RR Donnelley’s Appetite for Change

The next time you find yourself lamenting the fortunes of screen printing in the graphic arts, consider what our colleagues in offset have endured. Few industries have been more thoroughly squeezed between economic forces on one hand and technological displacement on the other. The volume markets once served by offset – business forms, direct-mail promotions, books, catalogs, newspapers, and (yes) magazines – read more like a World Heritage list of endangered species.

The next time you find yourself lamenting the fortunes of screen printing in the graphic arts, consider what our colleagues in offset have endured. Few industries have been more thoroughly squeezed between economic forces on one hand and technological displacement on the other. The volume markets once served by offset – business forms, direct-mail promotions, books, catalogs, newspapers, and (yes) magazines – read more like a World Heritage list of endangered species. And the inevitable buyers’ market caused by too many printers with too much capacity chasing too little work has caused horrific (and likely permanent) erosion of profit margins.

I was contemplating this bleak landscape while listening to RR Donnelley President and CEO Thomas Quinlan speak at EFI Connect earlier this year. As many of you know, Donnelley is the world’s largest commercial printer, a 150-year-old company rooted in an even older technology that Silicon Valley has disrupted, in a big way. Yet Donnelley thrives. It’s a $12 billion company operating in 40 countries that managed to improve its position in the Fortune 500 (currently #268) during the second-worst economic crisis in the company’s long history. How have they done it?

For starters, they’re following the classic playbook of what to do in a declining industry: When the pie isn’t growing, take more pieces. They’ve been aggressive about acquisitions, not because they need more facilities or offset presses, but to gain market share and leverage the cost advantages that come with scale. As challenged as long-run commercial printing has become, it still represents about a quarter of the company’s revenue.

Donnelley has also looked far beyond the borders that once defined an offset printing company. As Quinlan said at Connect, “We aren’t just ink on paper,” a comment that speaks to more than the company’s diversification beyond printing. Interestingly, at least three of the markets that he cited as vital growth areas for Donnelley – printed electronics, sensor labels, and in-store graphics – are areas where readers of Screen Printing magazine wouldn’t have expected to run into Donnelley just a decade ago. Which, in the interest of disclosure, means that the company doesn’t just print Screen Printing today: They read it, as well.

Consider what Quinlan said about retail: “We want to make a big inroad into in-store marketing. The workflow, we believe, is sort of a spaghetti ball: It’s mixed. If we can make the supply chain easier, so that people sitting at their computers know what has to be ordered and when … we think we can make a difference for retailers from a cost and efficiency standpoint.” Beyond scale, the company can also leverage its reach into packaging, promotional materials, and e-media to offer a single-source buy.

Perhaps the best takeaway from the Donnelley story is the willingness to reinvent a company’s business model around the changing needs of its clients. At Connect, Quinlan observed that disruption in this industry has been constant since the invention of the Gutenberg press. Not everything the company has done to adapt (including some of its investments in inkjet technology development) has paid off. But the company’s core mission of helping companies communicate with customers in the right way at the right time, regardless of the medium, remains. It’s a good mindset for everyone in the graphic arts.