Transmission - Transform the Packaging industry

TRANSMISSION Transform the Packaging industry

Jan-Olof Jungersten Written and told to Jonas Lรถfvendahl

TRANSMISSION

TRANSMISSION Transform the Packaging industry

Jan-Olof Jungersten Written and told to Jonas Lรถfvendahl

Text: Jan-Olof Jungersten Text editing: Jonas Löfvendahl Graphic design: Sofie Jungersten Cover image: freshidea/stock.adobe.com Printed on an HP Indigo Digital Press at Göteborgstryckeriet © Visutech Digital AB, 2018

Innehåll PROLOG 1. Hello again!................................................................................................................ 7 PART ONE 2. Q&A from my last book........................................................................................... 11 3. The next transformation – packaging.................................................................... 17 4. A year from now, you’ll wish that you had started out today............................... 23 PART TWO 5. Introduction to the packaging market................................................................... 27 6. The brand owners.................................................................................................... 32 7. Culture eats strategy for breakfast......................................................................... 37 8. Status: where we are today..................................................................................... 41 9. The importance of sustainability............................................................................. 47 10. Earth to table & the food waste............................................................................ 51 11. The mental journey................................................................................................ 57 12. The five elements................................................................................................... 60 13. Disruptions.............................................................................................................. 63 14. Conclusion so far.................................................................................................... 67 PART THREE 15. Case: StrongPoint Labels...................................................................................... 70 16. Case: Nordvalls Etikett.......................................................................................... 74 PART FOUR 17. How to add more value......................................................................................... 79 18. How to make sisters and brothers........................................................................ 81 19. How consolidation will appear in this market...................................................... 85 20. Building your team................................................................................................. 89 21. Legislation and plastic........................................................................................... 97 22. How to do more for your customer.................................................................... 101 23. Profitability............................................................................................................ 105 24. Super globalization vs. Super localization......................................................... 108 25. The drilling machine............................................................................................ 110 26. How to do the mental journey............................................................................ 113 27. The How-to-do-list............................................................................................... 117 28. Influences.............................................................................................................. 127 29. Your own story...................................................................................................... 130 PART FIVE 30. Everything is in place – what happens now?..................................................... 133 31. High and Low economy or only another roller coaster.................................... 137 32. The Economic future – Measure your progress................................................. 141 33. New, smart, and intelligent packaging.............................................................. 145 34. Keep Writing Your Story...................................................................................... 149 EPILOG 35. Epilog.................................................................................................................... 152

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PROLOG

••• Hello again!

Dear reader, it’s time for the next transformation and maybe a flip of the whole market. Very exciting times are ahead. I’m thrilled and scared at the same time.

It’s already been five years since my last book Visions & Transmissions, which was a snapshot from the first 25 years of Visutech and the graphic industry focusing on commercial print. It dealt with graphic communication and the story of physical print adding value to brand owners and their customers. We showed how the market had transformed in both good and bad ways and why the industry had suffered so much over the years, historically and future-wise. The second part of the book was my view of how and why things will NOT happen, paired with long-term trends. I looked to the future, and the five years up until now and in this book you will have the actual result – right or wrong.

Why do I write books like these? Already as a young kid in elementary school things were clear to me. I was very much left handed and dyslexic. That gave me a lot of extra space to learn more different things in different ways. Math, tech, and sports became my pillars. I developed a huge interest in why things really happen (or NOT) and the rest is history. Reaching people is not only about show and tell; it’s so much more. “All people are different; all people are as smart – all in different ways”. Practice using that approach tomorrow as, for me, it makes a big difference every single day.

At Visutech, we try to build a lot of value for our customers (I hope you are one of them), even before they become our customers. We care and focus on our clients, and we always aim to give more. We open up, share, and keep adding value so that our customers can grow – and we’ll grow together with them.

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PROLOG

When you read this book, use it as one of the many ways of adding your value to your business. Make your own story! You and your costumer are unique!

Tailor and customize your story together with them. It’s a win-win situation for both of you and it will pay off, I promise.

This time around, we will explore the exciting world of packaging. Why? The timing is NOW! In this market, things are happening fast and everything is growing and going digital. A lot of the technology from the commercial print market (a marketing-industry) can be used as a perfect base for the demand in the industrial print market (a process-industry). Ink on media is the one thing both markets have in common, but that’s also where the similarities end. The whole mindset is different and it’s another way of doing business. Commercial print adds value and emotion to the supply chain while the industrial segment is inside of the supply chain, as a part of the product, label, flexible media or folding carton. If you’re already in this market, you’ll understand what I mean.

Otherwise, you’ll have to learn and adapt. Remember, the winner is not the strongest or the biggest but rather the one that changes and adapts with the new needs and demands.

I’ve written 35 chapters that embrace the packaging market, as it will be our next important transformation. Let’s move forward together.

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PART ONE

VISIONS & TRANSMISSIONS: PRINTING – AN INDUSTRY IN TRANSITION

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2.

Q&A from my last book “Visions and transmissions: Printing – an industry in transition”, released 2013.

1. WHAT HAPPENED TO THE PRINT HOUSES IN THE NORDIC REGION? The consolidation is still ongoing. In 2013, the number of commercial printers in the Nordic region had fallen from 15,000 to 1,500. In 2017, we had around 400 and the numbers are still dropping. When everything is settled there can be as few as maybe 80 commercial (mainly) printing houses left in the hole Nordic market. The consolidation will, however, slow down during the upcoming recession. Then again, in a low economy, bankruptcy will be a part of the consolidating effect. Commercial printers must change and transform together with their customers. They must also be wider, find new and more diversified printing applications (large format, packaging, etc.), work with their unique customers thru the hole supply chain.

The commercial graphic industry has been polarized. Many of elite group has already transformed effectively into digital. They have added more values and become less cost price sensitive. Gross margins and earnings going slowly up in market that slow down. The prices are ok but the value for the price is to low.

Midsize companies that haven’t changed their profitability, business model, or anything else, are stuck in a status quo with no or low operational margins.

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PART ONE

The industrial graphic industry, mainly labels, gather new digital sectors where packaging, large formats, and other products thrive. Some companies have expanded their range. They are more directly connected to brand owners desire to order more and more products from a smaller number of suppliers. Here, consolidation also start to make an impact. The label market has already come a long way implementing digital, but it still needs to implement the new business model (the mental part of a transformation).

2. HOW DID THE VAT-STORY TURN OUT? The Supreme Court of Sweden decided that printing companies had to pay out retroactive VAT-money from 2008 when VAT on the books changed from 25% to 6%. Many corporations took this as refund “profit” but later found out that they had to pay back into their value chain. The impact was devastating.

Just take a big Swedish newspaper as one example that had to pay back SEK 300 million in VAT plus had a downhill in their own core business (newspapers) and have to apply for reconstruction, the step before bankruptcy.

The debt was in total SEK 2,700 million. The VAT project “Lazarus” (as it was called internally) resulted in a 75% write-off of the creditors’ debt. They then paid back SEK 250 million in the end of 2016, added a new bank loan of SEK 385 million and added new shares for SEK 81 million for 63.9% from a private local group of investors. The VAT-story had massive consequences all around the graphic market. We saw companies being liquidated and retaining the money after bankruptcy. It has been a moral test of the printing industry, even if it was the Swedish Government handled it strangely from the beginning.

The Government didn’t outline the VAT-case as (almost) a zero-sum game (private persons and no VAT-organization had the right to claim VAT-funds back).

SOURCE: DAGENS INDUSTRI, 20/06/2016

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2. QnA from my last book 3. NEWSPAPERS AND BOOKS – WHERE DID THE MARKET GO? Today, daily newspapers don’t use enough of tools for adding value to attract the reader and our next and younger generation. Newspapers are still losing subscribers. The breakdown of the Swedish newspaper company is only one example of that. Small, local area newspapers are doing much better and the older generation (X) still wants their local newspaper in their hand. But the news must be very local! I don’t need to read about the American economy or Asian business events in a local morning newspaper. I’ll gather world news from other media, sites and platforms. Digital printing technology can add value also for newspapers by increasing the value of advertising, cutting costs and creating more value to readers. One example is a newspaper in Switzerland that uses high speed Inkjet HP PwP presses. Switzerland has three languages, spread over three regions, and every ad can be dedicated to a different region. They now sell multiple ads too one and same spot in the paper that reaches different regions.

The book-market is growing and shrinking at the same time. Today, there are not more books printed, but far more titles published as readers read more titles. It’s still a source of knowledge that people acknowledge and it lifts your own status and personal brand, for both the younger ones in “Generation Y” and us older ones in “Generation X”. It’s also much easier and more cost effective to publish books today. Private persons that write books (like this) can easily upload them to digital sites and then have them printed in volumes, as you like.

The book market in general will have a stable growth especially children’s books; number of titles will continue to increase in the future. To read physical books instead of reading via iPad or listen to sound books will have a higher personal value and higher status. Variations will and occur from culture to culture also in the future.

4. AND THE PRINTED PHOTO MARKET? Yes, printing is turning homewards to Sweden as we predicted. As an example, photo books ordered at a Swedish/international photo book site today links back to Sweden and becomes locally produced again. Someone asked the simple question: is it environmentally correct to order photo books in Sweden just to see them being shipped from abroad or transported from far away?

Does that go along with your brand environmental policy? The trend is to print where your need is, made in Sweden – produced in Sweden. “Trustful Branding” is today an important factor of value also for the graphic industry.

Gelato group as one example is today a player in this, like a of print-Uber. They aim to be the biggest platform for print in the world without owning a single printer or press. Gelato connect print houses to their print cloud and orders can

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PART ONE

then be printed close to the customer, saving time and money. Their services are used both by consumers B2C and companies B2B (a whitepaper solution), print on demand. Everything is digital, the transportation can be kept to a minimum and the sustainability-check is in place.

Physical photos have a high demand especially in decoration, design, wallpapers, lampshades, t-shirts, coffee mugs and so on. It’s precious memories that create value and real emotions. Customers want to live “with” them in various ways. It’s also in line with the “ME”-trends (more on that later in this book) that we see in both Generation Y (millennials) and Generation Z (the teenagers of today).

5. HOW DID THE ”HOMEBOUND GENERAL TREND” TURN OUT? In the graphic industry, the excursion to low-wage countries is no longer the trend. Low-wage countries are catching up with high-wage countries in labor costs plus that digital technology requires less labor per dollar. The previous trend of producing print in China for a lower cost has dithered and the Chinese also today have their own huge and strong domestic market.

The digital disruption by default creates lower wage costs. On the road from analog to digital, digital will slim the manual work and with that the number of employees. A print operator in Sweden can costs about EUR 5,000 per month, and a part of the mental transformation is accepting being more business per person for the same amount of money as in the past – doing more business with less cost. Yes, it can be tough and emotional to change.

If any European printer moves or expands outside of their home country today, it is more often due to some kind of grant from the government or the EU. You can apply for EU grants to make an investment in a printing business, for example in Poland instead of Sweden, which still can affect a business decision – but we see less of that and more local grants where possible.

6. DID THE ECONOMIC CYCLES ACT AS PREDICTED? I predicted a high economy 2013-2017 and that is what happened. The curves went up and now (September 2018) it’s still high and outside of the normal curve.

We are now in the longest high economy of the last 100 years, longer than the one that ended September 2007 and the one in 1929 that was followed by the biggest recession, which is known as the Krueger crash. We are now passing the consolidation phase and housing prices started to dip. Sweden, with an upcoming election in September 2018, and today with a too weak currency (around 10.60 SEK for one euro), is holding its breath (consolidate) waiting for the downhill race in the economy roller coaster. The low economy slope will help us go through change

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2. QnA from my last book and transformation as packaging now turns to digital. When it has gone up it will go down and then we know it will go up again, and so on.

7. ANY SURPRISES REGARDING EXTERNAL FACTORS? Donald Trump is today the biggest influencer acting in the biggest economy worldwide. Is he unpredictable? Yes! Is he an external factor? He keeps pushing the economy upwards, far outside of its normal curve, which historically will generate faster and deeper recession. His actions of “making America great again” trying to change the trade business (USA against China), whether it will go to full action or stay rhetorical, is following the trend of today’s market values going more local after a long time of globalization.

Brexit was a surprise, also for the UK, except for fitting (again) the trend of going more toward local values. It’s the same as Trump but in a different way and a step toward our next big shift; “the paradigm shift”. Another surprise external factor has been the ongoing negative or very low interest rate that has continued for so long. Market traders are also pushing the market; in their mind, it has been too slow for too long. They need volatility to increase both selling and buying, that’s how traders get their business.

8. SMART AND INTELLIGENT PACKAGING – IS IT HAPPENING? Smart packaging as a design and use has been around for a couple of years. The printers who get into the next level products of today, all get into it. Smart ways to open, close, carry, and repack for easily returning e-commerce. Here is a lot of new sustainable, re-circular media popping up with new and smart finishing solutions that make new things smarter. We see smarter solution’s both in-line with production or near-line serving multiple machines. The digital technology will also boost this transformation through a lot of new possible disruptions, with fewer steps to produce. Intelligent packaging has not really kicked in yet. It’s still in the phase of implementation and will follow as an upcoming evolution in packaging – I will try to address that more later on in this book. Tag along!

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PART ONE

“A LOT OF TIME PEOPLE DON’T KNOW WHAT THEY WANT BEFORE YOU SHOW THEM” - STEVE JOBS

“IF I HAD ASKED MY CUSTOMERS WHAT THEY WANTED, THEY WOULD HAVE SAID A FASTER HORSE” - HENRY FORD

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The next transformation – packaging How and why is this transformation and disruption occurring right now? What is really going on? The easiest way to describe this phenomenon is technology through the demand for a transformation.

Every disruption always starts from a change in market needs and new demands. Here, the digital technology works as an enabler to execute a transformation. Technology disruptions are from day one a well-planned and often long-time development made on top of already developed technology. HP, for example, spends millions of dollars in R&D in this area every year, working hard to meet all transformations and new needs trying to nail the right timeslot and window. Doing this in advance, before new needs are visible, is a challenge in itself – aiming to close the gap between the present and the future. It takes a great deal of R&D-time and courage. It is even harder to spot a technology cut in an existing chain of processes (disruption), making a chain of processes shorter, faster, and cheaper using new technology. As Steve Jobs said: “A lot of time people don’t know what they want before you show them”. Henry Ford used the same theme in the early days of Ford Motor Company: “If I had asked my customers what they wanted, they would have said a faster horse”.

There are many stages here that will save both time and money. Cutting links in a chain with new technology, disrupting steps inside a process, replacing analog (manual) steps (links) in a process (chain), changing analog to digital – making more with less, and adding more value to the chain.

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PART ONE

The need and demand for a change grow constantly every day. We as Homo Sapiens (the thinking human) are driven from our 200,000-year-old DNA. The DNA made for hunting, protecting, surviving, and striving forward. We’re in constant progress for new needs and demands within our self or at least within our own group where we live and belong. A group can be our family, community, or the company we work in. The overall progress for more needs in many cases is constant in these three blocks within our daily circle of sleep, work, and private time. If you’ll push harder within the company side, it will mean a lower drive within the family, etc.

The period of time between changes also plays an important role. Far too many try to change in a hurry and end up with no change at all. The longer it takes between transformations, the more new needs and demands will be accumulated to drive a transformation. It’s the same as when you try a too big change – it ends up as a real U-turn. In that case, the change drifts too far away from the basement of the process. The distance between where the process originates and where it aims gets too big. The result will be no change at all.

It’s important that the change is based on where in the chain it hooks into the existing process and where it hooks on the other side of the chain. Strong and clear hooks will secure a strong chain with new processes, now shorter, more flexible, faster, and more value = profit.

Packaging today has all of that criteria for achieving a really big change. A big change, but at the same time sensible and practical. It’s still on a stable ground with a stable process, not having been transformed in a very long time. The new steps can use all the existing grounds for reaching the next level. Our society around the products and around the packaging have changed and developed, but the packaging itself has in many cases stayed the same. It’s still often made in a manual and analog fashion. A huge reason for this is a lack of priority of packaging as a marketing tool. Today packaging in many ways is the most important marketing tool for selling more of a product, not only protecting the product. We also see a faster time-to-market (T2M) where everything goes faster and faster. Delivering today is on demand, not waiting 10-12 weeks for a change. On top of that, we notice increasing demands for new and environmentally friendly media that fits in our upcoming demand of a circular society. New digital technology will play a big part of this transformation and comes from a close related industry, the commercial print market – a market that was transformed in our last low economy.

This build-up of drivers through plenty of new needs and demands creates a grand opportunity for the ones who change. Consequently, it will also close the door for the ones who stand still and simply do the same. The difference from the transformation of the commercial printing industry is that the basic digital

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3. The next transformation – packaging printing technology now has developed and is ready, and it will work as the base within packaging. A fast T2M is a given in many aspects of our business lives today, but in packaging there are still months of waiting for making a change. The environmentally friendly media is also increasingly becoming a very important and strong customer demand. With more focus on refined, exclusive and dedicated packaging, in combination with more variations and smaller runs, digital fits perfectly into the equation. In the commercial transformation it was also a competition against electronic displays. Information that was printed in the past like newspapers and manuals were now read on a display, like the iPad or a screen. At the same time, as the digital transformation happened, this market was losing around 10% every year (in Sweden alone SEK 100 million per year and the losses continue today), newspapers alone even more. We also see marketing managers and CMOs relocating their investment from plain printed advertising towards packaging that sells the product in side.

I call for this transformation of the packaging industry to become even bigger; we can reach a so-called “flip” happen in this market. A flip will change many things including high investments, a lot of money going in, and very high expectation of the ROI (return of investment). One thing is that this market is also growing a lot. Brand owners invest more money in their packaging and here it won’t be a competition with any electronic displays as seen in the commercial transformation. It’s hard to store a liter of milk inside of an iPad (if you get my point). Physical packaging will always be around, not only to protect the product but also to market and most importantly sell more, increase the value of the product.

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PART ONE

When market change, somebody wins, somebody also has to lose. With the number of winners, we’ll see in the packaging industry, there will also be a lot of losers. They are the ones that act as the commercial ones in the past, didn’t transform or only invested in a digital machine (no matter which technology) and stayed inside their old business model of selling analog and digital as separate products with no added value. They added a secondary product, accepted less quality for less money. They’ll excuse themselves thinking “it’s all an add-on service, so we won’t lose our customers to someone else”. Instead, they lost more; they missed the value and a great opportunity plus they had to lower their margins even more.

To create a new business model in a transformation is crucial, adding value will adding margins. It may be the difference between success or failing. Old ways of calculating are often based on the fixed cost of setting up the machine for a job, which was the big part of the cost while the printing itself was a smaller part of the cost. To this fixed setup-cost and make-ready-time, a cost per volume of sheet/meter was added. Then, a margin was added, a margin that still is under heavy pressure because of low added value. A constant drop in run-length per job did so the setup and make-ready-time obtained most of the work-time and cost – instead of the actual printing time. This made the old business model obsolete and out of date.

The new business model is instead opposite, first based on time to print, how much you can print per time-unit or shift divided by the cost per time-unit or shift. Then, use then the market prices for your value as a base for setting your selling prices and you will find more profit per job. Those jobs that are still too long and have low value can still be produced conventionally, either you are big enough to fill at least one analog press with those jobs or have stopped doing them and instead buy this specific production from a company that still hasn’t transformed their business.

Looking at the label market, this transformation has already started. It’s in process at least on the presses side, although not everyone has done the real mental transformation getting a new business model. Today, digital for labels increases with around +30% YoY (year-over-year) and is now moving into a balancing phase migrating analog to digital. Most of all the label jobs today (passing 80%) will favor cost-wise being made digitally. Still, most of all the labels in meter or square meter are being produced conventionally. In terms of value, a converter that prints 30% of their volumes digitally receive as much as 70% of their gross margin from digital.

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3. The next transformation – packaging In the segment of flexible packaging and folding cartons, the first wave of digital presses is already installed and up and running production this year in the Nordics, +100 machines worldwide. From the brand owner’s perspective, they see new needs and demands for shorter T2M and more variations and producing on demand not to stock. This demand is huge and comes from us consumers. All this happens in a world of polarization. We’re going toward super globalization and urbanization at the same time as a demand for super localization also growing. Brand owner’s demands to be both local and global at the same time are essential and necessary. Right now, the big ones are realizing that they are losing market shares to fast growing local brands. Most likely it’s a totally new process for them to change the big brand company towards customers new demands.

The packaging market is ready for this transformation. Are you ready? All the needs and demands for a change is in place, but we have a lot of work to do to make it happen. We must understand and define ourselves in our own market, categorize, going through and doing a lot of homework. A good thing is that all of you start almost at the same time and everyone must go through a lot of pain (yes, it will hurt) and you need to go outside of your own comfort zone. “If things are easy, everyone can do it, and if everyone can do it, there will be no money in it”.

I hope this book will provide some added value as you join the ride.

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PART ONE

“The best time to plant a tree was 10 years ago.

The second-best time is now.�

- A Chinese Proverb.

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4.

A year from now, you’ll wish that you had started out today Trying to understand When, How, and Why things will happen on the market is sometimes very hard. Why things will NOT happen (when it should) is even harder. In my world, I try to collect as much data as possible and narrow it down to understandable facts. I gather reports and studies from almost every institute available. If you want to dig deeper into any market, be as source critical as possible and use the most updated information you can find. Gather knowledge as a start and then continue refilling with accurate and fresh data along the way.

With all of the information boiled down to something usable for this industry and with a Nordic perspective, I build a time frame, a matrix. From day one, we start to create a storyboard for this book. In this process, when you gather information about the present and for the future, the data is often different depending on its origin, who paid for (sponsoring) it, who’s it aimed at, so on.

Maybe the source of information is a supplier claiming what they can or will achieve in their own upcoming R&D projects. Next generation often drives on top of already existing generations, etc. I see development, or a change and shift of value as a part of our ongoing evolution not so often revolution. Through demographics and cultures, different needs, and new demands. This has been a theme throughout my now 40 years of passion for transformations.

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The next transformation will not only be driven by new technology; it will be pushed forward by a change in needs, new demands, and by adding more values. New technology will be an enabler that can disrupt, cut links in the chain, lowering the total costs, shortening processes – and new add values. On top of that, my passion is about taking this to a new level. Taking this trend into a great future for this industry. My trademark in business is also to find out what will NOT happen in a transformation. A big part of that is figuring out why things work out in a predictable way or why they don’t. For some reason or another, things don’t always turn out the way they should. It can be due to culture, timing, technology, demand, sustainability, etc. It’s like looking for a needle in a haystack, but when you find the needle everything seems 100% natural and you’ll make fewer mistakes and save both time and money from that point on. Remember, it’s still OK to fail but ensure you learn from those mistakes and they will make you even stronger.

So, what do I mean by “a year from now you’ll wish that you had started out today”?

We’re in the beginning of the next big transformation; it’s time for the packaging industry. All of the vendors and supplier have sharpened their knives for a while and the technology is there and proven? Talking of foreseeing the future, one big part of that is as also the low economic cycles of 8-10 years that goes down and then goes up again – that’s the only thing we really know. If we look back at least 100 years we can see how the low economy follows the American 2x Presidential elections. Will that change? Not so far, but the last high economy was the second longest (more than 8 years) after the one leading up to the Kreuger crash in 1929. Both of them were followed by the two worst recessions known to mankind.

Now we have passed the top and are preparing for the low economy to get a grip. Meaning that you and your customer will raise questions about what will happen now and where you’re going. If you hear these questions from your customer, get up and seize the moment! Take the opportunity to create a dialog! It’s the best possible reason to start your transformation we have ahead of us. Keep reading this book and I hope you’ll understand what I mean.

If you see demand and business going down, you must act proactive with your customer, not with your competitions. Find out how you can change and add new value together. All transformations start in a low economy and so will this.

“A year from now you’ll wish that you had started out today”. It’s time to join the flow and change. We have a lot of new steps to be implemented in this transformation.

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4. A year from now, you’ll wish that you had started out today In this high economy, the technology for packaging has now developed and tested and the first early adopters is now migrating analog over to digital. The brand owner’s orders are getting shorter and shorter for every year and we see increasing in numbers of new SKU (stock keeping units). With digitalization, much of the information part has turned electronic. It’s found on the Internet instead of being printed at all. When it comes to marketing, many brand owners have found out the hard way that the Internet doesn’t fill that need by itself, without the physical printed communication that connects with the consumer.

In this circle of high economy, the brand owners CMOs (Chief Marketing Officers) have lowered the marketing budgets with as much as 10% per year, favoring social media and the product packaging itself including both labels and packaging. More SKUs, shorter runs, and less to stock. It has become more and more important for the product to stand out in the battle of getting the attention of the consumer. You must, now more than ever, catch the customer’s eye when they make their decisions.

In a high economy, corporations add more resources to what they already are doing. They don’t really change a winning formula. It’s only in a low economy that they must, and they must take the time to change. Order-volume goes down, changes come through adding value. Prices and margins go down, companies are saving capacity. It’s time to follow the flow and one thing is dead certain, the low economy will end one day, and it will then be followed by a new high economy – but please, that one will not come up where it went down (change).

The high economy will resurface at a new location with different needs and new demands. That’s why you also must change. If you are properly adapted with the new business model by then, you’re standing in pole position for the next high economy.

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PART TWO

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Introduction to the packaging market In 2020, the packaging market will reach a size of USD 997 billion, with a year-on-year (YoY) growth of around 3.5%.

The printed part remains at roughly half the market, with a growth of 5% YoY. Rigid-board, both fiber based, plastic, metal, and glass, are 56.5%. Flexible packaging, plastic, fiber based plus other foils sums up the rest 43.5%.

Observing the market as a whole, the flexible segment has the best growth rate in all of the available reports. Flexible is very much driven by consumer change in demands, regulatory targets, and a gradual adaption to the circular economy principles. The shift toward a higher demand for new sustainability media like bioplastics, compostable instead of the fossil-based media, plays a new role.

Sustainable media works impressively well together with consumers new demand. Old, heavy, and none flexible fossil packaging is on the way out. New, lighter, cheaper, smarter, and easier flexible packaging is on the way in. Baby food in pouches instead of glass jars is one of many examples of the ongoing trend.

Now, let’s view the packaging market more from a converter’s point of view.

We call them converters instead of printers in the packaging market because, here, print is only one of many stages going from an idea to the final product.

We got design, print, varnish and lamination, foil, die cutting, and gluing to be ready for the filling and/or assembly line, etc. The packaging market comes from a very conservative view (even worse than the commercial print side) on both the relation to media suppliers and brand owners. It’s very much a symbiotic relationship where they often sit in the lap of the media supplier, especially when it comes to the board side of the business.

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The time to market (T2M) for a package, or changing an existing package, is extremely long within the conventional and analog market. In some cases, it has a lead time of 12-16 weeks. Compare that with Commercial Print for “market communications”. If we look at General Commercial Print (GCP) as leaflets, brochures, manuals, etc. with some kind of finishing, stitching, gluing, and cutting, it has gone from a lead time of 8-10 weeks to within 24 hours. In some cases, delivering orders to the real estate market within 4 hours. Although packaging is much more and complex, the cost and supply chains focus more on the media. For the full experience of the whole product both in flexible and folding cartons, T2M will be a deal breaker. T2M will be the first important driver for this transformation toward a full flip of the whole market.

Regarding folding cartons, both pre-print production and post-print production must take many steps before the final product is ready, including varnishing, lamination, die cutting, and gluing. You’ll have to take further and different steps than in GCP (General Commercial Print) and the technologies will emerge making it a full implementation into the whole process. It is just around the corner, as I’m writing this. Every step must go through a full change, a total disruption. Cut all the links that are not adding any value anymore and replace them with new links, digital, and with high value.

The market (consumers through brand owners) drives the competition toward faster turnarounds, T2M. Simultaneously it is becoming increasingly more crucial to stand out against competitors. This becomes substantial in packaging motivation and provides a great response for a brand owner. It even makes it the single most important and growing segment in the entire graphic area (except the next and upcoming 3D print market – but that one need to pass the emerging phase first and then go through their own low economy cycle).

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5. Introduction to the packaging market As marketing people say, there are great possibilities within the transformation of packaging. It’s so big and strong that we see a possible flip of the market. The timing is now and the market demand for this is high, we got the technology available, we see many manual steps that can get disrupted, and it is also a growing market with a demand for more sustainability.

This will not only force existing players on the market to transform but also open the door for completely new players and new competition. Players outside of this business will make moves, and players from close neighborhoods as commercial printers, label printers, and logistic companies will get involved in this new supply chain. This is not a question of whether it will happen; it’s a matter of how they will make the adaptions within this change.

Brand owners are shifting their spending in marketing. Today and tomorrow, more money will be spent on social media and the packaging of the product.

The total spending on marketing, outside of the cost for the product itself, is almost the same today percent wise as in the past. But traditional marketing will focus heavily on packaging in combination with new and social media where the packaging itself will gain increasingly more attention. In retail, packaging will thrive as an eye-catching marketing method. Retail is a highly competitive segment where the need to stand out on the store shelf is huge and will keep on growing. We’ll definitely see more SKUs (Stock Keeping Units), numbers of variations of a product as in size, volume, flavor, targets, regions, campaigns, etc. This development will increase enormously on a daily basis in an almost unaltered and pretty much identical retail space. At the same time, we’ll see a big demand for new and more sustainable media. Nothing can be changed or added without taking full responsibility for the sustainability in design, choice of media, CO2-emissions footprint, product protection, minimizing food waste, and enabling recycling.

Printing has historically been a secondary thing among packaging converters.

The media/film, lamination, cure, die-cut, etc., have been much more important.

If you buy a package with cheese in the shop, there are needs for many barriers like moisture, oil, oxygen, aroma, flavor, gas and light. This must be laminated together for a ready-to-go flexible package. In folding carton boxes, the first priority is the media itself, perhaps with a barrier and then print, varnish, die-cut, and gluing.

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Often new technology is decidedly contributing in a disruption. New technology will skip as many steps as possible in a process. It’s a big difference compared to many manual and analog steps. For example, a disruption in the analog packaging industry means that you must print a whole jumbo roll before you can change from one job to the next. With digital, every small label job or packaging job can become completely unique – all from the same roll. That means you’ll add value and the consumers will receive more attractions/temptations while attempting to buy something.

Going into the store, the final decision of a consumer will happen between product A or B in a fraction of a second, it all happens in 0.3 seconds. That’s the last chance to influence the consumer from a brand owner’s perspective. If the products are more or less the same on the inside, the packaging must stand out and make the difference. Let’s use perfume as an example. Why does the scent of Zlatan sell so well? Yes, maybe it’s a good product inside the box. But this segment is driven massively by the brand and the name itself: Zlatan. The worldknown footballers perfume also has packaging that stands out with some added smart features. If you put the packages in correct sequence on the shelf it will read Z-l-a-t-a-n wider, expanding the brand itself. We also see this with some wine producers who find a wider pattern with multiple bottles in a row on the shelf. And this is only the beginning.

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5. Introduction to the packaging market

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6.

The brand owners Brand owners own the brand behind a product and the big ones invest millions of dollars to secure, protect, and add value to their brand. The brand value reflects what we as consumers are prepared to pay for the product. In between the brand owners and us as consumers, we normally have the retailer as the last link in the chain before the products reach the consumer as the end user.

The brand owner plays the role of a mirror to us consumers, eager to fulfill all of the expectations with the best illusions. If there is tough competition within the market, the reasons for how a consumer decides boils down to what attracts them the most: the brand illusion. If it’s a market with less competition, there is also less need for marketing the brand. For instance, in the past there was only one supplier of milk and really no need for branding. Products like cosmetics find themselves on the other end of the scale. The product inside the package, like perfume, is the “same” (if you’re harsh). So how to differentiate all of the fragrances from each other? This indicates more value to invest in branding and containers, wrapping, and packaging. The brand owners play all these parameters very sensitively and there is a lot of money involved. In my previous book, I call this the ICDT model (Information, Communication, Distribution and Transaction), if you want to read more about how this game works.

Today, branding influences and has an impact on all types of products and the consolidation among brand owners is brutal.

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6. The brand owners

If we look at the polarization of today, we find globalization on one end and localization at the other end. Yet they are two trends that work simultaneously.

In localization, we find new and small brands that act and attract fast, much faster than the big ones, which drives off customers’ new demands and needs.

In Sweden, small beer breweries are a perfect example, as we today are the leader in the number of breweries per capita. Over 400 new small beer brands have been registered at the Swedish government-controlled “Systembolaget”.

These small beer brands gain premium market shares rapidly and win against the big brands. This is really painful for the big brands and shows that they offer low value and don’t attract the consumers in that market anymore. Why? Well, big brands are just big which also makes them slow to change. This is bad news when they have the same demand as any brand to follow the consumer’s change of values. With new needs come new demands. The polarization drags the big ones away and opens up a market space for the small high value brands: the new, fast, and brave ones.

“It is not the strongest of the species that survives, not the most intelligent that survives.

It is the one that is most adaptable to change.”

- Charles Darwin.

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Gen Z

Gen X

Born 1995-2012

Gen Y

Born 1977-1994

Born 1966-1976

Boomer Born 1946-1965

MARKET DEMANDS CHANGE Today, consumer patterns are driven more by illusions and expectations that develop rapidly every day, month, and year. Added value will always compete well when the price and cost are involved. We must understand how, and in which order, the consumers value this, depending on the type of product and time. In the grocery store, most decisions are unplanned, over 70% happens within a blink of an eye, in 0.3 seconds. The execution will then come in the next 3 seconds. Brand owners must have attractive products that stand out on the store shelf.

Therefore, market demands and needs change and develop over time. Let’s summarize and add the knowledge and progress of generations on top of this.

Their specific characters also drive transformations to happen.

■■ Generation Boomers (born 1946-1965) are living longer and longer. We (I am one of them) in the Western world live 4 extra years per generation.

Boomers also in many respects have a healthier economy compared to previous war-generations. Even if the market changes toward the younger generations X, Y, and Z, there is a lot of business to be done here if the brand owners can convince and please us Boomers – if they can make life easier by adding value, creating illusions, and satisfying the high expectations of this generation.

■■ Generation X (born 1966-1976), sometimes referred to as the lost generation, was the first generation of “latchkey kids” exposed to lots of day-care and divorce. Gen X is often characterized by high levels of skepticism, “what’s in it for me” attitudes, and a reputation for making some of the worst music to ever gain popularity. Now, moving into adulthood William Morrow (Generations) cited the childhood divorce of many Gen Xers as “one of the most decisive experiences influencing how Gen Xers will shape their own families”. Xers are arguably the best-educated generation

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6. The brand owners with 29% obtaining a bachelor’s degree or higher (6% higher than the previous cohort). And, with that education and a growing maturity they are starting to form families with a higher level of caution and pragmatism than their parents demonstrated. Concerns run high over avoiding broken homes, kids growing up without a parent around, and financial planning.

■■ Generation Y (born 1977-1994) is the largest cohort since the Baby Boomers. Gen Y kids are known as incredibly sophisticated, tech wise, immune to most traditional marketing and sales pitches. Why? Well, they not only grew up with it all, they’ve seen it all and been exposed to it all since early childhood. Gen Y members are much more racially and ethnically diverse and they are much more segmented as an audience aided by the rapid expansion in cable TV channels, satellite radio, the Internet, e-zines, etc. Gen Y are less brand loyal and the speed of the Internet has led this cohort to be similarly flexible and changing in its fashion, style consciousness and where and how they are communicated with. Gen Y kids are often raised in dual income or single parent families, have been more involved in family purchases, everything from groceries to new cars. One in nine Gen Yers has a credit card co-signed by a parent.

■■ Generation Z (born 1995-2012). If you see “what’s in it for me” in generation X, here we have the true “ME and more ME” generation. Higher levels of technology will make a significant inroad in academics allowing for customized instruction, data mining of student histories to enable pinpoint diagnostics and remediation or accelerated achievement opportunities.

In addition, here, most of the general market trends change and moves forward into the next and new paradigm shift. More about the paradigm shift later in this book.

TIME-TO-MARKET Going from analog to digital, T2M is one of the big differences that will add value. Everything goes faster and faster, today and tomorrow, and delivering on time is crucial – including product launches, new variations (SKU:s) and regionals (language), events (timing), private labels (co-branding), personal looks and attractions (personalized). Production according to demand from consumers, the real need of the market, instead of warehousing in case of a coming need.

This transformation is also a disruption; cutting out links in a chain, making a new shorter and more powerful chain that will supply more for less. Many other segments in the industry have already gone through transformations with technology disruptions, like the car industry, TV, computer, mobile phone, and banking. We’ll see more segments going down this road also in the future, like sustainable energy harvesting, clean water everywhere and the next level of banking (blockchain), etc. YES – packaging is happening now, it’s lining up to become digital and on demand instead of producing to stock.

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7.

Culture eats strategy for breakfast The phrase “culture eats strategy for breakfast” was coined by Peter Drucker and has been like a mantra for me throughout my entire working life. It’s about respecting our diverse behaviors and understanding the implications of how different we are and react as well as what a major difference that makes regarding our future success or total failure.

It leads me into accepting that we’re all different. We all represent the same value but in different ways, it’s easy if you accept it and hard if you don’t care.

Every person adds different values, not more or less but different. Business will always be made between people and we are all unique, every one of us. It’s the same with marketing in which consumers are placed into groups and companies must use unique business plans per culture.

Globalization, on the one hand, makes us feel like we have all things under control, feeling safe and secure in our own comfort zone. Global strategy works out in the same way, being global is being big but square. You use the raw statistics data (measurable), all square and you are either inside or out. Local strategy is actually many different strategies and normally starts out from a global one. Then, you add local variations, editions with local values for each segment, group and/or culture.

Big corporations (mainly) outline just one global square strategy at the time. HP is a good example of this, despite the fact that various cultures react differently

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on one square strategy. The result in different groups and cultures differ and mirrors each culture depending on how far they are from being inside or outside of this square box. For example, if you make one strategy in one single US state and that one succeeds, it’s pretty easy to expand that to the rest of the 49 states in roughly the same way and with roughly the same result. In the US, the square box works ok throughout most of the entire nation. If you try the same strategy in Europe, starting a market strategy campaign, for example, in France for the French market and that works out well, what happens if you then expand the same campaign into the rest of Europe? The campaign was successful in France it’s pretty much guaranteed that it will NOT work in any other country or culture thru out the rest of Europe! What can we learn from this? Learn and understand how our local culture values as well as how our own market works.

Learn about your consumer-base and then use the right, go2market-strategy, not the other way around. It’s thinking outside of the square box (which also was a chapter in my previous book Visions & Transmission). HP and HPIndigo rescues itself by adding a wide number of qualified channels and partners that adds the local culture gap between the square and the local.

Now, remember that your culture must be a pillar when you make your own strategy for your own market and your own customer. Take every local influence you can find, good or bad, get inspired and learn from that. Your strategy must add value to your own customer. By interaction, you can build your new and digital business plan. In your approach, try to understand why we have two ears and only one mouth. To be humble, to listen and understand, will make big different. It’s about the chemistry between people, groups, and culture and with that also comes respect. Do you have the right people for this proactive work today? New digital tools from this transformation will generate and add a lot of new values to work with, for your team it will be known and for your customer it will be unknown before you tell them. This new dialogue will increase your relationship with your customer and bring it to a new and closer level of business cooperation. It’s a great chance to reach a more profitable business for both parts, a win-win-situation.

Why is culture local and not global? Time has passed since the World Wide Web entered as an unknown disrupting technology and today we can safely say that it was not a “fly” (an infamous statement made by Ines Uusmann, the Swedish minister of Communication 1996, saying that the Internet was a trend that would pass by). That transformation of information was a paradigm-shift itself that changed almost all of us on all levels and we didn’t know that we had that need before we got it. Then, the next transformation affected networking, where Facebook today has passed 2.2 billion users and has grown to that stature within a decade. Again, via new technology that wasn’t aware of the gap in needs and demands. Those transformations totally changed our need for

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7. Culture eats strategy for breakfast globalization. After a while, we started to miss what we couldn’t get from being global, the other side – local and the ME generation. We started to value and starve for a more local feeling. One of the most important motors in that change is culture. After we (in the Western world) have been so global in so many ways the value chain turns back toward local again. With that move, we also move closer in our relation to our own culture. Culture works as a driver for reaching everyone in every culture, meaning less mass-communication and more masscustomization. It is also a driver toward the digital printing transformation.

To begin by working with your existing customers and your relationship together is the right move. It’s a lot cheaper, easier, and faster than chasing new customers that you don’t have any relation with today. New customers are statistically three times more expensive to address and attract then existing costumer. You also repeatedly must expose and lower prices for them changing to you, meaning lower margins. Like it has been for many commercial graphic printers, trying to defeat a competitor via price instead of offering customers growth in value. You now have the opportunity to stand out and offer added value instead of using price as the only way to win business. If you help and develop your own customer first, they will grow and stay by your side for a long time. This won’t exclude the need for any marketing, you must still address your own market and inform that you are now focusing on adding higher values on your services in your proposition.

Another way to learn more about “Conscious Culture” inside of your own organization is to read the book with the same name by Joanna Barclay. Building a strong culture known by all employees often compares to a company’s passion for its business – and yes we have to have a great passion for print.

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HP INDGO LABELS & PACKAGING

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8

Status: where we are today Let’s have a look at the total market. The data from Smithers Pira forecast a steady growth across the packaging industry, valued at USD 839 billion in 2015 increasing by 3.5% year-on-year reaching a total value of USD 997 billion in 2020.

As this happens, sustainability will become an increasingly important factor for decision makers at all stages in the packaging value chain. The rigid packaging compared to flexible is 56.5%, but flexible will catch up. None printed packages, for protection only, etc., is still a big part of the total but the growth comes from printed packages. Offset stays for around 44%, most of them rigid board and paper. Flexo is the second biggest technology, mostly used on flexible, and then there is Screen and Gravure. Digital printed packaging was valued 2015 to USD 10.5 Billion, still as a small part of packaging, but expect to grow with a CAGR (Compound Annual Growth Rate) of 13.6% per year to 2020, almost doubling their numbers according to the prognosis from Smithers Pira.

To get a better picture of packaging today, we must split the market into groups.

Flexible packaging Converters in the flexible packaging segment are the ones with the greatest opportunities and a lot of challenge in this coming transformation from analog to digital.

If we look at the flexible packaging market by type (stand-up pouches, flat pouches, gusseted bags, wicketed bags, wraps), material (plastic films, paper, aluminum foil, bioplastics etc.), through analog and digital printing technologies,

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application and region – the future looks huge and prospering. A report from Markets and markets from 2017 shows a global forecast for flexible plastic packaging to growing from USD 100 billion in 2017 reaching USD 131 billion by 2022, at a CAGR of 5.2%. Another report, this one from Smithers Pira, shows the market for flexible packaging in total to be USD 230 billion in 2017 with a CAGR of 4.3% and then reaching a value of USD 283 billion in 2022.

The global flexible packaging market is witnessing a growth with consumers new demand, owing to the rise in manufacturing activities and growth in the demand of conveniently packaged products. The pressure of leaving the fossil based plastic media to new and sustainable, recyclable, and compostable media, like many bioplastics, also plays an important role. It’s a nice combination to have this transformation working both for printing and for new media. This paves the way for new sustainable bioplastic media and digital printing to hit the market at the same time. Both adding new value to us consumers and can cover some of the extra cost from the new and more expensive media in the beginning. We see for sure a growing demand of this and very soon it will be a must for the participants on the market. Shorter run lengths and more orders will also be a big driver, even if this segment originates from very long runs. Certainly, this segment will also go through the same development as both the self-adhesive Label Print and the General Commercial Print market already have gone through.

Rigid packaging The rigid part of the packaging market was 2017 around USD 500 billion.

Folding carton and Paper are 43%, then Rigid Plastic 30%, Metallic 17%, and Glass 10%.

By application the whole packaging market divides into Food USD 284 billion (29%), Drinks 102 billion (11%), Health care USD 41.9 billion (4%), Cosmetics USD 27.2 billion (3%), other consumer packages USD 119 billion (12%), while Industrial and Transportation is USD 401 billion (41%) and those are mostly none printed packages.

The growth within folding cartoon is found mostly in the US, Asia, and South Africa plus the emerging markets. That’s the same growth areas as within flexible packaging. In mature markets, like here in the Nordics, the growth rate stays at 1-2%. Within this, we already see a lot of new investment in the paper mills. They are looking for new ways and new products away from the decreasing demand in newspaper (bulk) and fine paper. Newspapers drop with as much as 20% YoY and fine paper with around 10% YoY. The Nordic mills alone have so far invested around USD 2 billion in converting or adding new machines for board. The total production capacity of board will increase

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8. Status: where we are today with almost double the amount in a few years. It’s great with new investments and braveness for new products in the Nordics, but this transformation from newspaper capacity to board and liner is also happening globally and don’t match the relative small overall increase in volume/tons of new demands worldwide.

5 European mills that transforming from bulk paper towards different products like carton board and liner.

1. Billerud Korsnäs, Sweden With an investment of MEUR 700 includes the construction of a new board machine at the Gruvön production site and rebuilding of the existing pulp mill. The new annual capacity of 550 000 tons of board on top of all ready existing 1 051 000 tones. The production is expected to start in the first quarter of 2019.

2. Metsä Board, Finland Investing around MEUR 1,200 and increase their production from 400,000 to 700,000 tons in Husum’s maily for carton board, primarily for the North America market. Net new capacity will totally increase from 800,000 to 1,300,000 tons.

3. Kotkamills, Finland Kotkamills opened a new 400,000 ton capacity BM2 carton board machine, a total investment of MEUR 170. Kotkamills have also announced that they will start a pre-feasibility study for one more machine.

4. Kama Pulp & Paper, Russia With Austrian supplier a new folding carton board machine installs with a production capacity of 220,000 tons. It is scheduled for start-up in the first quarter 2019. The total cost of the investment project will amount to approximately MEUR 455.

5. Dobrush paper mill, Belarus The Minsk based factory will in 2018 launch their new investment with a new production capacity of 200 000 tons.

The total investment will reach equal to around MEUR 350.

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Will the increase in volume, with all the new capacity in board and liner also affect prices? Certainly, all wood fibers that grow in the Nordic forest must find a new way of use! At least we know they’ll be growing as fast as they have done in the past also in the future, whatever happen with the packaging market, if it goes up or down today or tomorrow the trees will still grow at their own pace. The trend among paper mills is turning global, not only seen only in our Nordic market. Many other mills around the globe also transform their volumes today into board and liner paper instead of yesterday’s newspaper (bulk). The packaging market grows fast with upcoming new products waiting to add new value. At the same time, we see a continued transformation away from segments of low adding value print, none printed packaging, newspaper, and manuals.

Corrugated board This segment is first divided in pre-printed liners, roll-to-roll and post-printed board, pre-cut sheet. The actual consumption of corrugated board packaging by end users totaled 128.6 million tons in 2015, says a Smithers Pira report. That’s worth over USD 222 billion to converters, with a growth of 3.6% from 2014 to 2015. The shift geographically is dramatic. The US goes from 22.7% in 2015 down to <20% in 2021. Western Europe goes from 14.8% in 2015 down to <12% in 2021. China alone has gone from 22% in 2009 reaching 29% in 2015 and expected to reach 35.6% by 2021. With an expected growth rate of 3.6% annually in 2016–2021, that means a decrease in both the US and Western Europe. On top of this, the counting is in dollar and tons, if you count in square meters it’ll be even worse because trend and quality are moving toward lighter products with the same capacity.

However, within the biggest application Processed Foods there will be a growth of 4.5% over the average of 3.6% and Consumer Electronics will have the biggest growth rate with 5.5%. Most of this growth is created in Asia. We have only seen the beginning of the journey from analog to digital and for sure we’ll see a transformation but NOT a flip of this market as we see forthcoming in the flexible segment. With low margins for most of the converters today in Europe and no really growth in the next 5 years, there will be some losers. A positive thing about that is that it will turn others into winners. It will take longer to transform within this segment, and maybe with too low margins, and it will be harder to find the right value, at least in our region.

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8. Status: where we are today

Labels We must include labels into packaging. Today, we see labels (most press sensitive labels) as something we can add to packaging as a product. Labels integrate step by step as an application, a secondary packaging product; the line between labels and packaging will soon be blurred out. I see more of a definition when it comes to premiere packaging or secondary packaging. Premiere packaging covers the product itself. Secondary packaging covers one or many premiere packages in one pack. Therefore, label converters can easily expand their product portfolio. Not only within self-adhesive labels, but also by new applications in secondary packaging as shrink sleeves, sleeves, IML (in-mold), pouches, sachets, girdles, etc.

Most of the label converters today are already working with their transformation towards digital. From design, digital workflow to handling so many more jobs per hour, printing digital (HP Indigo digital-offset press) to die-cutting and finished labels. Digital Printed Labels, referring to FINAT, has grown from 17.7% in 2014 to 22.19% in 2015 regarding Converters total revenue. When it comes to gross margin, Digital Converters claim the figure is DOUBLE. Having already gone through this transformation, Digital Label Converters have a great advantage and by knowing digital as technology and hopefully digital as a business model, now stand in pole position for packaging. They can either expand their possibilities and portfolio or merge with conventional packaging converters who are waiting to experience this transformation in the packaging market.

Global printed label market by label type, 2009-19

GLOBAL($PRINTED LABEL MARKET

BY LABEL TYPE, 2009-19 billion, constant 2013 prices & exchange rates; trillion A4 prints) ($ billion, constant 2013 prices & exchange rates; trillion A4 prints) 0,4

$40

1,2

$35 1,0 $30

0,8

$25

$20

0,6

$15 0,4 $10 0,2

$5

$0

2009

2010 Wet glued labels

2011

2012

Pressure sensitive

2013

2014

Multi-part tracking

2015 In-mould

2016

2017 Sleeves

2018

Total label printed volume (trillion A4 prints)

Label types in global label ($ billion cosnstant 2013 values)

$45

2019

Label volume

SOURCE: SMITHERS PIRA

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9.

The importance of sustainability Environmental, Sustainable, or Circular. That’s a big issue right now. Let me explain. First, you grasp this as a new trend. It started with consumers’ focusing more on the environment as a value for them to choose, where all companies then started planning on how to be more environmentally friendly. Then, everyone realized the consumer-value of action instead of empty words and how it made them stand out differently from their competitors that hadn’t done anything yet.

Then, Sustainability came along, meaning that everything we use must, as best as we can, be returned to Mother Earth and be CO2-neutral. Companies started to display this in their ads; the use of alternative energy sources for production like solar panels, replanting trees, protecting the worldwide rainforest, etc. They did everything they could do to show that they really cared about our planet, that they avoided unhealthy competition, and were doing things – not only saying things.

Now, we enter the next level of demands, getting the world Circular. It’s both the Environmental care and Sustainability value; mix those together and you then close the circle. I hope it will add a lot of knowledge for both suppliers and consumers and become one important differentiator when we make our choice in stores or while e-shopping.

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This quick summary has no intention of giving a full overview of the aspects surrounding environmental and sustainable issues. But I will try to pinpoint how and why we react as we (as consumers) do. If you know a bit more than your competition, you can do a bit more. Will every consumer change his or her behavior? Will they accept to pay more for circular packaging, in the mindset of them saving the planet? Each generation and culture have their own different legislation around these topics and it will be very important in the future. It’s a significant external factor to be handled and cared for by every region, segment, and product. It’s probably the most important factor that will change the entire playing field of packaging, concerning when and how the market will develop over time.

It’s true that the knowledge and understanding of packaging, both when it comes to protection during transport and the possibility of extending the lifespan of a product, hasn’t reached the whole way through to the consumer yet. When the Swedish Environmental Protection Agency asked people about packaging, more than 50% of the consumers participating in the survey saw packaging in many cases as unnecessary and that we use way too much packaging. Communication about packaging and the evaluation of facts for why we use packaging and when we should use packaging is difficult. Helén Williams, a senior lecturer in Environment and Energy systems at the University of Karlstad in Sweden, shows that if we instead increase the amount of packaging, more portion-sized packages, it will be more environmentally friendly than using large packs. As an example, a new packaging idea about a two-piece bag of salad. You only break the package for a smaller portion at a time. The result is that you can increase the amount of packaging material up to 40% and still be more sustainable. By decreasing our food waste, we need to produce less food and with that less packaging. Cutting out unnecessary production plus transportation, it will provide big environmental benefits for our world and us.

Referring to Smithers Pira: in food packaging, the packaging itself causes on average less than 10% of the carbon footprint of the product. That’s almost equal with transportation. Whereas the largest proportion in general comes from the production of the raw material used to make the product. Despite this relatively tiny footprint, packaging is still extremely important. Why? Because, if it fails to fulfill its primary function, a full 100% of the product will turn into waste.

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9. The importance of sustainability

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10.

Earth to table & the food waste Food waste is one of the most important sustainability issues we have to deal with. We must solve this problem to ensure future life on Earth. Today, we produce food for more than 10 billion people even though we’re “only” 7.5 billion people on the planet. And still people are starving.

Of the total amount of food that we grow, almost one third is thrown away, both in the supply chain to our home and after that. Swedes eat around 800 kilos of food and drinks every year per person, according to the Swedish Environmental Protection Agency and Statistics Sweden (SCB). In addition, we throw away 81 kilos of solid food waste per person and year in the sink, plus 26 kilos of liquid food and drinks via the sewer every year. A total of 107 kilos! Of these, 28 kilos are decent food that could have been eaten instead of discarded. These figures are based per person in a family of four. In a single household it’s even more.

About a quarter of the greenhouse gas emissions that Swedish consumption causes comes from the food industry. Swedish households throw away food equivalent to a carbon footprint of 442,000 tons a year. It takes 360,000 cars to create that much pollution, referring to the Swedish Environmental Protection Agency. The Swedish Parliament has decided that the Swedish emissions of climate-changing gases should be reduced with 40% by 2020.

To succeed we must change our consumption habits.

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Three professors at the Swedish University of Agricultural Sciences (SLU) stated that we will have a 40% harvest reduction – if 100% of our cultivation would be organic/eco – that requires a vast expansion of cropland. Our current arable area of 2.6 million hectares would have to be expanded by an additional 1.7 million hectares. If we go 100% eco the outcome will be less food on the same area as we grow today, less food to feed the world population with. Therefore, it is very important to do this transformation with care. Not only as a plea to consumers to spend more money on eco to feel good and have a better conscience, believing that it will help save the world.

A greener and intensified local farming with less meat production can help make an agro ecological conversion, in the words of The Swedish Society for Nature Conservation. This will help the world becoming more eco-smart. As I mentioned earlier, we produce food worldwide for about 10 billion people, but there are “only” 7.5 billion human beings on this planet – and still people starve.

That tells you a lot about the magnitude of food waste. By turning farming into 100% eco, there will be even less food around. It will become more expensive and fewer crops will be grown. We must find a middle ground and take it step by step.

In 2016, Sweden imported 1.5 million tons of waste/garbage from other countries like the Baltics to feed our township heating energy plants. That’s a quarter of the total amount of waste we burn to get energy. Importing waste and garbage is an economic factor. Our Swedish plants get paid to take care of the waste and then paid again for the energy. The Swedish government now plan to tax the townships for this waste management. The EU has invented a staircase, the so-called waste hierarchy. The staircase shows the priority regime for legislation and policies in the waste area. The priority system shows that waste is primarily to be “prevented”, secondarily “reused”, thirdly “recycled”, fourthly “recovered” by other means (for instance, energy recovery) and as the last alternative being “disposed” of in another way. The scheme is valid provided it is environmentally justified and economically reasonable.

When it comes to packaging, we can help and improve a lot. Today’s consumers have a lot of opinions and feelings concerning packaging. Many are convinced that too much packaging and too many packages are bad for the sustainability of the world. However, in most cases, it is actually the opposite. The more we protect our food and products the less waste we generate and the less we have to produce. It’s a fact. This transformation within the packaging industry will help a lot. We move toward new, digital packaging and modern food packaging, combined with new fossil free, recyclable, and compostable media. Packaging will turn into being smarter and then also more intelligent.

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10. Earth to table & the food waste

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The key, and the most important use for a package, is to protect the product inside from the outside, physical damage, contamination, etc. Other important uses of packaging are for example identification, information about the product and attractants, helping the product to stand out against competition. Food packaging will also become smarter, with less waste and converting to a more agro ecological society. In the food industry, the time from farm to table is crucial and the size of packaging, from family pack toward portion pack, will save plenty of unnecessary waste. For example, salad filled with modified atmosphere (MAP) is an ideal solution. When you break an ordinary package for using only a part of the salad and then put the rest back in the fridge – that salad will turn bad very quickly because salad covered with plastic without the MAP rapidly turns into waste. Otherwise, storing salad normally is in fact storing it not too cold and covered in paper… Instead, we could use right-sized packaging for the exact amount we’ll use that day; here MAP’s have significantly increased the lifespan of salad and reduced salad waste.

Packaging makes food last longer and reduces the mountains of waste that increases worldwide. This fact is often forgotten in the everyday conversation.

Take the Japanese example of bananas; in Japan they pack bananas one by one.

They don’t understand us Europeans who put ten bananas in one package. We only eat one banana at the time and the Japanese bananas live 5 times longer than ours after we open the package. It’s the same as the discussion about the cucumber – with or without the plastic sleeve. Research shows that a wrapped cucumber lasts more than three times longer than an unwrapped one. And a longer life for the cucumber means fewer deliveries, less transportation, and less food waste. So, if you consider yourself an environmentalist, think about the plastic sleeve next time you choose your cucumber at the grocery store.

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10. Earth to table & the food waste The flexible packaging industry of today still mainly uses fossil-based plastic media. Here, the industry must convert according to new regulations and the vast and growing green demands from us consumers. We will see not only none-fossil and recyclable media but also compostable, bioplastic. First industrial composting that can scale, manage, and optimize the conditions together with the bioplastic development. Later, it will also involve home composting.

Digital print and the conversion of packaging and reducing the food waste (maybe down toward â&#x20AC;&#x153;zero wasteâ&#x20AC;?) involve many stages to go through step by step. Getting rid of the fossil-based media is prioritized, as is producing more on demand instead of to stock. Speeding up the T2M with a shorter delivery time of both the packaging and the product produces a faster response time and less waste. Variations with more SKUs dramatically increases the local approach and adds value by having the right thing at the right time in the right place. Digital by default means less waste also when it comes to waste in the setup of a print job, in many cases going from hundreds of meters of waste to only a few meters.

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The mental journey This part – the mental journey – is one of the most important segments in the whole process of adding digital value to your business, instead of only adding a new machine. It’s probably the most unknown factor that often stops us from executing our decisions.

You have to be prepared. If you don’t know and understand the steps and consequences of changing your business, nothing will happen. Not being prepared takes you far away from any decision. It will take you on a hard detour and it will feel tough as you might need to change and transform your business and company, but you never really get it done.

For most of you, reading this for the first time, transformations can be something new and unknown. If you don’t feel you’re in control, the upcoming effect (and result) won’t happen. You must understand all of the steps, good or bad, and be able to make the necessary changes. Otherwise, uncertainty will make you stop; uncertainty will make you look for easier and simpler alternatives. Your mental exit will emerge and you’ll hear yourself saying: “This is not for me, we don’t have this kind of jobs. Digital might be something for the future, but not now.”

What happens to us if we embark on the mental journey? Well, imagine you are about to make a business decision. There are two roads ahead. One you already know, the same road you always drive. A road you know inside and out. The other road is new and unknown. One thing is similar for both roads. You’ll have to go through the entire math needed; prices, costs, finances, specifications, profitability, quality, speed, new applications, so on. When all the data looks

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good, you reach a stage where you must make some kind of leap forward. It’s crunch time. Then, your defense mechanism reacts inside your stomach. Will you change? YES. Will you leave what you already know, change to something you never tried before? SCARY. Or will you stay on the same old road, that road you have been on for such a long time? EASY. Do you want to try a new road, where the market is moving, together with your customer? Yes or No? The new road, for you a brand-new direction, adds a great deal of new added value for both your own business and most importantly for your own customers.

Staying on the old road, using the same old tools (read conventional printing presses), will not take you forward. Maybe you’ll make a new investment to speed up your old tools. To shorten the time spent per job and creating a possibility of changing jobs faster than before. But will that add anything to your business value and improve your profitability? Probably not. You’ll soon have to give away every earned percentage to get the extra volume you need to reach the lower price tag per job. Will it add anything to your customer? No. You are back in the old treadmill, the usual rat race, where nothing new happened or got added in terms of new values to your products.

The Graphic market is known for being a mature business, with low margins that continue decreasing. Do you feel scared or inspired? Right now, there’s a risk that Packaging Converters will take the same road as many Commercial Printers. It’s time to change to a new road! Switch to a new path where you add new digital values made for both you and (again, more importantly) your customer’s new demands and new needs. Focus on your own customer! It will make you unique in front of your customer and it’s why there is no “one-recipesolution”. Your customers are also unique to you and they are the ones that pay your bills, etc. Are you scared or still inspired? Your decisions are controlled by your stomach (gut-feeling), the math-questions (head) says YES or NO and the passion is in your heart. Passion is your driver, your engine to go forward or not.

No engine, no move. But the real executer is your stomach. That requires some different kind of data. Not “what” but more of “how”, “if”, and “why”. Are we prepared? Do we have all the knowledge we need? How should we do it, how should we proceed? What if this or that happens? Welcome to the real journey, the mental journey.

You can read more about the scary part, if you want to, on how and why we react as we do, in my previous book “Visions & transmissions” where there is a whole chapter dealing with FUD (Fear, Uncertainty, Doubt) thoroughly. This is central for all decisions and is located right in your stomach, usually called the gut feeling. After we’ve gone through this, hopefully you are now even

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11. The mental journey more inspired to execute your own change. That will lead you through this transformation and youâ&#x20AC;&#x2122;ll come out on the other end both stronger and more profitable. Now you will grow together with your customers. That relation, that togetherness, will get both of you ahead of your competition.

I will say this now, and I will repeat it also later in the book. It will hurt down the road before it will get better again. There is no free lunch, Iâ&#x20AC;&#x2122;m sorry. But the tree will bear fruit. The new road, the one less traveled yet, will take you there. I have been through this kind of changes many times before in my almost 40 years of working with transformations having transmissions as my engine in many different types of markets, all confirmed to have paid off very well.

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12.

The five elements Let’s go back in time for a short while. Just to understand where I come from, and how (in my opinion) things work and why we act and react the way we do.

My time of learning and finding my own balance started in Japan. It became my true school of life and I learned what value means in business. My first trip to Japan was already in 1976 (19-years young). It was my start of learning and understanding culture, trade, and business behavior. If you then combine this simultaneously with my first hook into the power of how new technology can and will transform us (the first real mobile phone network of Sweden MTD) it was altogether a convincing wake up call for me.

I learned what a transformation really could achieve. What power it held to change our demands. How it could change people and their behavior. It was a thrilling and awesome feeling. Back in those days I remember the most common phrase from someone calling from this new mobile phone: “Hi, I’m calling from my car”. The first Swedish mobile phone network came with Handic MTD 450. It became my first job.

The company named Handic was founded by Gunnar Wennerström (then Hansa Nordic) and went through the state-owned Navigator investment over to Datatronic and Mats Gabrielsson. Handic grew within lots of different segments as high-tech products mainly from Japan, own branded as well as branded.

My passion for the Japanese business culture and the ultimate balance in their behavior came in handy. At this time, in the late 70s and first half of the 80s, behavior, relations, and balance were more important in Japan than the size of the business itself. A typical meeting was a minimum of three days. Two days of building F2F-relations and balance, you had to fit in, build trust and be one of them, adding something to be a part of the family. It was about understanding their core values.

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12. The five elements If that went well, you could continue with a last day of business talk. If you didn’t match, no feeling or connection in the first days, there wouldn’t develop anything fruitful out of that meeting, that’s for sure. I found out that a Japanese person never says NO, not meaning that he means YES, and that you never should let him lose face for any reason.

This time (up to 1986 – 10 years) of traveling became my best school of a lifetime.

Learning how and why we feel and react in different manners. Today, it still is one of my biggest assets. I have learned to respect and understand business value between people. I have learned communication and balance between people selling and people buying. It all fits inside the very old and classic elements: Earth, Water, Fire, and Wind. And for a Japanese philosophy the fifth: Void (sky or heaven). In business, this must be fulfilled in the right order. Earth comes first, meaning stone, square, and trust. Water, meaning to grow fruitfully and profitable. Fire represents the energy, the body, and our passion. The wind practices growth, expansion, and emotions. The fifth element void represents spirit, thought, and the possibility to create new energy. It represents our ability of thinking and how we communicate outside of the box, creativity.

This philosophy goes through the essentials: life, medicine, health, and harmony.

They are all affected by these five elements. In Asia, you see these classic elements represented everywhere with colored flags. Blue symbolizes the sky and space, white symbolizes the air and wind, red symbolizes fire, green symbolizes water, and yellow symbolizes earth. I had the opportunity in 2017 to visit both Bhutan and Tibet for the first time. This trip was emotional for me and gave me the feeling of gratefulness; it also confirmed what I once learned earlier from Japan and added a new cultural twist to my Asian love and passion. I truly understand why people visit the Himalayas from all over the world – it boosts both your body and soul and I warmly recommend it to anyone. My own bucket list has many new places to explore.

We all have a lot to learn from each other around the globe. Even if we’re all different, we have the same value and we represent so many different cultures – wow! When planning a new market campaign, you normally target and address a specific culture and it must be done through that specific cultural value (behavior and need) to be successful. Doing business, the American way in France is as bad as doing the French way in Sweden or vice versa. The more attachment and knowledge of the current culture, the better the result. It’s the same for us doing business in Sweden with Swedes. We have many different local cultures in Sweden and you have many different customers with different cultural values, so make your work different together with your customer. All of us are different, more or less, and that adds value.

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Disruptions The rapid development of new and advanced technology has so far played a major role in our transformation toward the globalization of today. It also plays a big part in the disruption of business models and in the way how we do business together. Disruption affects the existing chains from A to Z, discharges the chain, and creates a new shorter chain with fewer links. Everything then becomes faster and cheaper. New opportunities are provided with many new possibilities and with increased profit. Use the gap to increase the margin with new added value for both you and your customer. Don’t start a new price rally – gain your margins instead. Competition will come and push everything to lower levels. You can stay still and do nothing, drop your prices and margins, again and again. Or you can grab the opportunity, change and add value.

Disruption to a new chain often comes from outside, never from inside of an existing chain structure. An example of this is Henry Ford in 1908 and the Ford Model T. Ford decided to develop the production of cars instead of giving customers what they thought they need at the time, a faster horse. The Ford Model T was not the first car developed in the world; the car itself was not a disruptive innovation but an expensive luxury development that added things that horses couldn’t do. When the Ford Model T came along it discharged the chain with mass production and the era of horses as a means of transportation was over.

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This transformation was so big that we got a full industrial transformation, a paradigm shift into what we know as a part of the 2nd Industrial revolution. The existing and traditional chains will normally only develop from the outside, the ones active inside of the chain usually doesn’t change by default. Maybe they will evolve with small development of links in the existing chain, with a small impact on the whole value of the chain itself. As a result, there will be no need for a different way of thinking; no change, no disruption happens.

Therefore, a disruption normally comes from outside of the existing chain. It’s made by the brave ones, brave enough to think from outside of the box (“rosh gadol” is Hebrew for “big head” and was a chapter in my previous book that dealt with this bravery). These companies normally include an entrepreneurship of passion and full focus in going from A to Z in a shorter, better, and more effective way than what is possible today. In addition, they usually have no legacy to consider. Using Tesla as an example, manufacturers that develop traditional fossil cars can’t easily turnaround fast enough as they carry too much old legacy that they must have time to pay off (ROI – return of investment) before they can change their investment according to the new demands. Those who refuse to change or change too late in a market that already has transformed will miss the window of opportunity and get less attention and less value to work with. They will be left behind and miss out the new added margin gap. The transformation level is normally pointed out by how many losers and how big of a loss it will generate as well as the level of profit and number of winners. Ford Model T versus horses, a transformation that really flipped a whole industry.

An external factor is everything that can influence a transformation from outside of the chain. The impact can slow the process down or speed it up, reduce or increase its power. The political climate (Donald Trump) and the Chinese economy are two examples that will affect this transformation. External factors can also be the market legacy itself reducing the effect and speed of the process. I remember the Commercial printing transformation, where printing for generations had been done with a very small amount of development.

In addition, this chain is hooked into another chain, the brand owner’s chain toward us consumers. Looking at a direct chain from A to Z, you’ll notice that B2C (business to consumer) normally goes much faster than B2B (business to business). This transformation of the packaging market is as the commercial printing market a B2B, with the same risks of including market legacy, but this time we’ll have more of the tools in place before we start transforming. Yes, we still have things to do when it comes to integrating, like the finishing part to be pack-ready and adapting it in all segments. Today, we see big demands, external and internal factors that are showing the green lights. We see suppliers and investors that are investing big money now, which alone can make this transformation to be a true flip of the hole market. It involves producing on

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13. Disruptions demand instead of producing to warehouses, personalization for global brands, localization for local brands. We also see a big and growing demand for new sustainable and recyclable media, where the market pushes away from fossilmade plastic, meaning many more different and shorter runs. The timing and trigger for this disruption is the upcoming low economy that by itself drives the need for a big change, will it FLIP?!

Are you ready for this? You need to be on the right side after the market turns over and it will never resurface where it went down, I’m sorry. Some see this change entering as a dark cloud on the horizon even if they try to plan ahead, also in the graphic market. As for the newspaper sector, for example, some planned for change but made the wrong conclusions. A big Norwegian newspaper group told me in meetings almost 10 years ago that they could see the dark clouds coming, but they said that it was already too late for them to change. Now they have downscaled dramatically with no fuel left in the company-tank for a transform from where they are today. Newspapers overall have consolidated their business year after year with up to 20% annually and that market is still falling. If you don’t change in time you’ll most likely get badly hurt, it’s only a matter of time. The transformation that begins now in the packaging market will reach its full power in the incoming low economy and payback will arrive in the next high economy.

Culture also plays an important role in disruptions. Many regions, like Japan, have a culture of packaging everything, for instance bananas one by one. They don’t understand why we in the Western world insist on packing ours in a 10-pack when you only eat one at a time and we must throw too many away as waste.

In addition, we see a general demand of more packaging for portions pack instead of big packs. Most experts today agree that this strategy can profoundly reduce our food waste, even if there will be more packages produced. With as much as 40% more packaging, it will lead to a sharp decline in food waste – that’s better for Planet Earth. Now, we also change our packaging media in this transformation toward more sustainable and recycling modes.

The last, but not least, level of transformation changes everything to a whole new chapter. This disruption also includes external factors like new bases of value, new and different views of how we assess values that closely relates with our way of behaving, our relationship to Mother Nature and how we handle culture and believe in religions, etc. This is not only a development, it’s a full new business transformation. Together with other transformations at the same time, maybe we are moving into a new super or mega cycle. We are moving closer toward our next paradigm shift (Thomas Kuhn), shifting toward the 4th Industrial revolution.

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Conclusion so far We have come to the end of the first part of this book.

I hope you have enjoyed it so far! These are exciting times in an exciting part of our global business world.

If you’re already in this business or looking to enter and invest in a new business, this market is probably one of the best transformation opportunities of its kind in this upcoming low economy. High stakes, high returns. I am not saying that it’s cheap, not even easy, but the return on investment (ROI) is probably one of the best around. Remember the old saying: “If it’s easy everyone can do it, if everyone can do it there is NO money in it”.

We’ve been through the “how’s” and “what’s” of the packaging market as of today 2017-18. I started to write in March 2017 and took my hand away from this text and left it to Jonas, my text coach and shadow, at midsummer 2018.

It’s not meant to be the deepest or most thorough analysis; it’s more of an overview. Nevertheless, it’s important as a kind of background, so that you and I have the same outset and starting-point for the real journey.

I’ve emphasized the importance of knowing and understanding the brand owners.

How they think and why they react the way they do. They are most likely your customers, from where you get your income. As we go forward, it’s important to understand their concerns and challenges. So that you know what, where, and how you can add value to their business, and how you can in the best way possible attract their customer – the consumer. Integration is the key, talk and listen to your customers, open up a dialog about how you can do more for them.

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One thing that we can never underestimate is different cultures having different demands and needs. All things unique with your customers are also unique in your regions, behaviors, beliefs, and issues of sustainability. This is one of the most important parts of making your success story real. Don’t just copy a strategy without thinking about how that will affect your customer and affect your own company. How will it affect your client relations? Keep being bold and brave, but also smart and thoughtful about these things. Do your homework.

We’ve worked through where the market stands just now, the status and upcoming opportunities. Digital is a sustainability motor for the market and the consumer, watch how and to which level digital will drive this transformation.

A very important step is going from an environmental statement to really act sustainable and getting circular regarding everything that we eat and pack. Still the biggest enemy to Mother Earth is food waste. Thus, we need education to reach more accurate and circular packaging. Installing digital, as a machine only, will (I’m sorry to say) not make any difference to your business or value to you or your customer. The approach must be wider to succeed.

Two other things that we have established are the important factors of new technology and timing. New tech will play a role as an enabler for new disruptions and will become a factor in changing the market. Timing is of key importance, and how that fits with a higher demand or not. I also mention what role the elements will play. Earth, water, fire, wind, and for the Japanese philosophy the fifth element: void. It’s maybe too deep but have this in the back of your mind and it will help to understand WHY things occur in our business.

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14. Conclusion so far Finally. You must accept, and be prepared for, your own mental journey. I can’t address this enough. That it probably the best value, the most important lesson, of this book. Prepare yourself well for your own mental journey. It has to sink in and gradually form your own gut feeling. The new road, for you a brand-new direction, adds a great deal of new value for both your own business and most importantly for your customers (the brand owners). Don’t mind reading that chapter more than once!

Now we have climbed up to the top of the “mountain”. The next part of this book will take us downhill safe and sound. I hope it will give you strength to set YOUR own story, making YOUR own steps, and then executing YOUR own plans with lots of courage and confidence. Remember that courage is like a muscle; you need to keep training it to continue being courageous and remaining on top.

“Everything that’s not in development is in settlement” - Christer Olsson.

I hope this adaption to an ever-changing market will be your future way forward.

Be the leader and lead your company through this change! Build your courage and your knowledge – it will make your successful change so much easier.

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Case: StrongPoint Labels StrongPoint Labels has continuously invested in digital presses and was the first firm in the Nordic region to buy HP Indigo 8000. The company is based out of newly renovated premises in Malmö, which receives study visits from all over the world. CEO Leif Persson sold digital handbooks with the help of Rolls-Royce in the 1990s and has seen customers’ pursuit of variation drive an exciting market.

– We make more money with our digital presses than with other tools. It is incomprehensible to me that not everyone has digital print today. But it’s very important to work together with the customer in this process, he says.

TELL US ABOUT STRONGPONT LABELS, WHAT DO YOU DO? – We produce, market, and sell labels to all industries in Sweden and Norway.

We help customers with the entire business process of self-adhesive labels, from design to print, says Leif Persson.

HOW IS THE LABEL INDUSTRY? – Stimulating and developing! I’m basically a salesman and enjoy being out meeting customers. Our flexibility and breadth make sure that we meet all kinds of customers. It’s great fun, from slaughterhouses to drug stores to startups and everything in between.

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15. Case: StrongPoint Labels HOW DO YOU HELP YOUR CUSTOMERS? – We are an important part of their products. In the store, consumers make many decisions based on the label and we will make our customers’ products more attractive. Imagine when you go to buy a bottle of wine. What will make you pick a certain bottle from the long row of bottles on the shelf? Nine out of ten answers: the label.

WHEN DID YOU START THE DIGITAL JOURNEY? – In 1998, I was a salesman at Elanders that had digital presses from Visutech/ HP. it was there that I realized the greatness of digital, even if it at first was hard to convince customers about the digital quality. Luckily, we did manuals for Rolls-Royce at the time. I brought those to my other customers and kindly pointed out that if digital print was good enough for Rolls-Royce it might be good enough for them. I soon realized that the customers wanted smaller editions and chased variation.

HOW DID IT CONTINUE? – The demand of smaller editions and more variations have increased. Regarding more SKUs (Stock Keeping Units) digital is totally invincible. I was at Sydetikett around 2007 when we had great success with digital print. We were early adopters, sold a lot, and made good money. Sydetikett later joined PSI Group that became StrongPoint and kept growing within digital print.

WHICH LESSONS HAVE YOU LEARNED GOING FROM ANALOGUE TO DIGITAL? – I cannot understand in my mind that anyone in our industry doesn’t have digital printing today. It’s totally incomprehensible. I also think that they who buy digital do it in a far too divided mode. They put digital print in one house and traditional print in another house. It’s a mistake. Buy digital and use it! Widen the range and the offer to customers, work toward flexible packages and see the opportunities. It’s where the money is. StrongPoint makes more money with our digital presses than with other tools. We use them as much as possible, of course! Speed is our trademark. We have extremely short delivery times thanks to digital and our customers benefit from it.

ANYTHING ELSE? – We never talk tech with customers. We simply find the best solution in every case. And don’t just buy a digital press and think that everything is fine. You have to do more! You have to bring the digital values into the business plan and give the customers a whole entity. Work together with your customers.

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HOW HAS IT CHANGED OVER TIME? – Previously, digital printing was thought to be for special products only. When we bought HP Indigo 8000 in 2016, we decided to also run commodity. We must be effective making a simple price tag for a food producer as well. We have spent a lot of time creating good flow rates at prepress and at the order office so that the products quickly get into the machines and out on the market.

We have people around who prepare this. It’s in motion all the time. That is kind of a rethink concerning digital print. We have gathered all our printing in one production area instead of dividing it. Everything is gathered in the same world.

HP has ranked us #1 in terms of using our machine, so we are doing something right.

HOW IMPORTANT IS THE SUPPLIER’S ROLE WHEN INVESTING IN DIGITAL PRESSES? – Very important! Visutech has helped us massively when it comes to making the right decisions. I could have bought three flexo presses for the price of one digital press but chose to continue investing in digital. We see clearly that our output is way bigger there. Visutech has helped us to think correctly in our investment, when it comes down to our specific bags of jobs and strategies.

They have compared digital print with inkjet and flexo to see what’s best for us and have supported us through their professional staff.

WHY DON’T ALL COMPANIES TAKE THE DIGITAL ROAD? – The investment is the threshold. Many companies compare with what they have today. That’s wrong. Instead, they should look at how much they can bill per hour and what they can deliver to the customers per hour. You can deliver so much more per hour using a digital press compared to flexo. Therefore, you will make more money by the hour. To me, that is a simple equation.

HAVE YOU BEEN USING VISUTECH ACADEMY? – Absolutely, I have three guys there getting an education as we speak. It’s good and we’re satisfied. They have different programs for different levels, depending on where in the transformation you are. We’ve come a long way and made a special education with Visutech, raising the bar. It is a good collaboration where we benefit from each other. I feel safe and confident with Visutech and HP, they’re really smart people and when they introduce something you know it is well thought through. It’s not me who should think about and invent these things, it’s their job and they come up with stuff that is well intended and suited for my market. It’s a sense of security.

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15. Case: StrongPoint Labels DID YOU READ THE LAST BOOK, VISIONS & TRANSMISSIONS? – I read parts of it and Jan-Olof is right about many things. It’s in the low economy, when it really hurts, that companies begin to invest. The book can help people in the business going through the transmission from analog to digital.

Increasingly more people will walk down that road. It’s just a matter of time.

WHAT ABOUT THE DIGITAL QUALITY TODAY? – It’s best if you look at the options. You can be so creative.

WHAT DOES THE FUTURE HOLD? – Still only 10% of the labels worldwide are made digitally, so there is a lot left to do. At the same time, you cannot help but wonder what will replace labels far into the future; surely new technologies and new ideas will arrive. We’ll continue to be a part of the customer’s success. Digital technology enables you to work easier, faster, and more environmentally friendly all the time. It feels inspiring.

COULD YOU NAME THREE KEYS TO SUCCESS WITH THIS TRANSFORMATION? – One, do not see digital as a single technique but rather as your everyday life.

Make a business plan for your entire business where digital is included. Two, do the homework and calculate how much you can bill per hour with your new tool.

Suppliers can help you with that. Three, don’t make a fuss about it! Build long term and look at the opportunities.

••• SHORT FACTS Company name: StrongPoint Labels AB Employees: 50 in Sweden, 35 in Norway CEO: Leif Persson Parent company: StrongPoint ASA Revenue: Circa SEK 195 million a year Production: Malmö (3500 square meter) and Tangen in Norway Digital presses: One HP Indigo 8000, one WS6000, one WS6600 and one WS6800

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Case: Nordvalls Etikett Nordvalls Etikett digitized their machine park, got up to speed, and turned bad results into good ones. The company knows the importance of internal commitment during a transformation and has worked hard at improving workflows. New levels of flexibility, quality, and production speed have been achieved and created steady profitability.

– This gives our customers many options, and it gives us a strong belief in the future, says Patrik Jenemark, CEO.

TELL US ABOUT NORDVALLS ETIKETT, WHAT DO YOU DO? – We make all kinds of self-adhesive labels printed digitally or flexo. We work a lot toward the pharmaceutical industry and also with shipping labels, which increases hand in hand with online trade. Furthermore, we sell leaflets and tickets of all kinds, says Patrik Jenemark.

HOW’S THE COMPANY DOING? – Today, we’re fine. But it has been a tough ride from 2012 when the effect of the changed customer structure and increased cost affected us. Now we’ve been through a transformation that makes us well equipped for the future.

I see an effective organization with the right tools and a belief in the future.

HOW HAS THE EVERYDAY WORKING LIFE CHANGED? – With digital values, we’ve taken several steps forward. Take Felix Ketchup as an example. Ten years ago, the press was launched with their labels on Sunday evening and kept going until Friday lunch. Then, the press was restarted on

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16. Case: Nordvalls Etikett Sunday evening. Same ketchup all week. Now it’s completely different. It is variations with less sugar, eco, chili, Easter special, name special, so on. There are many more and smaller series and being able to produce that is a key to success. Here’s the digital revolution. If we do 50,000 runs, an hour’s setup time doesn’t matter. But if we run the series in five hours, then one hour’s setup is 20% of the total runtime. The more series and campaigns, the more we notice the digital benefits.

WHEN DID YOU START THE DIGITAL JOURNEY? – Early, but it didn’t take off. We were too traditional. The first digital press never became a serious alternative to flexo. I came here in 2012 and, since then, we have made a journey back to profitability. We went from 160 employees to 100, closed one factory, outsourced commercial print and found a good mix between short and long jobs. We bought two HP 6800 and were able to transfer unprofitable short jobs from flexo to digital and made the job profitable.

You can turn it around. We spent a lot of time finding the break-even point to save setup time and clichés. Everything below the breakpoint goes to digital.

WHICH LESSONS HAVE YOU LEARNED? – Employees need to understand the benefits of the process. It’s not just about educating operators but also bringing in the rest of the organization. Make them realize that we don’t suddenly sell “digital labels” to customers; we still sell “labels”. Whether it is flexo or digital, we choose the best print-tech according to customer needs. If we sell it as “new digital labels”, the customer feels like they should get a lower price. What we see is that they can get a good price even though they order fewer labels at a time. It is possible to create a win-win situation where it is not necessarily the price that is the most important thing.

In addition, we don’t sell printing technology. We sell labels.

ANYTHING ELSE? – We must use the digital benefits and help developing our customers. Seize the added value of digital. Take advantage of the fact that it’s easier and faster to make changes, so you don’t need storage, and thereby that prepress is simplified. It’s a journey.

HOW DO YOU GET THE EMPLOYEES ON BOARD? – By building a commitment. Study visits are good, Visutech Digital Academy is good and HP is good. They provide training, encouragement, and pep talks.

Jan-Olof Jungersten has been a good sparring partner for us at Nordvalls; he knows the trade and has been around for a long time. The support of the supplier is important.

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IN WHAT WAY DID VISUTECH SUPPORT YOU? – Jan-Olof is a man of vision and I used him as a sounding board. He initiates ideas and I’ve had a big exchange with him and his experience and foresight.

Visutech has a good and local service when you purchase HP presses. It’s reassuring. I read Jan-Olof’s book “Visions & Transmissions” and benefited from it, it was interesting while thinking along those lines. I was a little frustrated when we didn’t get started earlier with the process at Nordvalls and had many sound discussions with Jan-Olof who helped us achieve this.

HOW DID YOU USE VISUTECH ACADEMY? – We sent employees from all over the organization for inspiration and to bring something useful back home. Salespeople, production managers, calculators, and finance staff, which means there are many of us who can help to get the message through to the organization. It has been an energy boost but also provided us with everyday tools. Then, of course, we have trained our prepress operators and printers, hands-on stuff. That combination has been successful.

HOW IMPORTANT IS THE SUPPLIER’S ROLE WHEN YOU GO FROM ANALOG TO DIGITAL? – For us medium-sized companies, the supplier is important. A security. They broaden the market range, which is good so that more people and companies tag along for the whole entity. The more converting to digital that occurs the better. In addition, they support with education and ideas on how to change and sharpen the workflow.

WHAT IS REQUIRED TO BECOME A WINNER IN YOUR SEGMENT IN THE FUTURE? – Up until 2010, Nordvalls was a constant winner and was earning money. We then experienced some pretty rough years. Now we’re back as winners. There are several reasons, but a big part is the digital journey that we have been on.

The modernization. Now isn’t the time to settle down, instead we must keep moving forward with the digital development. There will certainly be more digital presses, but also by further digitizing the workflow. Look deep into what we can give back to our customers. Does the customer have to send repeat orders by mail to a salesperson who puts it in our system? Could the customer put the order directly into our system? There is more to gain.

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16. Case: Nordvalls Etikett WHAT DOES THE FUTURE HOLD? – If you are in the printing industry, you should probably be in label printing. The future will come with increasingly more information on labels. More languages, more warning texts, more information, more of everything. RFID tags have been tried a lot over the years; maybe there is a breakthrough around the corner. Or, we’ll see completely different labels. We the printers must be ready for techchanges and embark on digital journeys together with our customers, as our customers increasingly digitize toward their own customers.

YOU ARRIVED HERE IN 2012. DID THE DIGITALIZATION AND TRANSFORMATION FEEL OBVIOUS TO YOU BACK THEN? – When I came to Nordvalls, I thought the problem was in sales. That was naive.

Sales are a piece of the puzzle, but it was more about switching to an efficient production. We reviewed the production workflow and when we compiled everything, the conversion time for short series appeared as an important factor.

We then looked at the economy and a lot of jobs didn’t make a profit. Could we raise the price by 30%? Not every customer would love that. So we looked at digital presses to streamline the conversions and after only a few months I was convinced. This was the only way forward. We couldn’t do the label itself that much cheaper, but we could cut other costs. We managed to deliver everything with fewer resources. That helped us to turn the ship around. Perhaps me coming from another industry was a good thing in the process.

WHAT IS THE KEY TO SUCCESS WITH THIS TRANSFORMATION? – Preparations are important, do the mental journey where you decide wholeheartedly to do this. And create commitment and understanding internally within your company.

••• SHORT FACTS Company name: Nordvalls Etikett AB Employees: 100 CEO: Patrik Jenemark Owner: Possehl Group Revenue: Circa SEK 240 million a year Production: Sjöbo (8,000 square meters) and Kungälv (5,000 square meters) Digital presses: Two HP Indigo WS6800

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How to add more value Adding value to your service is the number 1 priority. It’s the most fundamental and basic of all ingredients in every business model.

As a converter/printer, you start out with a request to support your customer.

You want to serve them with a service of something, adding value anywhere from design to the finished product. There are costs involved on many levels from labor to media and consumables including the cost of tools (machines) etc. Some part of this cost, as media, is per square meter, ton, or sheet. Other cost is fixed, as the investment in tools. This is then calculated into cost per hour, per machine, sometimes including labor and sometimes with the cost of labor separate. Many of today’s converters/printers add this cost into the key cost per job, sheet, ton or square meter, as they and their parents have done for generations in the family business. Based on that, the old generation tells the new one, it’s about filling the presses using this key cost adding a 15-30% margin. “Then, you will make money”. This way, the price that you invoice your customer is not as dependent on what you deliver in value. It only depends on your costs.

Unfortunately, printers/converters of today are often seen investing in digital, but they are using old business models when calculating and planning every job.

They will find out that digital alone isn’t profitable in their P&L. Sorry, but that comes as NO surprise. Digital is not by default replacing an analog tool and not while using an analog business model. We’ll go through how we set up a new business model that will work for digital only and, maybe even more interesting, analog and digital in good partnership, complementing each other. Together, this will add more value to you and your customer, win-win.

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Let’s go back to the question of adding value and how to add value instead of getting stuck in a cost-structure with merely prices, seen from a customer’s perspective. A good price doesn’t necessarily mean a low price; it’s the value for the customer that counts. Remember: “the combination of cheap and good still hasn’t been invented”. However, a good price is important to the customer.

Begin by adding more value for the same cost as before. Then, add more steps and values inside your customers’ supply chain. The more added value you can implement in your service, the fewer suppliers that customer need to have. This will give you control and a healthier business, plus less exposure on price. This excludes the 80-20 law (80% of your business revenue being generated by 20% of your customers) – it’s still necessary to have a good balance between as many of your customers as possible. Plan ahead, so you can afford losing a big customer without destroying/damaging the rest of your business.

This means that your support must be more flexible and your delivery time must improve. Go from cost per order to value and price per time it takes to produce.

It will increase your profit without increasing the total cost for your customer.

For instance, leave the old concept of big quantity orders per 6 or 12 months.

Instead produce on demand per SKU and store digital instead of physical in a warehouse. This will save time and money and minimize waste. This way, each product can also be updated every delivery time, providing the opportunity of extra turnover and profit. Knowing that production to stock in the graphic industry has circa 50% waste because of today’s speedier turnaround, this means a growing insurance. It’s possible with an unlimited number of SKUs (editions, language, size, color, etc.), small and medium runs, digital long runs, giving the customer a great flexibility with one and the same supplier. This will create new areas of business that analog can’t do, such as personalization, unique products for targeting, security, anti-counterfeiting, track and trace, etc.

To digitally produce all of this is simple. And with no added cost, it will generate higher margins to you and a lot of added value to your customers.

Going from a cost-based business plan to a market-based business plan is more profitable and will deepen your relationship with your customer. It will also increase your value to your customer. Plus, it will be more complicated for the customer to change to another supplier as you are more integrated throughout their supply chain.

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How to make sisters and brothers The concept of “sisters and brothers” is a way of structuring your own work with your own customers and then using knowledge from prior success stories for the next customer. You can often reuse most of a positive and fruitful relation with some fine-tuning and smaller tweaks. Of course, you’ll see new needs and demands and remove some details that won’t work on the next client, but the foundation stays the same. First you must build this structure of information, so it will work when you execute it in your dialog with your customer, step-by-step and customer-by-customer. Using this mindset will optimize yourself and your recourses in the best way possible based on your own organization.

Start out by defining your own customer base. How many are above a minimal turnover (outline only your regular customers) and find out what share each one has of your total turnover (if a few have a too big part of your business, you perhaps have a sensitive issue to deal with). Also estimate the potential volume per customer, they might deal with more than one supplier like you and add how repetitive they are today – it could be of great value to them ordering more frequently and having less in stock. Investigate if they are increasing or decreasing their business in volume, profit, and job length per order. It’s important to get this type of data as comprehensive as possible and without engaging your own personal feelings. Don’t add your built-in legacy as a value and don’t “dress up the queen”, instead you should be completely honest to yourself. It’s the same when you do your SWOT, analyze the model (strengths, weaknesses, opportunities, threats) that gives you a view of your possibilities, on one hand, and what you must improve to be a better service provider,

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on the other hand. Organize this SWOT for yourself or even better in groups or by department and you will see how people perceive things differently.

With all this defined, you are good to go to the next half and build your own go-to-market strategy. This is more about how to execute from your collection of data, which has become the foundation of how to do it. Here, prioritizing is a must and “sister and brothers” can help you organize from one customer to another. Build your success on already made successes and approach each and every one of your selected customers. The new digital chain in your new toolbox adds plenty of new values, like speed to market and a massive flexibility that allows you to follow the increasing demands of your customers. You should analyze your own status as of today, your position and why you are where you are in your own segment. Go through the products you offer today and why customers are buying from just you (no legacy included). All of the reasons gathered in this process become good value and add knowledge to your new digital transformation – except for one reason, lower price.

The next thing on the agenda is to define who to start with and which customer you should approach first with your new digital value proposition. Use the mindset of “sisters and brothers” and remember that they function on a oneby-one basis; don’t attack all of them at the same time. There is no way you can support all customers simultaneously and you don’t carry any experience of that.

Now, here you are with your best and most trusted customers. Those you might already have a dialog with and a good relationship with. Your favorites; let’s call them your new digital VIPs. They will form your base when building the new platform on how to work within this process, going from being only a supplier to now becoming a vital part in a partner-relation. It will increase your possibilities to distribute your new value proposition and increase your new competitive advantage.

As we train on how to operate all new hardware tools (digital press), we also want to guide and lead you through the first upcoming dialogs between you and your VIPs. With this cooperation and your collected data, you will be able to approach the rest of the chosen customers later on and remember that all customers are different, so you need different approaches to different customers. They are your new “sisters and brothers”. You will find out how welcomed your new approach is when you set up new different meetings including your new values. Together with your customer you will now build the dialog around how to work within a new and more effective process. Your customer’s products will then also compete better. You can now, as a team, also plan for the upcoming needs of tomorrow.

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When you see that the dialog and the process is working you should document every key-point leading up to that success. Which tool was the most effective in the process, what made the customer realize that they really wanted to do what? Document this as thoroughly as possible. Note how it was done, how the costumers responded, which need they had, how to solve this with what new tool from your new toolbox, etc. If there were mistakes or misunderstandings during the process, note them as well, they also have a value in your future work.

Debriefing is the best learning process for success and that kind of knowledge will guide you to do it right next time around.

Now you have concluded your first case. This process can then be used as a platform for your next VIP and then for more and more of your customers.

“Sisters and brothers” distinguish that all people are different. So, take the best from one sister or brother and then add same new components, twist it, remove some, and you’ll have a new baby and your successful family keeps growing step by step. Please note that I still haven’t talked about potential customers outside of your existing customer base. I’m a strong believer in starting to work with what you got today. It’s a lot cheaper, three times more effective than trying to get new ones from the competition. If you do things right they will come to you sooner or later. Rumors travel faster than you think in our business, not only the bad ones but also the good ones. Brand owners talk a lot to each other, on how to solve new challenges, their upcoming needs, and how to find new fulfilment.

You will have new customers approaching and the good thing is that you are the one setting the price for your added value. If you instead start by approaching a new customer, prices and margins will be your dialogue instead of your value.

Working within your own customer base first will not exclude the need for some marketing. Your market out there must be aware of your existence and the fact that you are around. Show your presence and how they can reach you; there is a big demand for new digital tools even if many still don’t really know about it – yet.

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How consolidation will appear in this market When a market consolidates, it’s like the market holds its breath. Everything except the regular day-to-day work is postponed while the market enters a “don’t move” mode. This can happen when we, like now, are in-between two phases of economy circles, after a long time of high economy and on the verge of going down – or vice versa when it starts going up again after a low economy. A market consolidation can also appear when something big is about to happen like an election, a war, a new economic situation, etc. I call them external factors and it’s out of our control and will affect both timing and the level of a transformation, affecting how and when the market will turn into a new direction. In a market consolidation, companies within the market often merge or acquire each other. The reasons may vary; it can be market growth, new markets and new products, increasing market shares, scaling a business, technology and know-how through acquisitions, etc.

The commercial print market consolidates mainly because of a decreasing market size (today around –10% per year and expected to continue down with another –19% until 2020). We’re approaching a stage where the consolidation in the commercial print market will not make any more sense, where filling the big analog presses with more print volume adds no more value. Instead the way forward will be by adding more value to the commercial print product itself, going digital! The IRM (Institutet för Reklam och Mediestatistik – Institute for Advertising and Media Statistic) just made a study involving 200 CMOs (Chief Marketing Officers) in Sweden. They see a decline in commercial print –19% in the next 3 years. The reason for them is not the price of the product but the value the product gives back compared to other media. Very little development

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has occurred in commercial print products over time, and yes some things regarding quality, time to market, and price – when the market instead asks for more value.

Market consolidation will also happen in the packaging market, again in a different way and for a different reason. This market is experiencing good growth in general. A larger share of marketing money today goes to packaging while a lesser amount goes to the today low value commercial print communication, digital print still grows its market share inside of this, plus electronic displays and the social media have an effect. Today, CMOs spend in total roughly the same amount of marketing money per product as in the past. But they have changed their way of spending that money. More money nowadays goes towards media that reaches a higher return of investment (ROI).

Among the CMOs, we see a clear trend going for packages and packaging as part of the marketing, that’s their focus and today it represents a higher return than any other marketing money spent – and we can give them even more value by adding digital tools. This move toward packaging as new marketing also generates another level of needs to cover new, upcoming demands.

Most converters in the Nordic packaging business of today have a good to strong economy. The best growth figures still come from the flexible side and they are the ones having the biggest change to go through in this transformation. Not only analog to digital, but also a big challenge on the media side where they must convert from today’s fossil based plastic media, a strong sustainability trend powered by all junk cluttering our oceans and shores.

Consolidation here is not only within the technology and know-how, it’s the whole infrastructure of their services. Many packaging converters today don’t even have their own workflow and Pre-Press capability, still buying it from outside of the company, which has been OK in the past if you only run a few jobs per day. That won’t work when you add digital to your production line with many more and shorter runs, maybe 10 or 100 times more jobs per day will go through the system. We will see acquisitions regarding digital label converters that know the technology, workflow, and prepress. We will also see the opposite consolidation, going the other way around to add know-how about media, finishing, etc.

On the board side, folding cartons and corrugated, there is today a small market growth with generally thin margins. Consolidation will happen here as well, but more coming from the commercial print side that already has transformed to digital – or the opposite when a commercial printer with digital wants to add new types of products, like folding cartons, to their own customer base. The consolidation when converters merge with digital offset printer’s know-how of the technology will save a lot of time and speed up the transformation. It can be a good investment to make, if possible.

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19. How consolidation will appear in this market As we go through a transformation it is still important to include the whole company and organization in one new business plan. Converters that acquire, for instance, a digital label printer and add new digital tools (machines) only, and then place that investment as a separate business, will do and sell two separate products. Such as when producing for customers who demand digital, short, and fast turnaround jobs, for example, without embedding the existing analog with digital as one new business platform. They will end up selling two different products, priced differently, no extra market value, same cost pricing, and a big risk of an internal competition instead of complementing each other â&#x20AC;&#x201C; which will add extra value and margins. One profit center provides less marginal-pricing.

By setting the production more as one combined item, adding values with the old ones for long runs and using the new ones on top of the market price, it all makes sense. Do less for more.

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Building your team We’ve been through some of the reasons for making a digital journey. I hope you start to feel the passion to change, or find your strength to keep on doing it, or simply feel inspired in your day-to-day work. It all depends on where you are today. Now, get ready for some hard work.

Let’s dig deep, train, exercise, and feel some pain. It’s time to get stronger and more profitable.

If you do this 100%, it will pay off, I promise. Don’t just buy and install a machine and continue with your old way of doing business. Don’t stubbornly believe that you are better off doing what you have done for the last XX years. Instead, accept the challenge of going through every part and detail of your company – and change! Be brave and adapt even if it hurts.

Climbing the mountain is the easy part and you have just done that; the hard part is going down. Most people who climb Mount Everest don’t hurt themselves going to the top; they crash on the way down. This part of the book will bring you down safely, so you can start executing your own climbing.

PREPARATIONS Do your own investigation and analyze your own operation. Take control of what you have. Be fair and objective, that’s crucial. If you overvalue or underestimate your setup, you’ll pay dearly for that mistake later on. It will only give the change a lesser effect and your efforts will be wrongly focused later in the digital process. So, be honest for your own sake. In this chapter, we’ll split the preparations into different parts, or teams, that you need to address.

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COSTUMERS Start with your existing customers. Except for your employees, the customers are the most important ones we have. How can you attract them even more than you already are? Start by speaking to them! Not a monologue but a dialogue. That means you’ll hear what they want to say and not what you want to hear. They are the ones paying your bills, it’s not the other way around. If you can add more value to them, both will have a win-win situation.

Don’t go to all your customers at the same time. Begin with your favorites. Begin with the most important and the ones you have a close relationship with today.

Build a document together. How do they see your relationship today, what is working and what could improve? Are you one of many suppliers today or alone in your bracket? How will their business develop over time and how will that affect your values tomorrow?

I also mention this in the “how to do” chapter later in this book and in the story of building sisters and brothers. It’s important. In short: it takes 1/3 of the cost to develop an existing customer compared to getting a new one on board. To win a new customer you often need to lower your price to beat your competition, which means cutting your margins and dropping profits. That’s not the best way forward.

MANAGEMENT TEAM You also need to get the management team on board for this kind of change.

You need to convince them with well-substantiated facts and lead the way.

It’s all the same if you’re in a big or small company, owner led company with management onsite/inside, or dealing with employed external management on behalf of boards and owners. Everyone named with a C, like CEO, COO, CMO, CFO, CTO, must be on board. The purpose of the mission is the same, but how to get approval for this kind of change differentiates – yet it’s always important.

If the “top dogs” don’t approve the change, it will never fly, I’m sorry. It will only take a small mistake down the road and everything will be stopped. For you as the initiator, the mission of change then turns into a mission impossible and you will not reach your goal.

In a larger company with external management of different Cs, this preparation not only needs to be exact and correct – it also must be thoroughly documented. This detailed documentation is both for the board, which will evaluate the investment, and for you as a leader having a “clean back” during the

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20. Building your team whole process. It’s also something to fall back upon if something unexpected happens, and it will. Good documentation must be from A–Z. In this book, I’ll try to guide you through these steps in the “how to” chapters later on.

A smaller and/or owner-led company has to go through the same exercise, but for a different reason. Here it’s more about helping your motor skills, keeping you on the road for the goal ahead even if you have 1,000 other things to attend to at the same time you establish this new change in the company. Be fair to yourself, you as a leader/owner of the company. Don’t do everything on your own. First, it’s impossible. Second, it makes no sense. Involve at least the team leaders into this change and delegate as much as possible. A good leader delegates about 90% of their entire job. A good leader also accepts and learns from prior failings. A good leader employs good people and gives them room to learn and grow. As Steven Jobs says: “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do”.

We’ll come to staffing later on. The way to choose people today is different because times have changed. That doesn’t mean you have to change your entire staff, but see them with different eyes.

FINANCE TEAM You may have had an admin system for a long time based on big orders and a small number of jobs. Find out how many orders you are handling today and how big they are. Go through the last 5 years. You’ll find that the numbers have increased but sizes of orders (run length) have been shrinking year after year.

So, draw a line from the last 5 years up until today. Then extend the same line 5 years forward and consider your future needs. Prepare for your upcoming 5-year-period. You have to go through and check that you have an ERP (admin system) that can cooperate with the upcoming new business. It will be a lot more jobs to invoice, from small to big, times 100 and maybe if you go into e-business times 1,000. Small orders must fly automatically through the system without manual intervention. Small orders (e-business) also need connection to a payment system (credit card, PayPal, or something similar). Preparing for this will save a lot of time and trouble later in the process.

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PROJECT LEADING TEAM How will the project leading team be affected by going digital? First, we need new tools for managing many more jobs than what’s being done today manually.

They will go from handling maybe 5–10 jobs per day to maybe 50–500 jobs per day automatically. There are many good systems for this today and it’s all a part of a full end-to-end solution for this upcoming transformation. The exception is when you get a brand new customer or a new kind of job that needs a different set-up depending on the complexity of the job.

MARKETING & COMMUNICATION TEAM Whether you have or don’t have a team for marketing and/or communication – today you must sell the true value of your services. If you don’t, you will only work for your existing customers with things you always have done. Probably with lower margins than your competitors; otherwise, they change the supplier.

And your customers are in the same situation. No change, no value, no future, I’m sorry. Also, no new clients will ever come to you. The time when customers found you via the yellow pages is forever gone. We have already left the period when graphics and printmaking was a handcraft. It’s the same with customers calling you up, asking if you could be kind enough to produce a box while they pray for delivery within 10 weeks. Those days are also gone.

If you don’t expose yourself to the market you don’t exist. It doesn’t have to be an expensive advertising campaign. You can arrange an updated landing page, a special web shop for new and existing customers that will do the job. Don’t forget to update as part of your regular work and combine that through the relevant social media and apps. Keep in mind; frequently renewing the material is more important than the actual amount of new info spread at each time. Be there – and be active.

SALES TEAM We are all in sales! It’s the good, old way of seeing things. But the landscape within sales is shifting and you need to keep up. Selling big but few volumeorders is completely different from selling volumes with value, big or small. The conventional way often involves function, design, and price. However, the brand owners’ of today instead talk about the value they can get. Regarding volumes, they don’t need what you need to produce. This is something you will learn from your own customers if you start a dialog with them. Open up for a change! Your sales team will have to find new ways of serving the customer. Stop selling what you want to sell, start focusing on the needs of your customers. It’s all about flexibility, fast delivery, more variations (SKU), and letting it flow throughout the whole range of orders – from the small orders to the big ones.

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20. Building your team PRE-PRODUCTION TEAM The pre-press team needs to be a part of the transformation. Converters within packaging still buy pre-press and plate- and cliché-making outside of the company, this really is something that you now need to embed in your own facility. If you already have this team operating you’ll need to trim all the tools toward a digital workflow, automatically handling jobs end-to-end as long as possible for as many jobs as possible. They should work with a fully integrated workflow system together with sales and project teams.

Every job that flies through the system, automatic ones or big complex ones, must also be easy to track and find. The search, finding out where the job is in the process and what the next station is, must be easily done. This also allows you to communicate with the customer if the job stalls in pre-flight, missing a typeface or only stocked in the finishing line. Then, the customer receives the information or a message and can correct it themselves or let you do it.

It’s a quick, easy and important cost control. The prepress team must be your “Houston control” for all jobs flying in and out of the system and then released to the next team, the production team.

PRODUCTION TEAM We often get the question of what kind of persona should operate the digital press? One coming from the analog side, prepress, or which background is best suited? First, the number of jobs going through a digital press will be high.

At the same time, the total number of sheets or meter of film is less than in conventional. Changes of media will increase, it happens a lot more often with digital. And digital will with less than 20% of the total volume still account for more than half of your profit. The key is to find the person who really wants this and has the passion, someone looking for possibilities rather than being scared of problems, someone who sees the potential and is passionate about new challenges.

When it comes to the production manager, they play an even more important role. The production manager must plan and balance the production as much as possible. The priority is to fill all the buckets with detailed control, having a good overview on how the order-status looks like, where there is space in the engines, intelligently filling both the analog and the digital bucket as smart as possible with print per second instead of job size in mind. There will always be a gray area where it’s more profitable in analog or digital, but the worse scenario is not having a balance in capacity. Putting another shift into analogue while the digital is not filled or opposite will soon drain your profit. This is without a doubt the production manager’s responsibility, not sales.

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POST-PRODUCTION TEAM This part in the whole chain of teams is underestimated when it comes to packaging. Printing itself is probably the easiest part, finishing is something completely different. Plenty of time is invested here, spent on you and your customers demand. In some cases, existing equipment fits straight into digital, roll-with or board-size, capacity, change overtime from job to job, etc. If not, this must be planned and scheduled for upcoming new demands. Still, in many cases this has to be tailor made and that comes with a long delivery time. Flexible packaging has an extra dimension, either you bake the ink in the media (E-beam), on top of the film, or you print under the film and laminate, to capsulate the ink inside the packaging film. When it comes to folding-cartons, normally youâ&#x20AC;&#x2122;ll have an inline coating unit to protect the ink from migrating on the next sheet.

SUPPLY CHAIN TEAM This team, also known as assemblers or logistics, will play an increasingly important role when it comes to adding value to customers. To be able to sell assembling, to pack and take care of shipments to customers, amounts to a huge added value for many brand owners and more money for you. This team will go from storage-men to executors. What and how they ship is the impression you leave with the customer and invoices cannot be sent before the goods have left you. Weâ&#x20AC;&#x2122;ll go more in depth on this later on, how to work within this team and that they are your real face toward your customer in every single shipment.

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20. Building your team FINANCING Yes, everything has a price. Remember: “cheap and good still haven’t been invented”. Going from analog to digital is a big investment. But if you do it right, if you gather fundamental knowledge on how and what to do, this will become the best return of any investment you’ve done so far. We don’t want you to transform 100% away from your old technology (only your business plan) made for analog only, letting analog and digital compete on the jobs. You’ll then fail and sit there with a cost instead of an investment and no added value will come your way.

The choice of hardware is very important, but choosing a partner is even more crucial. When it comes to partners, be sure to also include financing. You can now leave the old way of investing, buying a machine, and then writing it off over 5 or 7 years or even longer, then having to refinance the rest value at the end – stuck with a too-old technology. The conventional side is still performing the same as before, but to which level of value anymore? The overcapacity is still affecting you with low margins, together with limited (little or none) possibilities to follow demands from the market and the brand owners of today. Look at the investment as you look at other tools. It’s what the tool generates versus cost per second, day or month – and be sure that your supplier can and will follow you the whole way through, end-to-end, not only delivering a box on your doorstep.

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95% OF PLASTIC POLLUTING THE WORLDâ&#x20AC;&#x2122;S OCEANS COMES FROM THESE 10 RIVERS

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Legislation and plastic A new Europe-wide EU Strategy for Plastics in the Circular Economy arrived in 2018. It’s aimed to transform how plastic products are designed, produced, and recycled, up until 2030. The strategy also includes specific ways of measuring this and new possible legislative instruments. Highlights in the strategy are how the impact of single-use plastic and plastic waste affects our nature, seas, and oceans.

Today, plastics are everywhere in our daily life. It’s used in packaging, buildings, cars, electronics, agriculture, and other sectors. Plastic production is today 20 times higher than in the 1960s, and it is forecasted to almost quadruple by 2050. Although there are thousands of different types of plastics, 90% are derived from virgin fossil fuels. About 6% of global oil consumption is used to produce plastics; by 2050, this share could reach as high as 20%.

In Europe, in 2014 about 39% out of 25 million tons post-consumer plastic waste was incinerated with energy recovery. The rest is either landfilled (31%) or recycled (only 30%). About half of that plastic waste collected and recycled is treated in the European Union while the other half is exported, mainly to China.

The interest in recycled plastic in Europe is still too low. Now we see a change, with new factories emerging also in Sweden. In 2019, there will be a new hightech factory in Motala, made by FTI (Förpackning & Tidnings Insamlingen), that will have a capacity to recycle 110 million tons plastic per year. Today, Sweden is feeding the market roughly 140 million tons of plastic and we only recycle around 60 tons, of this half goes abroad (mainly shipped to Germany) for recycling.

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Plastic is cheap, durable, and versatile, and brings us multiple benefits in our daily economy. But these very qualities can also pose problems when plastics end up for recycling or in our environment, with impacts on Mother Nature. Still we see a high dependence on virgin fossil feedstock, in 2014 more than 90% of the total amount of plastics were produced from fossil fuel feedstock.

The 192 countries with a coast bordering the Atlantic, Pacific and Indian oceans, Mediterranean and Black seas produced a total of 2.5 billion tons of solid waste.

Of that, 275 million tons were plastics, and an estimated 8 million tons of mismanaged plastic waste entered the ocean only in 2010. Plastic packaging is estimated to represent the highest share, as its weight, size, and low-value make it prone to uncontrolled disposal. This problem is present worldwide, as most of the bulk of plastic leakage takes place outside of the EU (in particular in fastgrowing Asian economies). A new study from 2017 shows the top 10 rivers, 8 of which are in Asia (4 of them in China) and 2 in Africa (Niger and Nile), accounted for up to 95% of the total global load because of the mismanagement of waste.

Dr. Christian Schmidt, a hydrogeologist at Helmholtz-Centre for Environmental Research (UFZ) in Leipzig, Germany, said: ‘A substantial fraction of marine plastic debris originates from land-based sources and rivers potentially act as a major transport pathway for all sizes of plastic debris.’

THE 10 RIVERS →→ Yangtze, East China Sea, Asia →→ Indus, Arabian Sea, Asia →→ Yellow River, Yellow Sea, Asia →→ Hai He, Yellow Sea, Asia →→ Nile, Mediterranean, Africa →→ Ganges, Bay of Bengal, Asia →→ Pearl River, South China Sea, Asia →→ Amur, Sea of Okhotsk, Asia →→ Niger, Gulf of Guinea, Africa →→ Mekong, South China Sea, Asia

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21. Legislation and plastic Therefore, what have we learned from a converter’s perspective? There is a big change going on. The packaging market will never be as it was before.

We’ll see a transformation on almost every level. New demands from the brand owners will also occur, driven by us consumers and how our market succeeds in influencing their choices in the future. Circular (both the environment and the economy) is where the EU with legislation and strategies wants to make an impact. One problem is that the work isn’t only based on statistics from inside the EU, but often global. Yes, we are all responsible for our own globe. However, you should be careful and accurate when you are reading all statistics and facts. I’ve read a lot of reports on this topic and have found many errors. There is more to ask for when it comes to mixing data between Sweden, Europe, and worldwide. We are doing pretty good with handling waste in Sweden and Europe. Yes, we can do more, but when someone tries to scare people with data not representative of where we are located, forcing people to change their behavior because of big problems somewhere else, that can be very unfitting and incorrect. It will not really solve the issue. This happens too many times and is often done to help someone else benefit from it. They are what we call lobbyists; it’s big money and exists in many markets.

Take the eco food as an example. Consumers pay extra money for the eco label.

It helps us feel like we are doing something good for the environment. This is without knowing the actual effect, without considering that producing eco means less food per square meter and includes more transportation.

Eco itself has nothing to do with being locally produced – it doesn’t correlate.

What we do know is that we as consumers, by buying increasingly more eco food, today assist in raising the retailer’s profit.

Removing plastic bags is a good initiative; then again 88-95% of all plastic garbage in the oceans is generated from ten rivers mainly in Asia. Still it’s important to reduce the way we consume plastic and especially the singleuse plastic that takes 5 seconds to produce, are used in 5 minutes, and take 500 years to get rid of in our environment. The balance of how we produce, consume and circular packaging will be important and a priority among politicians with new regulations and new laws. All politicians, regardless of political affiliation, have this on their agenda coming into this year’s election in Sweden, so much that the Green Party itself will have a hard time gaining enough own votes on this issue.

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How to do more for your customer A passion to do more for your customer should be your standard state of mind. Make that mindset a common thread through your entire life in business management. To always be willing to work more together with your customer will broaden the horizon and help you plenty.

The first thought while expanding is often to do more of what you already do.

That is correct, but also try to see the bigger picture. Look wider. Investigate what you’re not doing today. Maybe a competitor is doing almost your stuff but with a twist, and your customer isn’t aware that you also produce and deliver that. Do you know everything your customers need, demand, and what their road map looks like? Where are they heading for and who is the customer of your customer? What are their needs and demands, how are they acting now and how will they act in the future? If you know and understand this, you can add more value to their road map and help bringing them forward in the best way possible. It’s a great chance to support them with more products. Business opportunities will occur and you as a supplier will expand both in volume and in value. Business will be more profitable for you and your customer as you do this together – grow with your customer.

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Looking into the future, you’ll need to expand your product portfolio. You’ll need to produce more and different products. It’s what your customer needs.

The problem historically has been to know the demand today and tomorrow.

“What comes first, the technology or the demand?” Steven Jobs, Apple, had the answer: “A lot of times people don’t know what they want before you show them”. Know your technology! Find out what your customers might need – even if they haven’t figured it out themselves yet. That means driving you and your customer’s business forward, a bit of what we’re trying to do at Visutech together with you as a customer. That doesn’t mean that you need to write books to your customers but talk to them! Start the dialog, be a partner, grow both your own and your customer’s business. We call it the eco system of business. You can read more about it in my earlier books, the chapter about ICDT: Information, Communication, Distribution & Transactions as the DNA of business.

If you today produce for example labels, what stops you from doing more like shrink slews, flexible packaging, pharma packaging or in-mold? The printing part is the same, media, and finishing is different. Maybe there are some differences in regulations, but not too far apart. Doable? Big investment? Adding any value to your existing customer is good, and they maybe already purchase this from one of your competitors. As mentioned earlier; the trend ahead is clear, your customer will choose fewer numbers of suppliers and the ones kept will grow, do more and become an integral part of the company and their future business together. In the commercial print business, which currently drops in size around -10% YoY, today they have to buy volumes or acquire (consolidate) a company just to keep up the volume in their existing machine base. But when entering the next low economy, focus will change towards the ones that don’t make it any more, those who end up under chapter 11 or declare bankruptcy. Market demands for physical printed information are going down favoring the electronic display way of information like via iPad, etc. Still, printed market communication between customer and consumer have a value if it is carrying values outside of only printed ink on paper. It will require a greater value in the connection between the brand owners and their consumers. This segment will keep growing toward the full supply chain, taking more responsibility for the whole value chain from A to Z. From idea and creation to how, what, and when it is supposed to reach the customer.

Therefore, here are great possibilities to discuss if you should expand your product portfolio and offer new deals in cooperation with your customer. That could very well include supporting clients on a whole new level, taking care of the entire chain of communication. All of this, of course, varies from customer to customer. But your knowledge of what your customer values is crucial; it will be an important key to your success.

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22. How to do more for your customer For example, expanding toward large format printing for signage, point of sales or packaging that still is mostly based on sheet, fiber, and board for packaging.

Don’t miss out on opportunities if your digital HP Indigo today is based on sheet. There is a lot of high value media that can really expand into higher value products like fine art, plastic, synthetic, thermal and textiles like canvas for paintings, etc. This will at first not gather high volumes, but a high market value and high margins. HP Indigo also has a lot of different types of special ink outside of the standard 4-process color Cyan, Magenta, Yellow, and Black. Orange and Violet for IndiChrome, makes 95% of all PMS colors (kind of hexachrome, it is expanding the color gamut), White ink for printing on colored paper and Black with a very nice effect. Special PMS colors can be ordered as unique colors for special effects or a brand color. Invisible color for safety printing represents a high value and a great need in contra fitting (pharma, tickets, security, etc.).

Also, don’t underestimate that HP Indigo can print process color with only 3 colors EPM: Cyan, Magenta, and Yellow (without Black). That will speed up your existing press with 33% and save costs. Whether this is relevant for you or not will depend on which job you’re printing. Try it, setting up a new queue in the system and the rip will process the file toward 3 colors instead of 4. Ask us at Visutech if this is possible on your press and how to get it up and running.

If you have a roll-feed HP Indigo press you can do the same stuff when it comes to coloring and do labels. First, too many label converter’s with digital and flexo presses sell these as two different products and at different prices. Instead use one strategy and one business plan toward customers. It will increase the total margin and capacity. The balance today can be 30% digital volume representing 70% of the total profit. In many cases, 80% of the jobs can go digital at least 50/50 in volume flexo/digital, the rest is old legacy. Change your business strategy so it includes digital as one product only in your plan and the production manager will then fill and balance both technologies for the right machine, with the best fit possible and make them available for all of the shifts you are running. Second, there are interesting products that add extra value today regarding labels outside of media and ink via the finish. Benefit from it by adding same new offline finishing or add a new module to already installed equipment like die-cutting for fine-board, small packaging products for pharma, candy, giveaways, etc. Shrink-sleeves as an alternative product to labels can add a massive value to your customer’s products. The consumers also appreciate it, remember when Coca-Cola first added label variations and then a sleeve on the bottle? Today, these empty bottles still sell for more than USD 100 on eBay and have become collectibles. Talk about adding value to a product.

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23.

Profitability Many of our decisions are driven by how profitable things are. This is balanced with the amount of investment needed.

We can look at this in a few different ways.

One is the classic ROI – return on investment. Profit versus investment, 5%, 10%, or more, etc. It’s the first question and normal reaction from any Chief Financial Officer (CFO). We’ll try to convince the CFO, and the facts are sometimes also needed for the bank agreement backing up the investment.

Another way to look at profitability is per job, not per meter or sheet. Then, it’s the value that an order will give you as a producer, your customer, and the real user – the consumer. A good thing about the packaging market is the possibility of measuring every step in the process. Value can also be about cost savings and/or equal cost but with an increased value per job, instead of meter or sheet.

We see examples from the label and commercial market, printers that have fully transformed to digital. They soon find out that even when only 15–20% of the volume is digital, it can represent more than 50% of their profit. With more than 30% in digital volume, the digital profit can be as much as 70% of the company’s total profit. Do you think any CFO ever in the graphic market has seen such good return on investment for a long time? No, probably never.

But there are some steps that you need to take before reaching this result. The first step is normally offloading the short/midsize runs (and the ones with many SKUs) from your conventional analog presses. Adding digital to your portfolio is like adding a whole “smorgasbord” of new possibilities. But having done this, here is what can happen if you play it wrong – and I’ll take this story from a

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few real cases. So, after the addition of digital, they soon get the full attention from a lot of customers. Digital alone has made them more interesting on the market. More jobs come in, still the same existing type of normal jobs, which is good and ok. Then all of the focus turns to filling the old presses, the space made by digital when offloading all of the short runs, and business starts to grow. But it’s with an increase of analog volume and still with a slim profit. There are no new volumes coming in on the digital side, and the whole cost-customer is unbalanced. The total cost has increased, and they still work with the same slim margins. They had all the right intensions in the beginning but lost sight of the horizon. They left the mental journey and went back to the old model, well known and comfortable, doing business as they have done in the past, selling a product based on the old cost model instead of value. The problem is that they now sit with a double cost but only one technology that produces (the other one producing maybe 10% of a shift), jobs that have freed 50% of the time in the old press that now can be filled-up with more long runs. Without a balance in the production, you’ll sit with the same slim margin and a too high cost. You have no added value coming in and only work with optimizing an old kind of volumes. It’s like the old saying about “peeing in your pants”; warm and nice in the beginning but very soon cold and ugly. Yes, of course, it’s nice at first to get all the attention from the customers and getting jobs because you attract them.

But that is still the old kind of low value jobs, no new high value jobs. Why? Because the customer doesn’t even know that these new digital jobs exist and could add great value for them as well.

It’s in this phase that the question pops up: What came first – the technology or the demand? I use this question in many of my seminars together with Visutech Digital Academy. I show the iPhone as an example and most people in the audience answer that technology came first. This is one of Steve Jobs’ bestknown statements and the right answer is the opposite: The demand came first, but you just didn’t know about it. Often people don’t know what they want until you show it to them.

When you at first get all the attention from the customer, start working on how you can lead the way and be the best partner possible. Develop your relationship together and work close with one another. Not only doing what you have done before, long and short jobs etc. Don’t focus on digital or analog. Instead focus on understanding the need of your customer, expand your offer using your large number of new high value tools. How can you help your customer to grow and you with them? Hopefully that will be a profitable journey that you’ll embark on together.

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23. Profitability This procedure needs more understanding and more cooperation with every customer and we have agreed that it’s the right way going forward. Developing the relations with your existing customer is the right thing to do. Sure, you won’t have twice as many clients in the future. But you will have a great power and ability to be twice as big within your existing customer base. Develop each customer with the possibilities from your new “toolbox”. The value of your services will then go up and your profit will grow as you scale.

How your sales team works with the customer is crucial and so is the tight cooperation with the project leader, a person who must see all the new possibilities for each customer and create new solutions. The production manager has one priority in every step of the transformation: filling all the buckets equally 1, 2, 3, or 4 shifts! If the production manager instead of seeing the possibilities starts thinking too much about the run length and hard breakeven point per job, he or she will lose focus pondering if this shall go analog or digital and is doomed.

The fixed costs are the biggest ones. The machine operator plus other fixed costs per shift stays for around 50% of the total running cost. If you only fill half a shift, it will instead increase to 75% of the cost per job. And don’t forget the number of jobs going through digital compared to analogue; it’s a factor 10 to 1, or 100 to 1, maybe 1,000 to 1 with e-business. Digital gives you the power to increase your profit with really small volumes compared to analog. With the new business plan (more on that later in the book), we view and estimate the cost from the digital and now count the cost per time instead of per job, which also includes longer conventional runs.

When you give the CFO or the bank the facts of how the Return on Investment (ROI) will look like, there are a few cornerstones you can build your argument on. If the digital packaging investment in hardware and software can cost EUR 25,000 per month for a narrow web, to around twice for wide web or sheet fed B2 solution per month, savings come through less staffing with digital and will be at least 30% per volume EUR in turnover. Over 5 years, based on one shift, both analog and digital, real cases today from label and commercials (those already transformed) show, if based on an investment around EUR 25,000 per month (EUR 1,000,000 investment), that the ROI can be as high as 25% = EUR 75,000 per year on the bottom line. You shall see that as a hint, not a guarantee. With our own “Smartplan”, a calculator that will support you with your own personalized ROI, you’ll get a calculated plan just for you.

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24.

Super globalization vs.

Super localization On the one hand, we strive for a big and more global world.

On the other hand, we increasingly appreciate our local values. This turns into a polarization of how we value our own values. We end up with a split: Super globalization and Super localization at the same time. Confusing? Not really, it’s very human and fits very well into our deep desire for improvements.

This works a bit like a swing, not only going from globalization to localization and back again but also by balancing our values. The more global you feel, the more you value who you really want to be. The more global you feel (bigger swing), the more you will appreciate local values. Some call it the “seaman syndrome”, he longs for the sea when he is at home and longs for home when he is at sea.

Our market and us as consumers are experiencing this polarization right now. It’s driven by the hunger for improvements, a continued search for something more.

It’s the same need that keeps us moving forward. We as humans have done that through the entire human evolution, 99% of our time as humankind. In some respect, it’s for the sake of development. But sometimes it’s only a swing that goes back and, later on, forth, just like when we breathe in and out and then in again.

We see examples of this regarding food and sustainability. This interconnection has never been stronger or more relevant than today. It’s really a hot case and driven by the way we value new values, things swing back and forth. What we

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shall eat, how, and where. Price, value, and health all come into play. This very much depends on how we accept to be influenced by all different media, trends, and where we are as persons in our own life cycle and situation.

We also see and experience values differently depending on which generation we belong to. It’s an interesting perspective, as always. Young generations have a bigger swing (more global values and local values at the same time) than the older ones. Generation X (born 1966-1976) and Generation Y (born 1977-1994) feel and act differently and you need to do your research depending on which consumer group you are targeting today and tomorrow.

Generations are, by default, different from each other. Soon Generation Z (born 1995-2012) will start spending their own money; today, they are still spending their parent’s money. They come with a new way of evaluating their unique values. It’s driven by a big portion of polarization (big swing) in their ambition going toward Super globalization, at the same time as they are starving for Super localization – it’s the price that they pay and a solid focal point right in the middle of “ME”. Generation Z (today’s teenagers) is also known as the Me generation; read more about this in chapter 6: Brand owners.

The big driver for this development is how much and how fast we’ll change and develop over time. The payback must feel like a reward, which we then can and will deal with. We’ll make this change and it will become our profile over time, for good or for bad? Our ongoing hunger and need for constant movement forward controls this by our default human evolution and it will keep evolving for a very long time.

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25.

The drilling machine What do customers really want? That is the most central and important question. Put it this way, would your customer want a drilling machine or a hole in the wall? You already know the answer and I strongly believe that the customer wants a hole in the wall. Yes, the best one at the best price, made fast enough, good-looking enough, and so on. But they don’t really care how you’ve made it?!

Historically, printers and converters in the graphic market saw it the other way around. Back then, it was important to have the right tool (Heidelberg, Komori, KBA, Man Roland or HP Indigo) but still all of them delivered the “hole in the wall” – the right kind of “hole” at the right price? Today, there is almost no interest regarding what brand of tools you use as long as you deliver the hole, the perfect end product. What’s more important is your choice of partners and your own business model.

With the “hole in the wall” theory, I mean that the value the product generates is more important than the product itself. Not as it was in the past where high quality was the only value that mattered, which originates from the days when printing was a handcraft. Today, the value comes more from the communicated quality response we get from the print, most of today’s tools produce good or good enough quality for that depending on which kind of technology for which kind of product. The focus of brand owners has changed toward that value.

Spending money on printing today is more about what result (measurable) and/or what value you get back from using printed media instead of other alternatives like electronic, social media, etc. Commercial print is still struggling with how to add and present this value to the CMOs, while packaging has this

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attention today – the trend is to sell more products through the package itself.

The priority for packaging toward digital will first be value, time to market, shorter runs, variations, etc., and then we’ll get to the drilling machine or the hole in the wall again. This means that we need to add value in competition with other media. As commercial print today is being replaced by electronic displays when it comes to information, packaging still has to be physical and protect and carry the product inside (again, it’s hard to get one liter of milk inside of an iPad).

Packaging has to continue to develop and become smarter, lighter, and more attractive. We will also see more intelligence coming in, adding more value.

It boils down to the same question and the same answer. It’s the drilling machine or the hole in the wall, same-same but very different. The secret is to walk a mile in your customer’s shoes, view it all through their eyes. Place yourself in your customer’s position. Your view will change if you do. Try to imagine how your customers think. Understand their challenges and demands. They are fighting and struggling every day to achieve so many things that you can help out with and do for them, becoming their prime supplier. Support and help them to be more successful also in front of their customers, which is often us consumers.

Sell the “hole in the wall”. Give the customers what they want. The consumers don’t care about your drilling machines; they care about a nice hole done with good quality, the right value and at the right price, where the right price doesn’t have to be the lowest price. The brand owners chase the best “holes in the wall” because that sells more of their products. Keep that in mind. Think about it: drilling machine or hole in the wall.

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How to do the mental journey We now know that the most important step in our transformation is to mentally adapt the change. Being analog and then adding digital as well is a mental game.

Of course, it doesn’t stop there, adding a new tool is much more work regarding the way you change and implement it into your new method of doing business with customers.

But it all starts in your own mind.

The worst thing you can do in a market that is rapidly changing is to NOT change. You need to adapt accordingly to the change, not stay as you’ve always been. You need to evolve. Even worse is craving to stay the same way as you and the company have been in generation after generation. I’m sorry but that doesn’t work anymore in the graphic market. There are markets where disruption hasn’t entered yet, where that point of view could be acceptable, where things handcrafted through generations could become an advantage. We see brands expressing it, in bakeries, restaurants, etc. But in the graphic business there isn’t much room left for “typesetters”. That disappeared already in the 1990s and today we see a clear drive toward less volume print per job.

On the commercial side, we also see the total volume of printed sheet going down. But on the industrial side we see a growth mainly in label and the flexible side. Not so much on the board side, 1-2%. The number of jobs increases big time. From formerly 5-6 jobs per day and machine up to 500 jobs per site today with digital and adding e-jobs as much as 5,000 per day and site. It’s the right way going forward and to succeed you need to maintain the upcoming adaption

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in your mind. Do the mental journey. There are some wise words to make friends with: “If you want something you have never had before, you must be willing to do something you have never done before.”

Therefore, you are convinced but still scared. Scared for the possibility of everything not going as planned. You’ve made the best plan out of what you know and that is probably all you can do, and still you may fail. The good thing with failing is that you can learn from it and never make the same mistake again.

It’s OK to fail! The successful business people of the world know that failing is the best school of learning. Changing plans because of failure is also okay – but don’t change your goal. The road (planning) is the fun part and the everyday driver for you to reach a little bit closer to the goal. Accept changing roads but never goals. The target can be one of many milestones and when approaching the final goal, set a new one. The goal must be the driver for both you and the whole company.

If you’re the boss of your company, be the leader – lead and coach. Be crystal clear with your goals. Let the people around you get involved in which road you’re taking and if a road won’t work, change roads together but do not change the goal. To be as transparent as possible helps you in getting a committed team around you and that will make a big difference. I have seen too many leaders who have kept goals and plans to themselves, not involving the employees. I still remember one leader and owner of a company who made an investment and added a new digital machine, without doing any homework before. The leader signed the deal for the machine without allowing anybody to mention anything to anyone before the day the machine arrived on the factory floor. Yes, it became a big and bad surprise for everyone in the production. I remember our installation team calling back and saying they never felt so embarrassed before. It was like “look what the cat dragged in”. The boss called it a gift to the company and all the employees. No one understood what it was and more importantly why and for which reason. It’s not an excuse but an explanation why it didn’t work out at that company. The employees never let the gift be a part of their toolbox, as they felt completely left out.

Another example was a company where the homework was made, the whole company was in the loop, but the boss didn’t change their business plan. He didn’t have a strategy for how both technologies should complement and support each other. He didn’t plan for this being something else, it wasn’t just another offset press that would offload the fully loaded old press from the short runs. The digital press instead competed on jobs with the old presses in the old

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26. How to do the mental journey way of selling and setting prices, cost pricing per job. That meant maybe 50% of the number of jobs that they removed from the old press only stayed for 5% of the print volume and was done in the digital press in less than an hour. Taken the monthly cost with one-hour production per day, itâ&#x20AC;&#x2122;ll be the most expensive hour and can never compete with his old press counting cost.

That said, I promise you that most of the transformations made over the years (both in the graphic market and outside) have succeeded. It only takes a different amount of time for them all to reach the goal. The most common reason for that success is people accepting the mental journey as a fact. They have made a number of mistakes down the road â&#x20AC;&#x201C; but never lost sight of the final goal.

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The How-to-do-list Doing things step by step and in the right order and in the right time will help you a lot in a transformation. We have gone through the concept of “a year from now you’ll wish that you had started out today”. Then, it’s the importance of timing your own timing. Via the How-to-do list in this chapter we’ll explore the timing and necessity of preparation through 11 crucial steps within the company and together with your customers. It will show how to prepare for the transformation and how you can lead the way.

It’s important to go through this in detailed order, step by step, and by involving everyone around you. The ones you exclude won’t know what’s happening and will most likely work against you in the process. The ones being informed will be the other way around; included members on the road ahead. Make sure that the information delivered is clear and well defined. That the message goes through.

It’s important that everyone really understands the process, both the goals and the expectations including the risk to fail if you do NOT transform and go with your customers. Your examples and foresight as a leader on what’s on the other side of a digital transformation compared to what will happen if you do NOT do this is crucial for everyone. Also, be clear on how you will measure the steps and success throughout the process.

As the leader standing in front of your team of employees you must deliver your own genuine and trustful story, I hope you’ll get a lot of practical advice from this book and it is important for everyone to feel the conviction in this transformation toward your goal. That you really believe in the future, wanting them to join the

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upcoming adventure. It’ll be the most important ride for the company in many years to come. If you, for one reason or another, want someone else to execute this process, you, and only you are still fully responsible for giving this person all of the necessary power of attorney and support. This is vital in every step or decision that must be made, good or bad. You really must believe in your team and in the final goal. So, it’s time to prepare.

1. PREPARATIONS Like in everything you normally do, be well prepared. And prepare from more than one angle. This book is one way of doing that; if it’s not 100% clear yet, read it again and again, keep it under your pillow and repeat. I hope you can use it also when the “monkeys” start screaming in your head and you feel FUD (Fear, Uncertainty, and Doubt). It’s normal and part of the process. Prepare yourself through the upcoming steps. Do your homework and consider the whole chain of events. A transformation needs to be done step-by-step. Look at it from your customer’s perspective and examine all the different teams in your own company. Work through the process before it starts. And keep an open line communication with customers and employees.

2. COSTUMERS □□ How many customers do you have?

List your customers that repeatedly need and use your service. □□ How much turnover does every customer generate per year?

Organize them in the order of their size. □□ How many times do they repeatedly order jobs and use your service? List them per day, week, or month. □□ How long is their run length per order (average) and product today and tomorrow? □□ How many other suppliers do they have today? Any potential products you can offer? □□ Choose your top 10 or “best relation” customers on the list as your VIP’s. This will be your start, one by one!

Open a dialog with your customers based on what, how and where they see themselves today and their development in the next 3 to 5 years. Try to find out how you can be a part of that development. What do they want more of? Where

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27. The How-to-do-list do they want to move or increase? How can you help out? We know for a fact that there will be a lower number of suppliers per customer (general trend), how can you develop your relation to add more value? Don’t do it by lowering your prices, but maybe by adding more value for the same money. You can broaden your range of products (applications) so that they see a need for and want to buy from you in the quest for dealing with fewer suppliers. Offer online order systems, wider supply-chains, everything from order, print, assembling, distribution, and maybe a total fulfillment. Don’t go to all customers – choose the best ones. That doesn’t always mean the largest ones; but go to 10 of them or if you are bigger a maximum of 20%, we can call them your VIPs. That will give you enough of ideas and confidence to build your own story and trust for the ride toward the new goal. It will build a better future together with your customers.

3. MANAGEMENT TEAM AND/OR OWNERS □□ New market plan, a new SWOT-analysis, cost price-based plan per time unit. □□ Commitment from owner or board for you to execute with a return on investment (ROI) calculator. □□ Executing the new business plan to the whole range of management. □□ Timing, why right now? Set the time frame throughout the implementation step by step. □□ Present the result of your SWOT as a discussion – how to add more value to our customer. □□ Goals and added value, profits, competitions on where to reach after the implementation. □□ The road toward the goal – upsides, downsides, and soreness from all new and hard work.

If you’re the owner of the company, or an external MD on payroll from the owner or group of owners – it’s same, same but different. If you’re the owner and/or MD you are responsible both in front of your employees, yourself, and the company. Do you feel the pressure? Do you already feel a heavy burden on your shoulders? It will stay heavy if you don’t go through this preparation face. The pressure will slowly disappear as you start transforming on facts and together with both your customers and team of employees. The pressure will

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turn into a powerful feeling, a great sense of freshness. It comes with the notion of new opportunities and new profitable business based on adding value instead of lowering prices.

As you start your preparation with selected customers you also have to start with the team leaders. Set the goal (not negotiable) and set the time frame for this to happen. Explain what you have found from your dialog with the selected customers and what they expect from you and your service in the next 3 to 5 years. Explain how the company must develop (change) within this period. Be sure to also present both the upside and downside if you DON’T do this. The upside with all the opportunities you see from the dialog with your customers.

The downside where you paint a picture of the company’s development from the last 3 to 5 years, with shorter job-length per order, shorter delivery time, lower prices per order and product, etcetera (see earlier chapters). Paint this information as a graph and add a trend-line for the next upcoming 3 to 5 years.

You’ll find out, and show, how your business will develop if you don’t change to a new digital business model. And that is important! This is a change of business models and not only adding a digital press.

If you are an external MD, you’ll have to prepare this even more and in writing.

You will need a well-documented plan and hard facts from the market, the customer, a SWOT-analysis (Strengths, Weaknesses, Opportunities, Threats), a business plan, investment plan and ROI (Return On Investment). You will have to establish what’s in this for the owners. Depending on your relationship with the owner or group of owners you can do this in steps (together with the owner) or in a bigger presentation at a board meeting. If you can present new, good value propositions coming from your own existing customers with higher margin products, less workload needed with digital for the same value, etc., you will for sure have the owner’s attention.

It’s the same if you own your company; don’t miss out on drawing the graph on your company’s volumes, orders, job-lengths and profit developments.

And include a trend-line for the next 3 to 5 years (now in the upcoming loweconomy). Show them the future.

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27. The How-to-do-list 4. FINANCE TEAM □□ A new business plan is crucial here, based on both technologies as one product to the market. □□ P&L analysis where analog increases first, digital offloads for more analog jobs, before digital really kicks in. □□ A cash and liquidity management plan through the whole investment period. □□ ROI, return on investment, breakeven based on the same period. □□ Finance period of this type of investment is around 7 years depending on your ROI needs.

Either you have a CFO in the company, or in a smaller company someone responsible for your admin working together with the MD and the auditor. If you have your own CFO, they’ll want to see the same documentation as the owner plus the cash flow during the investment period. Therefore, all costs and profits must be made monthly (see our Smartplanner calculator) including existing machines, all capital costs, etc. Calculate this per business model, not one old analog machine compared to a new digital one. Compare both financial models based on up-to-date machines, running cost and need of workload with your customer’s needs and demands. Then you’ll see. Yes, if you have a new and old car it will affect you, but both cars can still drive between point A and B. If you don’t have a CFO level of controller it can be of value to involve the auditor in this project. My recommendation when it comes to financing is to use our Smartplanner cost calculator when you value the best financing models. How to finance the investment can be a later decision. But remember that going digital is also going high tech and that also changes over time much faster than the old analog side, therefore flexibility is a key factor when it comes to the possibility of growing with your customer in the long-term perspective.

When the process enters the executing face, you can make the best final decision on how to finance it. With thorough preparation and clear communication, that decision will be easier and more obvious than you might think today.

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5. PROJECT LEADING TEAM □□ Nominate this key team as soon as you can, the ones that need to have the passion to build the new road.

This is probably the most influential team of them all. They can lead and develop your business AND (maybe even more importantly) your customer’s business.

They are the ones that must understand their own chain value as well as from a shopper level finding new and more effective ways to maximize the value for each and every customer.

To make this right you must pick the ones that see this opportunity. If they don’t want to change and see problems instead of opportunities this is not for them.

This team will run customer-projects based on customer values and have to transform from the old way of thinking. They will have to leave their old mindset of how to fit existing production with the lowest price per piece.

This project leading team will have to think outside of the box and truly accept putting customer-value and flexibility first on a day-to-day basis. They must see that the road ahead is filled with openings and opportunities.

6. MARKETING & COMMUNICATION TEAM □□ Set up a market-training program well ahead of time, before the machine arrives on site. □□ Set up a train-the-trainer program for those who will then train the sales team.

For the marketing team this is a whole new and exciting toolbox. To use this power properly, education and training becomes very important. When you emphasize value instead of cost price per product/order it becomes a whole new way of thinking, you need to change your mindset. This is the first team to take over your dialog with the selected number of customers that wants you to develop your business together with them. Therefore, train these teams well!

Get them the proper education and instructions. Be certain that everyone is on the same page. They should be able to train not only your customer but also your whole company, from market value to communication (dialog) with all your customers. It’s a grand opportunity that the right team will embrace.

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27. The How-to-do-list 7. SALES TEAM □□ Set up a training program (from train-the-trainer program) on how to sell value, not digital. □□ Set up a training program about pricing – added value market price before cost based price.

Don’t let this team start to just “sell digital”. That is too easy and very wrong.

Digital is only a tool that can offer more flexibility like shorter run-length, fasterdelivery time, wider range of media, no setup time, easy SKU change, variations etc. For the customer, that is the first most important thing – not the printing technology itself.

A much better approach is to use a full-adopted digital business model that includes both technologies with both their values utilized where best fitted. It must be the production manager’s responsibility to fill both technologies equally in the smartest way depending on utilization, implementation and type of job and size. That is not the sale team’s job.

Let the marketing team train and get educated (if you don’t have that possibility let Visutech support through Visutech Digital Academy). The worst scenario is to sell products only because you have digital. Why? Well, the customer reflects still today over digital as something cheaper? And you will stay there with two different products instead of one that looks and feels the same whether it comes from digital or analog.

8. PRE-PRODUCTION TEAM □□ Plan the training of the prepress team on workflow to be done at arrival of the machine.

Prepress also have an important role to play in the process. They need new tools that will open up many new possibilities but also implement several new automatic routines for many more jobs and customers in the future. The greater flow of jobs that can run without a manual touch, the more jobs can go through the system without increasing the number in the team.

The number of jobs will no longer be the bottleneck in your business – this flexibility makes the difference. An analog business today maybe run 5-10 jobs per press and day, with digital this factor can and will increase maybe to 100 and with web2print maybe X000 jobs per day. The prepress team need their special digital tools and training for this.

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9. PRODUCTION TEAM □□ Nominate operators with passion for new challenges and focus on production as their driver.

What kind of profile shall we have behind the digital press? Which person is the best fit? Again, the most important base to stand on in this decision is that these persons must see the opportunities. They must have a passion for doing this. An offset printer can work; we have seen good ones coming from the analog side transforming their way of work. However, we have also met the opposite – the ones seeing problems before opportunities. That won’t work! With the correct and honest presentation of the tasks ahead this kind of person will appear. It will be pretty obvious. When you sell the view of how you and everyone in the company will reach your goal, the right kind of staff will choose to join (or not accept to join) already from the beginning. Interview people, describe the vision about the road ahead, and they will know if this is for them or not. The ones that don’t accept it should start planning for another job and will be your first savings. As I described earlier in this book, you will not need as big workforce when adding digital in your production to achieve the same volumes as before.

Therefore, pick the ones with the right persona and the ones wanting to join this change before the ones that don’t. This will be a crossroad for some people and get the right ones on-board, both for their sake and for yours.

10. POST-PRODUCTION TEAM □□ Here, training is more about adding new and more automatic finishing equipment. □□ Strategy training on how to finish 100 or 1,000 jobs per day instead of 10, same amount of media.

Here is where the risk of a bottleneck occurs in the beginning. Too often, and in too many cases, we see how this department underestimates the planning for flexibility, automation (maybe it’s time to start thinking about implementing robots) and sufficient throughput in capacity. Generally, the number of jobs will increase x100. This post-production team should think “leaning and even more leaning” to fit your customer’s new possibilities with more flexible jobs that digital adds to the equation.

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27. The How-to-do-list 11. SUPPLY CHAIN TEAM □□ Train the level of dynamics, from very small and simple jobs to large unique and complex ones. □□ Strategy training on how to assemble 100 or maybe 1,000 jobs per day instead of 10, still with the same amount of ton media.

As a printer or converter, this part with a supply chain team can today be an unusual service to offer the brand owners. However, this rapidly becomes more and more a natural fulfillment support that has a high added value factor and really connect your company with your customer. It’s a good fit and will turn into good business.

To transform or build this department from scratch will include going from many small jobs to a lower number of jobs, also including really large jobs and the strategy ahead will stretch this department in both ends, short to long. To build the perfect supply chain team, each team member needs to know his or her role and responsibility. The size of the team off course comes down to your customer base, but whether you start out big or small it will play an important role in the full transformation ahead.

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HP GRAPHICS SOLUTIONS BUSINESS 1 MILLION UNIQUE CHOCOLATE PACKAGES, EACH PACKAGE FOLDED TO AN ORIGAMI COW MODEL.

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Influences

Packaging as a market is unique right off the bat. Only a few markets have this amount of influence built into its essential core. It’s emotional and something that the buyer expects as an experience when he or she opens the package. It’s the most critical part in the value chain, from the core product inside to the expectation and the ever-important sense of value, what you’ll get for your money. High expectations and low value create disappointment and is not what you would imagine while opening the package. It’s the opposite when you get more than you expect, a sense of fulfillment and the right experience. It’s the great feeling of a good deal that creates high value for your money.

Three other markets that operate in much the same way as the packaging industry are the fashion industry, car industry, and travel industry. These industries aren’t covering their products that much in packages but use the same instruments, the same values of influence. They all make money on building expectations, fostering dreams, and maybe creating a positive acknowledgment and sense of lifestyle to the buyers.

The fashion market uses what we call the mirror effect. They expose the customers to a certain look in ads and in the store. It creates a good feeling; the right looks for a specific time of year. The fashion market has as much as 12 seasons to match the timing of the year. And yes, they miss from time to time when the weather doesn’t follow the season. But the big chains, still in 2018,

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don’t really handle the geographic differences from Northern Europe, which still is experiencing wintertime, to Southern Europe. When people of the north are using the ice scraper on the car windshield, the people of the south are excited about the spring. Fashion companies try to find a happy medium, looking for the middle ground, as it’s where the major regions are. I understand that there are logistical issues or challenges, but the one supply chain that will start nailing this region by region will have a huge competitive advantage against other players in the market. Do you really want to mirror yourself with a spring feeling (from the ad) when you’re still wearing heavy winter clothes? Think about it. Don’t forget the ever-important view of a customer/consumer expectation, their dreams and needs of acknowledgment.

The automotive industry doesn’t cover their products with a package. They work with specifications on the car, engine, size, features, and price. However, interestingly enough, most of the final decisions when a customer buys a car involve acknowledgment. It’s about the mirror. It’s about seeing yourself blending in with the car brand, profile, the community it offers, the Facebook-groups, and so on.

The travel industry works with consumers craving to go forward, customers starving for some kind of experience that will add something new. Yes, it can be a change in the weather, especially for us northerners in the wintertime.

Therefore, when the mirror attracts us with something from media (ad, billboard, TV, direct mail, magazine) it’s important that the mirror feels truly addressed to just ME. The attraction (good, not bad ones) needs to be personalized to ME and MY expectation and need of acknowledgement.

Expectations are key elements for the whole travel industry. Too many companies play this too wide and the feelings of expectation from customers gets too low, and then a lower price comes in to justify the choice of travelling product. The more direct and personalized mirror – the higher value of the same expected product. The travel industry has more customers willing to pay extra for a ME-expectation than any other market.

Therefore, what do we learn from these markets? One thing is certain; we must see things from a customer or consumer view to really understand it all. Then, you can find the differences and similarities, and create what’ll be unique in your own story to your own customers. Value vs. price not only involves the product inside the package. The level of expectations that you are able to build around a product, including branding, often sets the actual market price. Not only for the product but also for the package to the brand owners. Don’t underestimate the value of time-to-market, where digital has a great advantage against analog.

You’re also able to make many different versions (down to personalized)

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28. Influences for attracting more ME-values, as in different beliefs, languages, cultures, considering needs, seasons, etc.

When it comes to acknowledgment, we all crave it. All people love to get the confirmation of being needed, a sense of belonging. How many iPhone customers threw away the packaging, the nice box, after unpacking the phone?

Not many. Most of us kept it for the good exclusive feeling, maybe with the excuse to yourself that you might need it again. Packaging is a unique and powerful market, thereâ&#x20AC;&#x2122;s no doubt about it.

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29.

Your own story Why can’t you find success through “copy & paste”?

Wouldn’t it be nice to write one story that never stops selling? One recipe or one solution? It may sound pleasant and easy enough, but it won’t work.

What if we all had the same type of customer with the same need? Imagine everyone behaving the same way, valuing the exact same things presented in the same way. Maybe it was more like that in the past but, today, what a boring world it would be! And in that world, the price would be the only way to compete. Can you recognize yourself in this or not? Originality and authenticity would be buried and gone. Luckily, it will never happen. As a service provider, you are all different – at least from a customer’s point of view. If not, you have another problem. They might say you’re all equal, and that you’re the same as everyone else. But that is not true; it’s only an attempt to get a lower price out of you. One of the most important components of your success is to know your own unique values to your own unique customers. When a unique value meets a unique need, a healthy and really profitable business is born.

Customers are also different from each other and expect to be treated that way. The world is full of different people, how we look and behave. We are all unique and the more populated the world gets, the more information we want to receive, and the more intense the need of being treated in a unique way gets. Everyone wants it “my way”, and today’s new generation is called the ME-generation for a reason. This trend will continue to grow and is very usable when it’s time to make your own story. You should make your own story for your own customers. You are exclusive and rare to them and their unique demand.

It’s a great thing and it will create a good value for both of you. To understand

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29. Your own story and accept that people and customers are unique makes a big difference. I think about this every morning, that all people, every employee and every customer, have the same value, intellect, sense, etc. – but all of us in a different way.

There are plenty of interesting books on this subject, studies have been conducted in trying to define people into categories and profiles. An example is the IPU (Institute of Personal Development) that has the so-called DISC-system known as the Red, Yellow, Green, and Blue system. In these color-profiles, you see (D) Dominant = Red - has features that are targeted, willing, and determined. (I) Influence D I = Yellow - has characteristics that are outward going, social, and influential. (S) Stable = Green - has features that are calm, loyal, and thoughtful. (C) Conformity = Blue S C - has characteristics that are accurate, cooperative, and analytical. If you want to read more about this, a good book to start with is “Surrounded by idiots” by Thomas Eriksson.

To make your own story, you must believe and find trust both regarding your company and your future. Do your homework, conduct research, and then create your own base. Then, make your own story for you and your own unique customers and they will appreciate it and follow your lead into the future.

This concludes the 4th part of this book and matters concerning HOW to do this transformation. Convinced or not, if you find any gaps up to now, fill them in by either reading parts of the book again or by asking us or other questions that can give you positive energy and confidence when you’re now standing on the famous “doorstep”. Take a big breath, as it’s time to execute part 5, the last - but not least important - part.

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30.

Everything is in place – what happens now?

Now it’s time to execute your own story. You and your team are now well prepared and ready for this digital transformation. Being well prepared provides you with the necessary courage and self-confidence to improve your business model and help your customers to fulfill their change, their needs of today, and demands of tomorrow.

Adding new digital values to your existing analog business will increase your customer relations and your own profitability. You have already started to establish a new and open dialog with your key customers, the VIPs. You have shared your plan and explained how new digital tools can add value to them.

In turn, the customers have explained their needs of today and future plans.

They have showed you which new directions they see and want to explore and their demands for the upcoming 3 to 5 years. You can both benefit from the many new digital tools that will disrupt and add a lot in today’s process: shorter delivery time, more variations, producing on demand instead of filling the stock, etc. … to start with.

The first test production has maybe already been made and examined by your customer and you both feel euphoric and exalted with what you now can offer and deliver to the market. All hardware and software are underway or already installed, the first part of the training session is done and the ramp-up time to trim and set the system together with your existing one is almost there.

Expectations are sky-high. But most of the job requests coming in are still the same as before. It’s long runs and in many cases best still produced in the conventional machines. Yes, you are already about to move most of the short ones to the new digital, but these small volume jobs, maybe as low as 5% of the

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total volume, in digital take less than an hour but can represent as much as 4050% of the number of jobs. It will free up a lot of capacity in the analog presses and give you new space to fill with new long runs.

A lot of focus now turns to redirecting resources into supporting the increasing analog volume. Also, resources trained and prepared for the digital might have to move and support in the old position. The organization can get defocused and rumors start to spread. Was it right to invest in digital? Suddenly you’ve got a lot of new business, so much more to do, and another fear starts to grow. Every single possible problem that now can arise from the digital will feed your fear and your defense system will start eating plenty of your resources. People will ask you: “Look at our growth and at what we already know and master, was the digital investment really necessary?”

The real reason behind this is that your customers also need time to do their transformation after receiving knowledge about what they can do and gain from all new opportunities. If it took you a long time to prepare yourself it will take your customers even longer. First, they’ll have to understand the possibilities and how it will fit into their own supply-chain, see the opportunities and then transform that into their own products and processes. That’s why it is ever so important to involve your customer as early as possible in this, the transformation concerns both you and them – let that strengthen your relationship.

You are now more attractive to your market. Suddenly, it’s now easy to setup meetings and you have a lot of new things to talk about with your customer.

A good sign is when they understand what you can add in terms of new value compared to the past and your competitors; they’ll want to join you on the new ride. You are in focus and at least get more orders then before, yes, first your analog business will increase. It will take some time before new and existing customers get up to speed and are able to utilize your new toolbox. For you, this will be the beginning of what we can call the famous S-curve.

Curve 2

Transition

A

Curve 1 Curve 1: Existing life path Curve 2: New life path

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30. Everything is in place – what happens now?

The S-curve says: first it has to go down before it goes up again and again.

At the same time, you increase your relations and get feedback from the new meetings, your total business increase, still with the same low margins.

Simultaneously, you’ll see a very small move in the digital. Now it’s important to keep sight of the horizon and understand that growth on the analog side comes first and before the whole chain lines up. You have to count both technologies as one cost pricing – not as separate P&L (profit & loss) analog and digital. They support each other both in production (short and long term) and by sharpening the company’s competitive edge today and tomorrow. Here it’s very important to keep focusing on your own plan. Stay tuned and monitor the start of the S-curve and how the growth will become more in balance between the two technologies – instead of spending too much effort on the start-up time. That’s built into the S-curve and a part of the transformation. A change starts by default downhill and negative, no matter how good and positive the result will be.

“So, everyone is positive for a change. Everyone wants the change. But changing yourself is different – and to lead the change is even worse. Come prepared.”

Your business grows, your turnover goes up, but still with low margins and then your cost of investment enters the picture. The lower number of employees maybe won’t get as low (and not as fast) as you’ve planned. It takes more time to slim and relocate internally then what you’ve planned for. There are many open wounds in your organization, similar to soreness. If you don’t feel anything now you haven’t really done the change yet and the organization is still stuck in the old way of doing business. Stimulating the change is like stimulating the employees to do more exercise, stay within your plan and coach your team.

If you train more you will feel less soreness, less discomfort, and distress, and you will be better on what you really want to do. The wounds will heal, the organization will find its new setup and a balance will be achieved. A slimmed line organization that produces more value through less production and more customized products, all in an organization that understands both new and old added values represented from a market-value perspective.

The next phase will be to copy the best experiences you had so far to more of your VIP customers. It’s time to make “sisters and brothers”. We’re still working within your existing base of customers and I still think that’s the best way forward. It’s cheaper and will add value to your customers and your own business. It will provide more profit than by aggressively hunt/steal other customers, which costs more and normally provides less profit as well. When the first steps are done you can expand further, hopefully with a lot of new sisters and brother. You’ll then have the possibility to request the market value of your services instead of bargains on margins.

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High and Low economy or only another roller coaster How will a high and low economy and a recession affect you and your business?

Is that a disaster or only a kind of roller coaster effect going down and then up again? Maybe you are one of those who think that if the market dives it will soon resurface again, it’s just a matter of holding on. In one way you are right. It will go up again. But remember, the transformation roller coaster economics never comes up again where it went down! You might stay there for ages and wonder where and when it will come back up. The truth is that the market goes down and up but it will take new directions from the bottom of the economy curve (the recession). And all this with new demands and digital technologies that disrupt a lot of old and analog steps in this process, providing new possibilities that will drive an economy like a roller-coaster.

There is one big difference between economy curves and a roller coaster. The curves have no end and no start station; it’s an endless process. After a number of ups and downs in the economy curves they always enter a new chapter, a fact called a paradigm-shift (Thomas Kuhn, Germany). Remember that our teenagers today (Generation Z) are the last of our character. After that, we’ll have the next paradigm-shift, as we will call the 4th industrial revolution. Each full economy curve normally takes around 8-10 years. However, the last high economy that ended in October 2007 was the second longest we’ve had for the last hundred years. It also took the biggest dive of recession since the Kreuger-crash 1929 (named after the Swedish Match King and industrialist Ivar Kreuger) and is one of the Standard & Poor’s 500 “Four Bad Bear Markets”.

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As I mentioned earlier the market doesn’t resurface where it dives. Therefore, there is plenty of work to do, both for you and your customers when business stops growing and starts diving. Every moment you can spend must be used to prepare for a new change. Learn by communicating with your customer about how their consumer-demands change, talk about where and how the upcoming turns will have an effect. Discuss where, why and how you all can benefit from the new needs of your customers. Be ready for change when the market falls in the economy roller-coaster-ride and even more importantly – where it will turn up.

After the plunge, statistics show that it will take an average of four years before we’ll see the effect of all the work that’s been done by the whole market to change and go upwards again. The difference this time is that you can be more prepared! This time you can add a lot of things to yourself, a lot of new knowledge, new tools so you can climb and add value to you and your business.

You can prepare and enter a new and more up-to-date business model that changes toward new digital values, using new tools for responding better to your customer’s demand and need as a competitive advantage for your company in the next high economy. You can invest and upgrade the whole relationship with your customer.

Act proactive to your customer, be prepared when they start to slip and present a new value proposition when they need it the most. In hard times, you can add new products to your customer, offering up-to-date tools that uses the future disrupted way of production (digital). Time to market is today maybe the biggest bottleneck to you and your customers. With knowledge and communication in place on the way down into the low economy, you can implement and execute to be able to scale your new business model as you climb up in the next high economy. There are no shortcuts in this process. It’s painful, I’m sorry but that is a fact. Everyone that has been through the process will testify to that. Two companies (Nordvalls Etikett and StrongPoint Labels) that already have done this transformation share their stories in two cases earlier in this book, check out their testimonies.

When is the right time for me? How can I see the signs? What shall I look for?

Already when these questions enter your mind it’s a big warning signal, let me explain. Most of us don’t like change. We don’t embrace the risk that comes with changing. And leading and commanding through change is even worse, even if you know that the actions are necessary. You start to think that it might not include you and it is hard thinking about leaving your comfort zone. You’re facing to fall down at the same time that you need to invest. The fear for this happening to you is already there when the question comes to mind.

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31. High and Low economy or only another roller coaster I’ve many times been quoted in the media as one who “likes the low economy”.

People often ask me: how can you do that? Well, they will understand if they read my books. The great feeling and the kick it provides in seeing my customers succeed is worth all the money and time spent on this. When you see the whole circle and then prepare step-by-step, bringing you forward to new and more profitable levels. In the end, it’s my passion in life. I hope you will find that as well, that there has to be pain and both personal and real investments, before it will pay off. Remember: “if something is easy, everyone can do it and if everyone can do it, there will be NO money in it”.

And (this is important to me and how I use it myself) we grow only through the success of our customers. If we add value to our customers and they grow with their customers, we all will grow together. So far it has been successful for all of us having done that through the whole transformation, and not only added a digital printing machine. It’s happening by communication and cooperation throughout the whole value chain when all markets get digitalized. In the words of Benny Landa, founder of the Indigo technology and also today the founder behind “Nanography” and the Landa corporation in Israel: “Everything that can be digital will be digital and printing is no exception”.

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The Economic future – Measure your progress How do you know if and when the transformation is starting to pay off?

Mentally, your first payback arrives when you start to book meetings with your VIP-customers. It continues in your dialog where you present all of the new tools and explain how they will add value to both existing products and also potentially new products that earlier were impossible to make (short runs, more variations, etcetera). The result will be more jobs heading your way and maybe all of them still best fitted for long runs. Hopefully, you have already offloaded all short/ mid runs from the analog press and created space to receive additional long runs. Remember that it will take the same amount of time for your customer to change, as it did for you. You have just informed them of new technologies and solutions that they didn’t know existed before you told them. Then they need time to absorb and understand all of the possibilities from where they are and where their new needs and demands will appear considering the new potential you’ve presented. You will have some work left in terms of testing ideas, media, quality, etc., but you are in the dialog and that is your future – as a partner.

Then, how to measure the profits of this investment? There is a saying that applies here: “if you can’t measure it – it doesn’t exist”. The old way of counting cost price per piece, meter, or sheet is now turning into cost price per time, which is the key of your mental transformation. The new way of counting cost is the time it takes to print plus media; no setup times, minimum waste, and a utility-time around 80%. This also works on your analogue side, but with one big difference – here the utility-time is approximately 20%. Even with new analog

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presses with shorter setup-time between jobs, the utilization in percent is still low because of the average run lengths per job becoming much shorter over time. Check your run lengths from the last 5 years and draw a line, forward this line into the next 5 years and you will see how that will affect your need of production to your customer of tomorrow.

The run length per order keeps going down while the number of orders keeps going up. At the same time, we see more variations and unique prints, a shorter lifetime, more on demand production instead of producing to a warehouse, etc.

Calculating this based on a long setup and preparation time for each job, with only <20% left in real printing time, will not give you the correct view to base your digital cost calculation where 80% is real printing time including setup and maintenance. The old way of calculating will only work for the few long runs left.

The TCO (Total Cost of Ownership) for all machines one by one divided by the time (working hours per day) gives you the cost price down to per hour, minute, or second. Today, a digital press produces independently, if it is SRA3, B2, or B1, around 30,000 sheets, 60,000 pages per day or 20,000 meters of film or labels (roll-feed) per a full workday. Make then your full TCO including the cost to print per day divided that then down to per sheet, page, or meter per second independently of the job size or length. This will be your cost price add then the media cost. As an example, 2,000 pages of B2 takes around 2,000 seconds (in 4+0) or 33 minutes = the TCO cost per second times 2,000 pages, with EPM you will gain another 33% in speed and save cost. Then, set your market price based on the added value the brand owners receive from your add valued service. Added value always provides higher margins and remember that you now have a completely new digital toolbox within your new business, shorter delivery time, more versions, less waste, no stocking, etc. Less low value high volumes but more add value and higher margins. Not less work, but still “less will be more”.

Looking at it short-term-profit-wise will be hard; it will take some time. It’s similar to when you start going to the gym, it hurts in the beginning before you get the right feeling. You change your business model toward selling a quality product to the market using one new model for your entire business.

Both analog and digital technologies must lean up together side by side in your existing production. Here, digital will free up a lot of space and capacity for your analog production. The analog revenue will increase along with the cost of the new digital investment, both increasing at the same time. The P&L (Profit & Loss) will not change much and the analog side will look much better than digital in the beginning. Cost counting machine hour plus number of 1,000 sheets… with today’s short job-lengths that feels obsolete! With an increasing number of long-run jobs in the beginning there will be no big difference on your

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32. The economic future – Measure your progress bottom line. With new and higher margin jobs (including the added value), you will see your own margins and profitability starting to grow. Old long runs can now also be split in a number of shorter runs over a period, less volume per job but with an increased margin and less waste. The same long runs maybe exist today only to fill up the analog press or adding shifts, “margin cost priced jobs” with less or no margin. A well-balanced production workflow combining the analog and digital, selling one quality product that will fit both long and short runs, will give a higher value back from the market and provide more profit than by selling analog or digital as two different products at two different prices. As you know by now, 30% of digital revenue could stay for 70% of the profit while 70% of analogue volume only stays for 30% of the profit. And keep in mind that the run-length per job will keep getting shorter while the number of jobs will keep increasing.

How much time will it take to transform, not only in your own production but also regarding your customer’s transformation? It all depends on how focused you can and will be in your work together with your customers. It is crucial to work close and long-term with them. Don’t just give an introduction and then return wondering why they haven’t placed any new digital orders. The relation is a process for them as well, just as it is for you. If you learn and repeat the process of “sisters and brothers” with a controlled number of customer-VIP’s you will quickly collect knowledge about how they think and how to work with them. It’s learning by training and will give you time to expand toward more customers and later on also inviting new potential customers.

By doing this, you will grow your business and your relationship and trust together with your customer. We know for a fact that they will appoint a smaller number of suppliers from now on and consequently your value and profit will increase if you do this right. It’s less for more, as in more value back to both you and your customer. This journey takes you from the past of being an industrial production unit in a tough and low margin competition, to the present with a market priced mindset inside a value-chain. It makes you flexible, updated and synchronized for both today’s need and tomorrow’s demand. Your business becomes a part of the entire chain of values. It’s not only what you produce – it’s what VALUE you can add to what you produce.

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New, smart, and intelligent packaging One thing is certain; this will evolve differently from market to market and region to region.

Looking at the Asian market, packaging in general grows faster there than any other market. Going from a market where food and goods in many cases were unpacked products, or slim to minimum packaged, to where itâ&#x20AC;&#x2122;s now developed into every single banana being packed individually for a maximum lifespan.

In Europe and the Nordics, our focus is different, as our culture is different. Not only because we pack our bananas in 10-packs (for expanding the lifespan at least in the store) which makes the bananas go bananas (!) at home when we break the plastic barrier. Still, food waste is a major concern in general.

In our Nordic culture, we value and appreciate our sustainability factor highly, both regarding the product and how itâ&#x20AC;&#x2122;s packed and why. Sometimes the package around the product has more importance than the product itself when it comes to product development. As an example, our milk packages went from whitepaper to natural paper (brown) and claimed by this having reduced the environmental impact by 25%. It became an instant success while the product inside was precisely the same. We see the same trend for other milk-based products like crème fraiche, a development going from plastic packaging to a fiber-based packaging and thereby reducing the environmental impact with 50%.

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IMAGE SOURCE: CARLSBERGGROUP.COM

This trend is increasing, for instance Carlsberg shifted from glass/plastic toward fiber bottles. In that case, we see a mentally added value for the consumer in the Nordic countries, not really correlating with the impact on our sustainability where the recycling scheme for glass already today are over 90% in Sweden.

In Asia, the consumer-value of this is slim to none. That is a big reason why this isnâ&#x20AC;&#x2122;t a success yet, but regarding the issue of sustainability it should really have had a big impact.

Green thinking will have a different impact in different markets. It will not always be an improvement, sometimes even worse â&#x20AC;&#x201C; not adding any sense or value.

For big brands, this will be challenging. Market trends go from mass production (scaling) to mass customization. The big brands battle hard to engage with their consumer down to one-by-one. At the same time, the consumer turns more local, favoring small local brands. The digitalization will play a very important role in the engagement toward this evolution. Both for the big brands wanting to increase the engagement with mass customization and for all small upcoming brands where volumes still are tiny. Small brands get digital value from looking and feeling as a big brand plus adding all local touch, still to an affordable price.

In the Nordics, fiber adds great value compared to plastic. To us as consumers, the appeal is more about emotions than sustainability. The forest and fiber are in our Nordic DNA and it will play an important role in our development toward a full circular society. This development also includes smart packaging, where packaging not only solves traditional issues as protection, engagement, standing out on the shelf, etc. The way we design the packages shall also be smart, adding functionality both concerning how it is built, media, protection, and repacking regarding e-commerce, easy to return as well as easy to recycle, and constancy when different materials gets inside the package. Fiber stays fiber in the whole package; plastic stays the same and needs a more effective recycling process.

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33. New, smart, and intelligent packaging Intelligent packaging arises in special areas when the value can cover the still high-cost solutions of today. Areas like tags through 2 and 3D-bars and QRcodes already represent a value for rebates, price setting, stockholding, and unique things like coupons. Contra fitting protection is an important segment for pharma to protect brands, including unique patterns in the design with and without additional codes to control and protect. Here, we also see special ink, invisible or unique colors, without special UV-light. All this alone or combined are adding high value and can only be made through digital. Each label or package can be unique and possible to backtrack. There’s no doubt that this application will start as a niche, especially in the pharma industry where contra fitting already is a big problem both for the brands and for us consumers.

Alternative smart packaging can be reactive ink used for temperature change in the supply chain. As for ice cream, when the temperature changes in the supply chain it can activate an ink change of the color of the package. Good for the consumer, maybe not a dream product for the supply chain. It can also serve as a warning if a cup or package turns too hot, where special heat reactive ink shows up as a warning – “warning, too hot to hold”. Ink that react as our food will make a huge difference in the food industry and promoters of “zero food waste” will embrace it. It will get consumers to stop looking only at the “best before date” when throwing food away. Reactive ink that changes color will add a lot of value to us consumers; the question is if we’ll trust the package to tell us if the food is good or bad?

Build-in active technology can make the product really intelligent. Special digital ink can be printed as electronics directly on the package or label with a paper battery or add on inductive power reactance – and hence deliver or save information for both the brand, supplier, and customer. This active process will play an important role in our next and upcoming society; in my previous book from 2013, I called it the biological society. Today, some people call it the 4th Industrial Revolution, when computers combine and interact with human beings in a biological way.

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Keep Writing Your Story It’s time to wrap things up for now. I hope you have found some inspiration about how and why you should transform now, and some courage to act instead of standing still and doing nothing.

This book is not meant to be an encyclopedia when it comes to facts and data, which is almost impossible because facts change every day in this fast-moving packaging industry. However, the reasons WHY and strategies on HOW to transform will be there forever. You can pick the ones that best fit you and your business and start implementing. It will keep you on your toes and make you stronger and braver moving forward. I hope it will help you continue building your own story. “If you don’t grow you decline”.

The mental transformation when changing from an old value chain to a new and today digitally based value chain is too often underestimated. The build-up and implementation of new cornerstones regarding how to do, sell, and set the price is different today. If you do it correctly and successfully you will have a profitable execution of your new direction for your own business.

When you start making your own story, find out where you are today. Take your own data of today and years back regarding turnover, gross margins, profit, number of prints, number of jobs, run length per job, etc. That gives you the statistics to build a future trend line on, and you will clearly see how the future will look if you don’t change – if you don’t do anything. Are you happy with that development? If not, accept where you are today and use this book as a base in making your own story (transformation).

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Be self-realistic and self-critical of yourself and your business. I mean that in a good way because this is for you and for the sake of your own business.

Changing from somewhere you don’t really accept, as a basis, will only waste your time and become very expensive. Not being true to yourself will cost you dearly and confuse you and your customer even more later on. Therefore, no transformation will appear and your investment will end up as a cost only; “you can’t change anything if you don’t accept where you are today”.

I have seen too many businesses through my 40 years of working with market transformations that weren’t true to themselves, and then used it as an excuse and easy way out. “Maybe digital is the right thing, but in the future, NOT now and NOT for me, I’ve tried”. You need to make a true valuation of the present situation to be able to move on in the right direction. Now you know the facts and it’s up to you to start making your own story.

“If you want something in your life you’ve never had, you’ll have to do something you’ve never done.”

- JD Houston.

When is the right time to transform? One good indication is, in general, the economic cycles that go up and then go down every 8 to 10 years. Right now, we are leaving a high economy and facing a time of consolidation before finding our way down the hill. It provides us with many reasons, and the amount of time, to change and do things differently. When existing businesses, products, and values slow down it also opens up a need for a transformation. Today, external factors like Donald Trump, who still boosts and pushes the American economy, could shove us outside of the standard economy cycle, which normally then result in a deeper recession.

In the packaging market, we now have plenty of new technology that will result in big disruptions of the supply chain. We also have indicators, like the demand toward sustainable, recyclable, and compostable media that also create a big push for change. The graphic industry and packaging market are now more than ready for a disruption and transformation; maybe even a total flip of the market.

The good news is that this will generate a new and improved profit for the winners in this market, while the losers will be the one’s doing nothing.

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34. Keep Writing Your Story As we look even further ahead, at the next upcoming time for a transformation, we also expect a new paradigm shift that we call the 4th Industrial Revolution.

The driver for this is a big and wide technology change including both AI (Artificial Intelligence) and VR (Virtual Reality) and that will also change our day-to-day life. For example, a few sensors in or on our body that checks our pulse, temp, levels of sugar, blood pressure, etc. will produce information from us that will be enough to predefine ourselves. We’ll get information about how we feel and what we need, before we actually feel it. First only collecting the information, then also doing something about it in a practical way. We’ll always be online, already with the next mobile-system (5G) information we’ll stream and flow everything continuously and personalized, the “me and myself” generation. In many cases, packaging also becomes much smarter, more intelligent, and interactive. Connected packages will interact and tell us what we need and what we would like to buy from a store (online or e-store). Problems with reading small texts, as on many labels and packages today, will cease to exist. The intelligent package and our sensors will communicate directly so we’ll know if the product is suitable for us or not. The packaging itself will also include information on how to recycle and compost it in the correct way.

To me, the heart of this book is the power of getting released when the market really transforms. The market transmission is an engine that has so much power when it turns into a new chain with new values – dividing and splitting the market into winners and losers. Disruption through new tech must work together with the mental part of the journey, forming a new business model.

Buying a new digital press is probably the easiest part. It’s the things surrounding that decision you need to be aware of and in control of. I have collected as much information as possible in a year and a half about today’s packaging market, data, arguments, inspiration, and motivation for you to feel more prepared and inspired to start your own journey and to really transform. The machine part of the digital transformation, including finishing, workflow, and other tools, I have intentionally left out of this book – our first-class specialists at Visutech and HP Indigo will guide you through that part of the process.

The future is increasingly exciting. As you close this book, the next chapter will be your own story. Good luck, work hard, and we’ll see each other down this road.

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••• Epilog

It’s September 2018 when I add the finishing touches to this book. 18 months have passed since I started writing my third book, and over the course of 30 years, I’ve published Visions, Visions & Transmissions and now Transmissions.

It has been an exciting and hectic time in our part of the business world, that’s for sure.

The first book was based on the founding of Visutech back in 1988 and the last edition of that book was released in 1996. The book contained my vision and mission with respect to future developments in the graphics market.

Book number two came out 2013 and reflected on our 25 years in business and the transformation of the commercial print market, including an update of my visions for the next 25 years. My third book is released in time for our 30-year anniversary and it covers the next transformation, this time the packaging market. Here we will look at why, when and how this market is likely to transform.

Sweden is approaching the end of a hot and dry summer – one of the warmest ever recorded by mankind. The summer of 2018 is a clear symptom of climate change and pushes the whole market towards the notion of a more circular society. Over the last 18 months, I have consumed a lot of information, publications, reports and investigations regarding the packaging market. I have translated and deciphered data to show the new needs and demands that exist in the market. I hope this book will add value, understanding and knowledge about how to address these changes and how to respond to what’s now happening within the packaging market. Transform through the transmission as a toolbox, step-by-step.

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It’s now up to you to write your own unique story and you need to be brave.

As Thomas Jefferson wisely said: “If you want something you have never had, you must be willing to do something you have never done”.

It’s your time to transform as you transition from analog towards digital together with your own unique customers. Everyone must create their own story, focusing on their own unique needs and demands but with one important thing in common: adding more value. Your upside is achieved together with your customer and because you now know more, you can be braver. Use your “GRIT”. Your grit is your courage and determination, your strength of character, your power of perseverance. Your grit will drive you forward towards the next success with an abundance of passion.

Things happen so fast today that writing this kind of book has been a challenge over the last 18 months. Keeping up to date can be tricky as things change from the time you write it down to the time it reaches the reader. The digital printing transformation is now hitting the packaging market, something we are already familiar with from the transformation of the commercial printing market. While writing this book, some trends and demands have also received significant media coverage, which is pushing every supplier in an even more challenging direction away from traditional and well-known packaging towards a new, untrodden path. It’s not only focusing on more sustainability and the environment but also on having a full circular society with respect to all global resources like food, water, energy and waste. It will be a challenge, and a challenge we must enthusiastically embrace.

September 2018 Jan-Olof Jungersten

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Image source list Page Image source 10 Cathrine H., Dagens Industri (2016). Affärerna som fick mediajätten på fall, June 20, p. 14-15 14 Matthew Yohe (2010), https://commons.wikimedia.org/wiki/File:Steve_Jobs_Headshot_2010.JPG 14 http://uncyclopedia.wikia.com/wiki/File:Ford_Henry_Ford_Model_T.jpg 17 https://www.freepik.com, Created by Freepik 20 roz_chicken/stock.adobe.com 26 babaroga/stock.adobe.com 26 name/stock.adobe.com 29 Aleksandar Mijatovic/stock.adobe.com 34 Rawpixel.com/stock.adobe.com 37 Kenishirotie/stock.adobe.com 38 HP Indigo products 44 nblxer/stock.adobe.com 47 ylivdesign/stock.adobe.com 48 highwaystarz/stock.adobe.com 51 vchalup/stock.adobe.com 52 matryokeshi, http://matryokeshi.tumblr.com/post/124397962239 53 freshidea/stock.adobe.com 54 James Steidl/stock.adobe.com 59 Romolo Tavani /stock.adobe.com 60 denisismagilov/stock.adobe.com 64 pongsakorn_jun26/stock.adobe.com 66 max dallocco /stock.adobe.com 76 stokkete/stock.adobe.com 78 electriceye/stock.adobe.com 81 freshidea/stock.adobe.com 82 alphaspirit/stock.adobe.com 85 freshidea/stock.adobe.com 86 alphaspirit/stock.adobe.com 94 cribe/stock.adobe.com 94 Debris of modern life clogging waterways; https://www.thetimes.co.uk/ 98 FotolEdhar/stock.adobe.com 102 farizun amrod/stock.adobe.com 107 farizun amrod/stock.adobe.com 109 zlikovec/stock.adobe.com 110 freshidea/stock.adobe.com 114 ipopba/stock.adobe.com 124 HP Graphics Solutions Business 127 Destina/stock.adobe.com 130 seanlockephotography/stock.adobe.com 134 Sura Nualpradid/stock.adobe.com 138 naypong/stock.adobe.com 142 Anton Balazh/stock.adobe.com 144 Carlsberg Unveils New Green Fiber Bottle Design [28/09/16], www.carlsberggroup.com, 146 saiva_l/stock.adobe.com

THE NEXT TRANSFORMATION – PACKAGING The packaging market is entering our next important transmission. Perhaps we’ll see a flip of the entire market that changes it inside and out. It’s exciting times in a very exciting part of the business world. The packaging market is ready – are you?

Within the supply chain things will happen fast as the market grows, turns digital and packaging becomes the most important marketing tool around. This market is probably one of the best transformation opportunities of its kind with an endless amount of new possibilities.

New digital technology will play a big part in the transformation and originates from the commercial print market that transformed in our last low economy. But to prosper within packaging you’ll need to change your entire business plan. In this book we’ll go through the necessary stages step by step.

Consumers’ are demanding a faster time-to-market and every supplier in this supply chain must deliver. This transformation has already begun within the label market and a converter that today prints 30% of their volume digitally get as much as 70% of their total profit from digital.

Here, we’ll examine the all-important steps of connecting with brand owners, understanding different cultures, the issues of sustainability and how new packaging will reduce food waste. We also analyze how a low economy will get the transmission up to speed.

Doing things in the right order and at the right time will help you a lot in this transformation.

Make your own story together with your customers; it’s a win-win situation. Timing is essential and the timing is now. Embark on your mental journey today – it will be a thrilling ride.

ABOUT THE AUTHOR Jan-Olof Jungersten is the CEO and founder of Visutech, today one of the largest suppliers of digital production solutions for the professional graphic industry in the Nordics. The Visutech HQ is based in Gothenburg with operations in Sweden, Norway, Denmark and Finland.

Jan-Olof Jungersten has over 30 years of experience within the graphic industry. The transmission in packaging will be his fifth professional transmission after the cell phone, home computer, satellite-TV and commercial print. This is his third book.

The price for this book is SEK 400 to Visutech’s fundraising campaign for UNICEF in favour of all children’s right to education.

The fundraising campaign can be found at www.visutech.se/unicef