AMELIA ISLAND, FLA. — Borrowing a formula from a popular self-help book of the late 1990s, a panel of financial analysts came up with their own seven habits of highly effective packaging companies. Four panelists at the Packaging Strategies conference in Amelia Island shared what they thought were some of the most important moves a packaging company should make to stay successful. One even had his own list of seven highly ineffective habits of packaging companies.
The consensus, however, was that the key to success in this industry is cultivating people-to-people relationships.
The discussion was moderated by and included George Staphos, senior packaging analyst with Salomon Smith Barney in New York. Other panelists were Timothy Burns, president of Cranial Capital Inc. of Cleveland; Douglas Groh, vice president of J.P. Morgan Securities of New York; and Timothy Rothwell, an associate with Lansdowne Capital Ltd. in London.
The first and second good habits were recommended by Groh:
"`Begin with the end in mind." Groh said that translates to identifying objectives and understanding customer needs.
"`Put first things first," he said. "Make productivity improvements a continual process — not just a one-time occurrence."
Groh cited Ball Corp. as an example of this principle.
"Their acquisition of Reynolds [Metals Co.] was a great opportunity for them," he said. "They identified $75 million in cost savings, and additionally they've increased productivity at Reynolds by almost 10 percent."
Identify a market product focus and stick with it. That was the advice from Rothwell.
"The more successful packaging companies have been focused," he said, citing Tetra Pak Inc.'s focus on liquid packaging as an example.
"Less successful companies have done the opposite and have been a great drain on [research and development]." An example of the above, he said, is brewing companies that are considering packaging alternatives.
"Can somebody explain to me why on earth they want to buy plastic bottles?" Rothwell asked. "It does seem strange."
Maximize the return on your human capital. Rothwell said the key to a successful business is a strong and motivated staff, and is no different for packaging firms.
"The challenge now is to attract new blood," he said. "I would suggest more people from other sectors. Managers have tended to have a product rather than a market view of production."
Later in the discussion, Burns also would call for more professional and academic diversity in the industry — particularly more women entering the field.
Research and development is an investment, not a cost.
Burns said that R&D has been viewed as an expense for most packaging companies since the 1980s, but these companies are realizing today the need for innovation and differentiation, which can lead to growth and market share gains.
Customer selection is key.
"Don't be afraid to just say no [to abusive customers]," Burns advised a chuckling audience. He said companies must realize they have a choice in the business they take. "Let your competitor win that loser contract," he said.
Build a fortress during periods of weakness.
Staphos offered the final effective habit, which translates into turning downtime in business into productive time.
"When the markets that you all compete in are looking shakier than normal, it's very easy to shrink back from R&D or shrink back from investing," Staphos said. "What you've seen in the last several years is companies have been extremely successful by taking advantage of times in their markets when others have frozen, by spending on R&D or investments or both."
And although Rothwell did suggest that packaging companies consider electronic-commerce strategies, none of the panelists emphasized that point. In fact, Burns said e-commerce is not for everybody.
One of his seven habits of ineffective companies was to focus on e-commerce as a means of escaping current problems.
"To a certain extent, ease up on e-commerce. You're better off making good products," he said. "I think e-commerce is great for small- or middle-sized businesses, but how many Web sites can a buyer go to?
"You can spend millions of dollars and years of time that could probably go better into R&D and people."
Burns' other six ineffective habits were: cutting back on R&D; cutting prices to perturb the competition; focusing on size rather than profitability; not continuing to speak to analysts after the company misses its numbers; always saying yes to customers; and finally, he said, "When we think of failure, failure will be ours."