Executive Q&A: CSA’s Francis McMahon

We caught up with Francis A. McMahon, Executive Vice President at Canon Solutions America, in the wake of the virtual thINK Ahead 2020 Conference to talk about how Canon’s customers are faring in the crisis, how Canon itself has responded, and how the crisis has demonstrated the wisdom of the Grateful Dead lyric, “Once in a while you get shown the light/In the strangest of places If you look at it right.” 

WhatTheyThink: At the start of the year, everybody was looking toward a positive 2020, printing shipments were up—and then March happened. How have Canon’s customers been reacting to the crisis?

Francis McMahon: I talk to a minimum of two customers a day, and probably a max of five a day, and people are really looking at printing differently. They want shorter runs—and they don’t just want print-on-demand, they want super-fast print-on-demand. And they’re not as quality-sensitive anymore. It’s changing the value of what print is to the people that are buying it. For the marketer and the advertising agency, they’re saying, "Wow. If I can get a higher return, and I can turn it around very fast, and I can do shorter runs, that's a good thing."

WTT: That's really the Amazon effect coming to the printing industry. We want a really fast, streamlined order system so we can even make purchases from our phones. This is the year where it’s becoming clearer that printers need to understand the customer experience that Amazon is creating and how it’s going to affect us.

FM: Think of book printing. I don’t know about you, but I’m reading a lot more now. And there are a lot more books being produced for homeschooling. Book printers are thriving today, and that’s a trend that’s going to continue. It’s on-demand, it’s shorter-run, and it’s done digitally. The transactional side is suffering a bit. Projections from Keypoint Intelligence and I.T. Strategies, based on what we are seeing, are a little pessimistic. We’re not seeing declines of 20% and 30% page volume, but just under 10%, and a majority of that is transactional. People aren’t going to doctors as much. There aren’t as many automobile accidents because people aren’t driving as much. So there aren’t as many insurance claims and claim printing is much lower. On the transactional side, we also have to be thinking about paper prices going up, what’s happening with the U.S. Postal Service and postal rates and the impact that will have on our industry. If the total cost continues to go up, more corporations are going to start demanding more e-communications. We have to help people understand the value of print communications in the mix.

I think we’re in for some challenging times in the next two years—not bad, just challenging. The market’s not going to be as big as it was in 2017, ’18 or ’19, and I think it’s going to take until 2023 to get back to those levels. We all needed to be woken up; not just in our industry, but humankind just needed to wake up, and that's not a political statement. We live in a very prosperous country and prosperous world, for the most part, and we’ve just taken everything for granted. I think people get complacent and they don’t think as strategically or as innovatively as they could because they’re comfortable. The only way to force great change and create great opportunities is to be taken out of your element. Unfortunately, it’s happening in the form of a worldwide disaster. But for the printing industry, it’s showing us that the old ways of doing things need to evolve.

WTT: Canon has been very aggressive in continuing to launch products this year. How was that strategy developed and how is it playing out?

FM: The important thing is, there’s the virus and it’s a really bad situation and we need to be sensitive. At the same time, we have a responsibility to the industry to keep it going. We made promises to a lot of customers who made decisions months ago to wait until these products came out, and some of those businesses were counting on us to get our new products to them so they could start pursuing new markets or replacing older equipment. We felt a real need to stay on track. We moved forward with the Prostream 1800 because we had made commitments to customers that they would get one in a certain period of time. Then there are upgrades; there are a lot of 1000s out there, and if customers want them to run faster—and the return on investment is much faster when you can produce more—they needed upgrades. So the driver behind the ProStream 1800 launch was that our customers needed it, and we will always do what is right for our customers.

WTT: You also launched the varioPRINT iX.

FM: We had a lot of customers that were waiting to get the next generation so they could have sheetfed inkjet with the same type of running costs, but more flexibility on paper and higher image quality. We felt a real need to get that out. Going back to the changes in the printing industry, this is going to be one of the presses that helps our industry get to the future successfully. 

WTT: You have both continuous-feed and sheetfed units. Where are people making the bigger investment?

FM: Continuous-feed is going to remain an important product for years to come, but many of us believe that sheetfed is the dominant product: multiple substrates, being able to print more jobs because you’re not doing roll changes, super-fast turnarounds. We sold more of our sheetfed devices than we ever had in January to June compared to any other year

WTT: Canon has been doing R&D in labels and packaging and developing concepts under the LabelStream brand. Is there any update on Canon’s entry into the packaging market? 

FM: Not at this point, but it’s a growing opportunity, no question. Our infrastructure is set up to support the commercial, transactional, book and direct mail spaces. We’re the market share leader in production inkjet and we’ve got a really profitable business. I view labels and packaging as a different business, not necessarily outside of production printing, but it’s a whole other piece that requires the right infrastructure to support it and go to market. We’ve got our eye on it and you’ll hear soon about what we’re going to do. 

WTT: I want to kind of shift gears to the thINK Conference, which went virtual this year. Talk about the reaction to the event, what you’re building with thINK beyond just a one- or two-day event, and the general efforts toward community building.

FM: We believe that community outreach, especially now, is so important. We had over a thousand people show up, and the chats were pretty amazing. 

WTT: Two things that I took away from thINK: Canon customers partnering for disaster recovery efforts, and customers that were exchanging supplies so they could keep their operations going. The networking that happens at events like thINK really allows us to show how, if we’re all in this together, we can succeed.

FM: COVID does present a huge opportunity: we can change the print industry for the better. None of us can do it by ourselves, but together, we can create something really big and beautiful and important, and that delivers something better than it probably ever could have been because we now look at things differently than we did just a few months ago. If you’re selfless and and take your ego out of it, you can really do some amazing things.

WTT: A lot of it has been driven by fear, that a competitor’s going to steal a customer or that you’re going to share a trade secret. At the end of the day, your business is more than just ink on paper.

FM: Print does have a much deeper meaning than just putting ink on paper. The value of a book, the learning you get from a book, the person that’s being inspired by reading that book and how that person’s life changes based on what they learned from the book. And direct mail. You could be helping some small company that could be hurting. All of a sudden, they get business they never would have had before because somebody read their print communication that showed up in their mailbox. When you really start digging deep and thinking about what print does to people’s lives, that's what makes our industry so exciting.

WTT: Obviously everyone is eager to return to in-person events, but to what extent is the virtual component of an event going to continue? 

FM: We had triple the attendance for [virtual] thINK this year, so that really opened our eyes to say, hey, next year let’s get the same number of people that we normally get, but now let’s have film crews in every session and broadcast live so that all these people that can’t come are able to participate.

WTT: Like a lot of people, you’re largely working from home and not traveling. Has that helped your sales effort or contributed to closing the deals faster? How has the current situation affected that side of the business? 

FM: An inkjet sales guy needs his technical specialist. They may get them on the phone and ask a couple of questions, but they really need that specialist with a customer. We’d have to wait two, three weeks until that person was available to go visit the customer. It never even occurred to us before to do a Microsoft Teams meeting. Now, that specialist can sit at home and do seven one-hour or half-hour Teams meetings and reach seven different clients in one day. We have more orders sitting in-house today than we’ve ever had, or at least since I joined the company 10 years ago, because we can do a better job in front of the customer because we have more experts they can talk to on a Teams meeting.

WTT: Any closing remarks or final thoughts? 

FM: You start reassessing your values when things like this happen, and you get down to what's really important. I think a lot more about our people working, about the service people in the field, and what we need to do to protect them. I really feel like this is an awakening for all of us to just do better, period. 

For people reading this, from everybody at Canon, we just want everybody to be healthy and safe. We want to help any way we can. Our goal is to just help get our customers and get our industry through this. However long it takes.