Forget ROI. Think about ROT.

ROT is a measure of Return on Time. The phrase was first coined by Dr. Joe Webb. Here's how it works.

Next week printers will converge at Graph Expo to see what's new from the vendors. They will be asking themselves three questions. First, "what's interesting?" Second, "what's my competition doing? Third, "should I buy 'that'?" They'll be lots of talk about the ROI associated with various "thats." The problem is that it's impossible to confidently predict how much money a particular "that" is going to return.

At this morning' s, WTT, Dr. Joe outlines the problem:

This is what makes trade shows like Graph Expo so important. It's a chance to look at your costs, yesterday, today, and tomorrow, in relation to what the market will look like. These are the undeniable truths of what is ahead of us: print prices will not be allowed to rise. Materials costs may come down, but will be slow to do so. Lower wages will make attracting and retaining workers harder as they are drawn elsewhere.

If you can't control prices and only moderately control costs of materials and are not sure of market demand, it's a crap shoot to try to calculate ROI. On the other hand, you can get a pretty good idea of your Return on Time (ROT) . So the question is "Will that new "that" allow you to do something you already want to do - only faster?

Time is money. Money is time. Vendors tend to concentrate on press speeds. How many impressions get off the machine in how much time with how much labor?. But business time is not machine time.

Business time is the interval between finding a customer, selling the job, producing the job, billing the job and getting paid. The faster a business turns talk into money, Machine time is usually the least of it.

The bigger parts are usually the necessary intermediate steps:
1.How much time to find suspects?
2.How much time to turn the suspect into a prospect?
3. How much time to turn the prospect into a customer?
4. How much time to deliver the product?
5. How much time to get paid?

Machine time is in the middle of step 4.
1. How much time to clarify specs?
2. How much time to deliver the estimate?
3. How much time to get the files?
4. How much time to get an ok on proofs?
5. Now comes machine time.
6. How much time to finish the product?
7. How much time to get the product out the door?

The good news is that saving times within the process is more about careful thought and focus than about buying a Big That.

But sometimes, a Big That is exactly what you need. In a world of tight credit, this is a harder decision. But if you look at it from the ROT point of view, it's a little less risky.

How much time elapses between you saying Yes and cash coming into the shop? The vendors respond by saying , "We will have That up and running in X time. And then you will find new markets." But "That up and running for new markets" is not the same as cash in the door. Thats have to be integrated into a new production systems. People have to be comfortable with the That. Networks of business communication have to evolve. Production and sales cultures have to change. Plugging in a That is the least of it.

It's conventional wisdom that you have to "cut costs." Dr Joe clarifies why that's the wrong way to look at. Costs are usually measured in dollars. Business investments are measured in time.
So instead of ROI, keep your focus on Time.

Keep asking yourself, How long it will it take, with my people, with my customer base, with the investments I've made to use That to turn possible customers into cash - faster...also better and cheaper. The faster it is, the higher return on time.

Time is Money. Or is it Money is Time?

The conventional wisdom is that ROI drives sales. It's a variation of the old saw that buying events occur because of greed or fear. Since 1945, the assumption for consumer purchases has been that everyone wants more stuff. The "solution" to "recessions" is to get people to buy more stuff so that the "economy" improves. The purpose of mass market advertising morphed from informing consumers about the stuff available to creating a new needs for more new stuff.

But quietly a different reality has been growing. Now, as the funny money world of the most recent bubble is disappearing, that different reality is turning into an effective market, at least in the North - USA/Europe/Japan. Below are some excerpts from a blog out of the Harvard Business School. It's worth the click.

How Recession Will Accelerate Consumer Downsizing - John Quelch: "Watch out for a new brand of consumer in 2008: the middle-aged Simplifier. She finds herself surrounded by too much stuff acquired. She is increasingly skeptical in the face of a financial meltdown that it was all worth the effort. Out will go luxury purchases, conspicuous consumption, and a trophy culture. Tomorrow's consumer will buy more ephemeral, less cluttering stuff: fleeting, but expensive, experiences, not heavy goods for the home."

I would suggest that it's not only the "middle-aged Simplifier". In a world that already has enough stuff, the underlying reality is becoming more clear. The truly limited resource is time.
It's a natural evolution of the forces of automation that were unleashed by the industrial revolution. In the physical world, that automation keeps allowing us to make more stuff in less time. In the cognitive world of communication, that automation keeps allowing us to get more information in less time.

"Less time" to produce x amount of stuff, is the result of more efficient human intervention. Increasing efficiency of human intervention is the result of using the time that people invested in creating labor saving technology. Stuff that is produced faster, better, cheaper becomes a commodity. And that's the good news!

But there is also bad news. As less people are needed to produce the same amount of stuff, old jobs start to disappear. When stuff that was hard to produce becomes easy to produce, it has less value in the market. Companies that make and sell stuff have to quickly become as efficient as possible to maintain profit margins. They have to find new stuff to make cheaper, better, faster and they have to find new markets filled with people who want to pay them for it.

That's the problem for printers.

The mechanisms of the problems created by automation is obscured by focusing on ROI. If you can't clarify the proximate mechanisms, it's almost impossible to identify the right things not to do. I say "not to do" because the essence of effective strategy is to waste as little time as possible. There are a gezillion things that a business manager could do. Vendors are producing a huge number of options. The internet has so speeded up the exchange and availability of ideas, that it has become reasonable to say, there are no unique ideas.

The "I" in ROI is a stand in for "money." ROI is a stand in for "profit." Every business is in the same business - making a profit. The stuff being sold is just a way to do it. The problem with ROI is that while it makes sense in the some time horizon - the quarterly report, pay day or the end of the month - it is not present now. Decisions have to be made now. Plus getting to ROI requires many things that are not controllable now.

What is needed is a proximate indicator to inform minute by minute decision making. Dr. Joe Webb coined ROT, return on time that helps.

Here's how why it works. As everyone goes through the day, they are answering an implicit question "Is it worth doing?" In business, step one is to make that implicit question, explicit.
But, when sales people ask the question, "worth" means how much money am I going to make. Unfortunately, unless you get paid by the hour, that question is impossible to answer with certainty. Often impossible answer yield blah, blah, instead of evidence based decision making information.

Will time invested in a relationship with a customer turn into money? No way to be sure, unless you are at the purchasing stage. Prospecting, relationship building, "educating" are necessary, but not sufficient, to get to money for the sales person. For the firm, it's much more complicated. There are many intervening steps from purchasing to payment. If the focus is the life time value of the customer, as opposed to one purchase, it's even worse.

ROT is one approach out of this mess. It's still qualitative. In some organizations it's more quantitative. But in any case, it supplies a pretty good rule of thumb. Does that sales meeting on Thursday morning have a high ROT or a low ROT? Does chasing down an estimate have high or low ROT? Does following a job through the plant, sending out proofs, or going over the billing have High or Low ROT?

Once a salesperson sees that the sales process is first identifying suspects. Then moving those suspects into the prospect bin, then the customer bin, then the client bin, it's a lot easier to answer "Is the time I'm investing worth it." "It" becomes a clear indicator that every potential client is moved one step up the ladder.

The decision making rule then becomes "If the ROT of a customer exchange is below a certain point, don't do it." If it seems a "necessary" part of the sales process, make sure it really is. The best way to get a high ROT is to eliminate anything that is low ROT. If you can't eliminate it, at least automate it. If you can't automate, at least figure out a way to do it faster, better, cheaper.

The Power of Print(ed) Stickers

The reason that Print is better than the web is that it brings information into the real world. In the heyday of mass market advertising , "information" was used to persuade potentially everyone to buy stuff. It was straightforward because there were masses of people that needed the stuff that was being sold.

Richard Sears illustrated the cover of his 1894 catalog declaring it the "Book of Bargains: A Money Saver for Everyone," and the "Cheapest Supply House on Earth," claiming that "Our trade reaches around the World." Sears also knew the importance of keeping customers, boldly stating that "We Can’t Afford to Lose a Customer." read more

Today that mass market has evolved into millions of addressable niche markets. In the mature economies of the North - USA, Western Europe and Japan - masses of people already have alot of stuff. So the selling event is less about persuasion and more about taking friction out of the buying event.

But, buying and selling remain the same; a well enough informed consumer, a reputable enough seller, a clear enough value proposition, an easy enough way to complete the sale and a convenient enough way to get delivery. The only thing that keeps changing is the definition of "enough."

Today in New York City, a buyer can look at the menu on the wall and see how many calories that Starbucks latte is going to cost. Starting in 2009 in Washington State every car sold is going to have a sticker informing the buyer of the greenhouse effects of the car they are considering purchasing. Oh. . .and it's probably also on some website somewhere.

Sticker Labels for New Cars:
"Everybody wants to buy the best that their money can afford and if there is a sticker label on a vehicle with the greenhouse gas production of those cars, it is much easier for a buyer to choose a better car not just in terms of performance but taking into consideration what its environmental impact would be.

Starting 2009, passenger cars, vans, SUVs and light-duty trucks will have these sticker labels on their windows. It will become a standard for all new vehicles and without these sticker labels then the cars won’t be allowed to be sold. So it is everyone’s right to look for sticker labels when choosing to buy a brand new vehicle. This way you’ll find out whether or not the car you are eyeing is ecological or not."

The (professional) Print Buyer is your friend

For many years, the Print Buyer was the enemy. The conventional wisdom was that their only concern was to get the lowest price. Turns out that from the point of view of the employer, the print buyer creates high value. Below is an excerpt from a recent press release at WTT.com:

Based on surveys conducted by Frank Romano, Professor Emeritus, RIT, the savings come in seven specific areas:

1. Printer selection practices (equipment, capability, service, etc.);
2. Intelligent paper choices and buying practices;
3. Appropriate printing processes (digital, offset litho, etc.);
4. Efficient finished sizes, page counts;
5. Optimum print runs, on-demand practices;
6. Distribution approaches (targeted mailings, distributed printing, co-mingled mailings, etc.);
7. Other (online file delivery, preflighting assistance, etc.).

What is less obvious is the value the print buyer creates for the printer.

When printers invest the time to "educate" their customer, they have a low ROT (return on time, first coined by Dr. Joe Webb.) A professional buyer means that printers can spend less time "educating" the customer; more time discussing the right fit for print into solving the buyer's problem. Time spent thinking about the right use of your company's manufacturing capabilities has a very high ROT.

All your customers will still have questions to be answered. But a pro will ask hard questions. Hard questions and good answers lead to new knowledge. It's a win-win. From a time investment point of view, that interaction has a high ROT for both the buyer and seller. Simple questions, on the other hand, are just a transfer of information. The buyer gets a high ROT. But it's a low ROT for you, the seller. It's win - lose.

We all know that time is the enemy. Any time investment that gives you a low ROT should be completed as fast as possible. The good news is that mere transfer of information is often best accomplished on the Internet. One good example is Margie' s Print Newsletter at Print Buyer's International.

Now the necessary last piece is falling into place .

PBI's Print Media Professional Certification Program
Print Buyers International began offering its Print Media Professional Certification Program at their 3rd Annual Print Buyers Conference last month in Boston. Over 65 attendees filled the seats at Print Buyer Boot Camp, and many have already taken or are scheduled to take the certification exam. More certification programs are being developed for 2009, including an advanced-level program.

Interested print and media buyers who want to become Print Media Professionals as certified by PBI may write to info@printbuyersinternational.com.

Now that Print Buyers International has started an accreditation program, the sales person has a reliable indicator that a professional buyer really has professional knowledge and ethics. PBI has taken on the job of educating the buyer. They focus on the kernel of value in the internet (plus many other activities) to do that job. For the newbie, getting answers from the the internet gives a very high ROT. For PBI, educating through the internet has a high ROT. This is a win-win.

An alternative print training vehicle is PrintUniversity.org

PrintUniversity.org, the most extensive online training vehicle in the print industry, will unveil a new website Wednesday, October 22nd at the 2008 Print Solutions Conference & Expo. Powered by the Print Services & Distribution Association (PSDA), PrintUniveristy.org offers high-quality, online training for new employees as well as industry professionals interested in taking their knowledge to the next level.

Win-win usually means solving the problem and making the sale.

EHG: Government and Selling Print

As readers of this blog know, I believe that the growing market for Print in Europe and the USA is no longer in advertising/marketing. Instead it is in EHG, education, health and government. It seems to me likely that the professional print buying that we are seeing at the Federal Level will move through other levels of government.

Given the money being spent by State and City governments and the increased necessity to do more with less, there should be a growing opportunity for standards based, professional print manufacturers to fill their unused capacity. Unused capacity is found money. Going forward, printers are going to have find as much money as they can.

This morning I found a press release at WTT.com that lays out the challenges of selling to the Federal Government. It's a hard problem, that is getting a little easier. But solving hard problems is exactly what creates value. Creating value is what leads to sustainable profits.

How the Government Printing Office Can Increase Profitability
Source: Press release issued by the company, unless otherwise noted.

(October 13, 2008)Founded in 1813, the U.S. Government Printing Office's core mission is Keeping America Informed as it supports the work of the executive, legislative and judicial branches of the federal government. . . . Further, as required by Title 44 of the U.S. Code, all federal agencies are required to use GPO to procure their printing.

"Keeping America Informed" is the sweet spot for Print. "America" includes everyone. When informing "everyone," Print is a "must have," not a "nice to have."

Unlike most federal agencies, GPO operates much like a business, as it is not only reimbursed by its federal agency customers for the cost of work performed, but the GPO also receives from its federal agency customers a service fee which is based on a percentage of the work procured. Additionally, the GPO sells printing to its customers and this is done at the huge GPO printing facility in Washington for work that is not outsourced to the private sector, such as the Congressional Record, Federal Register, and U.S. passports.

The Congressional Record and the Federal Register will probably move to the internet. But that's what the federal government does in house. Doesn't affect the outsourced market.

For all outsourced work . . . $400 million in jobs the GPO awards each year. The good news is only about 400 or so printers are active bidders, allowing room for additional competition. Printing for the government can fill an important gap for a printer and can generate income that otherwise would not be there. It is a win-win for the GPO and the printer.

This is the different, sustainable business model: scheduled use of presently unused capacity.
Meanwhile $400 million of print buying is not bad. Add to that State and Local governments, and it can add up to real money.

But first, a printer must become a "qualified" GPO vendor in order to be awarded work. A printer must properly register with GPO, provide equipment lists and other detailed information, and submit stellar samples that can pass the muster of a rigorous GPO quality review. All of this is not easy and entails the assistance of a professional that knows the GPO business inside and out.

Professionals are available to guide through a complicated sales process. These days it's not that different from long term contracts with major corporations.

Once approved the printer still needs to grapple with the rules, regulations, paperwork, and red tape. Dealing with the Federal Government and its GPO is not easy for a novice want-to-be GPO printer. A printer must be able to read and understand the subtleties of the solicitation, specifications, contract terms, quality assurance guidelines, paper specifications, terms and conditions, and other requirements. This is no small undertaking.

Once this learning is earned it is the competitive advantage. Since most printers will not invest the time, the competition is limited. The problem is similar to that of selling to a large school district.

Doing work with the GPO is much different than working with corporate accounts. When a mistake is made, the printer cannot take the GPO to lunch and sweet talk its way out of the problem. The printer must know the rules and follow them exactly.

Standards based production is another new learning for many printers. But again this is not so different from working for a major corporation.

. . . Printers in the know are in general the profit leaders in the industry. Take Gateway Press in Kentucky, P.A. Hutchison in Pennsylvania or Corporate Express with its national footprint – all are profit leaders, all rely on the GPO for a portion of revenues, and none do work at paper cost or below.

What do these profitable printers have in common when it comes to GPO success? Here are the three most important things that they know:

• Open capacity is a unique opportunity to build profitability.

• Knowing the customer is as important in successfully accomplishing GPO work as it is in accomplishing work for any major commercial customer. . . . Therefore, successful printers understand the importance of working with a GPO expert in order to maximize profitability.

• Obtaining GPO bid opportunities that are highly competitive is relatively easy. These are readily available for a fee from a "GPO bid service" or for free directly from GPO on its Web site. Having those more profitable GPO bid opportunities available with sufficient time to bid is a different matter. Just like in the commercial marketplace, GPO bid opportunities are more profitable when fewer potential bidders see them; these opportunities offer fast turn-around in the bid process, the manufacturing process, or both. Also, there are the matters of amendments to which a response must be made before bid opening, how to assure 21-day pay so a printer does not have to wait for extended periods of time on its money, having access to past histories of prior jobs, reports on competition, and promptly obtaining accurate results of bids. Only an expert in GPO can fill these voids.

These experts exist. As for fast bidding turnarounds, this means a well organized, systems oriented bidding process. Again, not so different from working with major corporations.

The bottom line is this. If a profitable printer averages 4 percent profitability before GPO, partners with a professional government print management firm to avoid the long and expensive curve of learning to do work with GPO, and then adds the appropriate work, that printer can increase its profitability by 10 percent or more by utilizing what would otherwise remain idle downtime.