How to create strategic partnerships with outside companies to grow within our industry.
One thing I like about getting older: if you pay attention, life teaches you valuable lessons.
When we started Pictographics in 1994 our goal was to grow the business by taking on new technologies, skills, and capabilities. Over time, we accomplished our goal and became a totally vertically integrated company. We adopted excellent design, printing, fabrication, and installation capabilities. “Soup to nuts,” we were totally self-sufficient. We didn’t need any outside partners to do anything.
Then, one day, we were asked if we could print architectural safety glass. We figured out how to do it, but we didn’t have an autoclave or refrigerated storage for polyvinyl butyral (the fruit-wrap-like laminate that holds layers of safety glass together). It would be impossible to accomplish without involving a specialized glass printer. It took two failed attempts before we found a perfect partner. Between us, we had a nice run of selling digitally printed safety glass at very nice margins.
At about the same time, we landed a huge job printing interior and exterior stadium graphics for the 2007 NBA All-Star Game. We were a significant player in the fabric dye sub market back then. It was especially nice because there weren’t too many of us. We had just completed an 80,000-square-foot dye sublimation project for the inside of a stadium for the Fiesta Bowl and BCS National Championship. But doing the outside of the stadium was a different animal.
When the first 5-meter digital printers came out, we made a strategic decision not to ever buy one. We chose to limit ourselves to 3.2-meter printing. One really shouldn’t try to wrap the outside of a large sports arena unless they have 5-meter printing and finishing capabilities.
One option was to tell the client we would take the interior work, but suggest they find another vendor to produce the exterior graphics.
There are three problems with this approach.
• First, it would have jeopardized our relationship with a client. Plus, we had just successfully completed one of the largest jobs in the company’s history.
• Second, clients like to deal with one quote, one purchase order, one invoice, and one vendor. The company that can do it all has a much better chance of getting and keeping these huge and profitable projects.
• Third, they would like to have one company responsible for all of the event’s color management.
Sponsor and event logos are important, and that is why God invented Pantone “call outs.”
The second option was to do what many companies do: give the impression they’re capable of producing it in-house and actually subcontract printing and finishing on the “down-low.” We won’t do that.
What we decided to do was bring the 5-meter producer’s president into the meeting with the event organizer and introduce them as the print provider. Our commitment to the event organizer was we would be responsible for site survey, file setup, and color management. We guaranteed color matching for all print production and we would conduct press checks throughout off-site production.
The end result? We kept the contact. We were totally transparent as to how and who was producing the totality of the project. We marked up the 5-meter production to compensate for us selling and managing the job. The customer only had to deal with one quote, one work order, one invoice, and one check. Another major factor to consider when working on events like this is your contact person is overwhelmed for the entirety of the process. Having one person with whom they coordinate a huge portion of their job makes their life easier. And they don’t forget that.
I’m always amazed when an event like this comes off without a hitch and we all live happily ever after.
We consider companies we partner with to do extraordinary things – like the stadium graphic takeover – strategic allies. We like to invent stuff: create products and processes that are proprietary.
I’m not sure of the exact quote, but it goes something like “A man’s reach should exceed his grasp.” If someone in our industry thinks up a product that would be great, but they know some of the technology is outside their knowledge base and/or they lack one or more of the component production capabilities, they should just forget it, right?
No, just do it! What I’m not going to do is tell you one of those ideas and how we successfully found a partner on the other side of the country. We’ve been at it for more than a decade. But I will share that not a week goes by when we don’t produce an ever-increasing number of our components of this proprietary process. I know it’s selfish, but it’s just business.
It wasn’t easy. Our strategic ally handles all the sales and marketing. It took a couple of years for them to figure out how to market the new product. Volume ramped up slowly, but now it’s constant and profitable.
How do you find such a company? You start at the top. It’s a waste of time to talk to anyone who isn’t capable of making a decision. You want to talk to the owner or at least the general manager.
You need to know your stuff and have a grasp of the technology. You must be capable of clearly defining what each company must do to create that first “proof of concept” product. You must be willing to produce your end of the process at no cost to them.
You should have completed initial market research so you can speak intelligently about the size of the market, and what a target selling price would be. It’s also helpful if both parties agree to transparency. “I will show you my spreadsheet for cost of goods sold, if you show me yours.” Being able to justify every cost and expense goes a long way to earning your ally’s trust.
Keep it Friendly
Because you’re allies, it’s a given this relationship will not work unless it’s a win-win and you can form a trusted bond. If it starts smelling like either party is trying to take advantage of the other, it won’t work. The only relationships like this that are worth doing must have long-range potential. It’s too much work to put one of these partnerships together to have it not last at least five years.
We’ve created more than a half dozen successful, profitable alliances. In almost all we agreed we could both sell the product. We negotiate what their production costs to us are and vice versa.
It’s important to pick allies you personally like. Life is too short to do business with a**holes.
The importance of forming strategic alliances is you can expand your product offerings and your potential markets. You can do this with no significant capital investment and the associated risk of not making your ROI. You can create barriers to entry for competitors because few in our industry have the combined capabilities your alliance creates.
Finally, in the unnamed, more-than-a-decade-old relationship, we’ve been able to maintain the same price per square foot for the product in spite of dramatic deterioration of pricing in the open market. Consideration is given: we invented the product and the process. Sales remain profitable for both companies. Our partner has not pressured us to lower our price or, worse, dump us because they can buy it elsewhere for half the cost. I can’t think of anywhere else in our industry where you can find that advantage.
Let your creative juices flow and create new products where your company can contribute to the distributive manufacturing. Then, make a new friend (often outside our industry). Have fun and make money.
Craig Miller is a principal shareholder in Las Vegas-based Pictographics where he is also director of military and law-enforcement projects.