Print Mart was one of several companies involved in rapid printing for exclusive markets that required fast turnaround times. These turnaround times were in hours, rather than in the customary days or weeks.
Adelaide, where Print Mart was established, did not have a large market for the type of specialty work that Print Mart did. In fact, much of Print Mart’s efforts was spent in working with one very demanding customer, and other rational customers.
Print Mart needed a lot of current technology. There was a constant need to purchase new technology and to train the staff in its uses.
There were more than 100 staff in all. However, the company was owned and managed by its two shareholders, Graham and Brenton. Graham was an accountant; and the majority shareholder – who also had good experience as an operator of the technology – was Brenton.
Both partners enjoyed good relations with their customers but did not do any direct selling. It was a constant effort to get and retain new contracts for work.
Some work did come in the front door; but most national and local clients had to be “wooed” into more business.
This “wooing” was handled by ex-printing employees, all under the age of 35, and all working hard to become skilled in selling.
In fact, the staff were mainly young . There were three main reasons for this: management liked to train their own printers and operators; to be competent in modern technology required a high level of complex computer skills, which older staff seldom had; and it was a new company and had attracted many ambitious and motivated younger employees who were prepared to take a risk with job security.
The company throve for several years. Expansion followed expansion. It was outgrowing its premises, it was now operating late into the mornings, and management was getting increasingly stressed.
The production manager, an older, friendly man, but with a dogmatic and inflexible supervisory style, was either not capable or did not wish to plan effectively. In his own words: “I am a problem solver! I fix things! I measure my success by how much I have fixed during the day.”
Sadly, however, it was observed that he was not gaining any new skills in the newer technology.
Brenton was a relentless pursuer of good supervisory skills for his fourteen supervisors. He arranged an extensive course in management training for these supervisors. He encouraged them to join appropriate industry associations, but soon the supervisors began to complain. “We’re not allowed to practice what we’re learning. We can’t make decisions! We get sent to trade shows; we look at new technology; but we’re not really listened to.”
Brenton’s son came to work in the organisation. The other workers and supervisors resented this. They said that he told tales about them, was devious and did not pull his weight.
The organisation became fragmented. Dissatisfaction was rife. Standards suffered. Brenton became increasingly stressed but would not delegate or let others take the reins.
Profit, which had been steady, now began to decline.
Complaints about work conditions increased. Punctuality and absenteeism was rising. The company crashed after 10 years. Everything finished overnight.
What are a few things that could have been done, at any stage, to ensure that Print Mart would be still operating today? How could the fragmentation of staff be lessened? What should have been done to handle the perceived problem with the boss’s son?
Thanks to Ian Wilson for this case study.
Debra Shorter is joint managing director of The Shorter Group, one of Perth’s leading integrated marketing communications companies. Debra is a past-president of AIM WA and was the inaugural winner of the AIM Excellence in Management Award for Women. She was recently acknowledged in Western Australia as 1998 Advertising Person of the Year.
As a business owner of a medium-sized marketing communications company I can relate to the problems of Print Mart. Businesses born from an entrepreneurial opportunity often see their star rise quickly. It’s a heady mix when you realise that you’ve got something the market wants and that the market is willing to buy it from you. The real question is, though: “Are you onto the market?”
The two Print Mart partners had some genuine and complementary strengths when they began. Brenton, at the company’s birth, was on the leading edge with his technical knowledge, and was well supported in the financial area by Graham. It sounds like they had a solid recipe for business success.
Unfortunately, they both failed to understand or had little knowledge of a number of important marketing tenants.
They relentlessly pursued technical excellence but had little insight into the world of their customer. They were guilty of imposing their great idea, their product, onto the market and remained inward looking. They did little to pay attention to the “fit” of their product with the customer and did almost nothing to discover the customers real needs, wants or desires, or even who their future customers might be.
Their product rapidly matured. Product parity rapidly overtook them. They failed to generate new clients or new ideas.
Although they devoted resources to “wooing” existing clients, their business was, nonetheless, a leaky bucket. This is not uncommon but is a constant fact of life for many of us. No matter how well you try to secure your existing business you are always in danger of loosing some of it through external forces. Companies change direction, new management can overturn long standing supplier relationships and businesses go broke.
Print Mart failed in their new business strategy. They would have benefited from a dedicated sales team. Those bright young under 35s who had technical excellence obviously worked best on client retention and customer satisfaction. Trying to convert these people into expert sales people would prove time consuming and most likely fruitless. Without new business they remained vulnerable to the impact of their one large client. They did not spread the risk.
Print Mart employed some wonderful people, as by and large most of us do. However, they failed to maximise the potential in their own workforce. Moreover failure to recognise and act decisively in resolving human resources problems cost the company dearly in morale and energy. The unlearning production manager, the unloved son, and the under-utilised, highly energised young staff members created the crisis that led to the final breakdown.
Why didn’t Brenton delegate more? After all he was stressed and overworked. It’s quite likely that he lacked judgement, because he expected the right people to do the wrong things or the wrong people to do the wrong things. He had no plan because he had no understanding of the future direction. He failed to marry positions and people to take advantage of their strengths. He failed to understand the seriousness of having even just one round peg in a square hole.
The production manager may have remained a valuable asset to the company in a different role that made the best of his experience and skill but did not require him to provide leadership to the team. The son may well have been a valuable asset to the company if he had been schooled by his father that, as a future owner, his primary asset would be his people and his own people-management skills.
The world of the customer is dynamic and culture inside organisations is dynamic. Constant review of the “fit” between your customer and your organisation is critical. Examination of new products, new management practices, and new markets is essential to survival. Life is hard enough without letting a business fail after 10 years.
David Maccallum is a business consultant based in Sydney. He provides business planning and human resources advice and training to small and medium sized businesses and organisations. He has been a senior public servant, general manager of an independent finance agency and a director of several small private start-up companies. David is a Fellow of the Australian Institute of Management and of the Australian Institute of Company Directors. He has been a long time member, and past Chairman, of the Committee of the Strategic Management Network of the NSW Branch of AIM
The business was growing, profit was steady, technology was being updated, staff were well skilled and motivated, supervisory staff and sales staff had operational experience and were encouraged and supported to further develop themselves and both partners had good relations with the customers. Things looked pretty good. Yet the business went into decline and collapsed.
Like many small to medium sized businesses, Print Mart collapsed because those with the ownership and control of the business were not prepared to share power with those who have the appropriate skills, experience, and attitude to run the business.
The facts as given show the following causes for the collapse of the business:
1. Brenton, the major of the two shareholders, was the effective power in the business. Unfortunately, he did not have the skills to run the business as it grew to 100 people. He encouraged others to develop their business skills but did not develop his own
2. Brenton did not delegate. He was, apparently, not prepared to share power.
3. The ownership and control structure did not provide adequate checks and balances on the operations of management. Brenton was unaccountable and had the power to corrupt both himself and the business. He did not have to listen to alternative points of view or to change his behaviour.
4. The Production Manager had a dogmatic and inflexible supervisory style, did not plan effectively and did not keep his skills up to date with the new processes.
5. The structure and processes of the business were such that others could not compensate for the failings of Brenton and the Production Manager.
What changes could have been made?
The problems that lead to the demise of Print Mart were not ones that proscriptive business management proposals could, alone, have resolved. They were psychological, being tied up with the exercise of power and with family issues.
Even if Brenton was prepared to remove himself from day to day management, there could be no effective power sharing so long as he continued to hold the controlling shareholding. Would he have been prepared to give up this control?
The business could only have been saved if the existing shareholders were prepared to introduce a new power sharing business structure along the following lines:
Change the ownership by introducing outside investors and/or issuing shares to employees. The end result must be that Brenton no longer had a controlling shareholding – and other Directors and shareholders were able to vote in the best interests of all shareholders [and not the best interests of Brenton or members of his family if these were not the same].
Appoint one or two competent Directors to the Board to provide the necessary guidance and corporate governance checks and balances.
Appoint a competent General Manager with the responsibility and power to achieve the coordination, forward planning and personnel management necessary to meet the changing business environment.
Introduce management processes that empower staff, encourage openness, trust, recognition and cooperation; and provide an effective method of channelling staff suggestions to management.
The General Manager do an appraisal of the Production Manager with a view to achieving improvements in his effectiveness.
Fragmentation of staff
If the ownership problem was not resolved there are no effective measures that could have been introduced to remove the fragmentation problem.
If the proposals listed above were effectively introduced then the level of cooperation and coordination between the different parts of the business and staff morale should be such that the organisation would not have become fragmented or staff dissatisfied.
The boss’s son
Brenton’s son presumably was his heir and successor. If Brenton was no longer the power in the business perhaps the attitude and behaviour of his son might have changed.
Assuming the General Manager had the power and the will to ignore the wishes of the major shareholder, he could review the appropriate place for Brenton’s son. If Brenton’s son continued to be employed, it is important that his duties, and his role and responsibilities in the business be clearly understood by the other staff.