2011 Winter

Moving Past the Great Recession: Print’s Recovery Path for 2011–2012 and Beyond

February 1, 2011

by: Dr. Ronnie H. Davis and Ed Gleeson

An excerpt from the report from Dr. Ronnie H. Davis, vice president and chief economist, and Ed Gleeson, manager, economic and market research, Printing Industries of America Economic and Market Research Department

The Economy: Recession and Recovery

The Great Recession of 2007-2009 was a dramatic departure from the relatively mild recessions of the past two decades. The departure is true in both intensity and duration when compared to the last two recessions of 1990-1991 and 2001-2002. Indeed, even when compared to the last recession approaching this level of severity, The Great Recession scores high in creating economic damage and havoc.

The good news is that after lasting an official eighteen months, the recession has been declared over as of June 2009. However, while the recession may be over, the recovery appears stalled as the economy has taken to moving in an essentially sideways direction. Since peaking in the fourth quarter of last year, the growth rate of economic activity has declined with a very weak 1.6 rate in the second quarter this year and 2.0 percent in the third quarter.

Typically, the steeper the economic decline, the stronger the recovery. However, this is definitely not true of this recession. In fact, the recovery gap between this recession and the last similar magnitude recession (1981-1982) is large and has increased significantly through the past six months.

Where will the economy go from here? A look at the full recovery paths of the past four recessions should provide some guidance. While there is considerable variation in the recovery paths among the last four recessions, the average first year and second year increases in inflation-adjusted GDP are 4.6 percent and 4.2 percent respectively – healthy gains (Figure 1).

As we look forward to the path of the economy in 2011 and 2012, much uncertainty remains even after the November election results. However, based on a number of factors, including the election, the likely outlook has improved. At this time, the most likely trajectory of the economy over the next two years is a somewhat stronger rebound with inflation-adjusted growth of 3.3 percent in 2011 and 3.5 percent in 2012. While this is not a robust recovery, at least it is improved from just a couple months ago.

Other less likely scenarios include a sluggish recovery and a return to recession (the dreaded double dip). While these are less likely scenarios, we present them as alternatives for your own planning purposes if conditions change over the next few months.

Using these same three scenarios, we can focus further on the quarterly pattern of economic activity over the next twelve months. In the forecasted most-likely rebound scenario, the economy bounces up to 2.7 percent growth the first quarter and picks up speed in each of the next four quarters (Figure 2).

Whatever path the recovery ultimately takes, labor markets will remain in an over-supply situation for a while. A standard rule of thumb is that the economy has to grow at around five percent for a full year to lower the unemployment rate by a full percentage point, so it will take considerable time to soak up the large pool of unemployed and discouraged workers that have accumulated over the last three years. Further, the time it takes to return to job creation and a resulting reduction in unemployment has been increasing over the last few recessions.

Even with the growth rate forecast in the likely rebound, the unemployment rate will range over nine percent for most of 2011 and more than eight percent for 2012. The most likely path of the unemployment rate is a range of 9.0-9.5 percent next year and 8.5-9.5 in 2012.

If unemployment behaved like it did in past recessions, by 2011 the unemployment rate would be 6.5 percent, while if it was consistent with recent recessions it would fall to 9 percent by 2011. Based on current trends, we do not expect the unemployment rate to drop below 9 percent until 2014, the government forecast is more optimistic; they expect unemployment to drop to 7.9 percent by 2012. Price changes should remain in check for the next couple of years given the slack in the economy. However, inflation risk may start rising with the incessant bond buying and money creation over the past couple of years, as well as the purchases at the end of 2010 and early 2011 already announced by the Federal Reserve.

Inflation for the full-year 2010 is expected to be around 1.2 percent, which is just about the minimum level targeted by the Federal Reserve as a “healthy” rate of price change. The outlook for inflation in 2011 is for a slightly higher rate of about 1.7 percent as the economy recovers. Expectations for 2012 are more uncertain, but at this time, a rate of around 2 percent is a reasonable forecast.

Assessing the Damage: Print and the Great Recession

According to Printing Industries of America’s print market tracking model, the Great Recession shrunk print’s economic footprint by historic proportions last year. The number of U.S. printing plants declined to 33,565 – down from 36,508 or 8 percent in 2008. Total shipments in 2009 (not adjusted for price changes) were $140.7 billion – down from $166.6 or 15.6 percent industry wide. Employment declined by 6.9 percent from 976,400 to 909,200.

In total, 2009 print markets declined by 2,943 plants, $25.9 billion in total shipments and more than 67,000 employees. After adjusting for declines in printing prices, real or inflation-adjusted printing shipments decreased by about 9.1 percent. Even after the declines, print’s economic footprint is still substantial compared to other U.S. industries and remains a major American industry.

This report presents PIA’s annual review of the economy and print markets during the past year, plus our economic and print market outlook for the next twelve to twenty-four months. Additionally, we offer an assessment of longer-term competitive issues for printers. The objective of this report is to serve as a resource to plan the year ahead for your firm. Also, since it provides alternate scenarios in many instances, it also can be used to make mid-course corrections as the year unfolds. To purchase the full report, contact PIA at 412.259.1770 or visit www.printing.org/store.

Production Digital Print: Changing the Feeding & Finishing Market

February 1, 2011

by: Jim Hamilton, InfoTrends

There are some basic advantages of digital print that sometimes are overlooked. I’m not talking about economic short runs, quick turnaround or the ability to personalize documents. Those are well known and broadly acknowledged. No, I’m talking about capabilities such as electronic collation, automatic duplexing, the ability to mix multiple paper stocks in a document, having one operator run multiple machines and access to a range of finishing capabilities in-line. These capabilities are part of what makes digital print attractive, at least in theory anyway.

In practice, of course, customer demands and the nature of the printed piece will determine which type of print and finishing process to use, whether it’s offset, digital, some hybrid combination or another printing process entirely. Decisions about what process to use are made every day by print service providers. In regard to finishing, commercial printers have tended to use off-line finishing methods because of the wide variety of work they accept. Those who focus on a particular application such as books, catalogs, direct mail, magazines, newspapers or packaging are much more likely to have dedicated finishing capability that they depend on, and which may operate in-line. When digital print comes into the mix, it often happens that print service providers continue with off-line finishing methods because those assets are already in place and effective, even if they are not particularly well suited to the short runs and quick turnaround of digital print. Digital print processes with in-line finishing tend to be employed when users have a lot of one print application. In cut-sheet digital print environments, the most common in-line finishing is for stapled sets, booklets, folded brochures and bound documents. In-line coating and diecutting are in place in a small number of cut-sheet systems. Requirements for roll-fed systems are a bit different. Slitting, cutting, stacking and binding are common for publishing environments while folding and insertion are typical in transaction and mail environments.

Digital print’s biggest weakness to date has been that it becomes less cost effective as run lengths increase. Offset and other types of traditional printing presses, as you all know, are very effective at manufacturing large quantities of static printed matter but they lack the ability to personalize. In production environments, digital print often has been seen as not having the fire power to meet the demands of high-volume printing. A number of trends are conspiring to change this:

Run length requirements are dropping and so are expected turnaround times as the pace of our mobile society has accelerated.
Content creators are rebelling against the old mode of “warehouse and distribute” and instead are moving to virtual warehousing via electronic distribution of documents and selected printing of constantly updated materials.
Digital print engines are becoming faster and more robust, and also are adding capabilities beyond process color (CMYK) such as spot color, spot and flood gloss, white, MICR and UV security features.
In-line finishing for digital is expanding its range of capabilities and at the same time, vendors are standardizing finishing interfaces and using the same finishing devices across multiple product lines; it’s not unusual today for the same in-line finisher to be an option for black and white and color product lines.
In-line devices for cut-sheet production digital print are becoming more compact and productive, in part because of more flexible consumables for functions such as mechanical binding (case in point: GBC’s eBinder and Ellipse consumable).
All types of finishing equipment (in-line, near-line and off-line) are becoming easier to set up and adjust, often automatically.
Automated job ticketing and JDF workflows allow in-line and near-line finishing devices to pick up job information and set up easily for the next job.
Digital print processes are capable of hands-off, lights-out production that takes place with a minimum of human intervention.
New high-speed inkjet technologies are pushing the barriers of cost, speed and productivity.

Many of the items I mention above have been on an evolutionary path over the past two decades. These will continue to impact the market. It’s the last item – high-speed inkjet technologies – that is potentially market changing because the speed and economics of these devices are so impressive. At the same time, though, they create new requirements for next generation finishing systems.

One immediate challenge is supporting the finishing needs of wider web widths. Production digital print devices typically support a paper web width of between 18 and 21 inches. A number of new high-speed color inkjet printers (such as HP’s Inkjet Web Press T350, Kodak’s Prosper 5000XL, Océ’s JetStream 3300, Ricoh’s InfoPrint 5000VP and Screen’s TruePress Jet 520ZZ) all have expanded web widths, with some as wide as 30 inches. The speed, productivity and web width of these devices present challenges to existing in-line finishing equipment. These challenges are being overcome, but it’s also one reason why some users prefer to stick with the narrower format offerings, simply because they raise fewer issues in finishing.

You’d think that a trade show would be one of the best places to see some of the exciting new developments around roll-fed finishing products, and in fact, if you were at IPEX (last May in Birmingham, England) or have plans to attend drupa 2012 (next May in Dusseldorf, Germany), both of those events provide a great showcase. Most recent, however, was a special event that Hunkeler (a Swiss manufacturer of roll-fed oriented feeding and finishing equipment) has run at its headquarters over the past few years. A lot of people call it the Hunkeler open house, but its official name is “Hunkeler Innovation Days.” It took place from February 14th to 17th in Lucerne, Switzerland, and attendees were be able to see a range of equipment from vendors active in roll-fed print such as HP, Kern, Kodak, Océ, Pitney Bowes, Ricoh/InfoPrint, Xeikon, Xerox and – of course – Hunkeler, among many others. Closer to home, the ON DEMAND show (March 22-24 in Washington, DC) is a great place to catch up on trends in cut-sheet finishing for production digital print (in-line or otherwise).

The extent to which automation in finishing has advanced is demonstrated by what Pitney Bowes presented at Graph Expo last fall in Chicago. There, high-speed color inkjet output from an IntelliJet 30 was slit, cut and inserted into blank envelopes. An intelligent tracking system identified each envelope and, based on the number of sheets contained within, adjusted the height of the imaging platform so that the correct address, personalized information and marketing message could be added in full color to the already sealed envelope. Of course, this kind of high-volume intelligent production system represents a significant financial investment, but there are other examples that demonstrate that feeding and finishing innovation is not just taking place on the high end. For example, the Kirk-Rudy envelope feeder that RISO showed in conjunction with a 150-ppm ComColor 9050 solves a simple, but important, issue. How do you print effectively on all kinds of envelopes, including windowed ones which may have trouble passing successfully through the hot temperatures of the fuser rollers of toner-based systems? Inkjet systems such as RISOs ComColor have a solution, but only when used in combination with an effective and productive envelope feeder. In time, we expect to see more cost effective folding and insertion technologies that bring this finishing capability within reach of smaller print service providers.

We’re also seeing how inkjet technology is being used for spot and gloss coating. MGI’s JETvarnish uses inkjet heads to apply a UV coating on sheets up to 20 by 40 inches. At IPEX, an Israeli company called Scodix showed a digital embossing product it calls the 1200. The 1200 uses inkjet heads to apply a thick UV coating on sheets as large as B2 format (19.7 by 27.8 inches). We expect this to be an active area that is driven by innovative usage of inkjet heads.

Workflows that take advantage of digital print and in-line or near-line finishing are part of a larger trend toward optimization, automation and lean manufacturing. Printing has lessened in importance as it has become one weapon in an arsenal that includes other media. We no longer live in a print centric world and yet print continues to play an important role because it’s physical, lasting and doesnt require electricity to read. Digital print, in particular, is key, because it forces us to revisit the basic value of print in an electronic world. How we answer the following questions will in large part determine the success of print in the future.

How do you most effectively automate print and finishing processes?
How do you use digital print devices as virtual document warehouses?
How do you leverage digital print in conjunction with document delivery via e-mail, mobile or other electronic delivery methods?
How do you differentiate print and add overall value?

Finishing will certainly play an important role in how we address these questions.

In conclusion, it’s short-sighted in light of the changing marketplace to continue to view production digital print as a short-run technology. The market is expanding, and it’s only able to do so as finishing technologies provide a key component to help accomplish this revolution.

Jim Hamilton is a Group Director at InfoTrends (www.infotrends.com). You can follow him on Twitter at www.twitter.com/jrhinfotrends and read his blog at http://blog.infotrends.com/.

Merging Tradition with Progress at Roswell Bookbinding

February 1, 2011

by Amy Bauer, The Binding Edge

From its founding in 1960, Roswell Bookbinding of Phoenix, AZ, has remained nimble to respond to the changing demands of the marketplace. In the process, the company has established its expertise in specialty and high-end binding projects and restorations, in addition to library and trade binding work.

“We have evolved from a hand operation to a fully automated facility with state-of-the-art high-speed equipment,” said President Michael Roswell. “We still use all of the old hand binding techniques and materials in the same building as our 9,000-signature-per-hour sewing machines to create high-end bindings of all types.”

The company serves a wide variety of customers – including commercial printers, publishers, museums, art galleries, authors, artists, photographers, academic libraries and private collectors – throughout the United States and internationally. Jobs range from single books to tens of thousands through Roswell Bookbinding’s three divisions: library binding, which accounts for about 15 percent of its business; the specialty division (limited editions, portfolios and specialty packaging and boxes), which accounts for about 20 percent; and the trade division (new books, both soft- and hard-cover), which accounts for about 65 percent.

Rather than catering only to standard sizes, production for many of which continues to be outsourced overseas, Roswell Bookbinding has remained flexible in its ability to accommodate varied dimensions and all manner of special features.

The Beginnings

Roswell’s parents, Mark and Iris, brought their three children to Arizona from New York City in 1960, seeking relief for one son’s asthma. Mark, a certified public accountant, and Iris, a painter and graphic artist, unsuccessfully looked for work before meeting a woman who was selling part of a small bookbinding company. Using their remaining money, the Roswells created their start-up, the Roswell Bookbinding Company, Inc.

As Mark Roswell learned the binding business, Iris Roswell built up a customer base. “My mom called on every elementary, high school and college in the Phoenix area and was soon able to create a steady flow of work into the bindery,” Michael Roswell wrote in a recent profile of the company, which appears in a Roswell-bound book celebrating Arizona’s centennial.

From its library binding roots, the company grew into rebinding books and periodicals for schools and private collections throughout the western United States. In 1974, the Roswells purchased land on the outskirts of Phoenix and built a 50,000-square-foot complex (two 25,000-square-foot buildings), where the company remains to this day. Short runs are handled in one of the buildings and mid-range to long runs in the other. A 10,000-square-foot warehouse rounds out the plant.

Mark Roswell passed away in 2007, and Iris Roswell, while no longer involved in the day-to-day business, stays in daily contact with son Michael to keep abreast of what’s going on. While his siblings didn’t enter the family business, Michael Roswell began working at the bindery as a youngster, enjoying the hand binding so much that he found his career.

Artists’ Resource

A serendipitous collaboration with a publisher in Flagstaff, AZ in the early 1970s put Roswell Bookbinding on its path to artistic excellence. The owner of what was then Northland Press, which Michael Roswell describes as “the bellwether of the Western Art book industry,” came looking for a source to bind the art books he was printing. The popularity of Western and American Indian artists was growing at the time. The Roswells, who had so far never put together a “new” book, gathered the necessary employees and equipment, and a niche was born.

These high-end, coffee-table books were sought after by collectors. Limited editions of the books were produced, frequently accompanied by original art. The artists often came to the bindery to sign their books, deliver artwork or supervise the process, and Michael Roswell said such collaborations continue today. Roswell Bookbinding also worked with celebrated photographers, starting with Ansel Adams and some of his protégés, and has maintained its niche in art photography books.

These connections created a reputation for the company in the art market and among museums and galleries nationwide. “Painters and sculptors, graphic designers, architects, authors, photographers and commercial printers are regular visitors, coming in to see the birth of their work in print,” Roswell wrote in the centennial book.

Roswell’s interest in the art book genre goes beyond the professional. As a collector of western history and western art books himself, he brings additional insights to his clients goals. “The designers and artists and curators know I have an understanding of where their art is trying to go and what they’re trying to say,” he said.

Out of the Ordinary

The high-end and limited edition books typically are nonstandard, often oblong, sizes with features that require a high degree of skill and may incorporate exotic materials and both hand work and mechanical processes. They exemplify the company’s tagline of “Binding without Boundaries.”

For example, Roswell said, a book may have a regular edition run between 2,000 and 5,000 copies. And its limited edition version will run 50 to 100 copies bound in leather or other upscale material in a slipcase or clamshell box and often accompanied by a piece of original artwork.

Hand work makes up a significant portion of Roswell Bookbinding’s business: 30 percent to 40 percent. This crosses from the company’s specialty division into the library and trade divisions as well, and while some employees are specifically devoted to hand work, they are cross-trained in the mechanical processes and vice versa.

Roswell offered some examples of recent specialty jobs. One, for the International Olympic Committee, comprised 3,000 regular edition volumes plus 400 special editions each encased in a clamshell box stamped with an individual’s name. For St. John’s University, in Minneapolis, the company is producing a seven-volume set of leatherbound books, each measuring 16 inches by 28 inches, with 250 copies of each volume and each book encased in a clamshell box.

The Binding Industries Association (BIA) recognized Roswell Bookbinding with a 2009 Product of Excellence Award for Innovative Use of Materials for “Dancessence,” a book of photos of dancers. The Smyth-sewn soft-cover book was incorporated into a chemise of handmade paper with a custom bone closure, so it included both mechanical and hand worked aspects, Michael Roswell said. The company also was honored with two other BIA awards in 2009.

Diversification is Key

Roswell noted that several longtime binderies in the western United States have shuttered their doors, and he believes that Roswell’s diversification is what has kept it strong. “We’ve always been able to do the different, the obscure, the crazy concept,” he said, “and that’s what has allowed us to survive and flourish, frankly.”

Additionally, while specialized jobs are often more time-consuming, the company continues to find ways to speed the process. “We have gradually improved our capabilities to automate them more, and thus bring down the cost so that we are able to be more competitive,” Roswell said. “This has enabled us to keep work in the United States that previously had gone offshore.” To that end, the company recently installed a Smyth high-speed sewing machine that will handle a 14 1/8-inch-wide signature.

Additionally, Roswell said, the company makes the best use of its equipment. “We’ve got three full-time maintenance people who are very creative in adapting and modifying our equipment to handle unique sizes,” he said. “And we’ve always cross-trained our people,” he continued. “We’ve been cross-training since day one, so we have a lot of people who can do a lot of different things, and we have a lot of creative people who think outside the box.”

Secrets to Success

The bindery runs a single shift and employs about 100 full-time workers, all of whom are selected for their commitment to quality. Roswell said that while the company’s jobs are among some of the most difficult in the industry, the pay scale reflects that standard. “We demand more of our employees, because our customers are demanding more of us,” he explained. “We need the best in the industry, and we have the best, and we compensate them accordingly.”

New employees go through a 90-day trial period, and those who are average operators or helpers typically don’t stay, he said. Existing employees, many of whom have spent years with the company, help to maintain this culture, expecting top performance from those with whom they work.

Another business practice that Roswell’s parents instilled and which has served the business well is a commitment to reinvesting profits into the company. That focus allowed the building of the current bindery in 1974 and has helped the company to keep up with new binding technology. Michael Roswell said his father recognized as early as the 1970s that the company’s original focus – library binding – would not be sustainable for the long-term as its sole niche, so he purposefully went into trade binding as well. “I remember my dad saying that library binding was not going to last 30 years,” Michael Roswell recalled. “And he was pretty much right. That industry has shrunk.”

Today, as digital readers cut into the volume of trade binding across the industry, Roswell Bookbinding’s specialty work serves a crucial role, providing services still sought after by book connoisseurs.

Restoration Services

Though a small percentage of the overall business – about two percent, Roswell estimated – restoration work continues to fill a need for Roswell Bookbinding’s clients. Two employees are dedicated to this work, which Iris Roswell first trained herself in as she began getting requests from the company’s university clients. According to its website, www.roswellbookbinding.com, the company has served collections including those of the Phoenix Art Museum, the J. Paul Getty Museum, Texas A&M University, University of Arizona, University of Texas at El Paso and UNLV Special Collection Libraries, as well as private collectors.

“People have always brought in old books and especially Bibles to be restored,” Roswell explained. The company advertises its family Bible restoration services on its website, and Roswell said a few Bibles come in for repair each week. Roswell Bookbinding also makes custom boxes and portfolios to house rare books and documents.

Looking to the Future

The company has proven itself savvy in the face of a rapidly changing print marketplace. Founder Mark Roswell foresaw some of the challenges evident today – from a move toward more complex and difficult bindings to the trend of shorter run lengths – and this has allowed Roswell Bookbinding to position itself for long-term success.

“The way the market has changed over the years has hastened the demise of binderies that were only capable of standard sizes,” Michael Roswell said. “We have seen an increase in the specialty books and publications that we are known for in the industry, even in a down economy. I believe that there will always be a market for top-of-the-line products.”

Directions for New Leadership

February 1, 2011

by Richard G. Ensman, Jr.

Many centuries ago, leadership positions often demanded the right family connections. Later, an ability to read and compute became a requisite for leadership. Later still, demands on leaders included an understanding of production systems and today, leaders are expected to possess superb people skills.

The skills demanded of leaders will continue to become more diverse and complex, whatever the size or nature of the organization. Ask yourself: do you possess the skills necessary to effectively lead your organization?

Be “relationship managers.”

Leaders won’t simply supervise traditional “9 to 5” employees. They’ll manage constantly shifting groups of workers – including full- and part-timers, people working flex time, independent contractors, temps and even vendors “on loan.”

Become “learning listeners.”

Today, leaders practice the art of “active listening” – communicating with their whole bodies and sharing information. Tomorrow, leaders will use their communication skills to glean insights and information from the vast quantity of knowledge possessed by the people around them.

Broker resources.

Yes, tomorrow’s leaders will have to manage tight budgets – same as now. But the leaders of the future also will have to quickly shift resources from person to person as changing needs dictate. And these leaders will have to formally account for commodities such as morale, customer satisfaction and image, just as they account for money today.

Communicate electronically.

Skype™ Twitter™ Texts™ Tomorrow’s leaders may not see many of their employees and contractors on a regular basis. These leaders will need to learn how to manage people electronically, and to communicate effectively through audio, video and social media communication channels. And these leaders will need to learn how to motivate customers and find new prospects using these electronic tools, as well.

Creatively use technology.

Tomorrow’s leaders won’t have to be technical wizards, but they will have to understand the myriad of ways technology can be used to manage and market – and will need the “hands-on” skills to select the right technical tools and use them appropriately.

Influence behavior through motivation.

Next generation leaders will become masters of motivation. They’ll glean sophisticated motivational skills from the latest human relations and psychological findings, and use those skills to motivate employees. And they’ll rely on sophisticated consumer behavior models to influence buying behavior more frequently than traditional advertising.

Possess emotional stamina.

Today’s leaders feel stressed when events aren’t predictable or when demands come at them fast and furiously. Tomorrow’s leaders will embrace change, conflict and pressure as exciting professional challenges.

Possess tolerance for ambiguity.

Change, in the form of shifting customer demands, governmental regulations and technological innovation, is constant. True leaders will need the stability to remain calm in the midst of so much change – and to poise the organization to function effectively in a sometimes-frantic business environment.

Possess “translation” skills.

Leaders will develop an acute understanding of the business environment and translate complex technological, marketing and management requirements to simple, easily understandable principles for customers and employees.

Possess vision.

Don’t confuse vision with goals. While long-term goals may be based upon a business vision, an authentic vision is an easy-to-articulate principle cutting across goals and rallying everyone in the organization. A traditional goal: “we’ll achieve 5 percent sales growth next year.” A new leadership vision: “Sale or no sale, we’ll position ourselves as a state-of-the-art company in the mind of every prospect.”

Practice role adaptation.

In years gone by, leaders often were encouraged to identify their leadership “style” and practice it consistently. No more. In the years ahead, leaders will be expected to shift their style, depending on the needs of the moment. At one point, for instance, a leader may serve as a coach, at another moment a facilitator, and at still another moment, a strategist.

Provide self-leadership.

Before the leader of tomorrow can lead others, he’ll have to learn to lead himself. Tomorrow’s leaders will develop lifelong personal education programs, obtain their own mentors or coaches to guide them, and find ways to constantly renew their confidence.

Serve as knowledge brokers.

Next generation leaders will spend time studying and training. They’ll often maintain computerized “knowledge bases” of information, and constantly replenish them with up-to-date data. They’ll be quick to retrieve knowledge from the people around them, and repackage it for others.

Subscribe to personal ethics principles.

Bureaucracy has frustrated people the world over and has generated widespread distrust of institutions. Customers and employees will gravitate toward businesses led by principled leaders who base their actions on strong personal values and commitments.

Understand and manage diversity.

The workplace will consist of people of a wide variety of ethnic and social backgrounds. Customer backgrounds will become more varied as well, and even small firms will be doing business internationally. Tomorrow’s leader will understand the traditions and cultures of the people he’s serving and working with – and promote an appreciation for diversity throughout the workplace.