ebha congress, rotterdam, 30/08/2019 · spikes, labour cost increases, high cost of debt)....

FROM PRINTING TO THE CREATIVE INDUSTRY

Amedeo Lepore (Università della Campania Luigi Vanvitelli; LUISS Guido Carli)Stefano Palermo (Università Telematica Pegaso)Andrea Ramazzotti (London School of Economics)

EBHA Congress, Rotterdam, 30/08/2019

Arti Grafiche Boccia: a case study ofinnovation, organization and strategy from flexible

specialization to industry 4.0

◦A medium-sized family business in a less-developed area: ◦Owned by the founder Orazio Boccia and his two children, Vincenzo (CEO)

and Maurizio (CTO). Since the 1990s increasing separation between day-to-day activities done by hired managers and long-term strategy decided by the owners.

◦ In 2013, 150 employees, turnover 44,262,984 euros, earnings before taxes 1,300,563 euros.

◦Fast growth in the last 15 years, very resilient to systemic shocks

◦+50% turnover from international markets

◦Fast innovator and creative corporate identity

◦Located in the province of Salerno, in the Campania region (Southern Italy).2FROM PRINTING TO THE CREATIVE INDUSTRY – LEPORE, PALERMO, RAMAZZOTTI30/08/2019

The case study: Arti Grafiche Boccia

◦An interesting example of SMEs shifting towards a new industrial paradigm (industry 4.0)

◦Sheds light on the prerequisites for innovative renewal in SMEs

◦Technological change is connected to a new stance towards the creative industries.

3FROM PRINTING TO THE CREATIVE INDUSTRY – LEPORE, PALERMO, RAMAZZOTTI30/08/2019


Outline of the presentation◦Background◦The ‘fourth industrial revolution’ and the printing industry◦Printing and creative industries in history

◦Case study◦Context: SMEs and the printing industry in Italy since 1970◦Arti Grafiche Boccia: performance, innovation and business model since 1968

◦Conclusion◦The printing industry and the ‘fourth industrial revolution’◦Creative innovators and new business models


Industry 4.0 and the fourth industrial revolution◦ The fourth industrial revolution◦ Schwab (2016): A new industrial revolution characterised by ‘ubiquitous and

mobile internet, […] smaller and more powerful sensors, […] by artificial intelligence and machine learning’ and thanks to the integration of automated physical systems, software and biotechnology.

◦ Industry 4.0◦ Cyber-Physical Production Systems and ‘Smart factories’.◦ Cyber-Physical Systems: physical objects with embedded software and

computing power (Almada-Lobo, 2015) ◦Do they matter for economic and business historians?◦ Long term perspective◦ What is revolutionary and what is not?

30/08/2019 ROM PRINTING TO THE CREATIVE INDUSTRY – LEPORE, PALERMO, RAMAZZOTTIF 5

Industry 4.0 and the printing industry◦ 3D printing and the printing industry?◦ Schwab (2016): one of four ‘main physical manifestations of the technological megatrends’

in the fourth industrial revolution.◦ It really is additive manufacturing rather than ‘printing’.◦ Technological, economic and organisational constraints (Yeh and Chen, 2018)

◦ The digital economy means the demise of print?◦ Desktop publishing as a threat to traditional typography: reduction of value added in the

industry, especially if coupled with web-to-print and digital printing. Lower barriers to entry◦ E-books, born-digital content and the spread of internet access and smartphones as threats

to printing as a medium.◦ New operating models◦ Customer-centred platform strategies: from products to services◦ Collaborative innovation ‘between young, dynamic firms and large, established businesses’

(World Economic Forum, 2015)


Industry 4.0 in historical perspective: three industrial paradigms

Fordism Flexiblespecialisation

Industry 4.0 in a global economy

Demand Mass standardisation Batch customisation Mass customisation

Market structure Price oligopolyMonopolistic

competition over quality

‘Competing in capabilities’1

Technology Economies of scale2 Economies of scope2 Economies of scale and scope3

Organisation Multidivisionalmultinational firm2

Industrial district2 and Mittelstand4 The networked firm5

Size Large Small and medium Medium and large


1 J. Sutton (2012) Competing in Capabilities 4 A. Colli (2004) Il quarto capitalismo. 2 M.J. Piore e C.F. Sabel (1984) The Second Industrial Divide 5 Beltrametti et al. (2017) La fabbrica connessa3 P. Bianchi (2018) 4.0 La nuova rivoluzione industriale

Industrial paradigms and our case study

Fordism Flexiblespecialisation

Industry 4.0 in a global economy AGB’s strategy

Demand Mass standardisation

Batch customisation

Masscustomisation

Flexible-size batch customisation

Market structure Price oligopoly

Monopolisticcompetition over

quality

‘Competing in capabilities’1

Competitive advantage from creating capabilities

Technology Economies of scale2

Economies of scope2

Economies of scale and scope3

Joint economies of scale and scope

OrganisationMultidivisionalmultinational

firm2

Industrial district2

and Mittelstand4The networked

firm5

The ‘excellent factory’ project and the ‘business-as-

institution’ model

Size Large Small and medium Medium and large Medium Large


Printing technology and creative industries in history◦The ‘apocalyptic’ view◦ Marshall McLuhan: rise of the typographic

man.◦ Walter Benjamin: Mechanical reproduction

and arts.

◦The historical view◦ Elizabeth Eisenstein, Printing as an agent

of change.◦ Joel Mokyr and the limits of printing.


The national context: the rise and fall of printing

Number of printing establishments per 1000 inhabitants in 1971


0

5.000

10.000

15.000

20.000

25.000

0

20.000

40.000

60.000

80.000

100.000

120.000

140.000

160.000

1 2 3 4 5

Printing establishments and number of workers in Italy (1971-2011)

Serie1 Serie2

The local context: a steady rise of AGB

0

50

100

150

200

250

300

350

0

200

400

600

800

1000

1200

1400

1600

1971 1981 1991 2001 2011

Printing establishments and number of workers in the Salerno province (1971-2011)

Addetti (scala sinistra) Unità locali (scala destra)

Printing establishments by number of workers, Salerno province(bold: Arti Grafiche Boccia)

1971 1981 1991 2001 2011

0-9 92 154 274 272 284

10-49 8 14 19 26 15

50-99 1 1 2 1 5

100-199 0 0 0 1 1

200+ 1 1 1 0 0

TOT 102 170 296 300 305Sources: Istat, Atlante Statistico dei Comuni, 2013; Istat, Censimento di Industria e Servizi 2011; estimates based on AGB, Balance sheets, several years

Printing establishments by number of workers, Campania region(bold: Arti Grafiche Boccia)

1971 1981 1991 2001 2011

0-9 9278 14861 17453 18158 1043210-49 1722 2643 3077 2788 73050-99 163 181 149 163 68100-199 68 70 56 57 33200+ 45 38 23 22 12TOT 11276 17793 20758 21188 11275

Workers (left side) Establishments (right side)


◦ Timeline1

◦ 1945-1951: Orazio (b.1932 in Salerno) trains as typographer at the municipal orphanage

◦ 1955-1961: Orazio works as typographer at the municipal orphanage

◦ 1961-1967: Orazio establishes a small workshop with one associate and up to two employees. Core business: printing forms for municipal administration, flyers for the local section of the Communist Party, small occasional printing works.

1Timeline based on V. Castronovo, Arti Grafiche Boccia. Un’impresa italianaall’avanguardia, Laterza, Roma-Bari 2015; O. Boccia, Storia di uno scugnizzo, Guida, Napoli 2013; primary sources and conversations with Vincenzo Boccia.



◦ Timeline

◦ 1967-1984: with the help of a new financing partner, Orazio establishes a limited liability company. Slow but continuous growth despite exogenous shocks (energy and paper prices spikes, labour cost increases, high cost of debt). Technological leap: lithographic printing. Core business: local newspapers and magazines, diversification.

◦ 1985-1993: Paradigm shift: computerisation, towards continuous production. Product innovation and big customers (e.g. bar-coded forms for regional health services). Customer selection.



◦ Timeline

◦ 1993-2001: Idiosyncratic shock due to customers’ situation leads to financial fragility. Recapitalisation and restructuring.

◦ 2001-2009: Paradigm shift towards industry 4.0: flexible specialisation, digitisation and internationalisation. New main customers.

◦ 2009-2015: ‘smart factory’, creativity and a new business model to successfully overcome the economic crisis and gain competitive advantage.



Some early analyses◦ ‘I hope that [during the years 1969-71] it will be possible to amortise the start-up costs […].

Unfortunately the typographic industry has a big inconvenience, that necessary and indispensable machineries are very pricy and little lasting.’ O. Boccia, Relazione al Bilancio di esercizio 1968, [p. 4]

◦ The year 1970 was probably the most difficult for the printing business: continuous strikes, […] unavoidable wage rises, […] the paper crisis […]. These costs could not be passed on to customers, both because existing orders could not be amended […] and because it would be harmful to immediately ask customers to pay for the increasing production costs.’ O. Boccia, Relazione al Bilancio di esercizio 1970, [p. 5].

◦ ‘Because of increasingly unfair competition especially by new small and artisanal businesses, the market is shrinking.’ O. Boccia, Relazione al Bilancio di esercizio 1971, [p. 4].

◦ [Among] causes of the negative financial result [in 1983], there is a rise in bank charges and interests, due to an increase in the use of bank credit […] to meet our obligations with suppliers [as] we could not obtain receivables from our customers, especially from customers belonging to the public sector.’ O. Boccia, Relazione al Bilancio di esercizio 1983, [pp. 7-8].


◦ ‘The main aim of management is to balance, every year, the continuous rises in labour costs and in the prices of raw materials. In order to realise a positive result, we need to keep expanding the turnover. Turnover expansion is hindered by the persistent crisis of the industry and because of the rise of computers. Hence, there are two ways of expanding turnover: to increase the number of employees, which is limited by the installed machinery, or to improve the technology of the machinery itself. The second solution, although apparently more expensive, is preferable, because the financial burden will not increase over time.’ O. Boccia, Relazione al Bilancio di esercizio 1985, [pp. 7-8].

A strategic turn long in the making


◦ ‘The constant and continuous investment in machinery and in the latest technologies have allowed AGB […] to control all the production chain with notable positive spill overs on the range of products on offer, both in terms of quality and in terms of internal scale economies […]. Investing in innovation means to ensure against the loss of market power to potential competitors […]. Moreover, the crisis of the printing sector has made machinery producers static: there have been no significant technological evolution. Hence, AGB now posses a range of machines that is fully amortised and devoid of technological gap. This has allowed the firm to acquire a competitive position on international markets and to become one of the main European players in the sector. […] The business is strongly focused on making all human resources part of the corporate philosophy. It is among the first businesses in the printing industry to have adopted and adapted the Lean Production […] aiming to drastically increase the firm’s productivity. […] AGB follows closely the start-up world, aiming to identify technological innovations that can be used to add services to existing products in the different business lines, with little capital deepening.’ Arti Grafiche Boccia S.P.A., Documento di ammissione alla negoziazione degli strumenti fianziari denominati ‘Cambiale Finanziaria ARTI GRAFICHE BOCCIA S.P.A., 2016, pp. 6-7.

A strategic turn long in the making


CeruttiMaxinova S4This machine allowsto print up to 60.000 copies every hour, butit breaks even after 3.000 copies. It can print publications and booklets from 8 to 96 pages long, full colourand with changinmodularity.


Achieving flexibility: some examples

Komori Lithrone S4OPThis machine can switch automatically in a few minutes from one printing job to another.



Heidelberg SpeedmasterXL 105Fast rebooting and printing time, provides top performances for printing packaging material.



Komori Dual systemThis machine is the centre of a networkedproduction system that allows to automatically produce a complete publication, includingbinding and rich cover printing.



◦Web-approval◦Remote and real-time control for customers of the printing job

◦Flexible Computer-to-plate workflow◦Offset printing with desktop publishing

30/08/2019 From printing to the creative industry – Lepore, Palermo, Ramazzotti 23


Printing and the creative turn at AGB◦The ‘excellent factory’ project◦ Lean production◦ Employee engagement

◦The ‘business-as-institution’ model◦ Local community and sustainability

◦Corporate identity: transforming paper into art ◦ Printing art: printing products and trained specialists for artists◦ Collaboration with street artists◦ The factory as museum


◦ ‘I have always wanted to improve my business. But, besides my personal attitude, I have been forced to invest continuously in newer machinery and technology! It was the only way a business focused on private-sector customers could ensure profit margins. […] Earnings must be reinvested, money shan’t stay idle. This is the leading way to provide stability and to renew the business’ O. Boccia, Storia di uno scugnizzo, 2013, pp. 79-83

Strategy out of constraints: anticipating paradigm shiftFunctions Constraints Strategic reactions

MarketSegmented markets; private sector orders low unitary value but more timely payment, public

sector orders larger but slow payment

Customer diversification and market expansion (local national international mkts)

Competition Price competition from small businesses, quality competition by large businesses

High capability (quality-price level), location close to technological frontier

Technology Fast machinery deterioration and obsolescence Constant innovation, flexibility and efficiency

Investments High fixed costs and high cost of debt Reinvested earnings, productive use of public subsidies, search for alternative funding options

Human resources Rising labour costs Invest in training, employ skilled workers, new

corporate identity


Conclusions◦The printing industry and the ‘fourth industrial revolution’◦ Despite belonging to a traditional industry, printing businesses can revitalise their

performance using digitisation, real-time workflow and IoT to serve a larger market with more flexibility and lower unit costs.◦ As in other sectors, service-oriented business models can improve profitability but

they also increase competition and possibly lead to more market concentration.◦ The competitive advantage for global players is increasingly dependent on

capability building innovation rather than wage compression + stable long-term strategies (despite governance changes)


Conclusions◦Creative innovators and new business models◦Another way for printing firms to improve profit margins consists in

changing their relationship with customers’ workflows, appropriating chunks of the creative process.◦ In a broader sense, this signifies an evolution from printer as a producer of

physical supports to printer as participant to the creative process and enabler of content dissemination.


ebha congress, rotterdam, 30/08/2019 · spikes, labour cost increases, high cost of debt)....

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