Sometimes the fates converge, an industry runs aground, and companies lose profit, cache and competitive advantage.
It happened in the 1980s when problems in the Middle East led to rising gas prices. This situation elevated consumer alarm and paved the way for enterprising Japanese automakers such as Toyota to grab market share with compact cars that got great gas mileage.
For almost a decade, the American auto industry stubbornly refused to acknowledge the "new reality" of altered preferences among American car buyers: that once they purchased a compact car, they fell in love -- not only with the fuel economy, but also with the agility, durability and low cost of the (insert Japanese automobile name here) compact model.
What do you do when your industry is facing a similar new reality?
What do you do when the market evolves, when your loyal customers age out of the market, when the mood and perception of the country shifts, or when radical new knowledge changes the game?
The American paper industry has faced all of the above dilemmas, in spades.
Although our culture hasn't become the "paperless society" that pundits once predicted, the advance of technology has cast a long shadow over one of America's premier manufacturing sectors (responsible for 5% of U.S. manufacturing GDP, according to a survey by the Center for Paper Business and Industry Studies).
The advent of digital advertising has lessened the need for paper ads. Newspapers are floundering in the wake of digital news sites with round-the-clock updates. Books available on iPad, Nook and Kindle are conveniently and instantly downloadable, and can be stored on a chip the size of a pinhead or uploaded to the cloud.
Energy prices have risen, and so have postal rates. Natural disasters have decimated forests. Labor and transportation costs continue to rise.
Facing all of these factors, Wisconsin's Wausau Papers determined that its only option was to innovate out of the deadlock, as noted in the article "Paper Manufacturing Innovation is Grist for the Mill" by Jean-Marie Hershey in the trade journal High Volume Printing.
After the company merged with Mosinee Paper Corp. in 2004, executives examined the realities of the changing marketplace and charted a course that included the following:
- Consistent and far-reaching cost reduction
- Aggressive goals for new-product development
- Emphasis on print-on-demand technology that could be applied in a number of industry venues
- Focus on green systems that promote corporate social responsibility
As a result, Wausau has weathered the storm.
Currently, a quarter of its profit comes from products introduced to the market in the last few years. Wausau's innovative solutions in technical specialty papers and towel/tissue products have kept the company viable and growing.
Additionally, the company has built a solid reputation for green initiatives, a decided plus with an environmentally conscious customer base. A look at its corporate website reflects Wausau's commitment to sustainable forestry, and a pledge to reforest 100% of lands harvested within five years.
The lesson here? External change -- even major change in a number of seemingly insurmountable areas -- is not a corporate death knell. Strategic originality can save the day.
In an age defined and interpreted by all things digital, Wausau Paper is thriving and growing through determined, systematic innovation.
So can you.
Sally Mounts, Psy.D., is president of Auctus Consulting Group, a management consulting firm in Washington, Pa.
