Differences between traditional and digital printing businesses at R.R. Donnelley

R.R. Donnelly & Sons Print vs. Digital

Final Project -- R.R. Donnelley & Sons: The Digital Division

In 1995, the largest commercial printer in the world, R.R. Donnelley & Sons which was founded in the 1864, was experiencing challenges both internally and externally as digital printing technology began to completely alter the printing industry. Though the printing company had created a division to respond to the massive changes associated with digital technology, headed by VP Barb Schetter, the division had significant difficulties infiltrating and making an overall impact on the traditional Donnelley business model which was fully invested in larger and more costly printing systems and had an informal and formal business structure and culture to support these massive historical investments.

R.R. Donnelley & Sons Assignment Questions

What are the differences between the traditional printing business and the digital printing business? And in particular, what are the implications for Rory Cowan, who is sitting over those two businesses-Digital Printing Business

Places emphasis on speed and flexibility

Just in Time Delivery and Inventory Model

Reduction of cost in distribution including logistics and distribution

Revision capacity much greater than traditional printing

Short run printing is more cost effective than long run

Increased demand for short-run assignments and highly customizable and editable (individually directed processes)

Global distribution can be simultaneous with digital technology

IT Database with flexible storage and high security needed

Traditional Printing Business

Large infrastructural investment in offset and web/presses dubbed "heavy iron" establishing high fixed and low variable costs.

Large run printing on both types of presses if far more cost effective, with film and plates used in offset press (25,000-500,000 run length) set ups and etched copper cylinders for Gravure presses (500,000+ run length.

Cost Driven (cost per page)

Longer run length created lower costs per page for customer

Pre-determined contract with lengths from 3-10 years constitutes 70% of business

Necessary long-term customer relationships

Implications for Rory Cowan:

Cowan was concerned that digital printing was so revolutionary, based on its business model and necessary organizational thought, that a whole division needed to be created in order to ensure that the new model did not create divided and separate company digital sectors within existing plants and divisions. For Cowan the concern was that the traditional business model would lend itself to a system that held pockets of digital technology working in isolation from each other and their own division which would create redundancy and poor intercommunication and cooperation. Cowan was also very concerned about internal resistance as most leaders in the company, including Cowan, could see digital technology as innovative and capable of great potential, it was completely foreign in its application and therefore seen as separate from the traditional model. Market variation was extreme creating serious concerns about digital applications. The new division would have to create its own customer database and invest heavily in hiring skilled personnel more versed in digital technology and marketing strategies as well as invest in digital equipment and technologies. Internal resistance to the new technology was in part demonstrated by its very potential to compete heavily with the existing traditional models.