I toured a printing company that printed the DVD packaging and disks for Netflix, back when the entertainment giant sent DVDs to people’s homes for viewing.
The printer was growing and had the floor space to install a brand new specialty press with a dedicated production area — exclusively for Netflix.
At that time, Netflix was already phasing out DVDs and converting consumer subscribers to streaming delivery. Knowing that fact, the printer bought the press anyway. It seemed like a risky business decision. Was it?
Here was the printer’s rationale:
• The press would be paid for in 6 months, based on the volume and margin of print jobs already contracted.
• The press was scheduled to run 24/7 to keep up with Netflix’s disk demand. It would help fill capacity and keep existing operators employed full time.
• The press purchase would keep another printer/competitor from taking the work.
• The printer gambled (and was correct) that libraries, schools, and government entities would continue to want videos on DVDs.
• The cost of the press was, in their opinion, worth the opportunity to learn and grow with Netflix, a company that was making bold business choices.
Even though there was an ultimate dead-end to that particular printed product, the printer made a deliberate (and expensive) choice to move forward and form an alliance of sorts with a customer. It was a strategic decision I’ve thought about often in the years since then. (That printer is still in business, by the way, and doing very well.).
Now, here we are, picking up steam in the post-COVID landscape. Do we play it safe? Do we make the best possible guess to get us through the next 6 months? Do we look for doors that have a sliver of light under them — that aren’t even ajar yet — where there might be opportunities for strategic alliances?
What about strategic alliances?
If we were to form an alliance, what would that look like? Which strategic partners might be worth our time, effort, and brainpower? Who would be excited to choose us because of our business sense and initiative, not just as a way to get a discount on printing.
Are you having these kinds of discussions inside your company and with potential strategic partners?
Here are examples of companies that could be your version of Netflix:
- “Super” customers
- Vendors who really understand you and want you to succeed
- Media platform owners
- Friendly competitors
- Startups you believe in
- Disruptive brands
As you think about forming strategic alliances, bounce the concept off your business advisor or marketing strategist. Talk to the head of the production team that will be fulfilling the work. Look at the impact on the bottom line. How much will you be investing to build a partnership that could have a long-term payoff? Run the numbers; don’t just base it on a gut feel. Will you need a bank loan or a line of credit ? Will you need to make capital investments or hire more employees? How will you present the opportunity to your banker to improve your chances of getting funded? How soon can you “break-even,” as the printer did in the Netflix example? Which guarantees should you get in writing, and what does your attorney say about how enforceable those guarantees are? Do you have intellectual property or other valuable business information you’ll need to protect from disclosure?
Most important, do you have the mental stamina as well as the financial safety net to “eat it” if your partner goes under or reneges on the agreement?
I love talking with printing company owners who have flow charted what a strategic alliance could do for them, and where the pitfalls are. Let me know in the comments below if you’ve made a strategic alliance — and how it turned out.
Read more from Sandy here.
Sandy Hubbard is an expert Marketing Strategist specializing in the Printing Industry. She consults with Print CEOs and owners of print, media, and platform businesses of all sizes — helping marketing teams build visibility and increase sales.
Sandy is also co-host of #PrintChat, a weekly discussion on LinkedIn. Join the group here.
Read more from Sandy here.
* In case you’re not aware of Netflix, Inc., here’s how they describe themselves, via their SEC filing: Netflix, Inc. is the world’s leading internet entertainment service with over 139 million paid memberships in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages.