Kenneth Smit meets…:

Pieter Willemse | 04-08-2020

“Covid-19 has created enormous dynamics that have given me a lot of energy,” says Peter Hoorn of SHARP. In the section “Kenneth Smit meets…” we are always looking for people with a story, with a message that readers can relate to. In that context, Kenneth Smit meets Peter Hoorn, Managing Director of Sharp Electronics Benelux bv, this month. After starting his career at ASPA, Peter joined SHARP in 1991 and never left. We meet him in the beautiful office at Papendorp, an industrial estate near Utrecht, where the parking lot of neighbor BOL.COM is still completely empty due to corona, just like the SHARP building.

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A nice first question! What has been the impact of COVID-19 on your organization?

“The consequences are enormous,” Peter answers. “Our factories are located in the 'famous' Wuhan, among other places, and that meant that we were initially concerned about the availability of screens that are produced there. Naturally, we wanted to end our financial year with good figures at the end of March. That thought changed very quickly from March 15, everyone started working from home and we thought things would not go well, but now we know better.”

Peter continues: “Due to the urgent advice to work from home, our business has disappeared. You should know that 67% of our income is still generated by the sale of so-called 'ticks'. Every month we invoice for more than 1 million euros in 'clicks'. These are fixed income from maintenance contracts. When offices are empty, that income disappears completely, resulting in a drop of more than 16% in week 70. Large business services and government still work virtually from home, which means we now have a decline of 25% and that is because we operate more in the SME segment. But in some regional business areas you see that it is almost business as usual again.”

What do you think, what are the longer-term consequences; Will it recover completely or will it never be the same?

Hoorn: “Corona has ensured that something that has been going on for some time, namely the decline in demand for printers and multifunctionals (MFPs), because less printing is taking place, is now taking hold more rapidly. You notice that younger generations actually think that printing documents is outdated. This decline or trend started years ago and that has to do with changing working methods; such as the digitization of documents. We have seen such a move before in the sale of cash register systems. For example, SHARP sold its cash register systems through dealers, mainly in the catering industry. We stopped doing this from April 1, because demand has decreased enormously due to the increase in digital payments. There is virtually no cash payment anymore. The Netherlands is leading the way in this, while cash register systems are still being sold in Germany, but the Germans will probably follow suit soon.”

“My vision was and is that people will work 'anytime, anywhere, anyplace'. This has only accelerated due to the corona outbreak. I expected that there would not be a huge decline in print volume in the Dutch market until 2024. I expect a slight recovery in the short term, but the decline has now started sharply. Many companies have seen that they can work in a different way; through accelerated digitization of documents. For us, this means that if we want to maintain our profitability, we have to change and, for example, offer many more solutions for home working situations, something we hardly do now.”

SHARP, the company that first marketed a mechanical pencil, is known as an innovative manufacturer of printers. If that market is going to change so much, where does your future lie?

Peter van Hoorn: “In addition to printers and MFPs, SHARP also supplies professional information screens, for offices but also in shops, etc. We also have touchscreens for lecture halls at AVANS University of Applied Sciences, FONTYS, and the University of Utrecht, among others.

The Microsoft Windows Collaboration Display (MWCD) was developed in collaboration with Microsoft last year, with Microsoft supplying the software and SHARP supplying the hardware and screen. This MWCD is fully compatible with Microsoft 365 and Teams, in which employees collaborate with each other. Thanks to the built-in sensors, the screens can also connect to the new Azure IOT (internet of things) applications, including spatial intelligence and the intelligent office building.

By participating in this, SHARP is taking the first steps towards IT services. 'My vision', Peter continues, 'is that we must develop into a company that provides what I call “managed services”, so not only printing, but also IT services. We need to move in this direction to compensate for the recurring revenue, in the form of subscriptions, that we are currently losing from printing.

Sharp has grown not only through innovation, but also through acquisitions. Two years ago we made a strategic move with the 100% takeover of DYNABOOKS, the PC branch of Toshiba. As a result, we now also sell laptops, but you can buy them anywhere. The step we need to take now is to add value through our IT services. We are currently already working with an IT partner. This will only grow in the future and we will implement it ourselves. So we are transforming into an IT company, just like IBM did years ago.

Where is our added value or distinctive character? Companies that offer IT services stop at printing. We have large customers, take for example a large cinema company; the IT there is in the hands of an IT service company and we do the printing. These companies disrespectfully call that peripherals. In the future, our strength must lie in full-service 24/7. Printing will never stop, but of course I won't close my eyes to the visible decline. That would be very stupid.”

What does this change mean for your organization and the people who work there?

Peter: “This transformation has a huge impact on the organization, because no one within SHARP currently has the necessary knowledge about IT services. It should be noted that we set the bar high. We need to build up that knowledge through retraining and recruitment. All our salespeople, young and old, are now involved in the sale of MFP or printers, a very specific profession. Everywhere there is a fluorescent light, there is one. Because every product is replaced once every five years, there is a 20% replacement market. It is a “hit & run market”, if you have sold something here you go to the neighbor. Our people are doing that very well now. But the IT services market is a completely different market. That is a market of long projects, more business consulting; so completely different. It will be a challenge for our current employees to make that transformation. I can refer to the following example; Four years ago I decided to also include the sale of Touchscreens in our direct sales. It surprised me how long it took to become a successful account manager document solutions, becomes successful in the Touchscreen market. So apparently it is a completely different matter and many sellers find it difficult to get out of their comfort zone, except for the good ones.

As an organization in transition, we have to deal with this. In addition - and this has always been my view - I do not believe in all-rounders. You are distinctive and therefore extremely powerful if you have enormous know-how about your product. This also keeps you away from the price war, because you are distinctive and can advise at a high level. Customers do not get what they ask for, but what they need. We sell Document Solutions that are located in the middle of a network, where you have to deal with security, among other things; and that is no easy feat. That cannot be done by a generalist.”

How are you going to fight with your existing organization in a market that is already quite active and therefore quite divided?

Peter: “We initially focus on our existing relationships. Research has shown that our customers certainly see SHARP as a potential provider of IT services. SHARP is known as a reliable partner with high-quality services. This also makes customers open to a broader portfolio of services. The research has therefore revealed important information on which we can base our future strategy. We have an advantage because we do printing. For example, we now work with IT companies that now outsource printing to us. In the future, we will become the provider of the total package, whether or not in collaboration with those IT companies. We are currently already doing this nationally with a larger IT partner. As a manufacturer of peripheral equipment, we have the opportunity to create “Managet IT services” in a total package, where everything is in one hand. For this we will have to develop software, partly ourselves, partly in collaboration with partners.”

Are you thinking about collaborating with companies such as Capgemini and Sogite?

Peter: “Could be. We have long believed in partnerships; After all, you can't be good at everything. Our ambition is to ultimately become self-supporting through growth and development. For example, I don't rule out a takeover either. We know the tricks of the trade, because we used to consciously aim for acquisitions of colleagues and that could now be an IT company. Especially because it is difficult to recruit new people yourself.”

This is a huge challenge for you and your people?

Van Hoorn: “We will have to make choices. Initially, our existing people will continue to offer so-called 'document solutions'. In addition, we will expand through active recruitment of IT business consultants. Ultimately, we will also have to train our current employees and I also believe that as a company we have an obligation to facilitate these loyal employees in this. I do demand an open attitude from my people. In short, my biggest challenges: – how do I involve my people in that transformation? How do we ensure that we enrich the knowledge and skills of our people? Well, we do that together with our European organization.

It doesn't all have to happen 'today', but we do have to do it more quickly. We should not underestimate the level of our knowledge and organizational structure. Our service level has been at a very high level for years, so the foundation is there!”

How do your people react to that now?

Peter: “There is certainly understanding, especially because I have been preparing them for these changes for years. You notice that when you have told the story and people do the same thing again at work the next day, they think: 'it's okay'. Change is difficult. This crisis has forced people to face the facts, causing the acceptance rate to suddenly increase. We have an open and transparent culture, so employees see a 70% decrease in the number of 'clicks'. That does something to employees, it suddenly makes them very aware but also insecure. That is also the reason for my catch-up sessions; I can't offer them any guarantees, but I do try to remove the uncertainty. I urge them to go along with the change. We at SHARP will certainly facilitate that, but they must take their own responsibility. The latter may not be feasible for everyone.”

In a crisis situation, the standard human response is; flee, fight or freeze. Do you have enough fighters?

Peter van Hoorn: “We have a young and very talented team at the front. We certainly have a number of fighters, but do we have enough, that is always the question. I especially need pioneers and fortunately there is a strong awareness that we have to be very alert whether we have enough of them and we don't know that at the moment. We must take into account that there is a chance that employees in the back office, but also sales and service, will become rigid and experience it as very difficult. We will have to anticipate that.”

Then you will also have to focus on recruitment, does Corona offer extra opportunities?

Van Hoorn: “We currently have a vacancy freeze, but that gives me the space to think about what kind of people we should recruit based on our vision and strategy. I have appointed a manager who has to think about what kind of people we need in the future and which collaborations are useful. A crisis always offers opportunities, including in the field of recruitment. As a manager you look for balance. Balance between, on the one hand, solving problems so that your company does not go under and on the other hand, maximizing your opportunities. That is the core task of a manager. First survive, but immediately after the crisis you have to be there - especially in our industry - because I expect things to change very quickly. Companies are very aware that you can work in a different way. For example, are all the offices here in Papendorp still necessary or will they be apartments in 20 years, because people will be working from home much more often? I expect that there will be some kind of hybrid model where people work two or three days in the office, the rest of the time at home and with much longer working hours. The office then becomes more of a meeting place.”

Where will this company be in five years?

Peter: “Then we at SHARP have a leading position and we are involved in managed services, which is much more comprehensive than just printing. So a total offering when it comes to IT solutions in an office environment; ranging from printing to screens, from laptops to security and everything surrounding it. We work agile with project teams with various specialists. As said before: 'I don't believe in generalists'. Also consider increasing sales from existing customers by adding value in the areas of efficiency and effectiveness. That even applies to our own company and I know there are many companies like ours. So that's a huge market. For SHARP, this is mainly the SME market, companies between 20 and 100 employees. Due to the crisis, these companies in particular see that they have to work in a different way. Our strength lies in fully relieving these customers of their worries through a point of contact with high-quality hardware and high-quality IT services.”

“Our Achilles heel is that we are seen as a manufacturer, so we will have to create a different perception there. Our DNA is still that we have to sell machines, while we are actually much more concerned with generating income. The global organization will still have to get used to this, especially because we are really leading the way here in Western Europe.

Closing comments

Peter Hoorn: “Corona has created an enormous dynamic that has also given me a lot of energy. It was a huge shock at first, but it quickly turned into an opportunity creator, at least if you handle it properly. We at SHARP have to reinvent ourselves and that offers many opportunities.”

KENNETH SMIT BlogBusters Pieter Willemse

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