27 Nov ‘This is how you keep growing in a structurally shrinking market’ – MT.be (Nov ’20)
Even on a structurally shrinking market and in full crisis, you can reap success and even grow. Thijs Claes, CEO of printing company Daddy Kate did so through strategic acquisitions, a new leadership style and a far-reaching focus on the customer.
Thijs Claes heads the family business in Sint-Pieters-Leeuw that his father, as founder, had run for many years. ‘In 2006, my two older sisters joined the company, only to take over three years later.’ Claes was called in and asked about his plans. His parents got him to join it for a year, as an experiment, to see if it was for him.
In 2009, he took the plunge. ‘That was in full economic crisis and in retrospect that has been my salvation. I saw in it a challenge for myself. The company as it was then successfully run by my father had an expiry date. Father was a typical authoritarian leader, who owned everything from a to z, controlled everything, knew every leaf of paper. Moreover, he had no knowledge of digital. The company was not resilient that way.’
Claes noted, for instance, that there was no good follow-up of the figures, as they were all in his father’s head. As a result, we didn’t really have an answer to the crisis. Fortunately, we did have a good savings pot, so running at a loss for a few years did not mean the end of the company.’
Growing by acquisitions
In 2013, Claes became CEO. ‘I put my plans on the table then: I thought dad should retire, explained what role I saw my sisters playing, which companies I wanted to take over, and explained all these strategic changes. And they liked that. Go ahead, you do that well, they said. And since 2013, we’ve had tremendous growth.’
In 2010-2011, driven by Claes, Daddy Kate did some strategic exercises and market research. He noticed that small niche players in the industry were making a lot of money as were the very big players. Printers that fell in between – and most of them were – were very unprofitable.
‘We were in between that too, at the bottom of the U-curve,’ says Claes. ‘The question that arose was clear: are we going to shrink and find a niche or are we going to grow, with more machines, greater capacity and more flexibility. In my opinion, we needed to grow to survive. But how do you do that on and shrinking market? It seemed almost impossible to grow organically, so you have to start thinking about acquisitions.’
‘In ten years, the graphics sector has shrunk by 40 per cent. So we are in a structurally shrinking market. The advantage of such a market is that many companies are in the same situation,’ says Claes. ‘So there are some that cannot continue on their own, but don’t have the piggy bank, which we had. We were able to offer them a solution and thanks to them we were able to grow.’
‘In a crisis, customers drop out, not because they are dissatisfied, but because budgets are reduced’
‘That different leadership style and that deliberate acquisition strategy allowed us to respond to the current crisis in an agile way today,’ Claes said. But there was also a strategic turnaround that helped. ‘The focus in our company was entirely on operational excellence. Trying to work as efficiently and cheaply as possible to have the highest possible margin. Until 2009, that worked very well. But it is my belief that striving for operational excellence is not the only and maybe not even the best way to run a company. If you enter a crisis and customers drop out, not because they are dissatisfied, but because budgets are reduced, you have no recourse against that with operational excellence.’
From operational excellence, Daddy Kate has evolved to customer intimacy. ‘That means we offer tailor-made solutions as well as added value. But that choice also implies that we have had to say goodbye to customers who were less suited to us. You have to dare to choose customers who are a better strategic fit and refer other customers to colleagues.
The strategic turn not only impacts Daddy Kate’s client portfolio, but also operations. ‘When a customer has an urgent job, the presses are stopped and the job intended. This is complete sacrilege in many print shops, because you have to interrupt a job and also stop and restart the machine twice. Most printers don’t start it because it costs a lot of money and effort.’
A dreamer’s philosophy
‘Such a model also means that we now need many more people in the commercial structure and in production who think along with our customers and with our company. We are aiming for participation. That is not a dreamer’s philosophy, but really a strategic consideration.
To achieve that, you do have to bring your people into your story and explain to them that we are now going to do what used to be sacrilege under my father anyway, because our customer comes first. Is it going to benefit the customer or not, is the question we have to ask ourselves with every change. And you also have to make it clear that we are not throwing money away by meeting customer demands, because the customer is willing to pay for the exceptional service.’
Claes did notice that getting your people on board is not a given. ‘You have to get them involved and help think about how best to do things. It takes years before you really get them on board, and even then I’m sure there are still those now who think that it was all much easier in the past after all,’ he laughs. ‘And maybe it was, but now we are much more dynamic and therefore more resistant to the current crisis.’
‘In an organisation with an authoritarian tradition, you have to implement democratic management authoritatively’
The paradox of democratic leadership
For a strategic change to seep into your organisation, you literally have to take it down. ‘Paradoxically, in an organisation with an authoritarian tradition, you have to implement democratic management authoritatively, it has to be top-down and you have to impose democracy,’ says Claes.
‘The bigger your company gets, the harder it is to stay agile,’ Claes notes. That’s why he makes sure his company doesn’t get too big. ‘Back then, with 35 employees, we were too small to survive. A turnover of 20 million and 100 employees seemed the perfect size. Everyone knows everyone and we can still maintain the family feeling. With 200 or 300 people, you no longer have that. So I’m careful not to move in that direction.’
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