A recent study reveals that the packaging industry need not be discouraged by misleading indicators that predict the doom of the “new economy” but instead should continue to focus on being prepared for the long term.
When I speak to packaging industry executives at companies of all sizes these days, I am surprised by the degree of confusion that is widely prevalent. I can appreciate their anxiety — there are signs that the economy may be slowing down (though a recession appears unlikely), the competitive dynamics have completely changed and new business models are emerging (and failing, in some cases).
Since April, the stock market has further complicated the picture by sending several misleading messages to all of us. The media, which needs spicy stories all the time, has been delighted with the bloodbath on Wall Street. The same magazines and journals that were talking about nothing else but “dot com” companies and how they will change everything, are now similarly making a big deal about how it is all over.
No wonder, we just don’t know what road to take and what lies ahead. The risks appear to be so high that many of us in our professional roles are afraid of committing to anything for fear of being proven wrong within weeks.
Focus on long term
As a consultant, I try to be as objective as possible and help my clients take a longer-term and strategic perspective rather than be carried away by hype or discouraged by roadblocks. While everyone seems to be having fun at the expense of failed “dot com” companies or how stock prices of some have crashed, the reality is vastly different insofar as the strategic issues are concerned.
I have been regularly addressing in depth the fundamental issues underlying the new economy in my previous articles, but this time I want to share some eye-opening findings from a recently released study by The University of Texas’ Center for Research in Electronic Commerce. These findings should be able to convince all of us that we, in the packaging industry, need not be discouraged by misleading indicators and instead continue to focus on preparing ourselves for the long term.
Some of the findings from the fourth bi-annual Internet Indicators study that I think are relevant for us in the packaging industry are as follows:
- The productivity gains at Internet Economy companies are significantly higher. During the six-month period studied, an estimated 11.5% increase was observed.
- Internet-related revenue is growing three times as fast as corporate revenue as a whole for Internet Economy companies.
- While “dot com” companies have often been the face of the Internet economy, they make up only approximately 10% of the revenue generated. The remaining 90% of the revenue comes from companies that are exploiting the power of the Internet.
What does it mean for us?
These findings clearly show that real and significant business improvements are possible if we can adapt the tools to meet our specific needs. For instance, those packaging companies that have embraced online tools for collaborating on package designs with their customers and colleagues are already seeing major improvements in productivity. Several executives have confirmed to me that merely having a website has helped their company increase the number of good leads, reduce the cost of marketing communications, and, above all, their potential customers can evaluate and consider their products right away without having to wait for catalogs to arrive in the mail.
We all know that companies with bad business models eventually die whether they have a “dot com” in their name or not. On the other hand, we should learn from the mistakes that these failed companies made and then develop a business model that is better suited to our business, fits our corporate philosophy and can be implemented at a speed that meets the needs of our customers.
What drives growth within an enterprise is innovation, that is, coming up with breakthrough ideas and implementing them before anyone else does. General Electric, which believes in reinventing itself every couple of years and completely changing its business models (to the point of destroying its own business models, developed and perfected by it over the years), should be our role model. While the future is as unpredictable as always, it still makes sense to learn from industry leaders.