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Ba401_RR Donnelley

Dec 13, 2014

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Education

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  • 1. The Digital Division

2. Copyright 2009 R. R. Donnelley & Sons Company. All rights reserved. RR Donnelley is the worlds largest provider of printing and related business services. We use our unparalleled capabilities to help our customers Prepare, Produce, Deliver, and Process printed and digital content. 3. Company & Industry Background

  • The company, originally known as R.R. Donnelley &
  • Sons Company, was founded in 1864 by Richard Robert
  • Donnelley, father ofReuben H. Donnelley.
  • A privately held, Family run
  • Went public in 1956
  • Become the worlds largest commercial printer in 1995
  • Generated 60% of its revenues from directories, catalogs, and magazines
  • Organized into 38 divisions collected into 8 business group which were part of 3 sectors

4. Church Goodman & Donnelley building at 108-110 Dearborn Street, Chicago, 1868 .Digital Reproduction .R . R .Donnelley & Sons Company Archive . the ruins of the Lakeside Building at Clark Street and Adams Street, after the Chicago Fire,[ 1871 ].R . R .Donnelley & Sons Company Archive . Lakeside Building at Clark Street and Adams Street, built following the Chicago Fire,[ ca .1873 ].R . R .Donnelley & Sons Company Archive . 5.

  • The Evolution of a Graphic Identity :The R . R .Donnelley Indianhead
  • From the late nineteenth century onward, RR Donnelley's corporate identity was associated with its distinctive Indianhead trademark .

exterior decoration of the Plymouth Court building,[ 20 th century]. R.R. Donnelley & Sons Company Archive. Joseph C .Leyendecker's design first appeared as architectural decoration on RR Donnelley's Plymouth Court building . 6.

  • Early Advances in Technology
  • RR Donnelley's position as the printing industry's leader depended on a continuous program of research and development .

printing press #D2, 1949. R.R. Donnelley & Sons Company Archive. Another of RR Donnelley'sspecialty printing technologies,"Watercolor" printingused rubber plates. 7. Financial highlights 8. 9. Sales and Customers by Business Category (% of Consolidated Sales) Financial-5% Memill Lynch Smith Barmey Paine Webber Goldman Sachs Schwab & Co. Books-13% Random House Simon & Schuster Harcount Brace HarperCollins Bantam Doubleday Software/Harware-16% Microsoft IBM WordPerfect Quicken Telephone Directories-21% Sprint Ameritech Nynex Bell Atlantic Southwestern Bell Us West Retailers Wal-mart JC Penny Kmart Service Merchandise Toys R Us Metromail-5% Procter & Gambles First Card Mutual of Omaha Whirlpool Magazine-18% TV Guide Family Circle Time Glamour People Readers DigestCatalogs Lands End LL.Bean Eddie Bauer J.Crew 10. Organization & Incentives

  • Most sales forces were aligned with business groups rather than divisions
  • Division-level incentives became group wide in 1991
  • And became sector-wide in 1993
  • So, salespeople sell work to their business group only

The Traditional Print Business

  • Used gravure and offset/web presses
  • Cost about $12million for offset, and considerably more for gravure
  • Considered long-term relationships
  • High fixed cost and low variable cost

11. Industry Shifts & New Technologies

  • Change of customers wanted
  • Largely become of the rapid spread of office computing
  • Digital four-color and computer-to-plate were expected to have an even more profound impact.
  • In 1995, digital growth was forecast at around 16% annually
  • Traditional printing was expected to grow by 3%

Digital four-color

  • Reduce cycle times
  • Reduce chemical pollution
  • Can print directly from computer files
  • Infinitely customizable
  • Could be delivered in variable quantities as often as desired
  • Low cost and small size

12. Emerging Competition

  • In 1995, at least 55,000 printing companies operated worldwide. Most had fewer than 25 employees
  • Donnelley was larger than its next 9 rivals combined.
  • Smaller printing companies were building alliances, among themselves and with firm that had high-capacity networks for transmitting files.

13. A New Business Model

  • Need to develop:
  • A transaction management system
  • A system for royalty accounting and payment
  • An object-oriented database
  • A manufacturing database
  • Result:
  • Cost would be higher than offset/web or gravure for long runs, but lower for short runs.
  • On-demand printing would have an enormous effect on customers total system cost.
  • Total cycle time would be reduced by orders of magnitude from 20 days to 2 or 3 or single day.
  • More tailored marketing and better sales

14. SoA new division would be required, rather than imply spreading digital technology throughout the company. 15. Economic & technical validation

  • Research the capabilities and costs of new imaging technologies by Technology Center
  • Began by close contact with technology suppliers such as Xeikon
  • Oversight and monitoring on Xeikons development work
  • costs were higher than expecteddigital per unit costs were lower than the costs of offset printing
  • cost costdiscountRRD

16. Reengineering the Technology Development Process

  • The existing process
    • costdivision information systems technology and incremental technology improvement
  • Theredesigned process
    • processphases IVprojectmatrix

17. Technology Development Process 18. Deliverables for Phrase Reviews 19. From Vision to Reality

  • In April 1994, Barb Schetter was named program manager with the objective of creating a new digital color printing business.Cowan(phase 3development process)
  • Trapeze Team( working without net)
  • review phase IIIexistence of a market, possible applications, construct a deployment schedule and funding plan, and define the scope of the business2
  • On July 1,1994 Schetter was named vice president and general manager of the Digital Division. The Division would have its own P&L, with marketing and freestanding sales force reporting to Schetter.

20.

    • ISG market
    • print at any scale, using any print technology, or deliver the image in any other form the customer wants
    • criterianew business
    • 1. grow twice as fast as the corporation
    • 2. reach at least $100 million in sales
    • 3. achieve an above-average ROA
    • interchangeable workincentiveperformancedivision
    • ISG Financial service, Pharmaceuticals, Health care
    • divisionsales force sales force

The InformationServices Group 21. Building the division

  • Memphis, Tennessee central processing and distribution point of Federal Express (Fed EX)
  • Fed EX Memphis
  • printer 11 RRDindustrys low-cost digital producer
  • systemdevelop 3 software tools1. Target-ITpick, pull, compose their own pages2. Send-IT 3. Order-IT

Operations and Technology 22. Organization, Reporting, Relationship and Roles Partial Organization Chart, 1995 23.

  • Target markets
    • Donnelleys marketing directors
    • target they were continually updated based on
    • experience in the marketplace
    • target1. magazine reprints, 2.corporate literature, 3.marketing and product literature for pharmaceuticals and health care, and 4.advance, liquidation, and prospecting catalogs
  • Positioning
    • we sometimes say were not selling printing anymore, were selling marketing tool information by allowing greater market segmentation and more focus on selling
  • Consultative Selling positioning

Marketing and Sales Strategy 24.

  • 3 divisions own sales reps , the ISG sales force, sales force of other business group
  • business group leader, sales managers, sales representativesdid not always see eye to eye.

Challenges of InternalAcceptance

  • expected sales had not yet materialized, and under intense financial pressure.
  • see profits by 4th quarter, and a breakeven year in 1996
  • profit from our new business. Its hard to be unprofitable around here for even a fewyear
  • Memphis was working well
  • Donnelleywork lets see

25. The RR Donnelley Today

  • The worlds premier full-service provider of print and related services
  • Serving organizations worldwide
  • Doing bus