The 2017 LEAD (Learn, Engage, Act, Deliver) Conference provided its hosts, Toshiba America Business Solutions (TABS) and Toshiba Global Commerce Solutions (TGCS), a platform to not only provide an update on the overall organization and unveil some technologies they believe will enable them to stay two steps ahead of the competition, but also served to help clarify the company’s financial health in light of Toshiba Corporation’s challenges with its Westinghouse nuclear division. TABS and TGCS are part of Toshiba Tec Corporation (Toshiba Tec), a separate, associated company that is not wholly owned by Toshiba Corporation.
Scott Maccabe during Lead 2017 Presentation
Toshiba enjoyed a banner 2016 that included the launch of 23 new products, which helped spark abundant growth in A3 and A4 product. However, LEAD served as the coming-out party for a trio of new offerings, led by the Elevate MFP user interface that includes vertical-specific functionality for eight different markets and features simplified operations for industry-specific tasks.
Bill Melo during Lead 2017 Presentation
ENX Magazine took the opportunity to sit down with Scott Maccabe, president and CEO of both TABS and TGCS, and Bill Melo, chief marketing executive for both entities—who provided insight as to the opportunities for dealers and end-users alike to expand beyond their current bases with an eye toward the future.
Tell us about your career with Toshiba
Maccabe: I’ve spent 16 years with Toshiba, having been involved with three different businesses associated with the Toshiba name. I started out with Toshiba corporate, running their computer storage business for about 12 years. Having been with the TABS organization for about three-and-a-half years, Toshiba Tec had a vision of leveraging and maximizing the synergies across the broader set of market opportunities between the print and retail industries. So we, as a management team, sat down and targeted out a strategy. Nearly two years ago, Toshiba Japan asked me to take on an additional role as president and CEO of the retail industry. I run the TGCS retail company worldwide as well as TERIS, the Toshiba Tec retail company in Europe and Latin America. The charter in that vein is to integrate and merge the two individual retail companies into one global entity. Though TABS and TGCS have different elements of their market segments, there is significant opportunity and synergy that crosses both of those businesses.
Melo: I will have been at Toshiba 15 years in September and have been in the document imaging business since 1989. After graduating from business school, I was at Ricoh for nine years, then Hitachi, and for a brief period at a startup called Imaging Portals, now MWA. I’ve been at Toshiba ever since. I also have dual responsibilities as chief marketing executive with TGCS as well as TABS. It’s been exciting to help bring some TABS business and imaging business to that sort of customer; likewise, to utilize some of the great talent that we have at TGCS to help our document imaging business as well.
What were goals heading into the LEAD conference? How did the results match up with expectations?
Maccabe: The last six months or so have been a period of turmoil for Toshiba Corporation. That’s been a bit of a noise and distraction issue within our businesses, because we carry the name Toshiba. Our dealers understand the difference between Toshiba Corporation and Toshiba Tec, especially on the imaging side, because they’ve been with us for so long. Our dealers and partners on the retail side, who haven’t really been engaged in the relationship for a long time, didn’t understand the distinction. What we found over the course of the last six months is the need to have a more engaged communication with some of our retail partners and with our imaging partners’ end-users in particular. They saw headlines and didn’t know what was behind it. I think the general sessions, as well as one-on-one communication, proved that we were successful in getting that message across. This was also a significant opportunity for us to introduce this synergistic solution platform, because Toshiba Tec has been focused on rolling out, investing, and expanding the business solutions element of our company and moving further and further away from pure product play.
During your opening remarks, you pointed out that Toshiba Tec’s stock has increased 29 percent in the last 12 months, while some of your biggest competitors are struggling. What are some of the factors behind Toshiba Tec’s market success?
Maccabe: There are three influential factors. The first is diversity—Toshiba Tec is not a one-trick pony company. The vast majority of our business, greater than 85 percent, is split between our imaging and retail businesses. We also have our OEM business that’s tied to additional development. The second factor is performance. The imaging business has been consistently performing well. I made the statement in public that TABS is the most profitable entity under Toshiba Tec. All of the companies were profitable. Our imaging business has continued to perform well, and our retail business has really turned the corner. TGCS is number one in the world for installed point-of-sale systems, but it’s a highly competitive business environment. Frankly, when we acquired the business from IBM, it was not profitable. During the course of the last three quarters, our retail business has shown growth, recovery, profitability, and operational efficiency.
The third factor is the differentiator. The broader Nikkei market understood that there is a differentiation between Toshiba Tec and Toshiba Corporation. As Toshiba Corporation went down due to their issues with their nuclear business entity, Toshiba Tec—which is an associated company but not a wholly owned company—saw its valuation grow. Some of our competitors, particularly in the imaging space, have suffered because they’re not quite as diverse.
Our imaging business has continued to perform well, and our retail business has really turned the corner.
Scott Maccabe, president and CEO
Tells us about the symbiotic cross-selling relationship between TABS and TGCS.
Maccabe: We have a defined business strategy activity that relates on a tactical level, where our retail and our major account imaging organizations do joint strategic account reviews. Whereas on the imaging side, a majority of our business is in the small- to medium-business realm, and on the retail side almost all our business is on the upper one percent of the retail market segment. That allows us to reach up as well as down into a much broader collective market segment and customer opportunity base. The organizations are structured such that they’re compensated to help open doors. So where we do hundreds of millions of dollars a year in the Walmarts of the world, it now affords us the opportunity to address their imaging print needs. We now have a collective service organization where we can go into accounts and leverage our installation, environmental identification, and maintenance service capabilities. We have more than 2,000 service providers that are company owned across both entities, just in the Americas. Additionally, one of the hottest areas in retail is digital signage. We’ve been leading in digital signage for several years and it’s really taken off in retail.
Melo: One example of the synergy is we have a household name convenience retailer with tens of thousands of locations in the United States. They converted to a TABS printing customer by virtue of an opportunity that started on the TGCS services side. These retailers want fewer entities to deal with, so our service organization can do wall-to-wall service, whether it’s applications and infrastructure, computing systems, point-of-sales systems, or printers. We have a sales organization that can handle that with unified reporting and unified SLAs. Retailers want to pay for outcomes and they want someone who’s going to be reliable. Some really dominant household names in the retail space—Home Depot, FedEx, and Brookstone—are buying into this idea of Toshiba as a source of multiple products and services, whether it’s digital signage, barcode printers, or point of sale. It’s become a really big competitive advantage for both companies and part of the synergy that T. Tec envisioned when making the acquisition of TGCS.
Can you provide insight into the differences between your direct branches, as opposed to the dealer channel, and how they are taking advantage of these cross-selling opportunities?
Maccabe: We have focused at the direct level with major customers, so our sales people are engaged directly with them. As part of our strategy, we’re now in the process of expanding the development of some new products that can be taken into the market via our partner base. Our strategy all along has been to bring a broader breadth of solutions to our partners across the board. Our retail organization has a limited set of partners and they focus on the high/medium space of retail. Our imaging partners focus on the small/medium space, which hasn’t been served by our retail company in the past. We see that as a significant opportunity to enhance our imaging partners’ depth: they can go beyond their current boundaries, and we have an opportunity to provide greater value.
Melo: One of things we do well at TABS is enabling our channels to utilize our infrastructure. Our professional services consultants can use this superstructure upgrade with service, so it enables a dealer who is in a local marketplace to sell to a national account. With regard to enabling our partners to take advantage of the retail opportunities, it’s similar. Digital signage is a great example. One such example of a win is the Crazy Horse Memorial in South Dakota. That was brought to us by a dealer who identified a digital signage opportunity in their marketplace, and we dispatched our professional services along with design and development teams to create a solution for the customer that a dealer actually wound up billing. They get top-line revenue, and we act as a subcontractor to them. That gives the dealer a new account that they can approach with other services. It can be managed on a local basis or converted into a national opportunity for digital signage, POS, etcetera.
Everyone loves Elevate. It was a very bold move to essentially refresh the entire product line in one shot.
Bill Melo, chief marketing executive
Toshiba launched 23 new products in 2016, and both A3 color unit sales and A4 sales saw healthy increases. How did they surpass your expectations?
Maccabe: When we develop these products, we engage many of our partners to get their feedback on everything ranging from the residual image of the product to its functionality. We feel we really designed and enhanced the products in a way that their functionality was so much more engaging, it really launched the products. We’ve been fortunate to be successful, particularly with our A3 solutions. On our A4 products, we have a strong relationship with Lexmark. We found a way to work with them when we’re in a mixed-need environment, A3 and A4, to keep a balance for the growth of both platforms.
Melo: Everyone loves Elevate. It was a very bold move to essentially refresh the entire product line in one shot. As a result, when we launched the product to such great results, we had a period where we couldn’t make them fast enough. Now that we’ve caught up, we’re running well above the industry average in terms of revenue and unit shipment growth. We hit a home run.
During LEAD, Toshiba showcased a number of new products. Tell us about the differentiating factors they provide for dealers.
Melo: The Elevate value proposition is really straightforward. Imagine as a reseller talking to a law firm, and asking them a simple question: “Do you, in your law practice, do the same thing as a hospital does?” Of course not. “Then why would you buy the same product that a hospital does when I can provide you one that is custom tailored to what you do as a lawyer?” Elevate makes everyday functions easier to do. It’s about using a product unique to your office, in a language that you speak, tied to business applications that you use. When we show it to people, lightbulbs go on. Our mission this year is to make sure every sales conversation starts off with that. When that conversation happens, we win 100 percent of the time.
v360 is an educational program we provide free to our dealers. v360 starts with deep education in vertical markets, then goes on to the solutions that we offer to a specific vertical market, with a set of demand generation tools so that you can reach the customer, get in front of them, and have that conversation. And there are incentives, not only to the end user through lease subsidies or financial incentives, but also financial incentives to the sales rep so they can be encouraged to do the hard work and get in front of that customer.
The number one thing is to be creative, to think outside the box, and to push both organizations from a marketing, product, and vision standpoint.
Bill Melo, chief marketing executive
The E-STUDIO 4508LP is the second generation of product featuring erasable toner technology, which is unique to Toshiba. It’s now a hybrid model—it operates as a conventional black and white MFP, and with the push of a button, it can use erasable toner. The customer can have permanent documents done in conventional black and white, or if they want to reuse the paper and be environmentally conscious, they can have that option as well. It doesn’t require a separate erasing unit, whereas the previous generation did.
Your goal is to help resellers thrive in all areas of your portfolio. What are the optimal areas for dealer growth?
Maccabe: Internally, we’re cross-training our people on retail as well as cross-training retail on imaging. We want to take that forward to a large portion of our dealer base. We have a broad reach on our services ability, but we can’t cover every corner of the map. Our dealers, in partnership with us, have done a great job of filling in. That’s low-hanging fruit, being able to have them do wall-to-wall coverage. Some of our dealers today do IT support. That’s an opportunity across different market segments as well. Our goal is to offer an expanded, full breadth of services, including managed services and solutions. We hope that it’s going to be something that protects their future and expands their growth.
One of the hottest topics today is how to transform business for the generational and technological changes. What have you done in your organization to address those changes?
Melo: On one hand, it’s diversifying our revenue streams and our dealers’ revenue streams with products and services that are not necessarily print related. Our digital signage offering and a lot of our workflow and security solutions help resellers to expand their customer relationships to non-print related services. Mobility is another factor: the younger you are, the more it would appear that a phone was attached to your hand at birth. So we’re doing a lot of things in regard to enhancing the mobile experience for print and scan. e-BRIDGE Print and Capture is a really terrific app that is free of charge to our users. The cloud is another generational solution, so a lot of our service offerings, data, etcetera, are available through the cloud to our resellers.
We have business strategy goals to chip away at market share and continue to build on our foundation of solutions for this year.
Scott Maccabe, president and CEO
Maccabe: We’re really focused on developing products, solutions and applications that address the broader set of generational knowledge. We have Gen Xs, Millennials, and now Gen Zs. How they communicate and what they think about technology is different from older generations. We, as a company, have to internalize how we engage our own staff as well as our market opportunities. For our own staff, we use all forms of social media to communicate and reach a broader set of generations. We’re also investing in our people. We’re sending them to advanced CRM classes and engaged in advanced LinkedIn activities so they can utilize it to be able to appropriately represent the company. We’re going to have a senior-level executive mentoring program for our millennials that are employed with the company. We have to keep Millennials interested in our business to create a business foundation that fosters a next generation of thought leadership.
Both of you wear many hats. Can you point to one task that is the most important to your work?
Maccabe: My most significant task is to really focus the efforts of our individual organizations on a cohesive, collective strategy.
Melo: The number one thing is to be creative, to think outside the box, and to push both organizations from a marketing, product, and vision standpoint. One of my primary roles is to be the chief creative officer and leverage the direction Scott sets to find unique, innovative ways to get there.
What are your goals for the balance of 2017 and the coming year?
Maccabe: We’re going to grow and make money. It’s that simple. We have business strategy goals to chip away at market share and continue to build on our foundation of solutions for this year. We will have very strong, on-point messaging of how we engage our market opportunities with our sales people, to deliver on the fact that we’re morphing into a broader solutions company that crosses different business domains and verticals.
Melo: We need to grow revenue and units above the industry average. That’s a great measure of excellent performance. If the market is growing at X, we want to be percentage points above it. Our shareholders expect that of us. We have to make Elevate front and center, the beginning of every conversation. That is the differentiation and value that we offer.
