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Building a Business

One Success Story Shows it Starts with Strategy

By Barbara A. Pellow

What is a business strategy? Simply put, it articulates the overall direction of a business. A good business strategy should clearly differentiate one business from others in the same sector. It needs to be linked with available technology and deliver a unique customer focused value proposition. It is the high level decision on positioning and directing the company into the future.

I recently spent time with John Lacagnina, founder of New York- based ColorCentric. Lacagnina is a digital print pioneer and one of the best business strategists in the world of communications. In the 1980s, his company, Entire Inc., developed the first PostScript front end RIPs for Xerox high speed mainframe printers. In 1992, he started Electronic Demand Printing, Inc. (EDP), which specialized in document manufacturing using Xerox’s DocuTech equipment. He provided on-demand documentation for companies such as Microsoft, PeopleSoft, and Sybase. He then built ColorCentric from scratch, beginning in September of 2002. The company received its first order in January 2003. This year, revenues at ColorCentric will top eight million dollars, and Lacagnina sees his business increasing triple-fold in the next several years.

My interview with Lacagnina focused on his ability to build successful businesses from the ground up. He notes, "In the early 1980s, I read Megatrends: Ten New Directions for Transforming Our Lives, and it changed my life and perspective on how I was going to build businesses." For those unfamiliar with Megatrends, the book highlights major market influencers including the transformations from centralization to decentralization, national to world economy, industrial to information society, and forced technology to high tech/high touch.

Lacagnina realized that helping organizations effectively use technology was more important than simply selling technology. Through effective applications, he could address the migration into high touch, user-oriented environments and assist organizations with the distribution of services. From a personal perspective, Lacagnina saw offering a service that leveraged technology as far more profitable.

These thoughts led to the formation of EDP. As Lacagnina formulated his business plan, he followed the fundamentals of building a solid business. This included the identification of the right target market and understanding of key customer needs; development and delivery of product and service offerings; the message—a clear articulation of the value proposition; and effective mechanisms to reach the market.

At this point in 1992, the world was focused on supply chain management and improved inventory management. Firms wanted to reduce obsolescence and waste. This was especially critical in the high tech software documentation market. Digital printing and the DocuTech were emerging in the market as an accepted technology with appropriate quality for B&W printing. John seized the opportunity to blend market needs with advanced technology. Using state-of-the-art on-demand digital production techniques and tools, EDP offered clients a wide array of services to fulfill customer needs. The services included document mastering, storage and retrieval, archiving, distributed document printing, media duplication, finishing, inventory tracking, and facilities management. EDP captured a blue chip customer base, and managed the digital inventory of both training and software documentation. When the business was established, there was no online help desk support or CD delivery of information. EDP was deploying just-in-time manufacturing techniques to a new market. The firm would hold a minimum inventory and wait for the customer to signal a cycle of replenishment for production of documentation. It maintained an orderly and efficient flow of materials throughout the entire manufacturing process and fulfilled the documentation directly to the end user. The business was so successful that it attracted the attention of Kinko’s, and in 1997, Kinko’s acquired EDP—now Kinko’s Corporate Document Solutions.

As an entrepreneur and visionary, Lacagnina saw the next wave of opportunity in digital color. When he looked at Xerox’s iGen3 technology, he realized that digital color had become mainstream. "When Xerox showed me the iGen3, I got excited. I saw the tip of the iceberg again. Color on-demand was where B&W was ten years ago." However, Lacagnina realized that the market had changed. The Internet was entrenched in the way that people communicated and conducted business. As he talked to his customers, he realized that the new world was 1:1 communications and zero inventory versus minimum/maximum, just-in-time fulfillment.

His strategic vision was different for digital color. As he assessed the market and technology, Lacagnina saw a number of enticing Internet sites that needed print partners to deliver a complete product to the market. His vision was to become the print operating system for Internet-based service providers. ColorCentric established a model to interface Web-based applications to its operating system. "This gave us the ability to each focus on our core competencies. I am the middleware, providing print and fulfillment of run-length one output for Internet-based service providers."

One of ColorCentric’s strategic partners is Founded in 2002, Lulu is a Web-based, independent publishing marketplace where prospective authors can publish, sell, and buy any and all things digital.

There is no set-up fee and no minimum order to publish and sell on Lulu. The process is managed online, including printing, delivery, and customer service. Authors set their own royalties for each piece of content, and at the end of each quarter, Lulu mails a check for the royalties generated. Lulu makes a percentage from each transaction, which means that they make money if an author succeeds in selling their work. When an author wants to print, the book is routed to ColorCentric where full color production, kitting, and fulfillment for one or hundreds of books is handled.

ColorCentric has also established a partnership with Qoop, "makes tools to help Web users, Web partners, and developers customize content into products." The ColorCentric team helps Qoop deliver that vision by producing printed items, for example, photo books in a variety of sizes. According to Qoop, "Minis are cool. They make sharing easy and portable. You can pop them in your pocket and break them out at a moment’s notice. They’re super-easy to make with our new design tools." ColorCentric kits, fulfills, and delivers these on-demand to Qoop subscribers.

Lacagnina blends state-of-the-art printing with a philosophy of automation and lean manufacturing to deliver quality color affordably. ColorCentric streamlines the work process and integrates the latest technology to reduce cost and deliver with the turnaround expected by Internet users. According to Lacagnina, "I don’t just have customers. I have strategic business partners. We work together to deliver a product to the ultimate end client—the person sitting at his or her PC. I know that for ColorCentric to be successful, we need to collaborate and have a business model that works for both of us."

Lacagnina sees no limits to where ColorCentric can grow. He says, "The Internet has opened up tremendous new markets. The pages that I am printing were never printed before. I am not competing for offset transfer."

Throughout Lacagnina’s career, he has demonstrated that he is the ultimate business strategist. For each of his businesses, he has developed a solid business strategy that articulates the overall direction of the business and clearly differentiates his firm from others in the same sector. He has linked his business objectives with available technology to deliver a unique customer-focused value proposition. Lacagnina adds one more element to his business model—passion for what he is doing. That passion gives him a boundless supply of energy to tackle obstacles. It drove him to capitalize on where he thought the market was going before others saw the opportunity. After talking with Lacagnina, I conclude that the best combination for building a business is a good strategy and a whole lot of passion.

May2006, Digital Output

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