Print. What is it good for?

It's like an earthquake.

You feel the tremors, ignore them and go on with your business. The scientists say that an earthquake is inevitable. They talk about tectonic shifts. Then the earthquake happens. Some things disappear. Some things make it through. Some things thrive.

These last weeks we've been watching an earthquake. The reorganization of global finance is happening before our eyes. Over the coming weeks, the collateral damage for printers, designers and advertising agencies who work for the financial industry will be assessed. Hopefully most will make it through.

In the printing industry, we've been feeling tremors for years; at least since the advent of the personal computer, the internet and digital printing.

The world of Print has been through a couple of earthquakes in the last 500 years in the West. Once the dust settles, Print has always found a new growing niche that plays to its core value and has resumed its growth. To guess how this might play out, history and sociology are useful points of view.

I've been reading The Rise of the Network Society, by Manuel Castells. It was written in 1996. Below are some things he says about communication.

Around 700BC a major invention took place in Greece: the alphabet. This conceptual technology . . .was the foundation for the development of Western philosophy, and science as we know it today. It made it possible to bridge the gap from spoken tongue to language, thus separating the spoken from the speaker, and making possible conceptual discourse. The historical turning point was prepared for by about 3,000 years of evolution. . . Widespread literacy did not occur until many centuries later, after the invention and diffusion of the printing press and the manufacturing of paper. p.327

A technological transformation of similar historic dimensions is taking place 2,700 years later, namely the integration of various modes of communiction into an interactive network. p328

What TV represented, first of all, was the end of the Gutenberg Galaxy, that is of a system of communication essentially dominated by the typographic mind and the phonetic alphabet order. p 331

And then the crux of the matter:

Typography has the strongest possible bias towards exposition: a sophisticated ability to think conceptually, deductively and sequentially; a high valuation of reason and order; an abhorrence of contradiction; a large capacity for detachment and objectivity; and a tolerance for delayed response. p332 quoted from Postman, Amusing Ourselves to Death, 1985

The way I read this, what Print does better, faster cheaper than anything else is to enable logical, systematic thinking. In a world where education is becoming the key for individual success, Print will have something to bring to the table.

But what about e-this and e-that? I'll leave that for another e-post.

A rose by another name . . .

I read in this morning's NY Times that Washington Mutual has disappeared. Actually the company called Washington Mutual has disappeared. It's been absorbed by JP Morgan Chase.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

There might be some lessons here for printers and our industry. Washington Mutual did very well when the market for their product, home mortgages, was rapidly expanding. But when that market started to radically shrink, they were busy, busy, busy; first making lots of money, then trying to keep the ship from sinking. They didn't invest the time to look over the next hill. On the other hand, it seems that JPMorgan Chase did.

Bad ROT (return on time, coined by Dr Joe Webb) for WaMu. Good ROT for JPMorgan Chase.

Commercial banking is not going away. Most likely they will change the name on the door. But at it's core, they will lend money and charge people a fee for using that money. Hopefully they will make the process a little more efficient; innovate new product offerings that take account of the new conditions; settle for a smaller, but safer profit margin, for a while; and keep scanning the horizon to see what's next.

In our industry, it might look like this:
Commercial printing is not going away. Most likely the name for what we do will be different in different markets. But at it's core we will print stuff and get people to pay for it. Hopefully we will make the process more efficient; innovate new product offerings that take account of the new conditions; settle for a smaller, but safer profit margin, for a while; and keep scanning the horizon to see what's next.

Time is the enemy

I recently had a good conversation with a very rare creature, a printing sales person who has been working for the same company for over 20 years, is doing ok, and basically loves his job.

I say "basically" because he is forced to spend his time in nonproductive activities. For those who follow this blog, I think they will understand what I mean when I say, he has to spend lots of time on bullshit. See Princeton University Press.

This professional has to go to many internal meetings. The meetings can be seen as "important," But they have a very low ROT. (ROT is a term coined by Dr Joe Webb to capture the idea of Return on Time) as opposed to ROI. Since the most valuable resource is time, it's a very useful idea.

Here's how it can play out in the non printing world.

The financial industry reorganized itself last week. Merrill, Lehman, Bear Stearns gone. Morgan and Goldman becoming commercial banks. Neither investment banking nor the most talented investment bankers will disappear. Print is Dead? . . . or is it just that some printing firms will change or go out of business?

The most likely outcome is that investment banking and the people who know how to do it, will move to small "boutique" shops. Experts in niche markets. Firms with lower head counts and much more efficient product delivery infrastructures. A significant one-stop shop business model is broken.

It happened in one week.

The members of Congress, who are "very, very busy, important" people are usually vigorously engaged in partisan power struggles. Now they have made the time to put that to one side and focus on the problem at hand. It was amazing for me to watch C Span and see everyone in the hearing room, asking pretty intelligent questions, getting pretty intelligent answers, moderately little grandstanding or speeches. In short, there was a minimum of bullshit.

"The prospect of being hanged focuses the mind wonderfully" said Samuel Johnson. And nothing cuts through the bullshit like money disappearing. When an existential crisis hits, the most important metric becomes ROT, return on time. Congress has a week, maybe two. If they don't do it by then, whatever they decide to do will probably be irrelevant. Perfect decisions, made too late, are bad decisions.

What does it have to do with the printing business?
Many printing firms are in a crisis. Like anyone else, including congress people, for most the first response is denial. At the same time, or right after denial, comes anger and blame. Then comes the rushed response to deal with the crisis at hand. When the smoke clears, it's "back to business" as usual, which is often follows the same trajectory, only at the daily level. Lots of small crises to handle. Everyone again becomes busy bees.

Meanwhile, some firms got it right. Morgan started the application for becoming a commercial bank back in March. They planned for the worst, hoped for the best. When the storm made landfall, they were ready to act. I assume that Goldman did the same. They faced the nasty fact that their business model was falling apart. They prepared to move into a much less lucrative, but still a good business, commercial banking.

Morgan and Goldman obviously understood that spending time on alternative action options and looking very clearly at the invisible crisis had a very good ROT. The others did not.

"Lipstick on a Pig" and selling Print

"Lipstick on a pig" are the words that are appropriate in public or professional conversations that communicate the same thing as "bullshit" in personal conversations. In the world of finance, either words can describe bad loans, packaged into securities that then are "valued" at much more than they are worth. It might be said that it's a business model based on bullshit.

In the world of governance - either corporate or public, it points to the problem that is supposed to be solved with "transparency" and "accountability." In everyday life, it is the problem that is supposed to be solved by "not lying." In the world of brand building it is solved by delivering "a consistently good customer experience." In the world of professional selling it is the problem that is solved by a "code of professional behavior."

But actually in all of these worlds, it is as simple and difficult as "don't bullshit."

This may seem to be counterintuitive to those who grew up in the legacy printing business of the 20th century. I spent 30 years as a printing broker in New York City. You can imagine that I have seen the power of bs. When a customer asked, "Can you?" I quickly said "Yes" and then went back to figure out "how." When a customer said "when am I going to get that proof?" I quickly said, "should be this afternoon." Then I would go through some drama to make it happen.

When the customer said "When am I going to get my estimate?" I would often say "they are working on it." While that was true, it was bs because it didn't answer the question. The question was "when?" The only no-bs answer had to be either in the form of "You will get it on X day, at Y time" or "Let me find out, and I'll call you back with the answer."

Luckily my firm was pretty good at figuring out "how", and getting people estimates and proofs and quotes. In retrospect that was the real value we created that allowed us to not compete on price.

But, that was then, and this is now. If I were still in the game and a customer emailed me to ask "Can you?" I would now email back within 15 minutes with either "Yes" or "It depends on x,y,z." or "I think so. Let me get back to you as soon as I figure it out." "Can you" is not an essay question. It's multiple choice. There are three choices. Any other answer is some form of bs.

Post internet we live in an information rich world. Any hint of bs will be discovered in real time. Email stores bs. It's not like a face to face conversation that is open to interpretation. Once you have written it, it can come back to keep you on the straight and narrow.

The real danger is that these days customers have much more finely tuned bs detectors. As soon as a potential customer gets even a tiny hint of "spinning," it can destroy your credibility. Once you've lost your credibility, you are relegated to competing only on price.

If you are the lowest cost provider in your market, it's a little less dangerous. The problem is that there is always someone who will have a lower price. Another problem is that your book of business can be primarily bargain hunters. A still other problem is that even the lowest price doesn't overcome the hassle factor. If a competitor prices the same as you, and makes it more convenient and pleasant to buy, then you're back in the soup.

If you are trying to compete on service rather than price, it's a much more serious problem. At that level, you are really selling "failure insurance." Selling insurance, like buying and selling financial instruments, is about trust. If you've damaged that trust, your customer becomes more and more sensitive to price. In finance, the consequences can be much worse. In printing, chances are they will find the right mix for them from some else.

So if you are selling print for a living, what should you do?

The short story is keep the bs to an absolute minimum.
The longer story depends on who you are, who your customers are, who the production people in your firm are, what kind of hardware you have, how much money you want to earn and how you want to earn it. Because each situation is by definition completely different, the long story can't be done in a blog post.

The "End as We Know It" is not the same as the End

Publishers, maybe even more than printers, have broken business models. For the first couple of years, they decided that "people don't read." Tell that to Amazon or Lulu or Lightning Source. It's eerily similar to the stuff you hear from the "Print is Dead" crowd when they declare "It's the End of Print as We Know It!"

What some publishers are really saying is "People don't want to pay the price we've always charged for the stuff we've always produced." It's similar to what some printers are really saying, "People don't want to pay the price we've always charged for the stuff we've always produced." Actually, it's the same for every legacy business in the internet age. Consider Dell Computer or General Motors "People don't want to pay the price we've always charged for the stuff we've always produced."

Sound familiar?

Printers, just like Dell Computer and General Motors have three choices.
1. Get used to being a stagnating company in a shrinking market.
If you borrowed too much cheap money and cooked the books, go out of business as on Wall Street this September.
2. Find the people who want to pay the price for the stuff you've always produced.
Easiest for the short term solution.
3. Tinker with the stuff you make until you figure out how to make stuff people want while at the same time figuring out how to earn enough money to make a sustainable profit.
Most reliable for a longer term solution.

That's pretty much it. And it's pretty much what people mean when they talk about "creating value," "inventing new business models","monetizing value" and "innovation drives profits."

A good friend forwarded this link to a story at New York Magazine. It shows a business model innovation for publishing that might work. The title is Have We Reached the End of Book Publishing as We Know it? The writer is Boris Kochka. The date of publication is September 14.

Have We Reached the End of Book Publishing As We Know It? -- New York Magazine:

"Miller recently left Hyperion, which he founded seventeen years ago, to start his own imprint at the urging of HarperCollins’s then-CEO, Jane Friedman. She was replaced in June, but HarperStudio lives on. For all its ambitions, it’s a modest outfit: Miller and three women, two of them in their twenties, hope to publish two books a month starting next May, having convinced 25 authors to forgo big advances in return for half of their books’ eventual profit."

Idea 1:"...forgo big advances in return for half of their books' eventual profit"
Idea 2: "Miller and three women, two of them in their twenties. . "
Still books, still publishing, everything else is pretty much the same.

In this case, the "innovations that drive profit" were innovations in the business model. Truth be told it is now possible because the "makeready" costs to get the first books into market is better, faster, cheaper. Thank you, Adobe,et al, and digital printing. Plus, the logistics of getting it distributed is also better, faster, cheaper. Thank you, Amazon, the internet, et al.

It's taking a little while to get it right because business that prospered last century have been a little too busy blaming the customer. Also there are lots of people that have to either get retrained, more trained or fired.

It's a longer, but similar, story for print salespeople and the firms they work for, but that's for another post. Or you can just fill in the blanks yourself.