R.R.

DONNELLY:
T H E D I G I TA L
DIVISION
Group 8

ARPITA MUTHIYAN| PRITHVI CHAURASIA | UTKARSH SAHU | RISHAN CHATTARAJ| ROHAN AGRAWAL
 ABOUT THE PRINTING INDUSTRY

Industry Shifts
Moving increasingly toward such local, targeted communication called Mass Customization
TV Guide wanted shorter runs, more versions, tailored inserts, and greater use of color
Microsoft speed, simultaneous global distribution, and ability to revise material quickly
All customers faced
Sharply rising postal rates and paper prices
Increased inventory, warehousing, and shipping costs
Creating incentives to develop alternative Electronic Media, and New Channels of Distribution

New Technologies
Imaging technologies
Desktops publishing -Stripping, color correction, etching migrated to the hands of the document creator
Filmless printing technologies -Digital four-color, Computer-to-plate ,Reduce cycles and chemical pollution

Emerging Competition
Threats new technologies and new entrants to the business
Online service providers and software packagers -Making four-color images available electronically ,Color
printers (good quality) for home and small businesses
 TRADITIONAL PRINT BUSINESS

Heavy Iron Offset/Web Presses using films and plates were used
High initial capital investment, typically $12 million
Cost Effective for 25k-500k runs.
Gravure ( Used Etched copper drums )
Cost Effective for 500k plus runs.
Long term relationship with customers
Limited customization options available, moving towards mass customization
Due to the large size of the manufacturing equipment, production units were not close to
customers
 R. R. DONNELLEY & SONS

1993
Organizational
1956 Restructuring + Sector-
Founded 1864 Went Public wide Incentive Structure

Late 1800s 1991

Telephone Directory and Group-wide Incentive
Catalog Printing structure

Core functions : Manufacturing & Sales ( Make it or Sell it )

3 sectors, 8 Business Groups, 38 Divisions
$4.9 billion in revenue. Major Customers
Generated 60% of their revenues from directories, catalogs and magazines
Presence in 22 Countries and have 41,000 employee
Highly Autonomous : Division Managers were vice presidents. They are held Telephone Retail and direct Publishers of
accountable for operating profits Operating mail books, magazines
companies merchandizers and software
By 1995, it became worlds largest commercial printer with 6% market share
 SALES FORCE

Company greatest strength

Nearly 500 People
They are free to sell work that was printed at any plant
Have considerable knowledge about customers
Upper management came through sales
Sales people worked solely on commission and were paid no
matter what they sold
Sold 80-95% of its volume to its own plant ( due to incentives )
CRITICAL SUCCESS FACTORS

Digital Printing
Traditional Printing
Short Runs
Long Runs Databases
Economies of Scale Speed
Price Per Page Use this as a marketing tool
Infrastructure Setup Unclear about the
Plans built for specific clients customers
Clear about customers Printing on demand
High fixed cost, low variable Shift in printing from
cost manufacturing to
distribution side

Critical success factor for Traditional Print:

Long term relationship building and Longer Print runs
with lower variable costs, Tailoring and Customization
 IS DIGITAL PRINTING DISRUPTIVE OR SUSTAINABLE
TECHNOLOGY?

KODAK
Opted for sustaining of traditional photography with the reason
Customers werent likely to be early adopters
Profit margins were lower than their core business
End result : Business failed in traditional market and failed to find a new market

R.R. DONNELLEY
It is disruptive but WHY?
Digital technology will atomize the printing similar to what microprocessors did the
computer industry
Traditional growth was forecasted at 3% while it was 16% for digital technology
RRD being the biggest player in market with 6% would set the trend internally (business
units) and externally (competitors)
Operational efficiency would improve allowed short run, customizable images, print-
on-demand(POD) with help of Information Resources sector, lessor inventory, economy
of scales
 KEY STAGES IN THE DEVELOPMENT OF DIGITAL
DIVISION

Phase 1:Program Initiation
SWAG Analysis
Schedule of development/deployment
Make vs. buy
Skilled set of people
Initial market assessment
Phase2:Proof of concept
Rigorous financial review
Cost of development/deployment
Ongoing cost estimates
Completed program audit
Phase 3: Deployment commitment Phase 4:Post Mortem
Final financial reviews Metrics
Completed second program audit Evaluation of actual vs planned
Final approval or OK to deploy Roles and responsibility problems
Process problems

Memphis chosen as site of 1st digital facility saving the division from
several hours of work time each day thereby providing rapid and reliable
Operations and Technology delivery
For Donnelley to be a low cost digital producer it chose 11 digital presses
from 3 vendors having strengths in different jobs

Categorizing the sales force team into 3 vertical teams : Health care,
Organization, reporting relationship and Federal Govt. and Eastern US region
Building up its own sales force team under Scott Russel
roles
Target Market: Magazine reprints, corporate literature, marketing and
product literature for pharmaceuticals and health care.
Consultative selling: Customer training, content reuse, literature
Marketing and sales Strategy management process and advertising agencies.
Mobilizing sales through better incentives and commission plans to rep
level
 KEY STRATEGIC CHALLENGES

Believed that the DD represented an entirely new model

Have large databases that integrate the software of multiple OSs at multiple
geographic locations
DD success depends on developing these new skill sets which are hard to find
Incentive pay structure dividing the business units in themselves
Focused on current customer needs rather creating long term strategies
The Digital Division not welcomed as part of organization- resistant to technological
change
Biggest concern: missing companys strategic initiative on this new technology and
business model: Short-run, on-demand, color printing and the associated delivery
system are a strategic initiative.
Action Plan

Employees have clarity about their roles & responsibilities. Restructuring of

the organization, if required.
An HR system in place aligning companys goals with individual goals
Transparency in work culture throughout
Creating long term strategies, along with focus on current customer needs
Clearly articulated missions for each team at all levels of operation
Weekly/monthly meetings within the team depending on the criticality of the
work
Developing company rollout plans
Analogs & Antilogs

3M is an analog

long history of stimulating internal entrepreneurship

Background of developing small autonomous business units in order to learn about new technologies, develop
managers, and improve their venturing processes

3M post-it note is one innovation came through such ICV

Xerox PARC (Paulo Alto Research Centre) is an antilog

ICV mechanism responsible for technologies such as laser printing, GUI

Unable to develop them into commercially successful products.

Kodak is another antilog

Leader in camera technology - accounted for 90 percent of film and 85 percent of camera sales in America

Invented the digital camera through ICV

Kodak grew complacent and sluggish and also feared that digitisation will lead to cannibalisation

Lost the digital business to Nikon and Canon.

THANK YOU