How to innovate in this industry?
Maybe like the Mexican stationery company whose slogan read BACO WITH "B" FOR GOOD?
👀 To view the video clip, click on the image above or on the following link:
Note: Our apologies, this video clip is in Spanish
"INNOVATION IS THE PROCESS THAT TRANSLATES KNOWLEDGE INTO GROWTH AND SOCIAL WELL-BEING"
On a rainy night and driving through the peripheral of Mexico City, I saw a famous corner, where the bright advertisement for "Baco", which is a stationery manufacturer, could be seen contrasting with the darkness.
With the car moving and as best I could, I took a photo of the famous corner, because for many years, this school and office supplies factory has been there, announcing itself with a spectacular illuminated sign.
"Baco" defines himself as follows: "We are a pioneer company in the commercial stationery industry in Mexico, founded in 1943. Throughout decades we have built one of the main factories for school and office supplies. At our 75th anniversary, and always following the precepts of respect, quality, service and price, we remain as fresh and motivated as in our beginnings. We are proud to be one of the main and largest manufacturers of school supplies and office supplies in Mexico.
Today we continue with the desire to develop new school, writing and office products, always staying at the forefront in the manufacturing and distribution processes"
When taking the photo mentioned above, it came to my mind that some years ago, when I was president in Mexico of the "National Association of School and Office Supplies Manufacturers" (ANFAEO), we carried out a very interesting and in-depth market study on the Stationery Industry in Mexico.
Said study was carried out by the firm "Consensus" led by Laura Gutiérrez Santibáñez and where, among other curious facts, it was detected that the name of the firm of "Baco" was confused with "Acco", being this second firm (Acco Brands), one of the largest companies in the world of school and office supplies and direct competition of "Baco", it is for this reason that after said market study, the owner of Acco ( Edgar Urich-Sass) decided to use "BACO, with B for Good" as a slogan.
It is not strange to think that the stationery industry is declining due to the effect of the "Digital Age", as we already discussed in the case "Tops Products" en EUA, however, in countries like Mexico and much of Latin America, the poverty rate still accommodates traditional stationery items for a long time and this fact makes our friends at "Baco" very happy.
The poverty index allows the format of independent businesses in this field called "Independent stationers" to still persist, since they provide service in low-income and medium-income neighborhoods, where for the consumer it is an advantage to find personalized attention and, a diversity of items stationery, avoiding the cumbersome transfer to a self-service, which also have a limited supply of this type of item.
According to data from ANFAEO México, (National Association of School and Office Supplies Manufacturers), before the pandemic there were 120,000 stationery stores that sold school supplies (including traditional stationery stores, chain stores, and general merchandise stores selling these items). Now, between 20 and 25 thousand have closed due to the effects on the industry and the pandemic.
According to ANFAEO, between March and July 2020, 8,000 stationery stores in Mexico went bankrupt and disappeared due to economic pressures and the confinement caused by the pandemic, and those that still exist are at risk of closing, since the season school—which traditionally began in Mexico in July—represents 70 percent of its annual sales.
An average stationery store is 43 square meters and when it is not the school season, they lose 70 percent of their sales, facing two options: they close or look for business alternatives such as diversifying through the sale of gifts and sweets.
Given the impact of the digital age, this industry must find mechanisms to innovate, as in fact we know that they are trying in "Baco" (mentioned above), however, it is important to know the types of innovation to be able to guide where to direct their efforts:
INNOVATION HAS DEGREES OF INTENSITY
1) Incremental innovation
Known by many as "Product and Service Improvement", this type of Innovation happens when there are improvements in existing products and services but motivated by consumer needs.
For example, the creation of folders with an integrated clasp or the folder - bag, to replace the traditional folder that requires a metal clasp so that the papers do not fall out:
FOLDER WITH CLOSURE INCLUDED
This is an example of a product that replaces the traditional folder and metal clips of "Baco" or "Acco".
FOFOLDER - EXPANDABLE BAG
This is an example of a product that replaces the traditional folder, the metallic clasps of "Baco" and the accordions for folders of "Esselte" (Tops Products).
2) Disruptive innovation
It's when at some point, customers don't want to pay more for existing products and prefer cheaper and smaller but good enough products.
INSTEAD OF A BOX OF 24 CRAYONS
For example, instead of offering a box with 24 crayons, for the end user, a more attractive and reusable package, and of course cheaper, would be more practical, such as a 28-crayon PET: A PET WITH 28 CRAYONS.
INNOVATION AS A GENERATOR OF COMPETITIVE ADVANTAGES
The Crayola crayon pet with 28 jumbo crayons (incremental innovation) is a product that I had to launch several years ago in the Latin American market.
This innovative presentation was very well accepted in schools and at home for its attractive "Premium" design and, also, because the plastic pet lasts longer than a cardboard box and can be reused
A cardboard box deteriorates, breaks, and then there is nowhere to store the crayons.
However, it must be remembered that every competitive advantage has a lifetime because, over time, competitors imitate it and its effect on the company's profitability erodes.
📁 HOW TO INNOVATE IN AN INDUSTRY LIKE THE STATIONERY?
Peter Drucker, the great Business Consultant, mentions seven sources of Innovation:
THE 7 KEYS TO INNOVATE
• Systematize the search for innovative ideas in their organizations.
• Identify specific areas in which to seek innovation.
• Prioritize your organization's innovation efforts.
The sources of innovation are listed in the following table.
Note that some are internal, and some are external to the firm.
Most R&D departments focus on new knowledge and process needs, as these are the most desirable to be monitored by scientific staff.
One of the benefits of the Drucker model is that it draws attention to other sources of innovation that may be more practical and less difficult to achieve.
SOURCE OF INNOVATION
Returning to the question, How to Innovate in the Stationery Industry? the answers are given to us without a doubt, by two big names in the Stationery Industry:
Steven Jacober, who was one of the great talents and Innovation Gurus, in this industry, who for many years led in the United States of America, one of the largest stationery expos in the world "SHOPA SHOW" (SCHOOL & HOME OFFICES PRODUCTS ASSOCIATION).
Steve Hilleard, CEO at OPI, who has been leading OPI (Office Products International) for over 35 years, with extensive reporting, working and consulting experience for the global business supplies/workplace products industry. Connected at the "Senior" executive level with most major industry players worldwide, Specialties: Former Office Products Reseller (OP). Now a publisher and media owner in the international PO community, and provider of consulting, executive search/recruitment, M&A, and business development services to the office supply industry.
Reviewing the list provided by Drucker, we can see that Steve Jacober & Steve Hilleard applied the following principles:
Internal Factors of Innovation Sources:
1) Faced with pressure from internal SHOPA partners such as OfficeDepot, Steve Jacober knew how to capitalize on discontent, innovating the way of doing business with a win-win approach for both partners and customers.
2) Given the unexpected changes in the industry, Steve Jacober had the vision of approaching other associations in Latin America, such as ANFAEO, which allowed us to create the "American Association of Manufacturers and Distributors of School and Office Supplies"), where they associated Canada, Mexico (ANFAEO), Central America (Costa Rica and Guatemala), Andean Countries (Colombia, Venezuela and Chile) and the Southern Cone (Brazil and Argentina).
3) In the face of industry changes Steve Hilleard managed the transition from transforming the OP (Office Products) from a reseller of office products to a large media publisher in the international OP community, and provider of consulting, hiring/executive search services, mergers and acquisitions and business development for the office supplies industry.
External Factors of Innovation Sources:
1) The onslaught of the Digital Age (New Knowledge), which allowed Steve Jacober to innovate through the inclusion of other types of manufacturers correlated to this industry, but of a technological nature such as the company "C-Pen" among others.
2) Faced with the opportunity and the changing process of this industry, Steve Hilleard transformed his office products marketing company into a knowledge marketing company, creating organizational value for the companies he serves.
INNOVATION IS PUSHED BY THE DIGITAL AGE
👀 Be sure to watch the evolution of a typical office over the years in the video clip mentioned above: https://youtu.be/27G6-_PKguA
Note: Our apologies, this video clip is in Spanish
1) Website of Baco: http://baco.com.mx/
2) Website of OPI: https://www.opi.net/
3) Omniverso - eaBC: "How Tops Products Plays its Best Role" https://www.eabc.website/post/how-tops-products-plays-its-best-role
5) Erdozain Rivera, Juan Carlos. "Peter Drucker, Knowledge and Innovation". Omniverse -eaBC. Mexico. 2020