Subtitles in English and Portuguese

No question: around six months ago, the industry leader Heidelberger Druckmaschinen AG seemed to be in violent turbulence: radical organizational changes, the cancellation of entire product areas, unfavorable financial conditioning, the reduction of around 2,000 employees as well as the Corona crisis and drupa 2020 cancellation created a series of challenges that kept the industry in suspense and made investors doubt.

This makes it all the more exciting to be able to offer an interview with CEO Rainer Hundsdörfer as part of the INKISH@WORK road tour, which Andreas Weber, CEO INKISH-D-A-CH was able to conduct at the main plant in Wiesloch near Heidelberg.

Despite everything, Rainer Hundsdörfer was very optimistic. In July 2020, the occupancy rate was almost back to the previous year’s level. His action plan is having an impact, the financial situation has improved significantly despite the crisis, including debt reduction and the sale of peripheral areas. The CEO is committed to redirecting Heidelberg’s focus to core competencies in sheetfed printing without losing any of its innovative dynamics.

This is to be achieved above all through an even stronger focus on customer needs, new digital communication formats, the change from the sedate group to the agile medium-sized company that Heidelberg was before the IPO, and a new openness in thinking and with regard to networked platform strategies.

In short: less is more. And after the crisis comes catharsis. Heidelberg appears refined and is focusing on a new openness, closer customer proximity and a changed go-to-market.

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Keine Frage: Noch vor rund sechs Monaten schien der Branchen-Primus Heidelberger Druckmaschinen AG in heftigen Turbulenzen zu sein: Radikale Organisationsänderungen, das Streichen ganzer Produktbereiche, eine ungünstige finanzielle Konditionierung, der Abbau von rund 2.000 Mitarbeiter sowie Corona-Krise und drupa 2020-Absage schufen ein Bündel von Herausforderungen, die die Branche in Atem hielt und Investoren zweifeln liess.

Um so spannender erscheint es, im Rahmen der INKISH@WORK Road-Tour mit dem CEO Rainer Hundsdörfer ein Interview bieten zu können, das Andreas Weber, CEO INKISH-D-A-CH im Stammwerk Wiesloch nahe Heidelberg führen konnte.

Rainer Hundsdörfer zeigte sich trotz allem sehr optimistisch. Bereits im Juli 2020 sei die Auslastung schon fast wieder auf Vorjahresniveau. Sein Aktionsplan zeige Wirkung, die Finanzsituation konnte trotz Krise erheblich verbessert werden, inklusive Schuldenabbau und Verkäufen von Randbereichen. Der CEO setzt darauf, dien Fokus von Heidelberg wieder auf die Kernkompetenzen im Bogendruck zu lenken, ohne an Innovationsdynamik einzubüßen.

Gelingen soll dies vor allem durch eine noch stärke Fokussierung auf Kundenbedürfnisse, neue digitale Kommunkations-Formate, den Wandel vom behäbigen Konzern zum agilen Mittelstands-Unternehmen, das Heidelberg vor dem Börsengang einmal war sowie eine neue Offenheit im Denken und bezüglich vernetzter Plattform-Strategien.

Kurzum: Weniger ist mehr. Und nach der Krise kommt die Katharsis. Heidelberg zeigt sich geläutert und setzt auf eine neue Offenheit, stärkere Kundennähe und ein geändertes Go-to-Market.

Hello and good day from my side! Nice that you were able to take the time. Dear Rainer Hundsdörfer, we spoke on the phone not long ago. And then you said: “Oh, times are already hard, extremely hard. Nevertheless, you don’t seem to be tired at all, but optimistic. Where do you get this inner joy from?

Mr. Weber. Also nice to see you in person again now. It is also always a pleasure to meet people again.

Thank God.

And let me say, I might want to put it this way. Of course, crises are always a special challenge, but they are also an opportunity. And for Heidelberg it is once again a special time, as we have also communicated in recent weeks and months. Long before Corona, namely in the fall, we initiated a major transformation, where we want to turn Heidelberg back into a financially and not only technologically leading company, but also a financially stable one. We also had to make some very unpleasant decisions. It’s just that for someone who is actually an engineer like me, it’s always particularly tough when you have to end the best products available in a particular segment because you can’t earn money with them, for a variety of reasons. The Primefire is currently the best digital press in this size range and our large format press was the best in this segment. But we were the only ones who couldn’t make money with it. And then you have to make these hard decisions, which are also very difficult for engineers and technicians. But we have done this and we have set up a transformation program that will transform Heidelberg from a corporate group to a medium-sized company, where decisions are made quickly, where administration is reduced, where the customer is put much more in the focus than perhaps we have done in the past. This has also helped us to get through the pandemic better. The measures that we have also found, on the financial side for example, to make the funds from our pension fund available to shape this transformation, to also push ahead with our debt reduction. We are currently in the process of paying back our high yield bond. As a result, Heidelberg is more stable on the one hand, financially more stable than we have been for a long time. And it also provides the basis for serving our customers not only just as well in the past, but even better in the future. Also in the interest of our customers. To provide maximum support from end to end, from data, from prepress to the ramp of the finished products. With machines, with software, with all services and everything the customer needs, and in any meaningful business model for our customers, either in the classic transactional way. We are also happy to supply every customer with a machine that can pay cash and cash equivalents or even an advanced pay-per-use or subscription model.

Transformation is a very abstract term. Most people understand by it: something is changing. And if it goes well, for the better. But now, as you mentioned, for various reasons, you are already in a position where you really have to make a cut every now and then. Then it’s a leap between transformation and disruption. So what KPIs do you have to say that we are now seeing success? Because the whole thing is incredibly complex, and we had the conversation. Decisions are important, and of course you can only make them in bits and pieces and not in a block. That’s the nature of things. And then misunderstandings arise when you can’t quite understand something. And that’s why I’m asking you: Do you have key performance indicators where you can say what you think: Now things are going well, we are on schedule, or are there still deviations, delays?

First of all, there is one KPI that is always very important to me. That is customer satisfaction, because no company can afford to have dissatisfied customers. So that has to be the focus. On the other hand, it is of course just as important that a company makes money and is financially stable. And that is relatively easy to measure. And Heidelberg has simply not earned enough money in the past. And that’s not because we have a business that is bad. But we have afforded too many things that have cost a lot of money and have brought nothing. And that is why you have to be consistent. And that’s where we come in with the disruption, having the courage to do and also do this very painful story and say: Even if it’s the technically best product on the market. We can’t make any money with it at the moment. So let’s stop it. The same applies to marginal businesses, which may even be nice, but they can sometimes cause a management defocus. That is why we have decided. We defined what is Heidelberg’s core business? Where do we want to be the technology leader, the driver of innovation in the future? Where do we want to be the number 1 address for our customers? And we simply stated that this is sheetfed printing – not just offset, by the way, but digital as well. That is open to technology. From data to the ramp, in other words a closed chain with all the services a customer needs. Regardless of whether these are consumables, regardless of whether it’s the software that controls the entire process, regardless of whether it’s the financing models or the payment models.

But when I think back two decades or more, this is already a disruptive change of that, so to speak. Because Heidelberg, to put it crudely, has always said: We offer the egg-laying wool-milk sow, we can serve all customers in the world, with all the frills. And then they expanded into pre-press and post-press. And what you say now makes sense. Just when I’m about to say this, I’m reading a beautiful book by a star chef who also has a PhD in philosophy. And he has written a book about the Kai Zeki. That was his doctoral thesis, and there are things in it, Japanese wisdom. It is as it is, and things are as they are. And he talks to Japanese cooks about German cuisine. And then the Japanese say this Kai Zeki, which is the premium league of chefs there. They don’t understand that in Germany you don’t have to constantly make something new. He would like it best if a star chef could develop the best Wiener Schnitzel and really do it, as the Japanese do over and over again in this way and get better and better. Is that something that drives you a little bit, too? It’s not back to the roots, so to speak, but it’s a clear cut, and we are now concentrating on what you said: Value creation processes with what we do best.
There is no doubt that Heidelberg is building the best machine for our industry. It’s not for nothing that Heidelberg has had a huge market share over many years – by mechanical engineering standards. Which of Germany’s top mechanical engineering companies already has a 45 percent share of the world market and then in regions like China over 50 percent, or even more impressively in Japan, where one of our major market players is based. Also over 25 percent and not just once, but very sustainably. That shows that we are already doing something right and that focusing on it helps us to earn money again. And that in turn is necessary to secure this performance for the future. Because a company that doesn’t earn money is not good for its customers in the end. And that is exactly what we have said. And that is what we will do. But by concentrating on what we can do best now, what we do best, what is obvious to us. And when we then have the stability that we are now in the process of achieving. By also restructuring the company. It’s not just that we are also adjusting our capacities, we are also restructuring our structures. Away from a group that has a lot of administration and does many things that may not necessarily have to be. I don’t say garage, but I do say large medium-sized company. Where decisions are made quickly, where I don’t need 10 people, but that the decisions are made by those who make them. Where we make our employees into entrepreneurs who work closely with our customers. So large medium-sized companies are the topic. Perhaps a description of it. Examples are always very helpful for me. Heidelberg was once twice as big as it is today. And very successful. Due to the change in industry, I don’t need to explain now, we all know, we are only half as big. And Heidelberg has also shrunk. But we have never adapted our structures to this new business and also to our size as consistently as we should have done. It’s like when a person who weighs 150 kilograms goes on a wonderful diet. He still weighs 70 or 75 kilos, but the only thing he does with his suit: he makes a hole in the back of his belt and straps it even tighter. He can’t walk with that suit on. Especially not quickly like this, and that’s just us. We’re just making a new suit. And I just say middle class is not a question of size for me. Middle class can also be 3 billion. But medium-sized businesses are a question of mindset, entrepreneurship, proximity to the customer. A medium-sized company is much less concerned with itself than with its customers. Companies that I know very, very well. Trumpf has always done it and has always managed to remain medium-sized to a certain extent despite its size. And that is exactly what we are aiming for. And that’s why we will not only be financially successful again, but we will also help our customers even better than in the past, because we will simply focus on what the problems really are. What is a challenge for our customers? And then adapt quickly and agilely. At this point we believe we need to convert our customers in one direction or another. What happens when you think you have to convert your customers? You see that you have products that they don’t sell in the end.

Because you don’t do the customer any favors? You force something on them.

It is a very simple rule for me. I am an engineer and also very technically minded. But all my life I have always been very customer-oriented. I have many positions and am very sales-oriented. And for me it is always very decisive. Anything that doesn’t create added value for the customer is ultimately worth nothing for the manufacturer, for the machine builder. It must create added value. I have always said it in general terms about my sales organizations: People, we have to make our customers successful and rich. If our customers are successful and rich, then so will we. And this truism applies, and as a rule, the best way to do this is to do what you do best. And that brings us to your Japanese example.

With Kai Zeki. It’s nice that you mention this, this young touch, the human factor is important, and that’s what I often lose in all these discussions about digital transformation. Technology cannot replace exactly what you say, the personal visit, the quality of a personal conversation. It can complement it. What do you have to do to make an organization the size of Heidelberg cope with this? Because I can imagine the younger ones who come in thinking: Well, with our tools, we solve everything, and they don’t feel the same way as the salesperson. Well, but I still have to talk to my customer. I imagine that centrifugal forces are set in motion.

Absolutely. And that is always a difficult transformation that you have to master. And I agree with you. Digitization is important because it supports people, but it doesn’t replace them. Nor does it replace human contact. An essential element, for example, is role model. That is similar to children. And one of the things that bothers me most in this pandemic is that I can’t go to our customers anymore. I have always sought and found a lot of customer contact and I have always taken the trouble to visit the customers. And then not just the people, but to walk through the print store with them and to look at them. Where are your challenges? And to discuss this directly with the people at the machine or at the machines. And if you do that as the boss of a company, then everyone else does it too. This is a basic element and then there is of course the fact that we are increasingly motivating or training our employees in this direction. And I think we’ve all understood this now, even with the pandemic. As nice and efficient as it is to make a telephone conference with the customer. It doesn’t replace personal contact, not every time, but much more often than is possible today. And I’m glad that in many regions of the world it is now possible to visit our customers again. And we can see it in the business. It comes back. We had the low point in April. May, June was always better than the previous month. And July was really neat again. Positively even better than my sales team predicted. Both in terms of incoming orders and sales. I am very positive that whatever happens in crises happens. You can see it in yourself when you see that the problem simply does not disappear. And I am convinced that this will accompany us for a long time to come. Then you think about how we act in this situation. How do I run my business? Waiting is not an option. We are redesigning the framework of possibilities we have, our business. Heidelberg is doing that. That’s what our customers do, and that’s what we do together. And let me say that a crisis like the one we’ve had also offers many opportunities. Especially to practice customer proximity and to cement the importance of the relationship you have.
And we have managed to do it quite well. At Heidelberg. For example, we installed a machine in the middle of the pandemic, in Brescia, where it was really bad. With a huge circumstance that cordoned off the entire area. Our people were there, they also created a place where they could stay overnight. And hotel nearby provided them with food. We got the machine up and running properly on time and enabled our customers to continue production.

And I find that very nice. That you give a concrete example, because that is not a natural thing to do. Many people could only find excuses why it is not possible after all. You have done that. What I now take from what you say is also part of this change or transformation, after all, a new form of openness. And that you say clearly, as they say, that’s not good, and that can’t get any better. And that has to get better. Is that also an important part of the new understanding of culture? Because I may add. Heidelberg always gave the impression: Well, we can always do everything ourselves. And if need be, we can reinvent the wheel. That was something that was actually very tangible for years, including customers of yours with whom I spoke. And this openness also means digitalization, networking, connectivity. That you have to act differently.

I think you hit a very important point there. Heidelberg was certainly one of the companies in Germany that believed they could do everything better. Some things we were able to do really well and better and some things we were perhaps not quite as good. And I believe that this is an understanding that we are now slowly creating at our company. First of all, through internal openness.
For example, we have eliminated our business units, and they are all in the process of tearing down all the walls. By always having a management team of another management team that works with the board of directors. Where we also discuss things openly, controversially and sometimes intensively.

I think you call that the Executive Committee?

Yes if we take the Executive Committee. All the key functions of the company are represented there, and that’s the first story.

Different talents and skills?

Absolutely. And the second is to do the same, of course, outwardly, to listen much more to the customers instead of trying to influence them. To understand what their problems are. And then it goes much further. That’s really the networked work, the cooperation on all levels. And if you recall the press release of the last few days, Zebra is exactly that. In the past, Heidelberg would have said: Our platform is Heidelberg, closed store.

Brand name on it you then it runs already.

Yes, exactly. We said that after a process – which is how we started, by the way – after a process we said: No, it can’t work like that at all, it will only work and bring benefits to our customers if all participants at our customer’s site, all who supply machines, all who supply consumables, all who supply software, all who supply services, are allowed to participate in this platform and are happy to do so. Not only as users, but also as co-owners. We have decided to open this platform completely and we will invite everyone, no matter who they are, to participate. Even direct competitors, including technology competitors. Not just a Koenig and Bauer and Komori and Bobst to name a few, but also a Canon and a Ricoh and Minolta Konica or all the manufacturers of consumables. Whether it is a Flint or Sappi? Or whoever it is. Everyone must participate, because then the added value and the benefit for our customers is created. And I believe that is something we all have to learn in our industry or in our world. That if we work together, everyone will be better off. That everyone benefits. First of all, our customers, because things that don’t add value can be so beautiful. They won’t fly in the end, and then those who provide these things are not successful either. Heidelberg has had a lot of good ideas in the past, but they often didn’t bring customer benefits. That’s why the money was then thrown out of Heidelberg and ultimately put Heidelberg in a difficult financial situation over the years. We have now dared a liberating blow with the transformation of what we started in the last months before the Corona crisis. We have looked very consistently. Where are our weak points? We have not left a stone unturned. We have taken unconventional measures to finance all of this and regain financial stability. We are on an excellent path, and the result is that, unlike many others in our industry, we are able to cope with the Corona crisis in addition to the transformation, with external aid of some kind, such as state aid. We have been able to position ourselves so securely that we will succeed. Of course, we also had to part with things that were dear to some people. These are once products that we will no longer make. These are entire businesses that we had to sell. So there are two things. We really get management attention to the core business, and we also get the money we need to pay for this transformation.

Mr. Hundsdörfer, thank you very much for taking the time. I think the picture has now become clear what it’s all about. And we will certainly continue to deepen this topic of the new openness of networking, also with the corresponding specialist from your company. And then I would like to thank you for this and I think we are not at the beginning of the journey somewhere in the middle of it. And I see that you are confident and optimistic. You are not yet tired. With all the things that are on your shoulders and all the employees here. And so I would like to thank you in particular for taking the time. And I’m afraid we will talk and see each other again.

Yes. I would be happy to see you again. And I’m happy to talk about the progress we’ve made, but also about the obstacles and setbacks we’ll face along the way. I’d like to talk openly with you and, of course, with our audience, with our customers.
I believe that this is also something new at Heidelberg. But I believe that if we want to be successful, this is how we will have to work in our entire industry in the future. Thank you very much.

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