MassEnvelopePlus
1. How does MassEnvelopePlus need to change?
2. How should this change be lead? How would you explain the need for change to employees and family members?
3. What should Roger’s and the management team’s roles be in the change process? What role should the family play?
4. How could the company continue the family tradition of loyalty and generosity to employees amid technological changes and an increasingly competitive environment?
5. What should Steve Grossman do to ensure that the business can be passed on to the fourth generation as a strong, growth-oriented company?
MassEnvelopePlus
My grandfather taught me that the greatest resource of our family business is the men and women who walk
though the door each day. That’s not a 2001 concept that most CEOs will spend a lot of time thinking about.
But you can do it in a small business, when you own the whole business and you aren’t driven by quarterly
earnings comparisons, and you are driven by a commitment to people.
-Steve Grossman
Somerville, Massachusetts-Steve Grossman, CEO of MassEnvelopePlus and 1969 Harvard
Business School Baker Scholar, sat at what was once his father’s roll-top desk and stared at the
window between their offices through which they used to communicate. Long active in public
service-contributions he had balanced with his company responsibilities-he was now planning his
first run for political office, and wondered what that might mean for the future of MassEnvelopePlus.
The fourth generation, family-owned printing company prided itself on providing superior customer
service while running a clean union shop with wages 30% higher than anyone else in the business.
But the industry was changing, and he was being urged to invest in dramatically new technology.
Did the director of print operations have a point when he mentioned last week that it “was time to
unravel the 90 year-old umbilical cord” and make some radical changes? And what about leadership
in this new era?
MassEnvelopePlus and the Commercial Printing Industry
MassEnvelopePlus, founded in 1910 by Maxwell Grossman, was a company rooted in family
tradition and driven by the goal of providing “an unparalleled package of consultative services.”
Steve Grossman, following in his forefathers’ footsteps, presided over the $28 million, 125-employee
printing company, originally named MassEnvelope. Recently, a fourth generation of Grossmans had
joined the company as it transitioned into a full-service commercial printing company, targeting mid-
sized customers with print budgets ranging from $10,000 to $100,000 annually. The company was a
small business in an industry experiencing rapid change largely due to technological advances and
consolidation. (See Exhibit 1.)
Commercial printing had come a long way since its inception in the Far East during the 11th
century when printers used wood and ink to create an impression. By 2001, the commercial printing
industry had grown to approximately 32,000 US. companies with annual sales nearing $90 billion. In
addition, commercial printing had become the fourth largest manufacturing employer in the United
States and the largest of the 17 segments of the printing industry, as defined by the US. Department
of Commerce. Annual revenues for private companies ranged from $1 million to $300 million; public
Research Associates Brooke Bartletta and Michelle Heskett prepared this case under the supervision of Professor Rosabeth Moss Kanter. HBS
cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or
illustrations of effective or ineffective management.
Copyright © 2002 President and Fellows of Haward College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
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photocopying, recording, or otherwise-without the permission of Harvard Business School.
302-103 MassEnvelopePlus
companies, such as Consolidated Graphics and Mail-Well, brought in anywhere from $50 million to
$2 billion.1
However, because commercial printing served every sector of the economy, the industry was
particularly recession-sensitive. 2 For example, the economic downturn of 2000-2001 negatively
affected the bottom line of many of the large corporations (e.g., Nationwide Graphics, Kelmscott
Communications, Consolidated Graphics, and Mail-Well) who had partaken in M&A binges during
the “boom period” of the late 9os. These conglomerates had swallowed up local MassEnvelopePlus
competitors such as Acme Printing, Northeastern Envelope, and United Lithograph. Some of those
plants were in danger of closing down as the large corporations created regional printing centers in a
scramble to cut costs in the economic downturn. Other competitors such as Curtis 10003 had
followed a similar path and were still floundering from diminishing customer service as plants were
consolidated. In addition, they hadn’t been able to execute well after a move into a new wave of
print-on-demand technology in the early 9os.
Technological advances not only affected Curtis 1000, but the industry at large. What originated
as a handcraft had become an industry run by electronics, most notably the computer (introduced to
printing in the late 196os). Presses became faster and more efficient, with nearly all hand and
machine composition (hot type) replaced by photo and computer typesetting (cold type). Electronic
imaging systems were slowly replacing photography; color scanners were replacing the camera. By
2001, 95 percent of all color separations and corrections were made electronically and digital data was
replacing negatives used in offset printing to create a plate directly from the computer. The
workforce was also affected by technological progress, as computers began to make some positions
redundant (such as with the 8-unit offset press, which was predicted in 2001 to require only three
people instead of four or more).4
A handful of competing Boston-area printing companies ran high-tech operations. Spire Printing,
a $22 million, 130-employee company in downtown Boston, employed several digital presses, (in
addition to traditional presses) including the very latest on-demand digital equipment linked to the
Internet for online design and ordering. 5 Spire had also grown through acquisitions, purchasing one
of its clients to obtain its waterfront printing plant. With plans to move into a new, 78,000 sq. ft. plant
in Dorchester, MA, Spire was representative of the high-tech competitors MassEnvelopePlus needed
to watch.
Additionally, consolidation in the banking industry into regional and national institutions
impacted MassEnvelopePlus. Scores of small banks in the Boston area had provided a steady
demand for statement, ATM, and other types of envelopes. But, as the banks grew and consolidated,
they ordered larger quantities and went for the rock-bottom bids only national printers were able to
offer. In 1987, the stock market crash led a major client, Fidelity, to take their business elsewhere due
to increased price sensitivity. With the painful memory of the loss of one client accounting for almost
20% of total revenues, MassEnvelopePlus preferred not to have any one account represent more than
10% of revenues.
1 Compass Capital Partners, “Far from Dead.” Printing Impressions, December 1, 2000
2 http: / / www.napl.org/ newsroom / industry_info.htm
3 Curtis 1000 is a subsidiary of Mail-Well, Inc.
4 htpp: / / www.ipcommercialprinting.com/ industry / printinghistory.asp
5 Brett Rutherford, “Boston’s Spire Printing Soars to Success With First US. Installation of NexPress,” Printing News, July 30,
2001.
MassEnvelopePlus 302-103
MassEnvelopePlus had long focused on envelope printing, warehousing, inventory management,
and print brokering. However, as burgeoning technology (e.g., computerized filing, laser printers,
and e-mail) threatened envelope sales, the company diversified its product lines to include business
forms, cards, labels, and brochures. Between 1998 and 2000, MassEnvelopePlus acquired four
companies to offer an even wider breadth of services and products from “concept to completion”
(e.g., engraving, foil stamping, embossing, four and six color printing, and graphic design), thus
formally breaking into commercial printing. The diversification led to a company-wide name change
from simply MassEnvelope to MassEnvelopePlus and GBEPlus, the company’s Connecticut
subsidiary.
The acquisition of Finch Engraving gave MassEnvelopePlus the opportunity to expand into in-
house commercial printing, rather than outsourcing the work. Finch was a small, 27-person company
with $2.5 million in annual revenues, formerly based on the downtown Boston waterfront. It was
described as colorful, eclectic, and wacky-very different from the tightly managed atmosphere in
nearby Somerville. Despite efforts to create a comfortable workplace for the new employees, the
disparity in company cultures remained. For example, the envelope shop and the “Finch shop”
(which was the larger of the two) were separated by a wall with an opening “large enough to drive a
forklift through.” Some thought the wall should be torn down.
Two other acquisitions, of a small engraver, Hub Engraving, and printer, ConnTrade, highlighted
the company’s need for cross-training. One of Hub’s engravers who joined MassEnvelopePlus had to
take medical leave, but no one else was capable of operating the machinery. ConnTrade-bought
primarily for its two six-color presses-was folded into GBEPlus. While the acquisition was intended
to push the company technologically forward, the lack of employees at GBEPlus trained to readily
understand and run the new presses meant that the technology and know-how did not complement
the resulting new business.
Throughout those periods of technological change, consolidation, and diversification,
MassEnvelopePlus continued its legacy of being family-oriented and customer-focused. During his
tenure as CEO, Steve Grossman had grown the company eight-fold while preserving solid employee
relations. The company competed on service, quality, and professionalism-not price, and believed
maintaining excellent customer relations was critical to the family business. Grossman continually
urged his staff to “go to any length” and “move at warp speed” to keep their customers happy and
remain competitive. He explained:
In the midst of all this impersonal growth and consolidation, we are keeping our eyes
focused on the process of relationship building It’s about a culture that is always relentlessly
customer-focused. We are a customer, marketing, and sales-oriented company The
customer is king.
Employees: Running a Union Shop
MassEnvelopePlus had been a union shop since 1952 and employees had worked there an average
of 22 years. When Steve Grossman’s uncle, Jerome Grossman, was in charge, he sought out the union
because “we get better quality, craftsmanship, dependability, flexibility, loyalty. And you cannot put
a price tag on those qualities in your colleagues.” The union provided clear-cut rules guiding
relationships among the shop employees and management, and it gave MassEnvelopePlus the
opportunity to get business that required the union label-e.g., insurance companies already working
with unions. Grossman felt confident that being a union shop was a sound business choice.
302-103 MassEnvelopePlus
MassEnvelopePlus’s contract was with the Graphic Arts Union, Local 67. The local president, Eli
Davis, worked for MassEnvelopePlus as a pressman. The contract was drawn up every three years to
determine wages and benefits. If a grievance was filed by one of the employees, the shop steward (an
acting witness and shop representative) and the general manager attempted to resolve the matter
before it escalated. No grievance in the history of MassEnvelopePlus had ever reached the point of
arbitration or strike. Even grievances were a rare occurrence, averaging one a year. This was a stellar
record. Moreover, MassEnvelopePlus paid high wages-about 30% over prevailing industry
averages. (See Exhibits 2 and 3.)
The bidding process Standard union procedures followed at MassEnvelopePlus included the
bidding process for different jobs in the plant. Each job running a particular piece of machinery had a
set hourly pay rate and employees knew what they would make at a given job according to the
predefined contract. An open job would be posted for 48 hours, giving employees the opportunity to
bid for it. The bids, submitted verbally or in writing, were assessed by the foreman and the general
manager and jobs were awarded on the basis of seniority, fitness, and ability. Given the low
employee turnover rate in the shop, jobs were not frequently up for bid. In the days before cross-
training, the company occasionally sent someone out for training if a job was coming open. But more
often the experience came in the form of having helped out on the machine, worked near it, or
watched the setup. The employee who won the bid was given a 30-day trial period in which to pick
up the additional know-how to run the machine.
A union contract could sometimes limit managerial flexibility. Mike Flynn, vice president and
general manager, had assisted in negotiations with the union since 1978 and explained some of the
tradeoffs:
If we wanted to hire temporary help at night to pick up some slack (which is common
practice in the printing industry) the union will not allow this. This does not allow the
flexibility other printers have. In the event of a slow down, if you lay off a more senior person,
that person can “bump” a more junior person. However, the senior person must be “fit and
able” to do the specific job. The senior person must also accept the lower rate. As a result,
seniority protects the people that have been here a long time, but can hurt a more junior person
who may be a very skilled employee.
Integrating Finch At the time of the acquisition, Finch was not unionized. Some employees
had unrealistic expectations about life in a union shop. According to Eli Davis, the local union
president, “They believed the union should be flexing its muscles for every reason, and they tried to
take advantage of it-like not calling into work, not giving 100 percent, thinking they should be paid
more.” MassEnvelopePlus increased wages and vacation time, and decreased hours as a result of
negotiations with Finch and the union, but Finch employees lost their dental benefits. Finch
employees were offered the option to join the union or pay an administrative fee to not join. All of
the Finch employees joined and were given full seniority credit for the years they had worked at
Finch. An employee described the improvements in working conditions:
The positive thing is that the building is air-conditioned. We worked in a place that had no
air conditioning for years and it was absolutely horrendous. You would have paper curl and
terrible drying times, because it would get so hot. But this place keeps the climate control
pretty good, so we don’t really have those sorts of problems.
Operations: Preparing for Change
MassEnvelopePlus’s printing, shipping, warehousing, and operations were run by Mike Flynn
(vice president and general manager), John Rogers (director of print operations), and Mike Dubie
(vice president and sales service manager). A sales force sold jobs, customer service representatives
managed the jobs, estimators provided bids, a production manager scheduled the work, and press
operators handled the print runs. The company was investing in new technology, which was aimed
at streamlining and speeding up this process.
As MassEnvelopePlus began updating its capabilities to offer more services, Grossman and his
management team had to evaluate which technologies to invest in and when to wait for the next
innovation cycle to hit. New systems could eradicate the need for print negatives used to make a
plate, but that equipment might not be necessary at all. As Steve Grossman pointed out, “One press
goes back to the 189os and it still produces engraved stationery, for which the margins are often
huge. I don’t really care whether the machine was built in 1896 or 2001 if it satisfies the customer’s
needs.”
MassEnvelopePlus was rethinking the press room because customers were demanding greater
speed, and new technology offered it. One wave of press technology made it possible to send the
print image directly from the computer to a printing plate, then load the plate on the press and run
the job. Another technology was being developed that allowed the image to go directly to the press.
But the commercial presses at MassEnvelopePlus, the big, two-color Heidelberg Sormz and the four-
color GTO, were based on older technology. Setup for one of the larger six-color presses at the
company entailed many cumbersome steps; for example, putting the printing plates on each roller,
tightening, and manually adjusting them for each job.
Mike Dubie, vice president, sales service manager, and a seven-year veteran of MassEnvelopePlus
with 24 years of printing experience, explained:
Customers want everything yesterday. Two years ago it took an hour and a half to set up a
four-color commercial printing press. Now it’s down to about thirteen minutes with new
commercial printing press technology and it runs at two-and-a-half times the speed of old
equipment. It’s put us behind the eight ball because what we are quoting out at $1300
someone else can quote out at $859. It’s becoming an issue, and it’s going to get worse.
The highly skilled pressmen, who knew their craft inside out, welcomed new technology. In fact,
there was more anxiety about producing poor work because of the limits of old machinery than there
was about learning how to use new technology. One pressman commented, “Well, some of the
equipment here is kind of old and needs to be updated. The machine I’m running, they bought it
used six or seven years ago. I would say it’s 25 years old anyway. It can’t do the quality of work you
see on the wall like this; we could not handle that here. If we had an updated press you’d have no
problem, you could handle stuff like that.”
A second reason for considering new technology was to eliminate the pre-press bottlenecks. Pre-
press was the area where customers’ designs were turned into plates for the press. The pre-press
people could not do their jobs fast enough to keep production moving smoothly. When Finch’s lone
pre-press employee moved into the MassEnvelopePlus pre-press room, management expected that
they would be able to get much more productivity out of the department. What they got instead was
a worse backup.
Dubie knew that buying a new operating system for the pre-press room could cut up to 60% off
the time it took to prepare plates for the presses and save hiring additional people to speed
production. (See Exhibit 4.) The more than $100,000 investment would pay for itself quickly,
eliminate bottlenecks, and make work easier for the people in the pre-press area. Initially the
experienced pre-press employees were concerned about job losses. Flynn said, “This new pre-press
equipment will greatly affect their jobs There’s enough for them to do, but well, they won’t be as
busy as they used to be, no.” Flynn pointed out that there were other responsibilities such as
scheduling, and special pre-press jobs like proofing and proof reading that would always require
more work.
Empowerment and cross-training in the pressroom Empowerment and training in the
pressroom became an issue at the same time John Rogers joined the company as director of print
operations in the summer of 2001. Rogers was a veteran of Mass Medical Society and the reputable
New England Journal of Medicine, where he had been given the task of “bringing them into the 215t
century.” He called himself a “blue collar manager,” having begun his career running a press at age
15. Rogers’ definition of the task before him included more than just installing new technology.
Empowerment was his theme-giving people the freedom and the skills to excel at their job. Rogers’
predecessor had a rigid philosophy, keeping the people he oversaw trained only for whatever
equipment they were running-and sometimes not even completely trained for that. Only one
person in the 40-employee shop was trained to run all the machinery, and he was a second shift
employee who had to know everything to compensate for the fewer number of employees on the
evening shift.
For the first time, shop employees were allowed to use the phone for personal calls during the
day. And Rogers had recently asked Steve Grossman to allow him to remove the shop’s time clock,
arguing that the floormen should no more have their pay docked for being two minutes late than
someone in the office. “I think if I announced that, it would open up the flood gates of trust,”
commented Rogers. Furthermore, Rogers began cross-training sessions. One afternoon he brought in
an engineer from New Jersey. “We closed down for the afternoon. He was here until 7:00 at night.
And what impressed me was-I left about 4:15-only two people left, because they had family
commitments. The rest stayed to learn. They were that hungry.” The union backed the cross-
training plan, but it was strictly voluntary. One union employee talked about how his initial fear of
commercial printing gave way to an appreciation for new opportunities:
Everybody is afraid of change I felt like, because of the new technology taking a lot of
our work away, we were slowly being phased out, but that isn’t the case They are willing to
cross-train me; if I don’t have any work over there, I can come across here and do something
over here. I definitely think I will probably be employed here until the day I die if I want to.
New processes and systems in sales and customer service The sales force consisted of
about nine salespeople and 11 customer service representatives, reporting to various people on the
management team as needed per job. The company’s sales manager had recently transferred to New
York, but had not been replaced and there was no immediate plan to do so. Sales and marketing
were crucial to MassEnvelopePlus’s livelihood. The company was founded on the notion of
relationship building and first-class customer service was a top priority. To speed service, the
company was seeking change in the customer interface, which involved up to eight people touching a
job before it was in production. The handwritten estimating process sometimes took two days and
was prone to simple but critical errors, such as numbers being recopied incorrectly or misread. The
new office software would modernize and radically simplify the order entry system, allow better
analyses of job estimate accuracy (both time and dollars), and reduce the potential for error.
Additionally, it would generate proof letters, packing slips, and labels for the boxes of finished
products via one electronic system. CFO Doug Smith also hoped it would illuminate the operating
costs for some of the newer print operations:
We still have the rates but I don’t know if the rates are right, I don’t know if the running
times are right, I don’t know if the setup times are right. On an envelope, because you’re
setting up a simple one and two color job, you don’t have the difficulty factor that you do with
the commercial print side. (See Exhibit 5.)
Inevitably new technology meant additional training for the sales force. Grossman was adamant
that his people be the best trained in the business. “The biggest challenge it seems to me, that
everybody faces,” he commented, “is will we have enough well-trained, well-educated people to be
able to compete in this unforgiving kind of business environment? I believe we will, and I think
we’ve not had a better, more educated team in many years than we’ve got now.” Training was both
formal (e.g., an offsite l’forms school” run by the National Business Forms Association) and informal
(personalized ongoing coaching they dubbed “Dubie School” after “head coach” Mike Dubie, the
service VP). Grossman also brought Printing Industries of New England (PINE) into the office for a
weekly seminar over a couple of months and sometimes the sales team went there for offsite training.
The most important issue to resolve was the interface between the sales team and the pressroom.
Occasionally, in their haste to please a customer, sales people would try to rush a complicated job,
forgetting that commercial printing required more intensive labor and processing time than
envelopes. Each individual who tried to reorder the schedule to suit their client caused greater
confusion and frustration on the floor, ultimately leading to lower quality work and worse delays.
The situation was equally frustrating for the sales people. The difficulty in producing consistently
high quality work, particularly with jobs run at their Connecticut subsidiary, GBEPlus, had led to
some strained relationships with customers. Like MassEnvelopePlus, GBEPlus had been primarily an
envelope printer until the acquisition of ConnTrade. After a few botched jobs, sales people became
uncomfortable sourcing jobs with GBEPlus, preferring to go to outside sources. In turn, GBEPlus’s
sales fell off, and that got CFO Smith’s attention. Smith recognized, “If you’re an outside sales person
and you’re working your butt off out there trying to bring in the clients for the commercial print
business, and then we bring it in-house and we screw up the job Credibility is everything with a
customer.”
Leadership
The MassEnvelopePlus top management team included Steve Grossman as CEO; Mike Dubie, vice
president and sales service manager; Mike Flynn, vice president and general manager; Amy
Grossman, vice president and director of marketing; Mary Ellen Grossman, treasurer; Maureen Kelly,
vice president; Doug Smith, CFO; and Henry Ward, vice president and envelope sales.
Steve Grossman succeeded his father, Edgar, as CEO. When Edgar Grossman ran
MassEnvelopePlus, alongside either his brother or son, he was very involved in his employees’
personal as well as professional lives. He dined regularly with the operations general manager, Mike
Flynn, often getting to the end of the day and asking, 1’Did we do all three meals together again?” He
watched the shop employees play stickball behind the building during breaks and sometimes even
participated. He shared rides. His management style engendered a deep sense of loyalty among his
employees. One pressman, who had been with the company 34 years recollected:
Edgar ran a nice clean business here and he let you know how you should conduct
yourself under this roof. He used to say, ‘This is my home. This is my house.’ And, if there
was a piece of paper near my press, he would pick it up. If he didn’t pick it up, he would ask
me to…. He used to get us all a little pissed off. But, you know what? He is gone now and I’m
picking up paper. Whenever I clean I think about him. It worked. Anyway, I miss him.
Steve Grossman was considered more “relaxed” and “open-minded” than his father. Grossman
had a keen interest in public service, as civic duty was deeply imbedded into his family’s core
principles. His grandfather and founder of the company, Maxwell Grossman, had retired to a life of
public service roles, as had his uncle, Jerome. Even Grossman’s sisters, Amy and Mary Ellen
Grossman, were involved with non-profit organizations before Grossman persuaded them to join the
family business. In the late 198os, Grossman began spending about fifty percent of his time away
from the business to focus on a string of public service activities. The most prominent was his term
as National Chairman of the Democratic National Committee (DNC) under President Clinton, but he
also served as chairman of the Brandeis University board of trustees and had other important
leadership roles. (See Exhibit 6.)
Still, Grossman was viewed as widely available to his employees. Flynn recalled Grossman’s
tenure as chairman of the DNC, when he spent most of each work week in Washington, DC, 1’There
wasn’t a time I couldn’t reach him. Maybe if he was behind closed doors in a high-level meeting at
the White House, that would have been the only time. If he was in a regular meeting, he would take
the phone if I said I needed him.” It was known throughout the company that he maintained an
open-door policy during his office hours, which was appreciated by many. As one said, ”…if you are
not happy with the people that are running this business and you think they are doing something
wrong to you or you think something isn’t right, [you] can walk in that office any time. He has an
open door policy and he will listen to you A lot of companies won’t do that.”
In 2000, Grossman launched a campaign for Governor of Massachusetts. While balancing his time
between the business and his political campaign, Grossman was committed to empowering his
management team to lead during his absence. A self-described optimist, he felt confident that his
management team had the qualities necessary to continually serve the company’s customers and
provide high quality work. He commented that they would rise to the challenge:
All of a sudden, I am not here and [the management team] gets a chance to lead-show that
they can step out onto that bully pulpit called leadership and run a company and take it to a
new level. Because I am not going to be there for them to check with all the time, they can
make their own decisions, their own mistakes, and that is an empowering experience for a
small management team.
Grossman hired a management consultant with a specialty in corporate leadership development
to “[help] the management team coalesce around a set of shared values, principles, and priorities.”
The coach worked with team members one-on-one and occasionally sat in on management meetings.
Just as it was done in Edgar Grossman’s day, the team also frequently had quick “stand up” meetings
in order to be as efficient as possible while discussing an issue. Flynn explained:
We bounce ideas off each other Edgar’s philosophy was don’t get comfortable; don’t sit
down, unless it’s something that really takes time. But we used to stand up around his roll top
desk and make more decisions than most people-people spend days doing these things and
we’d have them done in an hour.
Despite Steve Grossman’s efforts to create shared leadership, some on the management team had
identified, as one said, a “leadership vacuum.” One member of the team temporarily withdrew from
the management meetings altogether, because, 1’I didn’t want to be involved in the leadership tug of
war.”
View from the floor The pressmen also required a leader to manage the production floor.
More recently too many people were giving instructions, which created some angst. As one said,
we answer to five, six, seven or eight people. Not to say there are too many chiefs, but hopefully