Wednesday, August 16, 2006

Textbooks, Digital Printing and The Dog Food Dilemma

"You have to remember that the market for textbooks is like the market for dog food because purchasing decisions are not made by the ultimate consumer" - Barbara Levitt, Clifford Nass; Administrative Science Quarterly, Vol. 34, 1989
March 21, 2006 -- Most printers are in the dog food business. They are trapped someplace in the middle of a value chain where incoming money is from their customer's customer's customer. Everything except that last link of the chain is a outgoing money. When you are in the money out part of the system, it's harder to add value (make a profit) without cutting margins.

Being so far away from the customer might explain why digital and variable is moving slower than it soon will. It's really not that different from the first 50 years after printing was invented. Guttenberg et al worked feverishly to be as good as handwritten manuscripts. That was the standard in the 1460's. Then small editions of portable books turned out to be good enough. That brought a whole new population of consumers into the marketplace.

Isolated inventions lead to tipping point change when they are let people to do things that were previously impossible. Computers started by doing the work of adding machines, typewriters and huge filing cabinets for many. They were better ways of doing what was already being done. But when VisiCalc gave people the power of the spreadsheet, and PostScript allowed the printing of well-formatted documents in the office, the desktop revolution began in earnest. And affordable portable computing went on to change the world.

In the world of 2005 digital printing, large scale 1-to-1 marketing is generating lots of buzz and movement of dollars from one part of the value chain to another. It's 20th century marketing being done much more efficiently.

But, based on revenue generated, does large scale personalized marketing really make sense? Getting 10 times better results is a legitimate, great success story for the marketer or marketing department. But 10 times 2 percent is still only 20 percent. And the kicker is that response is not revenue. When money spent on advertising is measured against actual revenue generated, will it continue to make sense?

Successful businesses, no matter how large or small, are using data based decision making that predictably drives value to the top line. Will direct mail and advertising stand up to this scrutiny? As a printer, how much money do you spend on advertising or direct mail marketing? Do you think it's the smartest way to spend your money? As a consumer, how much time do you spend with advertising and direct mail? Is it the best way to spend your time?

Dog food and textbooks
There is general agreement that the textbook as an educational content delivery system is either broken or much too expensive. But everyone in the process is trapped by the "dog food" problem. It's a great example of "it's the process, not the people" insight that comes from Six Sigma process controls.

Specifiers and buyers are in the educational bureaucracy. Their incentives and rewards are not directly tied to producing the "optimal customer experience" for students in the classroom. Yet, they make the million dollar purchasing decisions. Students, the real customers, or teachers, those closest to the customer, are given little choice in the purchase of textbooks.

In addition to the problems of textbooks for students and teachers, the legacy systems for specifying, writing, printing, distributing, and purchasing, textbooks are inefficient. Their very complexity makes the potential risk of making a radical change very high for everyone. At this scale, only a demonstrably better system, one that is tested and proven in the real world of day-to-day practice will lead to real change,

But when it does, it could happen fast.

For a while, technology enthusiasts were sure that e-delivery and e-learning were the answer. Store all the educational content in an XML database, slice, dice and package as necessary, control digital rights, of course, and send to laptop computers or e-book readers. At the time, any opposition was ascribed to organizational inertia and lack of vision.

But, the educational community understands something that the advertising and technology communities don't. Advertisers can identify their best customers and figure out the best way to talk to them. Public education and government don't have that luxury. They are mandated to serve everyone.

When you have to serve everyone, if the content delivery system doesn't include print, it just doesn't work. This is not because educators are backward. It's because when you spend time on the ground, you truly understand the value of print. (Just as retailers today understand it).

Until just recently, there was no practical way for the content delivery system to include design quality printed output. But now, it is starting to change.

UDPP - Print Output is the Enabling Technology

UDPP is my acronym for the Ubiquitous Digital Print Platform. As of this writing, it's probably best represented by the line of Xerox output devices from the desktop to digital production press. But as Canon, HP, KonicaMinolta, NexPress, Océ, and Ricoh continue to deliver devices at various price points and functionalities, it will evolve into a standards-based network output platform.

A recent article in ODJ describes a major investment by the Lincoln, Nebraska school district. They have purchased an integrated input/output system spread over 53 schools. It's a good example of what a UBPP might look like. Once it is connected to a standard-based network of "print for pay" providers, the platform is complete.

Probably only the most forward-looking school districts in the nation will be able to make the investment made by Lincoln, Nebraska. But many more could use a hybrid system, integrating some in-house printing and print-for-pay work with local commercial partners.

On the commercial side, the islands of innovation are emerging. But for the most part, they are trapped in individual companies. Fedex/Kinko is probably the leading player in enterprise-wide collateral pulled from the network and output where appropriate. But the potential reach of a standards-based output platform will dwarf the capabilities of any one company.

The New Print Experience in K-12 Education

A classroom teacher, a curriculum coordinator, department head or school principal will be able to select exactly the right combination and presentation of content for a specific class room situation. Given the time constraints, it's probable that many will prefer to choose from an edited selection of appropriate material for different situations.

That content will then be delivered as appropriate. It might be to a $100 laptop, or maybe to an inexpensive e-book reader. It might be to a teacher's computer to use for a class presentation. But in any case, it will also be available in print. Whether it's printed in the building, in the district, or in the commercial world, will be irrelevant to the user --as long as it's the right product, at the right time, for the right person, at the right price.

The new authentic voice of print is emerging. And it's not merely to do what we've already done better, faster and cheaper. The UDPP enables a completely different experience of Print. Embedded in the other digital information systems, it makes possible what every customer has always wanted, but is only now available: " I want what I want, when I want it, in a form that I want, at a price that I think is fair."

And the world will change again.

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