your distasteful experience.

Our company’s management team frequently analyzes our core competencies and tries to select appropriate business strategies.  Over time, we’ve observed that when we work on projects and processes that “light our fire” our people tend to excel because their work is interesting to them.  For the last twenty years, we have gravitated toward technically challenging folding, stitching and gluing work, because our people are good at it.  Although this strategy works for us, it isn’t appropriate for every company – some successful postpress companies have core competencies in grinding out commodity bindery work.

Rickard Bindery hasn’t always been a specialty bindery services company.  For many years, we were a high volume commodity services company.  During the 1970s, we acquired a lot of technical expertise and began straying from commodity work, toward more challenging jobs.  Slowly we began to remake ourselves into a mid-to-long run “technical solutions” company.  But, we didn’t get there overnight or painlessly.

Case Study: A Rickard Mistake
In 1980, the direction for our future growth wasn’t clear.  Back then, a lot of our customers were asking us to enter the mailing services business because they thought they could save a lot of transportation costs between our plant and various mail houses.

Our business model for entering the mailing business looked simple enough.  We would help our customers by vertically expanding into mailing services and enjoy a low-cost producer market position because of reduced transportation costs.  In the spring of 1980, we entered the mailing business.  We learned the postal regulations of the day and structured a routine in which our truck driver delivered processed mail to the Post Office.

However, we soon recognized that our mailing business was doomed.  We weren’t making any money because the cost structures of binderies and mailing houses are very different.  We were using our highly skilled, highly paid bindery machinists to do the work that low-cost mailing employees could do better.  Moreover, productivity suffered because mailing work didn’t “light our fire.”  In addition, our customers were unwilling to pay us any premium for our work.  Then, disaster struck.  We lost our truck driver and soon discovered just how important his contacts with the U.S. Postal Service were.  We began having problems getting the Post Office to accept our mail and soon were forced to outsource work to other mailing companies.  After eight ill-fated months, we exited the mailing business.

Lessons Learned
Good judgement comes from experience and frequently experience comes from bad judgement.  After our failed mailing project, we adopted Corporate America’s trend of outsourcing non-core operations.  If we had it to do over, we would think long and hard before offering a vertically integrated service, like mailing, of which we know very little about.

Our foray into the sort/tie/bag mailing business caught fire with neither our employees nor our management.  We regarded it as a nuisance, not a challenge, and as a company, we were glad to return it to better-suited competitors.  Even after our exit, there were some customers who still wanted us to handle their mailings.  We discovered that outsourcing work to our former mailing competitors allowed us to offer better services for less money.  The result was happier bindery customers, which has always been our primary goal.

When entering a mature industry such as mailing, a proven way of quickly grabbing market share is buying it.  Offering adequate services at a low cost is necessary to attract customers.  In our case, eliminating the transportation costs from us to mail houses wasn’t enough.  Our mailing experience acted as a catalyst for us to fundamentally change our business.  Although we began the process of moving away from commodity binding work in the 1970s, we rapidly completed our effort shortly after our mailing debacle.

A Silk Purse Out Of A Sow’s Ear
By the time we decided to exit the sort/tie/bag business, personalized mass mailings were becoming a staple of American marketing efforts.  Impact printers had a strong foothold in the Midwest and Rickard Bindery was cutting, folding, gluing and stitching large quantities of personalized products.  Handling and converting pre-personalized mail requires different bindery procedures and we discovered that our failed mailing experience had given us valuable expertise at keeping large quantities of paper in proper sort order.  It was obvious that we had a new core competency in our company and since we were now out of the mailing business, our former competitors no longer felt threatened outsourcing work back to us.  We developed a whole new class of customers – mailing companies – and further solidified our niche as a postpress provider of technical solutions.

Change
The one constant in the graphic arts industry is “change.”  As we once entered the mailing business without any core competencies, some letter shops decided to take a stab at vertically integrating themselves into the bindery business – our traditional domain.  Trade binderies are used to commercial printers installing bindery equipment, but many of us were blindsided by mailing companies doing the same thing.  In the end, mailers discovered that they don’t convert paper as well as we do, and ultimately ended up giving us more, not less, work.

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The last two decades of Rickard Bindery’s ninety-nine year history were greatly affected by our decision to enter mailing.  We thought we had a trucking-induced cost advantage, but we couldn’t have been more wrong.  Instead, our lack of product excitement and core competencies set us up for temporary failure.  We learned that if you intend on being a low-cost producer in the marketplace, one thing is certain.  Sometime soon, no matter what your investment, somebody will come along and undercut you.  However, if you stick with products that “light your fire,” and differentiate your company accordingly, you will be around for a long time.  Burnt fingers taught us this valuable lesson.

Kevin Rickard is Vice President of Operations for Rickard Bindery and an Officer of the Binding Industries of America.  Rickard Bindery specializes in discovering solutions to challenging folding, saddle stitching, gluing and other bindery jobs.  Kevin can be reached at (800) 747-1389.