A Positive Way to Inspire Change

October 16th, 2016

At their best, sports provide invaluable life lessons.  This story demonstrates the power of sports to have a positive impact in our world.

The Cleveland Indians are a feel good story right now.  Despite substantial injuries, they’ve kept winning and as I write, are two wins away from a very unexpected World Series appearance.  I’m a big Indians fan.  I’m an even bigger fan of their manager, Terry Francona.  “Tito” as he is called (in reference to his father), has demonstrated that leadership matters from the time he put on an Indians’ uniform.  His honesty towards and compassion for his players is easy to see.

All of the coverage that I’ve seen about athletes advocating for social changes has centered around kneeling for our national anthem.  I haven’t seen the national medial pick up the Indians’ story.  A link to local coverage is below and I encourage you to read it and share it with as many people as you can.  A synopsis: The Indians were in Chicago when the kneeling story broke.  Francona talked to some off duty Chicago policemen working the game.  He “ruminated” and thought he had to do something.  He approached the African American players on the Indians’ team.  They were on board with him.  The team and staff raised $500,000.  Ownership matched.  The Cleveland Indians are donating $1MM to create the Larry Doby Youth Fund which will work with youth-focused community organizations to provide educational assistance and resources to help curb youth violence that is all too prevalent.  (Larry Doby was the first African American player in the American League and played for the Indians.)  Importantly, every member of the team, the coaching staff, administrative staff, and ownership contributed to this fund.  This all came about because of one special man, Terry Francona.  If this isn’t a case study in leadership, I don’t know what is.

Character matters.  Leadership matters.  Tito, you demonstrate both.  Thank you.  The wins are great but an action like this is what makes you and this team special.  If only the national media would pick up on a positive story, maybe we’d have a more productive dialogue about the challenges we face in our country.


Creative, Crazy, or a Sign of the Times?

October 11th, 2016

I was on planes a lot last week.  It is my habit to take several trade magazines with me, pretend that I read them on the plane, and recycle them at the airport I land at.  I was perusing one such trade rag last week.  I came to the last page and an advertisement caught my eye.  A certain manufacturer would like to “thank you for your business by presenting you with world-class ammunition perfect for Home Defense, Conceal Carry, and Long Range shooting.”  That is direct text from the ad.  I did a double take.  I showed the ad to someone else on the plane to make sure I wasn’t hallucinating.  Sure enough, if you order a minimum of $2,500 worth of print products, said manufacturer will send you 6 boxes of ammo!  But wait, there’s more: you can mix and match all calibers!  Hand guns included!

I am still trying to figure out what ammunition has to do with print.  If someone knows, please enlighten me.  I guess the ad is successful because I shared it with our sales and marketing team and I’m writing about it now.  We’re certainly talking about it.  Isn’t that one of the goals of marketing?  There must be a target audience that orders print that free ammunition appeals to.  Shame on us for never targeting (pun intended) that group!

We’re all looking for creative ways to reach our customers and potential customers.  It is quite common to confuse getting attention with marketing.  The ad certainly got my attention.  Marketing is defined as the act of promoting products and services for the purpose of making a sale.  I don’t quite get how this ad promoted any products and services offered by the manufacturer, other than they like to buy and give away bullets.  Marketing is certainly harder than getting attention.  The narcissistic guy running for president is good at getting attention.  He’s not that good at marketing.  Unfortunately, we live in a time where getting attention seems to have become an end in and of itself.  Think of all the people that are famous simply because they’re famous.  (Did Kim Kardashian ever accomplish anything?  Ever?)  That attention getting mindset is now infiltrating our businesses.  Don’t succumb to the temptation.  Creativity is sustainable; someone can always come up with something crazier than you.  Stay on message, promote what you stand for, and you will be successful.  Remember, the goal of marketing is getting a sale, not getting attention.

If You Invest in Technology, Use It!

October 3rd, 2016

I left for a business trip last Thursday.  I got to the airport and discovered I didn’t have one of my credit cards with me.  I checked at home, no card.  I checked at work, no card.  Great, I lost it.  I called my credit card company to cancel it.  After 7 minutes and 23 seconds of verifying my identity and if the last 5 charges were mine (they were), I got connected to a representative.  She proceeded to ask me the exact same questions.  Fortunately, I was in a good mood so instead of being flippant, I inquired as to why she asked me those questions after their computer system asked me the exact same questions.  Jackie (I’m quite confident that’s not her real name based on the accent.), told me, “Mr. Brian, we are going through a system upgrade and right now our systems are not integrated.  I apologize for the inconvenience.  We ask these questions for your protection.”  Of course, I had to ask when the system upgrade would be done.  She replied, “Approximately 2 weeks.”  I know 2 weeks is IT code for never.  IT folks know executives will forget about the 2 week promise and ask about the project again in 2 weeks at which time they’ll give the same 2 weeks answer to when the project will be done.  If you’re IT department tells you 2 weeks, you’re in trouble.  As long as I deal with this credit card company, I will continually have to input data to get to a representative.  The representative will ask me for the same data the computer system asks me for.  Thankfully, I only lose my card once every couple of years.

If a company is going to spend money on technology, it should use it.  Make me use your automated system.  Let me talk to a person if I want to.  Don’t make me do both.  I couldn’t bypass their system without answering all of their questions.  Maybe I could have if I knew how.  Make it easier!  I was flustered – I didn’t know where my credit card was and I was about to get on a plane.  Technology isn’t easy.  Technology isn’t cheap.  (I had a conversation about this subject with a friend this morning.  Has anyone seen margin increases because of technology?  Or is our money just deployed in different ways?  That’s a PhD paper subject, not a blog!)  After I got off the phone with my credit card company, I had the lyrics to the old Stealers Wheel song in my head, “Clowns to the left of me, jokers to the right.  Here I am, stuck in the middle with you.”  The middle is not a good place to be; you get attacked from all sides.  It’s tough to keep all of your customers happy but driving down the middle of the road will get you killed.  One competitor will out service you; the other will out technology you.

Oh and that credit card?  It fell out in my car.   I’ve spent several hours changing all of my automatic payments.  Oops.

A Window into Real America Explains Trump’s Popularity

September 27th, 2016

This past weekend, my son and I went fishing in southeastern Pennsylvania.  Needless to say, it was a great trip and we caught a lot of trout.  As we drove to a fairly rural part of Penn’s beautiful woods, I experienced firsthand how Donald Trump became the Republican presidential nominee.

First, as we got off the PA turnpike and made our way to our destination, we noticed how the shopping area looked exactly like one near us.  Same architecture, same layout, same national chain stores.  As we drove a little farther, we saw the vacant stores and boarded up factories that built the little town two or three generations ago.  I was waiting for “Youngstown” by Bruce Springsteen to instantly start playing on my radio.  I was driving through a living example of that song.

While we drove along, we saw more Trump signs than people and houses.  It was almost surreal how many signs supporting him were along the roads.  Billboards and yard signs everywhere, all for Donald Trump.  We didn’t see one Clinton sign.  We fished with a young man (late 20s now qualifies as young to me) from the area.  We had an interesting conversation.  He was a fourth generation resident of the area.  He will be the first one in his family to vote for a Republican presidential candidate.  He told me, “I was raised to believe Democrats cared about the working class.  I’m here because of coal and steel.  Regulations have killed us.  It’s not foreign competition.  It’s our own government killing our jobs.”  He told me stories of guys that got laid off from various coal mines and factory jobs that tried to start their own businesses.  One of his buddies wanted to start a taxidermy business.  It took him months to get the permits and thousands of dollars to get his business going.  Another friend tried to start a furniture manufacturing business.  He gave up after realizing what it would cost him to have workers’ compensation insurance, liability insurance, and other costs just to open his doors.  Yes, these stories are anecdotal but as I watched Hillary Clinton in the debate saying she was going to make things easier for small business, I thought of Ronald Reagan’s famous line: “The most terrifying words in the English language are: I’m from the government and I’m here to help.”  I think people are starting to realize Reagan had a point.

The Trump insurgency should be a wake up call to both parties.  I’ll be surprised if he wins but I understand why he is garnering support from people who ordinarily would not vote for a Republican simply because of party affiliation.  It’s going to be a fascinating 6 weeks building up to this election!

Random Thoughts on Label Expo, Elizabeth Warren, and Apple/Deutsche Bank

September 20th, 2016

Label Expo:  No MacTac sale announcement to report.  Some of the rumors were great.  Overall, the show was well attended and it was great to see several industry friends.  It is clear that the rules of the game are changing.  More capital is required to buy equipment as the digital revolution unfolds.  You can’t buy a piece of old equipment, fix it up, and expect to compete.  This isn’t your father’s label business anymore.  Increasing capital requirements will continue to drive consolidation throughout the value chain.

Elizabeth Warren:  On behalf of those of us that participate in the free market, I feel an obligation to respond to Senator Elizabeth Warren’s comments about Wells Fargo.  In summary, Wells Fargo paid a significant fine for issues related to aggressive cross selling (including opening accounts without customers’ consent) by its employees.  It has fired over 5,000 people over the last few years whom participated in the shenanigans.  Clearly, some bad things happened at Wells Fargo.  Senator Elizabeth Warren, never one to miss a good sound byte opportunity, had to pipe in.  She felt obliged to opine, “There’s a serious problem with senior management at Wells Fargo.”

I would like to opine back: Senator, when have you ever managed anything, let alone an institution with 265,000 employees?  I looked at your biography and I didn’t see any experience that remotely resembled managing a profit and loss statement or making payroll for one employee, let alone 265,000.  If it weren’t for senior managements like those at Wells Fargo that create economic value, where would your tax revenue come from?  How could you redistribute wealth if there is none created?  Be careful.  Don’t kill the goose that lays the golden eggs you feel you have the right to take and spend with as you see fit.  I’d really like the opportunity for a bunch of CEOs to ask Congress how they spend our money.  Yes, we get to vote.  But I’d like a panel inquiry subpoenaing several blowhard members of Congress to testify under oath about government spending.  Wouldn’t that be fun?

Finally, a few weeks back, the European Union said Apple owes $14 billion in back taxes.  Last week, the US Department of Justice proposed a $14 billion settlement with Deutsche Bank for its activities related to the financial crisis.  Analysts had expected the DOJ fine to be in the $4- 5 billion range.  (It is being negotiated.)  I wish I could take credit for noticing the coincidence in the amounts.  That goes to my buddy Jeff.  Are our government s starting to engage in economic warfare?  Economic warfare isn’t good for anyone and usually leads to real wars.  I pray our governments aren’t that stupid.  But with both major party candidates now running on platforms that include protectionism, it looks like we are that stupid.

It’s Label Expo Week!

September 13th, 2016

Every two years, our industry gathers in Chicago to eat, drink, and be merry.  There’s also an exhibit hall filled with the latest greatest equipment, materials, supplies, and everything else you need to start a label business and a set of speakers to enlighten you about all things labels.  (The gathering is actually annually, alternating between the US and Europe.)  Two years ago, Label Expo kicked off with the announcement Bemis was selling MACtac to a private equity firm.  For weeks, rumors have been swirling that an announcement will come that MACtac is being sold again.  Various other rumors about substrate manufacturer consolidation have been floating about as well.  You’ve got to love rumors!

Regardless of what deals do or do not get announced, Label Expo is always a great event.  For the umpteenth time, we’ll hear that digital printing is here to stay.  Expect hybrid (traditional flexo printing paired with digital on the same unit) to dominate the press technology aspect of the show.  New/improved adhesives for challenging applications will take center stage on the substrate side.  It’s a label nerd’s paradise!  As I looked through the conference agenda, what really stood out to me is the emphasis on the business aspect of our industry.  Sessions on M&A, succession planning, and finding and training people dominate the conference agenda.  It’s another sign that our industry is literally maturing before our eyes.  People are retiring faster than we can replace them.  Attracting people to our industry is a problem.  It’s good to see our industry leaders addressing it.  Bravo!

If supplier consolidation isn’t announced this week, don’t fret.  It’s eventually going to happen.  Business forces will continue to change the shape of our industry.  A major supplier, UPM Raflatac, just announced a reorganization, creating global business units.  We’ve gone from a local to a regional to a national to a global business, as has the rest of the economy.  The political winds might change the speed of the globalization ship but it isn’t going away.  Embrace it or find a niche that you can protect.  In business, being stuck in neutral doesn’t work.  See you in Chicago!

Why Isn’t Anyone Talking About the Real Issue the EpiPen Saga Has Exposed?

September 6th, 2016

Over the last few weeks, a fire storm over the costs of the EpiPen has been created.  If you missed it, Mylan, the maker of EpiPen, has more than doubled the price over the last few years.  It is a vital medicine for people with allergies and is relatively inexpensive to make.  Mylan claims it has improved the delivery apparatus, justifying its price increases.  The responses have been predictable.  Right wingers blame the government and lack of competition for the EpiPen created by FDA bureaucrats.  The left is demanding a consumer drug price committee or some other government apparatchiks (I’ve always wanted to use that word in a blog!) to solve the problem.

Why has this come to light so vehemently and suddenly?  That’s the part no one is talking about.  Health insurance rates have risen dramatically, as any reader of this esteemed publication knows.  As a result, consumers of health care have higher out of pocket costs than ever before.  Five years ago, they probably paid a $10 copay for the lifesaving EpiPen for their child.  Now, they have a $5,000 or $10,000 family deductible and pay for that EpiPen until that out of pocket maximum is reached.   Now, they actually care what that drug really costs.  Yet, I haven’t seen anyone, from the right or left, mention this as a reason for the outcry.  If people were still paying a $10 copay and nothing else, they wouldn’t care if the drug was $10 or $10,000.  The one positive of Obamacare is consumers actually see more of what healthcare actually costs.  When you actually have to pay the bill, it’s amazing how much more you pay attention.  I firmly believe Obamacare was all about wealth transfer from the working population to the non-working population, not healthcare.  The middle class bears the brunt of any wealth transfer legislation and it is feeling the wealth transfer effects of the law right now.

The wisest business man I know reminded me constantly about the law of unintended consequences.  Every action we take has results we expect to occur with some probability.  Most actions also create results we never anticipated.  Those unintended consequences matter a lot.  Fortunately, elections are soon, giving the public the opportunity to create consequences for our politicians!

We’re Approaching Year End.  Where Do You Stand?

August 30th, 2016

A lot of consultants and software companies have made tons of money creating and selling tools that essentially help us remember what we said we would do.  Simply stated, these tools help us be accountable.  At I.D. Images, we use an online tool that helps enforce accountability.  In an age where we are bombarded with information, it’s nice to go to one place to see what everyone is doing, or not doing.  Peer (or boss) pressure can be a powerful tool when used properly.

I do my best to get in workouts several days a week.  Given summer weather to enjoy, those workouts have consisted of running.  Our dog, Mac, (He is affectionately known as “The Beagle” because he is half beagle/half lab but acts like a beagle!) is often my running partner.  OK, I’ll be honest, he runs while I plod along.  He is clearly faster than me and likes to remind me of that fact when we start out.  Fortunately, my body mass far exceeds his so he struggles to pull me along.   After a little sprinting, the laws of physics take over and we go at my plodding pace.  Occasionally, he tries to show off his wheels when he sees another dog.  However, age is starting to catch up with him so he generally likes my pace after he feels comfortable that he showed me he can still bring it.

This past weekend, I was contemplating skipping my run.  I was tired, it was hot and humid, and there was a “Peanuts” marathon on the Boomerang channel.  It was very easy for me to rationalize laying on the couch Saturday morning.  Mac acted like he had to go out.  I went to let him out but rather than go outside, he looked at the closet where his leash is kept.  He looked at the closet, then looked at me, then back at the closet.  Those of you with dogs know this little routine could have gone on for hours.  After engaging in the look at the leash routine for a few seconds, he won.  I quickly changed and we went for a run.  Had The Beagle not been persistent, I probably would have skipped the run and regretted it.  Fortunately, my dog doesn’t rationalize quite as well as I do!

I’ve got a fitness goal in mind that I got ever so close to that I let slip a little; my dog is getting me back on track.  We’re heading into the final third of the year.  It’s time to dust off those goals you set for the year and make the final push to reach them.  If you really want to accomplish something, find a way to hold yourself accountable.  You can spend money on a consultant or a software program.  There are apps to help.  You can use a friend.  You can spend egregious amounts of money on a dog.  Whatever it takes, find a way to hold yourself accountable.  Ultimately, the choice to rationalize or to push to hit goals is yours but a little help never hurts.

What is Something  Worth if it Doesn’t Work?

August 23rd, 2016

I spoke with a customer last week that had a fairly demanding label application problem to solve.  We trialed several different materials and came up with a few that worked.  After he told us which ones worked, we provided pricing.  He replied, “The products that work are outside of the price point for this project.”  That statement still perplexes me, over a week later.  I’ve had several George Constanza moments, thinking of the perfect comeback well after the conversation ended.  Some comments I wish I had thought of during our conversation:

“Would you guarantee you’ll pay me your target price after I send you a product that doesn’t work?”

“How about you just send us money and we send you nothing?”

“So you’d be OK with a product that doesn’t work as long as it’s at the target price point?  Got it.”

Given the nature of the application, the price difference for labels that work versus the other products was minuscule in the grand scheme of the product.  The labels make up a very small fraction of the overall packaging cost and even less if the entire product cost is considered in the analysis.  Someone had established a target price point based on other label applications this particular company had.  In their analysis, they neglected to factor in the additional requirements they demanded for the labels.  These requirements, which they designed, were only met by higher performing (read: more expensive) products.  Those of us that sell “stickers” for a living crack up when people complain about prices.  Many labels cost fractions of pennies.  Even in this application, the price of the label was less than 3 cents!  The retail price of the product is hundreds of dollars per unit.    Factoring out the retailers’ gross profit and distribution costs, my guess is the high-performance label represented less than 0.03% of their total cost.  Not 3%, three thousands of one percent!

I am certainly biased, but when I think about the performance demands required of labels, it’s a pretty good value proposition for the customer.  Obviously, we’ve got some work to do to promote that value proposition.  Remember, labels make the total package!  If they don’t work, that package (product) is worth a lot less than you think.

The (Retail) Times They Are a Changin’

August 16th, 2016

Macy’s reported earnings last week and also announced plans to close 100 of their 728 stores.  Their CEO, Terry Lundgren, appeared on TV and provided the following statistic:

The United States has 7.3 square feet of retail space per person, while France and Japan both have 1.7 square feet, and the U.K. has 1.3 square feet. (More from his interview can be found here: http://www.cnbc.com/2016/08/11/macys-finally-starts-addressing-the-overstored-retail-landscape.html)

I always thought shopping was a national pastime in the US.  The US has a much more geographically dispersed and diverse population than any of the countries used in the comparison, necessitating more retail space, but we have over 4 times the retail space per person of other major countries!  4 times!  Think about the impact that amount of space has on the economy.  From builders to utilities to maintenance personnel to advertising – we might not have 4 times the employment of those countries in support services to retail but I’m quite confident this dramatic difference in the amount of retail space also leads to a dramatic increase in employment to support our shopping addiction.  Just think about the impact on little old labels and packaging.  All those shelves need to be stocked.  Having 4 times the space means a lot more labels and packaging.  I’ve seen studies about packaging use per person across countries.  One thesis is the rest of the world will converge with the US.  Maybe the thesis should be the US will converge to the rest of the world.  That’s a scary thought.   Think about the impact of Macy’s closing 100, or 14%, of their stores.  They probably won’t lose 14% of sales, as some will shift to other stores.  As of July 30, Macy’s carried $5.3 Billion in inventory.  Inventory is probably not going down 14% with the store closings but 10% is still a $500 million inventory reduction.  That’s a lot of labels and packaging that won’t be needed.

Certainly, some of the packaging and labels will be replaced by online shopping but I think something bigger is occurring.  I’m old enough to remember when most stores weren’t open on Sundays.  Shopping wasn’t quite the national obsession it became in the US.  I don’t think the US consumer is dead but I think the consumer’s attitude is changing.  Experiences and interactions are more valued than another sweater or a new pair of shoes.  With this change, there will be significant changes in the economic landscape.  Position yourself to mitigate the risks or take advantage of the opportunities.