His career may have begun as a trainee accountant at a commercial laundry business in the 1990s, before a chance move into recruitment consulting lured him into sales, but after crossing paths with a certain Nick Dixon, his future in print was all but destined. Whether he liked it or not.
Darryl Danielli How did you get into the industry?
Jeremy Walters Back in the early 2000s, when I was working at online directory Scoot, I met a character called Nick Dixon, who had just sold Colorgraphic and was under a non-compete in the print industry so had bought into a company called Red Volcano, which was a Scoot reseller under my responsibility. Then in February 2004, Nick bought Howitt out of administration on the Sunday and called me on the Monday and said: "I need you to come up here, I’ve bought a business and I want you to come and work for me." I thought, this is great; apart from the fact I’m not sure if I want to work in the print industry. So I agreed to see him very early in the morning, because I didn’t really want to waste a day. Then I was just blown away by his vision and was really impressed with the Nottingham site.
So he did a sales job on you basically
You could say that. He always had this mantra that he was going to turn me from a good sales guy into a businessman. So I joined, but I very arrogantly said that I wanted to be sales director. However, there was a certain Nick Barbeary already doing that extremely well. so Nick [Dixon] just said no, I needed to learn the business. And he was right. My first few weeks were spent working on the shopfloor, working on enclosing machines, making lots of tea for the minders. It was a really sensible thing for me to do. But the sales area I was ultimately responsible for was bids and tenders, the contracted work, because it was clear that I was never going to be a ‘streetfighter’ salesman that could get down and dirty with the best of them. I’ve got a lot of admiration for those type of salesman, and we’ve still got characters like that in the business, but it just wasn’t my style.
So Dixon took you under his wing?
He did. So I did that for around 18 months and developed a great understanding of the business, and benefitted from some fantastic mentoring from Nick and also Rick Taylor. Rick was definitely the sometimes-forgotten brains behind the partnership. Then Howitt bought Olwen Direct Mail and I was sent to Croydon to run the client service and commercial part of that business. We dropped in another team to run production, but that didn’t work out and I ended up running the whole thing. That was a really interesting time; it was a very underinvested site and losing a huge amount of money, so that was a huge lesson in cost-cutting and how to restructure a business that is really struggling. Regrettably, we ended up closing the business after nine months and Nick gave me a month off because it was such a draining experience.
That must have been tough learning curve, only for the site to close?
It was. I mean we looked at every aspect of the business from lease costs to how much milk we were wasting in the fridges. We worked really hard.
Obviously hindsight is a wonderful thing, but if it was in such bad shape shouldn’t that have shown up in the due diligence part of the acquisition?
I just think they didn’t appreciate the size of the challenge, they knew that there were some acorns there, in fact some ultimately grew into Data Lateral, but it was the manufacturing side that we just couldn’t turn around. But in my month off, Nick had bought another business in Kent [Eden Lithographic Reproduction], which was a £1.8m turnover business and on the face of it not very exciting. But what Nick said was that he wanted me to grow it. So I’d spent nine months at Olwen developing an understanding of costs and how important it is to get that cost base right and I put those lessons to use and during the four years we were running that business. We rebranded it as Howitt Digital and took it from £1.8m to a £15m-turnover operation.
Organically or through acquisitions?
Organically, and it was profitable all the way through – and it was all though the principles of good cost management, not over stretching, understanding where we needed to invest and investing in customer service. Looking back, the awful experience of Croydon really helped massively. We then rebranded from Howitt Digital to Dialogue Solutions and then we all became Lateral Group and then we were bought by DST [becoming IOS in the UK].
The rest you know, really. Nick left when he sold the business; Mark Felstead, who was then chief executive of IOS, said he thought I could run a site a little bit bigger than Edenbridge, and I went from running a site with 70 associates across 1,600m2 to one with 400 associates and 16,000m2 in Dagenham.
[Felstead left the group in December 2011, when Nick Dixon returned to the then IOS and Lateral Group businesses as chief executive, himself leaving a year later after the IOS business had been restructured and rebranded DST Output UK.]
Dagenham was a big step up then?
Just a bit. But some of my experience proved very useful, in that it had a lot of costs that just had to come out. So regrettably we made some redundancies there, around 140. We looked at the customer base, too, and removed a lot of work that we just couldn’t produce profitably with what we had.
Was that as important as the cost-cutting process?
Definitely.
So, in terms of sales and profitability, what have you taken the business from and to?
I can’t talk about that because we’re a publically quoted company, but [before DST was involved] it was certainly suffering losses across the UK group in total. I would love to tell you how well Bristol is doing now, how well all the sites are doing from an operational perspective. I would love to shout about that now, but I just can’t.
Can you say how big the UK business is as a whole?
Well, our half-year results have just come out, and we were around £83m – so I’m sure you can do the maths.
How many staff do you have in the UK?
Around 1,300. It was probably around 1,600 at its peak, not including Lateral Group.
I was going to ask about that. How does that work? The split between DST Output and Lateral Group, I mean. Do you and Jason Cromack (chief executive of DST Output’s sister company customer engagement agency Lateral Group) follow different reporting lines?
If you look at Lateral Group now, it’s all about data analytics. They’re still involved in email broadcasts though. It has around 100 staff in its London office. DST Output reports into DST International Holdings and Lateral reports the Global Insight Group.
I guess data’s a truly global business.
Exactly, and there’s some really exciting R&D going on in Insight, it’s a really exciting part of the business and Jason splits his time between here and the US.
Do you share a lot of resources?
We share HR and finance and some sales, but it’s a totally different business in many respects. For example, the margins in Lateral are significantly higher.
And where do you see the big opportunities for DST Output in the UK?
For my part, the big opportunity is to position the business correctly.
Do you think you’re right-sized now, after all the site consolidation?
Absolutely. From an overarching DST perspective, it’s important that we position ourselves correctly and that people understand what we do, internally and externally. I think even a year ago there was a lot of confusion about who we were and what we did.
How is that an opportunity though?
With the strength of the brand and the facilities that we have across the UK, I think we truly have best-in-class manufacturing and client services. So much so that what we’re now doing is bringing in a third-party agency that has a lot of experience in commoditised industries and we’re going to take all of our client-facing people and develop a ‘standard’ based on all the great things we do. We’ll take all the mediocre things we do, because no business is perfect, and bring those up to that standard of excellence. The whole project will take about six months, but it will be another differentiator. 99% of UK businesses produce great print, and that’s something to be proud of, but to really stand out it has to be about customer service.
How are you going to measure the success of the scheme?
A lot of it will be anecdotal – from customers and managers. I would love to say it will be measured from a pounds perspective, and ultimately we might be able to and also through client attrition too. But client feedback will form a huge part of it. I don’t think DST will ever be the cheapest, but we can, and do, offer the best value, and I think we can get to the point where an even higher proportion of our customers will say that we give them great quality and, more importantly, great quality of service. Don’t get me wrong, we already do that in a lot of areas, but we can always improve.
In a business of your scale though, surely making that kind of cultural change is a massive task?
One of the things that we focus on, as a management team, is to not let our size restrict what we’re doing, and not do something just because it looks too difficult. For example, if we take the client service initiative, we did take some time discussing it and asked ourselves if it was feasible to try and ensure someone in Dagenham operates the same way as someone in Nottingham, Jarrow, Bristol or Peterborough – especially when they’ve all got slightly different product sets. It would be really easy to say ‘you know what, we can’t do it’. For me we have to try things, we have to want to change things and communicate that. Communication is critical.
But if you look at the business, in essence it was created from three quite entrepreneurial firms, DsiCMM, which was acquisitive before it got hamstrung by the financial crisis; DST, which even though it was owned by a massive US corporation was quite agile in the UK; and Lateral Group, which was clearly very entrepreneurial. So by trying to standardise the merged business aren’t you risking killing that spirit, certainly in the minds of those ‘streetfighters’ you mentioned earlier?
That’s certainly something that we don’t want to quash, but it’s about setting parameters and giving guidance and support. It’s certainly not about taking away entrepreneurial spirit, or flair, or creativeness; at the end of the day, people still buy from people.
Do you think there’s still place for the traditional salesperson though? More and more businesses seem to be moving away from sales people to focus on customer service staff who concentrate on increasing the spend of their existing clients rather than on winning new business.
I think there will always be a place for good sales people. It’s about a variety, you need your streetfighters because some people like to be sold to, but others need to be sold to structurally.
How do you think that translates to the industry generally? Are we a professional industry?
No, but we’re getting there. We’ve all made big steps towards that and the integration of other services has helped, but there are a few areas I could comment on and then probably get fruit, or worse, thrown at me in the pub…
…go on, live dangerously…
…well, I don’t think we help ourselves with things like phoenix companies. I also don’t think it helps when we position ourselves by not paying our suppliers on time or not embracing new technology.
On that subject, are you looking at making any investments, in terms of technology or even M&A?
My view would be that in the UK we should be looking at our equipment. Yes, when there are depressed business sales, everyone looks at those opportunities. But you can’t just sit around and wait for someone to go bust and buy them. For me it’s about making sure we’ve got the right equipment for delivering what we already have today and what we want tomorrow. It would be very easy to look at each of our UK sites and take the view, ‘you know what, the site works, it’s well invested, let’s just leave it where it is, it makes a good return’ and then think in the future ‘oh crikey, we need to start investing – we’re being left behind’. We’re setting our 2014 budgets at the moment and I’ve said to all the site principals, give me a wish list and we’ll work back from there. I should imagine we’ll be making a multimillion-pound investment in 2014.
If you look at the business though, and I’m playing devil’s advocate here, some would say you’re largely in a declining market?
I don’t agree. At all. It’s a changing market sure, but as an industry we need to view it as an evolving market, not a declining one. If you listen to Royal Mail and just look at its research on how consumers interact with print, the sales stimulus it provides when people receive print. There’s no doubt that the industry has changed and every consumer’s doormat is much less crowded than it used to be, but what this means is that a well-targeted piece of DM, with the right stimulus and the right science behind it reaps rewards, and brands have to recognise that. We’ve had a record-breaking month at a number of sites in terms of the volume of mail packs they’ve produced. I certainly wouldn’t say that sounds like we’re in a declining market.
Thank God for that. But do you think that the industry generally talks itself down?
I think we do. If we view ourselves, as an industry, as a ramshackle unit on an industrial estate in the back of beyond with poorly maintained kit, we may as well just not be here. We should be proud of what we do and that’s what we all need to present.
It’s clear that you’re very proud of DST, but which other businesses do you admire in the industry?
I admire Communisis, they’re doing a good job at reshaping their business, and they’re raising funds and trying to do some things differently. Same with St Ives. There’s York Mailing too, the thing I like about them, as well as the acquisition trail they’ve gone on, is that they have done what a lot of others haven’t typically done, which is invest in new equipment. There are a lot of smaller, niche players I admire too, like Inc Direct and Real Digital.
On the latter two, do you think transpromo has come of age then?
I still don’t quite think the quality is where it needs to be. And the move to transpromo unsurprisingly stalled at a pretty aggressive stage in the economy because I don’t think the investment, the appetite for change, and confidence, were quite there at the time. But it’s still there and it’s certainly of more interest now to a few of our customers.
And what about cross-media, is that actually starting to drive up printed output?
There’s definitely a relationship between cross-media and print and this comes back to collaboration for me, because you ignore that at your peril. Well, perhaps that’s a touch dramatic, but if you don’t embrace it you’re restricting your opportunities.
A lot of small companies think that cross-media is beyond their reach – do you think they might be missing a trick though?
Definitely. I think smaller businesses have opportunities to partner with others. We do it and we’re a big business, but we’re not the biggest in every discipline and so we have conversations on a weekly basis asking other businesses to partner with us in certain areas. Collaboration is something we need to do a lot more of in our industry, at all levels.
Which individuals do you admire in the industry?
Nick Dixon, he’s out of the industry now, but he gave me my break in the industry and taught me a huge amount. Certainly Rick Taylor too, he’s an incredibly smart and measured person. I’m not sure there will be another Nick-Rick opportunity, but if you see the two of them working together it’s inspirational. It reinforces the fact that you can’t run a business by filling a room with people like you. They were so different, but unbelievably complementary. On that note, I admire my UK management team too, for the same reason.
Are you ever tempted to go it alone, like Dixon and Taylor, and run your own business?
I don’t give it much thought to be honest. For where I am with DST, it’s a big job; there are 1,300 associates. For me it’s about doing the best job I can for those associates.
Final question. Why do you call staff associates?
We have to; we used to call them employees up until DST bought us, now they’re ‘associates’. It’s an American thing. Sorry.
DST OUTPUT AT A GLANCE
Locations 45 across 12 countries on five continents
Employees 14,000
Sales $2.5bn (£1.5bn)
Mail packs processed globally by DST customer communications division 2.99bn
UK sites Bristol, Dagenham, Jarrow, London (Lateral Group), Nottingham, Peterborough
UK Employees 1,300
