Brian's Blog

The 2012 TLMI Converter Meeting just wrapped up.  As usual, the TLMI team put together a strong conference with speakers who provided a lot of take home value.  Greg Jackson of Columbine Label put together a great agenda – thanks again, Greg.  Of course, the business advice and laughter shared among friends puts the icing on the cake.  Fortunately, no one fell in a fountain this year.

One of the speakers was Howard Putnam.  Howard spent his career in the airline industry, serving as CEO of Southwest Airlines among other roles.  Howard said, “Turbulence is inevitable, but misery is optional.” What a great reminder.  We all do budgets and projections based on some type of straight line pattern.  We’d love customers to provide us with consistent order patterns.  That’s just not realistic.

Growth occurs in spurts, not linearly.  Our brains struggle with non-linear data.  We want a simple model that we can understand.  We shouldn’t fear the spurts – we should embrace them.  Managing the bumps gives us the opportunity to shine.  Too often, we talk about “smoothing” out patterns.  We’re wasting our time doing that.  We should build our capacity and resources to maximize opportunities and meet customer needs.  As I thought about Howard’s analogy, it occurred to me that a lot of us do like turbulence – we pay big bucks to ride roller coasters or do some other adrenalin seeking activity.  Think of your business the same way – embrace and enjoy the rush of making progress and remember it won’t be in a straight line.

In the words of the immortal Peter Drucker, there are two ways to grow your business: marketing and innovation. Both activities create long term, sustainable competitive advantages. I have become intrigued lately by business to consumer marketing. It is so much more creative than what happens in the business to business world. In particular, Malley’s (www.malleys.com), a Cleveland institution in chocolates, has been advertising a Leap Day promotion the last few days. The ads are fun, eye catching, and, based on the conversations in our office, are working.

That’s the objective of marketing and promotion – getting customers to communicate with you. We don’t do that well in the business to business world. We don’t view marketing as an investment; we see it as an expense. We don’t know how to track results well. We will just confuse our customers with promotions. Those are all weak excuses. Don’t fall into the trap of making excuses. Invest to grow.

We decided to do a leap day promotion at I.D. Images. A link to the promotion can be found here. Hopefully, it will generate some new business and make for some fun conversations with customers.

In the meantime, I’m off to Malley’s to celebrate Leap Day with a chocolate or two!

As we’ve expanded our capabilities at I.D. Images, we get more and more requests for products outside of our traditional comfort zone. To play on a political putdown, it’s often easiest to be the “company of no”, as in “No bid.” Are there any more painful words for a salesperson (or company owner) to hear than “no bid?”

But, as I’ve written before, no company can be all things to all customers. You will become the proverbial master of all things and master of none. When a customer asks, however, you want to deliver. As an old friend tells me, “First, you get the order. Then, you figure out how to do it. Then, if you’re lucky, you figure out how to make money with it.” That attitude has spawned millions of businesses and created millions of jobs in this country. Of course, with that attitude comes the risk of failure.

Instinctively, I want to look for ways to say yes to as many opportunities as possible, even if yes means purchasing or modifying equipment. I want our culture to encourage people to ask how to do something rather than list reasons to say no. There does need to be a discipline regarding what you say yes to. You need to make sure you can meet (and exceed) your customer’s expectations. Balancing is a skill I lack. My wife thinks I can’t even stand up straight. If you want to learn words used in new ways, observe picture hanging at the Gale household. Lean towards yes and you will see progress in your business.

I was in our Charlotte facility the last few days. (We are opening a new facility. The ordeals involved in that activity could be the subject of multiple blogs and maybe even a book.) I forgot my phone charger. I went to the carrier’s store (large national carrier that starts with V). The staff was prompt and friendly. One of the employees looked at my phone and quickly got a charger and checked me out. Do you ever have that feeling that something is wrong? I had that feeling, but didn’t act on it. I bought the charger and left the store without testing it with my phone. Sure enough, I got back to our plant and it was the wrong charger. As you might imagine, I wasn’t a happy camper. I couldn’t get back to the store before heading back home.

I was back in Cleveland today and took the charger to the local store of said carrier. I told the clerk my story and his initial reaction was, “We can’t help you. You have to take it back to the store you bought it at.” I said, “Really? I have to go back to Charlotte, North Carolina, when your people screwed up?” At this point the manager overheard our conversation. I’m not sure, but perhaps she heard my voice rising. She came over and the clerk said, “He bought this charger at another store and it doesn’t work. Doesn’t he have to take it back to the store he bought it at?” She very quickly said to him, “Go find the right charger.” He fumbled around and found it. She exchanged the charger without even processing a transaction and apologized for my inconvenience.

I’m pretty sure she violated some corporate policy. But she generated a grateful and loyal customer. Isn’t that the goal?

Virtually every day, I get an email from an economist or investment advisor explaining why we are in a no growth environment. The “New Normal” has been evangelized by the good folks at PIMCO, the world’s largest bond fund manager.

Virtually every day, I am asked something along the lines of, “Where is economic growth going to come from? Where are jobs going to be?” These questions come from employees, suppliers, customers, job seekers, parents of job seekers, and others. I ponder these questions quite a bit as I think about where we should invest as a company. While I don’t have a crystal ball, I do think there are some macroeconomic trends that will play out over the next 10-20 years that will provide opportunities for growth.

1. Aging of the world population. Get a job or invest in health care, right? Sure – that’s the easy trend everyone has picked up on. Here’s a different one: How do you make life easier for an older population? For my world, that translates to packaging that is easier to open or the trend towards single serve units. How about labels that are easier to read? How about talking labels? They’re out there, just not mainstream – yet.
2. Higher commodity prices. Yes, companies will continue to find ways to extract more commodities. Yes, they will become more efficient in how those commodities are used. But economic growth across the world will increase demand more than supply. What opportunities does that create? We already have a shortage of mining engineers. For those of us not going back to school or not so hot at calculus, focus on using commodities more efficiently. I also think we’ve only scratched the surface of recycling. There are ways to re-use virtually everything. Someone will make money figuring that out.
3. Less government spending BUT more government intervention. Let’s face it – our governments cannot continue to print money and place the burden of paying the money back on future generations. Government spending across the world will be reigned in over the next 10-20 years. The aftermath of the financial crisis, however, will lead to the government taking a more active role in many areas of the economy. Does that create opportunity? There will certainly be more opportunities for advisors to guide businesses through the maze governments set up. In my world, we are seeing more and more opportunities regarding food traceability. As many of you have heard me say, I find it frightening that the paper labels we produce can be traced back to the trees used but tracing e.coli outbreaks is sometimes impossible. I’m the last person to request more government regulations, but I have to admit there are some roles the government should play.

The point is, there are opportunities in every business related to the macro trends everyone talks about.

Consider the following:

1. Demand. UPS released their earnings earlier this week. From an article about the earnings release:

   United Parcel Service Inc. (UPS) executives Tuesday forecast slower global economic growth in 2012 compared with 2011 but offered a relatively upbeat U.S. outlook, saying conditions clearly have improved since early fall. “I wouldn’t call [the U.S.] a robust economy right now,” Chief Executive Scott Davis told analysts on a post-earnings conference call. “But we certainly are seeing a better U.S. economy than we would have thought” several months ago. In addition, Davis said he’s hearing “a more optimistic tone” in the U.S., and he forecast continued “modest improvement” through the year.

   More shipments = more labels, not only for the products, but also for the shipments. That’s a positive for our industry. While we have to watch the global economy, the US is still the world’s economic engine.

2. Inflation. Last year at this time, we were dealing with yet another round of inflation. While there are no guarantees, input costs have stabilized for the most part. Pulp is down, oil is steady, and major chemicals are in a steady state. Tamer inflation means we can focus on growth, rather than managing costs. Another positive.
3. Packaging trends. Packaging is undergoing major disruptions. Everyone and his brother wants to rationalize packaging. In this chaos, opportunities will arise. See my post about Kashi. Start talking to customers about the advantages of pressure sensitive/flexible packaging.

All these trends point to a growing market. Let’s go earn more business!

Every year, I pick a theme for I.D. Images. I try to pick a theme based on the environment we’re in as well as something we need to improve. Our recent themes have been:

2009: Be Creative
2010: Be Professional
2011: Build Relationships

In 2012, our theme is Be Accountable. I was inspired by a line from Stephen M.R. Covey’s book, “The Speed of Trust.” Covey wrote, “Remember – the people you rely on most in your company – the performers – like to be held accountable and want others to be held accountable, too.” That line hit me like a 2×4 across the face. High performers like to be held responsible. They like to be measured and want everyone around them to be measured as well.

Shouldn’t we be able to rely on everyone within our companies? Business isn’t like little league – we can’t stick someone in right field and hope the ball isn’t hit there. Competition won’t allow that to work; companies that keep underperformers will ultimately underperform. The performers will exit in droves. The converse is true as well – people who aren’t performers don’t want to be measured. They will self-select themselves out if you set standards.

Part of my commitment to accountability is providing a copy of Covey’s book to every member of the I.D. Images’ team. We are also spending work time discussing the book. By the end of 2012, everyone at I.D. Images will have read Covey’s book. I have also made a habit of outlining my goals and objectives each year with our management team. I spend more time focusing on the goals I missed than the ones I hit. I believe those discussions have helped our team understand I hold myself accountable and also recognize we all (even me) make mistakes.

I’ve had two very interesting meetings in the last few days. Last Friday, I was invited to speak to a group of logistics professionals (including the proud, but tired looking, parents of a bubbling 6 month old. Be careful of office romances! Ha, ha.) about how I, as an executive, want to be sold to. One of my messages was that I want to hear about the soft costs and associated soft savings with your product or service. Everyone talks about hard costs; I discount those supposed savings. Very rarely do they materialize.

However, there are significant costs with changing suppliers. Those range from the expected – setting them up in your system, for example, to the unknown – dealing with changes in packaging or shipping quantities. While very hard to quantify, they exist. We all do our best to plan for changes, but things happen. As a quant geek, I used to struggle with these “soft” costs. As a business owner, I know they cost me tons of money. If you want me to be interested in your product or service, you better be able to explain what I should expect. Most importantly, being able to have that conversation demonstrates you understand my business and have thoughtful solutions for my problems.

This became a huge conversation topic after my presentation. We had a long and lively discussion on how to communicate these costs and savings.

Earlier this week, we met with the leadership and sales team of a major supplier. Our discussion evolved to the hidden costs and savings associated with business. We had a candid conversation about the things we do as a customer – order patterns, order quantities, for example – that create hidden costs for them and things they do – packaging that is challenging to remove – that create hidden costs for us. Having those candid conversations with prospects and clients will help you grow your business. To do it right, you have to understand their business. Do you?

Not a day goes by where I am not asked or I don’t ask someone about growth. We all want to grow our businesses, our incomes, our responsibilities. For regular readers, I’ve written several times about growth areas I see in our industry and in the economy in general.

Fundamentally, there are two ways to grow:

1. Take more of the pie. Examples include taking market share and doing what you do more efficiently to improve profitability.
2. Grow the pie. Two examples of growing the pie are expand your product/service offerings or enter new markets.

At its core, every growth strategy is based on taking more of the pie or growing the pie. Most people and businesses focus on taking more of the pie. It’s not necessarily easier than growing the pie, but it’s a lot more visible. We all see market share statistics of our competitors and put dollar signs on percentage points we can take. Salespeople “know” they are better than their competitor and can win more business at an account. A lot of time and energy are focused on short term wins.

It’s a little more abstract to think about how our products can be used differently or offerings we could add that would make our customers’ lives easier. The results often take longer to achieve as well. Given that we all have developed the attention span and patience of three year olds, it can be psychologically challenging to think longer term. Most incentive systems are not built around the long term, particularly in smaller companies – we want results yesterday.

Successful people and businesses balance short and long term results. They invest time and money in both the short and long term. Think about your 1, 3, 5, and 10 year plans, for you, for your business. Do you have them? If not, now is a good time to think about them.

After a week of R&R, it’s time to hit the ground running in 2012. It should be a fun year to write a blog or be a late night comedian. Elections, the continuing saga that is Europe, the Olympics, and an unsteady world economy should provide lots of fodder throughout the course of the year. Keeping focused will be a challenge.

Focus will be a big theme in our industry this year. Just yesterday, Avery Dennison announced the sale of its office products business to 3M. The sale of this division had been rumored for a while, as 3M had developed a very strong global platform in the office products space. Avery will focus on its pressure sensitive and retail branding and information services businesses, two businesses that have much more significant market share than office products did. I expect to see a lot of companies to refocus on businesses where they are positioned to grow. Remember: one man’s trash is another man’s treasure. That axiom will hold true this year, as we will see companies exit certain markets or sell business lines. Keep your eyes open for opportunities.