The Digital Division William “Trey” Dockery, III

Company Background Industry Overview Digital Integration Issues Technology Development Process Transitioning the Vision into Reality

Founded in 1864 Initially, 60% of revenues from directories, catalogs, and magazines Privately held until 1956 when the company went public By 1995, was the world’s largest commercial printer with 41,000 in 22 countries Organized into 38 divisions, collected into 8 business groups, as part of 3 Main Sectors Commercial Print Network Services Information Resources

Manufacturing Division Managers could choose printing jobs they wanted to run and the equipment they wanted to buy. Until 1991, Division Manager’s incentive compensation was tied to division’s profit performance.Sales Personnel worked solely on commission Allowed to sell work printed at any sister plant, but incentives were tied directly to the profitability of their particular group. Between 80 to 95% of sales volume in a typical group was linked to its own plants.

Management was divided focusing only on profits for individual business groups and divisions Highly incentivized to focus on individual plants, rather than the company as a whole. Focus on high profits vs. high efficiency

In 1995, approx. 55,000 printing companies world wide. RRD&S had 6% of the $80 Billion Market; was larger than next 9 rivals combined. New technologies led to the rise of threats in several areas Online Service Providers and software packagers making images available electronically Color printer technology was improving quality and proliferating in homes and small businesses.

Office computing on the rise, printing companies no longer the artisans. The “craft” side of the business could increasingly be done by software document creators. Rise and integration of filmless printing technologies Digital printing eliminates the need for plant-based manufacturing process. Printing could be done at any distribution center or at customer's property.

Current State Moving towards mass customization. (local, more targeted communications) Shorter runs, more versions and tailored inserts Speed, simultaneous global distribution, and instantaneous content revision. Rising postal rates and paper prices. High incentives to develop alternative electronic media and new distribution channels. Future Forecasts Future Forecasts Mass customization will be the new normal. In 1995, digital growth was forecast at 16% annually, traditional printing expectations were 3%. Digital Technology will dominate once it is developed further and overcomes fear from publishing traditionalists.

The Challenge: Innovators must overcome organizational biases and cultural apprehension towards moving outside RRD&S core business strategy to gain acceptance for the digital transition Organizational Roadblocks: External Pressure Internal Pressure Inefficient decision process Fragmentation, too much segmentation Cultural Roadblocks: Focus on the Individual vice Organizational health Poor internal cooperation

Rather than make direct challenges to traditional values, employ a stealth approach “…to create a new business and have it drip into the culture.” – Cowan Print-On-Demand Concept eliminated costly steps, like warehousing and inventory, that represented 60% of publisher costs. New approach to Technology Development Process Status Quo: No limits / Reviews New Tech never realized full market potential Too much segmentation Future State: Redesigned Process “Discipline does not have to mean bureaucracy 4 phase process with toll gates

New process focused on greater speed, improved financial data, checkpoints & communication

4 Phase process with toll gate reviews and specific deliverables for entry into the next phase

The Digital Project was the first to use the newly revised technology development process. Digital Division moved to the Information Services Group. Picked initial digital facility sight close to FedEx central processing in Memphis, TN to maximize daily work time and offer rapid delivery. Built infrastructure to house customer content and make transactions that allowed customer orders to trigger the process. Digital Division created and consolidated value in 3 main areas: a content management system, a transactions management system and digital imaging technology.

1.The Digital Project was the first to use the newly revised technology development process. True/False 2.The Digital Division created value from: a)a content management system b)a transactions management system c)digital imaging technology d)All of the above. 3.In 1995, the company was organized into 38 divisions, collected into 8 business groups, as part of what Sector(s) a)Commercial Print b)Network Services c)Information Resource d)All of the above.

1.R.R. Donnelley & Sons: The Digital Division. Harvard Business School. March 13,