We talked with Stefan Syrén of Papyrus about what it is like to lead a company in a market with declining demand, about innovation, and about the challenges related to sustainability.
The 2014 Forbes List of Most Innovative Companies was recently published. Without questioning the methodology or the conclusions, we cannot help noticing that relatively few materials and manufacturing companies are represented. Why do you think that is?
Caution can be good, because it is safe, but it can also hinder breakthroughs
I don’t like clichés, they are boring. But innovation isn’t just a cliché, it’s vitally important. The truth is, we are in a low-margin business, and it has been difficult for us the last few years.
Does innovation also involve how to survive in a declining market, or how to increase operating efficiencies? Compared to what some companies or even entire industries are doing, maybe not. But for us, this is innovation.
As a paper company, we have been facing shrinking demand in many of our traditional markets since 2009. We went through painful downsizing.
In addition, we identified our entire logistics operation as an area which required major changes in order to run our business successfully. So we completely redesigned it, and went from 13 large warehouses to a hub-and-spoke model. This allows us, with less warehouse space, to have more stock points closer to our customers. Availability is key in our business — availability to customers and supplier representation. We also changed our supply chain organization to allow us to be even more effective in meeting our customers’ needs.
The idea of shared services has been around for 20 years. We observed, spent time with suppliers, customers, and other strategic partners, and learned from them. We considered our own capabilities, adapted the idea to our own needs, and then used it for ourselves.
We looked at cooperation opportunities across markets, looked at our clients, and thought about what we could do differently with our new logistics capabilities.
Our investments in system-to-system communications allow us to deliver 320 sheets of specific paper from one of our hubs to a specific printer at a specific date and time. We took that a step further, and now offer a logistics service for our clients’ deliveries. We can drop off our paper at a printer, and while there, pick up a job they have completed and deliver it to our client’s customer.
A related idea is the deliveries we are doing on behalf of our client ISS in Scandinavia. After they have added their cleaning materials to our platform, their deliveries are integrated into our scheduling system, so that our trucks can deliver their products straight to their client locations.
Established companies, like ours, tend to be careful about innovation. We need to see exactly how it is connected to our business. That caution can be good, because it is safe, but it can also hinder breakthroughs.
In our leadership feedback sessions, I consistently rate us as being low on innovation. If you talk with other paper merchants, that might be a surprise. They would likely say we are innovative, because we have achieved so many firsts. I think we can do better, even with our tight margins.
In that context, how do you see print media developing?
We see that communication is multimodal now. The best companies know how to mix paper communications with their website, social media, paid media, and live events. Paper has to grow and evolve so that it can support and integrate with all of those channels.
Is the Papyrus culture set up for that kind of innovation?
The closing of warehouses and our transition to a hub-and-spoke model was a dramatic change and a first for our industry. It led to the increased efficiencies that we were looking for. But it also led to confusion and fear among the team members that remained, especially our sales force in areas where we closed warehouses. In some of those impacted geographies, we actually lost salespeople that we wanted to keep.
Every successful organization has a “way we do things here”. When I came to Papyrus in 1999, the promise was that it would be quicker and looser. And it is. We are driven more by personalities and individuals. I spent a number of years in leadership roles at P&G. The investments that P&G has made in systems and processes is astonishing and impressive. But there can be a dark side to too much process, especially if too many checklists and manuals begin stifling creativity.
One thing I don’t like about bureaucracies is how easy it is for leaders to lose their connection with what is really happening on the ground. In Sweden, I see it in politics with the elected officials. They spend too much time in Stockholm and not enough time at home with the people that they are supposed to be representing.
And it happens in companies too. When people feel connected to their leaders, and encouraged and protected by them, they also have the confidence to make decisions. The solution is to promote independent decision-making at every level, especially at the mid-level.
I believe companies succeed according to their ability to make real decisions at the mid-management level.
Of course there is no scientific evidence that says this way or that way is the only way to have a culture of innovation. What we care about is that it is our way. That we believe in it, and do it.
After the re-sizing of the organization, how did you attract people to Papyrus?
It was a real learning experience for us. We think a lot more about how we communicate change, especially with our workforce. We now know that transparency is key, both to establish credibility and to inspire others to follow you as a leader.
So how did you rebuild the teams?
Guts attracts guts
One of the real difficulties is the lag time between making a change and seeing results. Since we were the first to make a change, it caused a lot of people to shy away from us until recently.
But guts attracts guts, and now that we are seeing the impact of the changes we implemented, our recruiting has completely changed. We are in a low-margin business, and we fight for every bit of margin we can. We are one of the only companies in our field succeeding in this.
We have recently hired 10 talented new team members, some from within and some from outside the paper industry, and I am now getting at least one call per week from someone looking to join our team. That did not happen before.
You can be successful only if you are humble enough to copy what is working for others, and also bold enough to do something completely different. After a while, people will recognize what you are doing.
Especially at the beginning of a change effort, though, you need stubborn people with you on the team. People who understand the need for change, how it can best be implemented, and who will not give up.
Can you talk more about being humble enough to copy, and bold enough to do something completely new?
The most important thing is you have to believe in your idea. First you have to have an idea. But then you have to really believe in it, and dare to go for it. Then it doesn’t matter where it came from, if you copied it or if you came up with it yourself.
How do you view the issue of sustainability?
Sustainability is more than just ecology. It is multifaceted. It certainly includes ecology, but it is also economic, societal, and relational.
In some places in Europe, we have youth unemployment rates of 50%, and in many countries throughout the world, our education systems are simply failing to prepare the next generation for any kind of future. This worries me.
Economically, when we catch shrimp off the coast of Norway, ship them to China to be peeled, and then ship them back to Europe, there is something wrong. It doesn’t make sense.
Or take clothing. How can a T-shirt made in Asia be sold in Europe for € 1.99?
In our value chain, which is very price-sensitive, everyone is under pressure. For us, that has meant having to make some painful decisions about how we conduct business, but also which suppliers we work with and the types of paper we will carry. Until recently, we did not distribute papers from Asia, since they did not meet our sustainability standards when it comes to business ethics or the environment. In the meantime, we have proof that conditions in the paper industry in some Asian countries have improved to the point that we are now considering marketing paper from selected partners from that region.
Everyone talks about sustainability, which is a key element of our society. But in the end, the true and crude test is what consumers are willing to pay for.
From that perspective, I personally do not believe we have a sustainable culture in Europe.