Four years ago, PBD Worldwide was on a roll, tearing through its eighth consecutive year of hand-over-fist growth. Then, in the second half of 2008, a hard one-two combination knocked down the Atlanta-based storage and distribution company.
The first blow that staggered PBD was the recession. The broad downturn rocked all the market sectors in which the company does business, forcing customers of all stripes to pull on their reins and cut their budgets.
Second, and more ominously, PBD’s core business — distributing books and other printed educational material — began to shrink noticeably. Customers that had been dipping their toe into digital media started jumping in with both feet. The shift cut into PBD’s core revenue dramatically.
“In 2008, we had our best year ever,” says Scott Dockter, president and CEO. “We’d had eight straight years of double-digit growth. A phenomenal amount of new clients had come on board. Our Chicago distribution center had opened the year before, and it was growing fast. We had a lot of good things going on.”
PBD’s leaders were aware that the print-based book business’s best days were behind it and that digital media was the wave of the future. But they weren’t as prepared as they wish they’d been for the speed and impact with which that wave would hit.
“The thing that had been lurking before the economy took its turn was that our company was very dependent on books — in particular educational material — to achieve that growth,” Dockter says. “There were a couple of groups who were starting to talk about moving to a digital opportunity, and they were looking to change their program.”
PBD had originally stood for Professional Book Distributors. The company changed the name in the late ’90s because it was starting to diversify its product.
“But we hadn’t really diversified all that much,” Dockter says. “Then, in late 2008, we started to see our core business effectively disappear due to some changes some of our clients were making in their business models.”
Those changes involved a couple of shifts that were happening simultaneously: Schools were buying fewer books, and some of PBD’s major clients were being acquired by companies with new and different ways of looking at the business.
PBD had a division, the Georgia Schoolbook Depository, which shipped books to schools mainly in the state of Georgia for grades K through 12.
“We also had a nice contract going with Harcourt — we were doing all their distribution throughout the Southeast,” Dockter says. “Then a couple of things happened. No. 1, Harcourt was purchased by Houghton Mifflin, and No. 2, schools quit buying books. Their budgets effectively changed overnight. A lot of this was economy-driven.”
Suddenly, PBD was facing some core changes that, while it had been aware they were coming, it was not fully prepared.
“Frankly, when you’re going through a long period of double-digit growth, you think you’ve got it all figured out, and you don’t worry so much about what may be coming,” he says.
The long string of robust growth turned to double-digit contraction in the blink of an eye. Between 2008 and 2009, PBD’s revenue dropped 10 percent. It was time for the company to get serious about diversifying its business base.
Broaden the base
By 2008, PBD had built itself into a $50 million-a-year business with five distribution centers around the country. At its peak, the company employed more than 500 people. PBD attained this growth mainly by distributing books and other printed material using a traditional distribution model: pick, pack and ship.
But with the sharp business downturn that PBD experienced between 2008 and 2009, Dockter and his leadership team realized that the company needed to branch into new areas to broaden its base — to put its eggs into more baskets so it wouldn’t be as vulnerable to market downturns in the future.
After looking at what they do well, Dockter and his team talked about applying those revelations to other related businesses.
“We said, ‘We’re good at inventorying items. We’re good at taking orders. We’re good at building e-commerce. We’re good at integrating all of that. So what else can we distribute?’” he says. “It sounds simple, but when you’ve been doing books for 30-plus years, you’re pretty much siloed in. Prospects are out there thinking, ‘Well, they’re really good at book distribution, but I can’t see my product in there.’”
One of the first areas that PBD expanded into was distributing protective cases for handheld electronic devices.
“We got a new client that was really growing their business,” Dockter says. “They had a product that was related to iPhones and BlackBerrys. That was a great diversification for us. It gave us a chance to show outside groups that we could distribute practically anything — anything that could go in a box — that became our mantra.”
PBD’s new philosophy also encompassed a move into an area that — in light of the overall trend of print dying off and digital media booming — seems counterintuitive: printing and mailing acknowledgments of donations for nonprofit organizations.
“We have a lot of not-for-profit clients, and when they receive donations, the IRS requires that they send out a printed acknowledgment,” Dockter says. “There were a lot of printing companies going out of business, so we saw this as an opportunity. It was a chance for us to basically extend our markets within our current client base.”
It was a wise move. PBD’s printing and mailing service, bolstered by the 2012 acquisition of a similar company that was looking to get out of the business, has grown exponentially since PBD began offering the service in 2008.
“It was a natural fit for us,” Dockter says. “We just had to get the right equipment and the right people in place that knew what they were doing. And lo and behold, [last] year, we had a company that went out of business that we absorbed. So now the revenue we’re getting from that part of our business is 300 times what it was in ’08-’09 when we started it.”
PBD has diversified into other areas as well. Among the operations that are bringing in substantial new revenue are electronic distribution, consumer products, gift catalog items and logo promotional items, such as clothing and pins to be distributed at conferences.
“We’re excited about all of these new lines, because they all have a tremendous amount of capacity to grow,” Dockter says. “Plus it gives us more sales points, both within the current organizations that we work with and with prospects.”
As the economy has fitfully rebounded from the recession, all of this diversification and spreading into new markets has begun to pay off for PBD, according to Dockter.
“The economy has gotten a little bit better, and as a result, some of our sales are coming back naturally,” he says. “Our clients are putting more money into their marketing and into new product.
“These newer services we’ve expanded into have really helped us to right our revenue ship. We now have a better array of services to offer and a wider range of products. That’s allowing us to win new business at a better clip. And it’s helping offset the decline in what was our traditional core business — pick, pack and ship fulfillment.”
Dockter says he’s learned a lot from guiding PBD through this ordeal, and he and the company will be better prepared the next time they face a similar set of circumstances.
“One of the key things I learned, from a leadership standpoint, is that you can’t let yourself get too comfortable when things are going well,” he says. “You have to always be challenging yourself and your team with some what-ifs.
“When we were flying high, we weren’t challenging ourselves as hard, because we felt great about what we were doing. But there were some signs that we missed. So even when things are going well, you have to make sure you’re challenging yourself on things that might not go well going forward. Sometimes it’s hard to force yourself to think in that mode when you’re hitting on all cylinders.”
Dockter also says he believes that when PBD runs into a similar challenge in the future, he and his team will recognize the signs of impending change and react more quickly to counteract them.
“Of course, as a leader, you want to show confidence — you want to exude confidence — but you’ve got to be careful not to lose sight of the changes that can happen,” he says. “We knew certain things could happen, but we didn’t want to admit it while everything was going well.
“And, of course, the most important thing is when you do get to that place — when those changes are starting to happen — how do you react? You’ve got a couple different ways you can do that. I think we were slow. You’ve got to be fast. That doesn’t necessarily mean working harder. It means putting your strategy in place as quickly as possible, and then executing it, decisively.” ?
How to reach: PBD Worldwide, (770) 442-8633 or www.pbd.com
The Dockter File
President and CEO
Education: Bachelor’s degree in economics, University of Virginia
Looking back over your years in school, can you pinpoint a business leadership lesson you learned that you use today?
I played tennis at the University of Virginia. A big part of doing that was creating leadership within my team, especially in the small-team environment. And the work balance was important from a time-management standpoint.
What was first job, and what important business lessons did you learn from it?
I had two jobs that were tied together — delivering newspapers and cutting lawns. The premise was to be able to earn my own money that I could spend the way I wanted to, and to do it without anybody telling me what to do. I learned a lot about responsibility from doing this. And I learned that figuring out how to create an avenue to make money can be a lot of fun.
Do you have a main business philosophy that you use to guide you?
Communicate as often as possible in a face-to-face mode with both your clients and your employees. Our company has a no-email policy on Fridays. We’ve had it for six years. The idea is to communicate at the highest level and to build relationships in order to get things done. When you communicate in that mode, you tend to create partnerships and true teamwork. That’s something we feel strongly about.
What trait do you think is most important for an executive to have in order to be a successful leader?
You need to be trustworthy. Your customers need to trust you, and your employees need to trust you. It comes down to this: Do you look them straight in the eye? And do they look back at you straight in the eye? When you’re able to create that bond, that means you’re truly a trusted partner and leader.