Print and Starbucks

In a previous post I argued that a good way to look at printing is in traditional terms of producers and retailers. Another way to look at is a somewhat different business model that combines some aspects of production and retail.

My favorite example of this model is Starbucks. To see how this applies to Print, consider the following excerpts from a blog at Harvard Business Publishing.

Why Traditional Recession Tactics Are Doomed To Fail This Time
Posted by Umair Haque on October 21, 2008 1:11 PM

How should boardrooms respond to the macro crisis? Is it just a case of recession-as-usual: budget-paring, personnel-slashing, and portfolio-trimming?

Not a chance. The tactics of recession-as-usual are neither necessary nor sufficient for firms to weather the global economic superstorm - because it's no ordinary squall, but a once-in-a-lifetime gale ripping up the very foundations of the global economic order. Rather, the macro crisis requires decision makers to confront fundamental transformation on three levels.

The first and simplest level is a change in global patterns of savings, investment, and consumption. For too long, the poor have financed the rich. China and other emerging markets have lent to the US so Americans could buy Hummers, McMansions, and Frappuccinos. But this never made sense -- it was deeply unsustainable; the macroeconomic equivalent of a giant planetary fossil fuel engine. The days of export-led growth -- and it's flipside, force-fed consumption -- are numbered.

Strategists in the boardroom face a new global macroeconomic picture. Overconsumption in developed countries must slow sharply, and capital must be redirected to long-run investment, especially in public goods. Conversely, emerging markets must shift from financing consumption in developed countries, and begin investing in the basic institutions of a vital microeconomic environment and power long-run growth.

What does that mean, concretely? Let's take a simple example. If Starbucks wants to grow in the States via new stores and new products, its corporate strategy must support the clear macroeconomic need to shift overconsumption to long-run investment. That means relying less on Vivannos, and more on, for example, Starbucks as a platform for communities to build and invest in local resources. Conversely, if Starbucks wants to grow in developing countries, it cannot just rely on a handful of new stores serving fatter-margined deluxe water to a new global bourgeoisie -- rather, to make growth sustainable, Starbucks must reinforce and support fair trade, responsible relationships, and account not just to count profits -- but to gain insight into long-run value created.

If ABC Printing wants to grow via new products, its strategy must support the clear macroeconomic need to shift overconsumption to long-run investment. That means relying less on advertisers and direct mail, and more on, for example, ABC Printing as a platform for communities to build and invest in local resources. Given that one of the best ways to build local resources depends on vibrant local conversations and that Print is still the best way to facilitate public conversation, it's a real opportunity.

Let's go back to our Starbucks example. Starbucks tried to grow by selling us more junk we don't need -- music, mugs, and mouse pads. That was orthodox, textbook, industrial-era strategy: grow by seizing share in adjacent markets. But it's also defunct in a world where we don't need more useless junk.

What do we need in the 21st century -- not just as brain-dead consumers, but as global citizens? We need opportunities to grow and amplify our capabilities. For Starbucks, that might mean, instead of hawking mugs and chocolates, training baristas to teach classes in coffee-making, letting communities use Starbucks as a venue for local government, or, at the limit, training local suppliers from developing countries as Baristas in developed ones. How cool would that be? Very.

Let's go back to ABC Printing. ABC tried to grow by selling us more junk we don't need -- more color, faster color, bells and whistles. That was orthodox, textbook, industrial-era strategy: grow by seizing share in adjacent markets. But it's also defunct in a world where we don't need more useless junk.

What do we need in the 21st century -- not just as brain-dead consumers, but as global citizens? We need opportunities to grow and amplify our capabilities. For ABC Printing that might mean, instead of hawking more, faster cheaper color, training pre press people to teach classes in file prep, letting communities use ABC Printing as a venue for local government, or, non profit organizations. How cool would that be? Very.

On the third, and deepest, level, strategists must rediscover entirely new sources of advantage as old ones fade and decay. Once we rediscover how to create value, we must learn how to sustain and maintain it. But the sources of advantage we teach in business schools and boardrooms alike were built for an industrial-era -- not a hyperconnected, hypercomplex 21st century. For example, brands ain't what they used to be -- and, as the investment banks just showed us, neither is scale, proprietary knowledge, or top-notch relationships.

Tomorrow's sources of advantage aren't like yesterday's. They're not built on being able to exploit, dominate, or coerce more strongly than others -- they don't result from being harder, better, faster, stronger. They're about exactly the opposite: being softer, better able to fail, having the ability to be slower, gaining the capacity for tolerance and difference. Ultimately, they are about a true advantage -- one that accrues not just to the corporation, at the expense of people, society, or the environment; but one that accrues to all.

Let's go back to our Starbucks example. If Starbucks wants to survive the 21st century, it must get radically experimental, learn to tap the power of network effects, shift to becoming resilient, develop and live a sense of purpose, or learn to occupy the creative high ground. It is only through new economic avenues like those that Starbucks can make sure its own advantage isn't just the flipside of Detroit's, Dar es Salaam, or Dhaka's disadvantage -- that it's not just, like the investment banks, building an economic house of cards.

Let's go back to our ABC Printing Company example. If ABC Printing wants to thrive in the 21st century, it must get radically experimental, learn to tap the power of network effects, shift to becoming resilient, develop and live a sense of purpose, or learn to occupy the creative high ground.

That's incredibly difficult -- because industrial era DNA is built to power a nakedly competitive advantage; one that's deliberately blind to being unfair, unsustainable, or flat-out imaginary.

There's a different way to say that. Discovering new sources of advantage depends on new DNA -- on building new kinds of institutions with entirely new capacities. Because, at root -- and as we'll discuss at length shortly -- the macro crisis isn't really a financial crisis, an economic crisis, a liquidity crisis, or a solvency crisis. It's an institutional crisis: the economic institutions of capitalism are in shock.

And though it's a scary, frustrating time -- the cool part is this: it's up to us to reimagine, reconceive, and reinvent them. We get to rethink the institutions of capitalism for a new century.

What could be cooler than that?

Discovering new sources of advantage depends on new DNA -- on building on new kinds of printing manufacturing and sales with new capacities. Because, at root -- and as we'll discuss at length shortly -- the macro crisis isn't really a financial crisis, an economic crisis, a liquidity crisis, or a solvency crisis. It's an institutional crisis: the economic institutions of Print delivery are in shock.

The old notions of "trade secrets," "owning the customer relationship" and rejecting anything that is "not built here" are over. The new notions are open shared information, helping the customer make the best decisions for them and finding the right capability and get it to the right person at the right time (which is usually pretty close to now.)