Thursday, June 15, 2006
The Change-Resistant Printing Industry? I Don't Think So.
I've always been amused by the contention that the printing industry is resistant to change, when in fact, the only thing that never changes is the lament that the industry is resistant to change. The following list shows the changes the supposedly "change-resistant" printing industry has gone through in the last 30 years.
Mid-1970s: letterpress to offset conversion
Mid-1970s to early 1980s: hot type to phototypesetting
Mid-1980s: phototypesetting to desktop publishing
Late 1970s: color separations by camera to color separations by scanner
Early-to-mid 1980s: photographic and craft-based color image manipulation to digital color workstations
Early 1990s: film-based page output to film-based imposition output
Early 1990s: quick print shift from ink-on-press to digital copiers
Mid-to-late 1990s: film-based platemaking to digital plate exposure
Early 2000s: digital color printing, variable imaging capabilities
Early 2010s: fully-automated, fully-networked, cross-media?
You will notice that a twenty-year production veteran could possibly have had to adapt to two or three major changes to their jobs during their career. The list above even "skips" the changes that products like QuarkXpress and Adobe Photoshop have brought to the market. These changes are rarely sudden, but are incremental, year by year, escaping detection until one decides to thoughtfully reflect on matters. So what hasn't changed?
Some would say that while the technology has changed, the culture of the industry has not. It is still resistant to change. To me, culture makes little difference. Market forces and opportunities are more important. It's far more essential to watch behavior, because people often say one thing and do something else.
We recently analyzed what the statisticians call the "establishment birth-death" data. What these data report are the business startups and closures in our industry; the latest data are for the year 2003 (it takes quite a while to compile these things). The decade and longer trend of losing 1000 printing businesses a year is still intact; in fact, it was 1300 this time. To me, that's not the important story at all. The long term trend is 2000 startups and 3000 closures a year. What's happening? Whether or not the culture of the industry is changing, the economics of the industry definitely are. When bigger printing companies consolidate they get lots of press coverage. But, there is a broad swath of the industry that is changing under the radar, especially in firms under $5 million annual sales. This is individual print business owners shutting their businesses and opening new ones, sometimes with past rivals.
The data are not reporting 2000 new people starting print businesses every year, they are reporting companies that are restructuring themselves but creating new legal entities to clean up balance sheets and change their managements. They're also cleaning up the various quirks of family business ownership in the process. Things such as jobs for family members, or benefits paid to family members, often make it hard to sell or merge the company. Life as a Subchapter S small business has its benefits, but there are often issues that make it easier to close and reopen than to change the existing entity. It’s often easier to restructure a print business that plans to offer itself up for sale by updating its legal form to make its operations more transparent to prospective buyers.
In larger companies, those consolidations lead to management changes. Even stable companies have management changes. Consolidation does not reduce the risk of being in business, in fact, it adds new risks of transition and coordination to the daily risks that the marketplace offers.
Sure, some companies are closing for good. Many close and reopen. Others lick their wounds and invest elsewhere. These kinds company adaptations do not occur quickly; they take years, many years. What's the bottom line?The printing industry is not exempt from economic, technological, or demographic forces that shape their markets; no industry is. The culture of the industry matters little, because behavior is far more important; culture reflects behaviors that are known to work. Change behavior first, and culture will reflect those experiences later.
The birth-death data that show the industry is changing. Consider this: these data show that there are 5,000 print business entities closing or opening every year. That doesn’t include companies that make changes in their management staff, which would make the rate of change yet larger. Using these statistics, this means that every six years, plus or minus, the industry is completely turning itself over, whether the industry culture at the time wants to or not. Resistant to change? Sorry, the marketplace is too ruthless for that. Those who can't change are quickly dealt with by dismissal or poor performance.And it turns out that change is actually a part of our culture. Just ask those old letterpress printers, hot lead typographers, and color separators... who became lithographers, phototypesetters, desktop publishers, design shops, and digital printers. Entrepreneurs find ways to survive when others say they can't.
Mid-1970s: letterpress to offset conversion
Mid-1970s to early 1980s: hot type to phototypesetting
Mid-1980s: phototypesetting to desktop publishing
Late 1970s: color separations by camera to color separations by scanner
Early-to-mid 1980s: photographic and craft-based color image manipulation to digital color workstations
Early 1990s: film-based page output to film-based imposition output
Early 1990s: quick print shift from ink-on-press to digital copiers
Mid-to-late 1990s: film-based platemaking to digital plate exposure
Early 2000s: digital color printing, variable imaging capabilities
Early 2010s: fully-automated, fully-networked, cross-media?
You will notice that a twenty-year production veteran could possibly have had to adapt to two or three major changes to their jobs during their career. The list above even "skips" the changes that products like QuarkXpress and Adobe Photoshop have brought to the market. These changes are rarely sudden, but are incremental, year by year, escaping detection until one decides to thoughtfully reflect on matters. So what hasn't changed?
Some would say that while the technology has changed, the culture of the industry has not. It is still resistant to change. To me, culture makes little difference. Market forces and opportunities are more important. It's far more essential to watch behavior, because people often say one thing and do something else.
We recently analyzed what the statisticians call the "establishment birth-death" data. What these data report are the business startups and closures in our industry; the latest data are for the year 2003 (it takes quite a while to compile these things). The decade and longer trend of losing 1000 printing businesses a year is still intact; in fact, it was 1300 this time. To me, that's not the important story at all. The long term trend is 2000 startups and 3000 closures a year. What's happening? Whether or not the culture of the industry is changing, the economics of the industry definitely are. When bigger printing companies consolidate they get lots of press coverage. But, there is a broad swath of the industry that is changing under the radar, especially in firms under $5 million annual sales. This is individual print business owners shutting their businesses and opening new ones, sometimes with past rivals.
The data are not reporting 2000 new people starting print businesses every year, they are reporting companies that are restructuring themselves but creating new legal entities to clean up balance sheets and change their managements. They're also cleaning up the various quirks of family business ownership in the process. Things such as jobs for family members, or benefits paid to family members, often make it hard to sell or merge the company. Life as a Subchapter S small business has its benefits, but there are often issues that make it easier to close and reopen than to change the existing entity. It’s often easier to restructure a print business that plans to offer itself up for sale by updating its legal form to make its operations more transparent to prospective buyers.
In larger companies, those consolidations lead to management changes. Even stable companies have management changes. Consolidation does not reduce the risk of being in business, in fact, it adds new risks of transition and coordination to the daily risks that the marketplace offers.
Sure, some companies are closing for good. Many close and reopen. Others lick their wounds and invest elsewhere. These kinds company adaptations do not occur quickly; they take years, many years. What's the bottom line?The printing industry is not exempt from economic, technological, or demographic forces that shape their markets; no industry is. The culture of the industry matters little, because behavior is far more important; culture reflects behaviors that are known to work. Change behavior first, and culture will reflect those experiences later.
The birth-death data that show the industry is changing. Consider this: these data show that there are 5,000 print business entities closing or opening every year. That doesn’t include companies that make changes in their management staff, which would make the rate of change yet larger. Using these statistics, this means that every six years, plus or minus, the industry is completely turning itself over, whether the industry culture at the time wants to or not. Resistant to change? Sorry, the marketplace is too ruthless for that. Those who can't change are quickly dealt with by dismissal or poor performance.And it turns out that change is actually a part of our culture. Just ask those old letterpress printers, hot lead typographers, and color separators... who became lithographers, phototypesetters, desktop publishers, design shops, and digital printers. Entrepreneurs find ways to survive when others say they can't.
Thursday, June 08, 2006
The “Newness Crisis” Revisited
Almost four years ago, I wrote about a "newness" crisis in the printing industry. I contrasted it with the "now-ness" of the consumer market. At the time, the consumer economy was being bombarded with technologies, like cellphones and the Internet that allowed consumers their first real taste of the "wherever-whenever" economy.
The "now-ness" trend is still playing out with growing use of broadband to access information and entertainment at any time,and wherever we want.
When products, even old ones, are introduced to new ranges of customers, they are perceived as "new." In the "now-ness" world, does anything really seem "new" anymore? Targeted campaigns built on narrow data bases, specialty magazines, and the "buzz" among small groups of communities are signs that the mass marketing of the past that gave a general sense of "newness" to consumers, is almost gone.
Four years ago, I contended that the amount of "newness" in the economy was a driver of print demand. The demand for printing is often derived from companies needing new support materials, new ads, new product literature, and just the general need for spreading information about new products.
Lack of "newness" has been a factor in disappointing print demand. "Newness" typically requires heavy transmission of information. If it's new, you've got to communicate it, because people use information to understand it. Newness has traditionally driven demand for brochures, training materials, advertising campaigns, and so many other uses for print.
New markets, new products, changing regulations, mergers and acquisitions constantly churn and create the need for new printed materials. Or do they?
The lack of economy-wide sense of newness served as an opening for alternatives and substitutes to sneak into our marketplace. I warned that we needed widespread newness to really stimulate demand for print, that it didn't look like it was coming anytime soon. I said that the seeds for widespread change in communications were being planted at that time, but we hadn't seen the sprouts come out of the ground yet.
I then offered advice. I noted that when there is corporate cost-cutting, printers needed to get into clients' offices with ideas and solutions that help them reduce costs, take over tasks, stimulate sales, and facilitate communications. “Now is a more important time than ever to realize that it's not a printing business, it's a persuasion and facilitation business. But printers often have to be persuaded to consider facilitating anything beyond keeping their presses busy,” I wrote.
While "newness" ain't what it used to be, it's essential to look for it where we can. In client companies it's things like:
Opportunities to leverage newness are always there if one knows where to look. Clients may not even be aware that they have communications opportunities they are leaving untapped. Sometimes they just don't have the time to deal with all of them. Clients have trouble implementing their communications in a market where "now-ness" is so critical. Who says printers don't have opportunities any more?
The "now-ness" trend is still playing out with growing use of broadband to access information and entertainment at any time,and wherever we want.
When products, even old ones, are introduced to new ranges of customers, they are perceived as "new." In the "now-ness" world, does anything really seem "new" anymore? Targeted campaigns built on narrow data bases, specialty magazines, and the "buzz" among small groups of communities are signs that the mass marketing of the past that gave a general sense of "newness" to consumers, is almost gone.
Four years ago, I contended that the amount of "newness" in the economy was a driver of print demand. The demand for printing is often derived from companies needing new support materials, new ads, new product literature, and just the general need for spreading information about new products.
Lack of "newness" has been a factor in disappointing print demand. "Newness" typically requires heavy transmission of information. If it's new, you've got to communicate it, because people use information to understand it. Newness has traditionally driven demand for brochures, training materials, advertising campaigns, and so many other uses for print.
New markets, new products, changing regulations, mergers and acquisitions constantly churn and create the need for new printed materials. Or do they?
The lack of economy-wide sense of newness served as an opening for alternatives and substitutes to sneak into our marketplace. I warned that we needed widespread newness to really stimulate demand for print, that it didn't look like it was coming anytime soon. I said that the seeds for widespread change in communications were being planted at that time, but we hadn't seen the sprouts come out of the ground yet.
I then offered advice. I noted that when there is corporate cost-cutting, printers needed to get into clients' offices with ideas and solutions that help them reduce costs, take over tasks, stimulate sales, and facilitate communications. “Now is a more important time than ever to realize that it's not a printing business, it's a persuasion and facilitation business. But printers often have to be persuaded to consider facilitating anything beyond keeping their presses busy,” I wrote.
While "newness" ain't what it used to be, it's essential to look for it where we can. In client companies it's things like:
- new management
- new ownership
- new products
- Subscribe to websites, e-newsletters, and publications in industries of your key and target clients
- Put your clients company names and names of key executives as a Google news alert
- Learn what trade shows are essential to your clients, and get plugged into the buzz of new products that clients and prospects are introducing, seminars they are running or speaking at, and other activities
- Regularly check client and prospect information with Hoovers, D&B, and other data bases.
Opportunities to leverage newness are always there if one knows where to look. Clients may not even be aware that they have communications opportunities they are leaving untapped. Sometimes they just don't have the time to deal with all of them. Clients have trouble implementing their communications in a market where "now-ness" is so critical. Who says printers don't have opportunities any more?
Thursday, June 01, 2006
One-Stop Shopping, No; One-Stop Implementation, Yes
It was recently announced that data base provider Harte- Hanks purchased a digital printing business, PrintSmart, located in Southeastern Massachusetts. For all of the talk about printers getting into the data base business, this is a data base business getting into printing. PrintSmart is not a big printer, but this step may foreshadow that other data base providers like InfoUSA, Dun & Bradstreet, and numerous others, may move down this path. Data bases are not really content, and they’re not information until they are directed to a purpose. Data bases are representations of a marketplace. In essence, Harte-Hanks and others sell access to a marketplace, just the same as publishers and broadcasters do. Harte-Hanks has worked with printers for years, and indeed, through its newspaper properties, is a printer itself. This might be a sign that data base companies are looking to add value to their offering, and increase the attractiveness of working with them by adding the implementation of print campaigns. There are pressures on marketers to do more with less, and part of that process is to reduce their own overheads and use the services of others to meet their goals. In other words, to outsource more.
Outsourcing is still a very strong business trend despite corporate profits taking a strong upturn. In fact, the first quarter of 2006 was 24% higher than the first quarter of 2005. In a year of energy price paranoia, concerns about world political stability, threats of offshore competition in all industries, and worries about interest rates, the spending restraint of corporations has been combined with a stronger-than- expected economy, resulting in buildups of cash. It's not likely that corporations are going to start spending lavishly and begin adding staff. Those business concerns are still there, and the desire to further outsource to all kinds of small businesses to retain budgeting flexibility remains as well. The more connected businesses are by broadband, the greater their capability to outsource and do so productively.
The greatest beneficiary of outsourcing has been small business. The economy is adding on average more than 70,000 new small businesses a month. Yes, a month, and that's after deducting the businesses that close. This is why companies like Staples and Vistaprint have been doing well; there's nothing better than riding a strong, secular demographic trend that lasts for years. The rise of in the number of small businesses and the concurrent lack of employment growth in large businesses has been well-documented. Small business is where the action is in this economy for the past two years or so, and it's been an under-reported story in the business press.
A primary application of data bases is to manage the high costs of the sales prospecting process. There is nothing more costly in sales than a sales person who has no idea whom to call. The next highest cost is a sales person who knows what kinds of businesses to call on, but who has to do further investigation to uncover the right contact person and their requirements. Data base providers offer a means to deal with these problems. Sales prospecting has often involved printed materials, especially brochures and other hard copy product information. The use of data bases actually reduces the aggregate amount of printed materials needed. Good data bases allow companies to narrowly focus their sales prospecting efforts to their most likely new customers. Therefore, printed materials are not wasted on unlikely prospects. This also means that office-printed materials are more likely to be sent, avoiding use of commercial print providers for much of the content. But data bases do stimulate the use of other kinds of printed materials.
Data base providers can reduce the costs of sales and marketing management by coordinating the implementation of prospecting and promotional campaigns. They know how people use data bases, of course, and know that direct mail is a primary outlet for data bases. They also know that time-strapped sales and marketing executives no longer have the staff, and perhaps the expertise, to work out the details of direct mail and other media in an era of corporate penny-pinching.
This brings out the most important and unrenewable management resource: time. Time cannot be replaced. Outsourcing implementation tasks creates time for corporate management because they can apply their managerial time elsewhere, and access expertise in implementation that they could not acquire personally or would have to hire at great cost.
Printing companies have significant opportunities to lift burdens and create time for their clients. Knowing how their clients use print, or would use print if they could, and what other information distribution methods they need to tie into, has been hard for many printers to understand. It's essential to focus not on getting ink onto paper, but on translating client ideas into actions. It will be quite interesting to see how (or if) Harte-Hanks expands their services in this way. It will be also interesting to see how many printers also view this as a core strategy for their own businesses. There are hurdles: clients typically do not think of their printers in this way.
The Harte-Hanks article http://members.whattheythink.com/news/newslink.cfm?id=23239
Outsourcing is still a very strong business trend despite corporate profits taking a strong upturn. In fact, the first quarter of 2006 was 24% higher than the first quarter of 2005. In a year of energy price paranoia, concerns about world political stability, threats of offshore competition in all industries, and worries about interest rates, the spending restraint of corporations has been combined with a stronger-than- expected economy, resulting in buildups of cash. It's not likely that corporations are going to start spending lavishly and begin adding staff. Those business concerns are still there, and the desire to further outsource to all kinds of small businesses to retain budgeting flexibility remains as well. The more connected businesses are by broadband, the greater their capability to outsource and do so productively.
The greatest beneficiary of outsourcing has been small business. The economy is adding on average more than 70,000 new small businesses a month. Yes, a month, and that's after deducting the businesses that close. This is why companies like Staples and Vistaprint have been doing well; there's nothing better than riding a strong, secular demographic trend that lasts for years. The rise of in the number of small businesses and the concurrent lack of employment growth in large businesses has been well-documented. Small business is where the action is in this economy for the past two years or so, and it's been an under-reported story in the business press.
A primary application of data bases is to manage the high costs of the sales prospecting process. There is nothing more costly in sales than a sales person who has no idea whom to call. The next highest cost is a sales person who knows what kinds of businesses to call on, but who has to do further investigation to uncover the right contact person and their requirements. Data base providers offer a means to deal with these problems. Sales prospecting has often involved printed materials, especially brochures and other hard copy product information. The use of data bases actually reduces the aggregate amount of printed materials needed. Good data bases allow companies to narrowly focus their sales prospecting efforts to their most likely new customers. Therefore, printed materials are not wasted on unlikely prospects. This also means that office-printed materials are more likely to be sent, avoiding use of commercial print providers for much of the content. But data bases do stimulate the use of other kinds of printed materials.
Data base providers can reduce the costs of sales and marketing management by coordinating the implementation of prospecting and promotional campaigns. They know how people use data bases, of course, and know that direct mail is a primary outlet for data bases. They also know that time-strapped sales and marketing executives no longer have the staff, and perhaps the expertise, to work out the details of direct mail and other media in an era of corporate penny-pinching.
This brings out the most important and unrenewable management resource: time. Time cannot be replaced. Outsourcing implementation tasks creates time for corporate management because they can apply their managerial time elsewhere, and access expertise in implementation that they could not acquire personally or would have to hire at great cost.
Printing companies have significant opportunities to lift burdens and create time for their clients. Knowing how their clients use print, or would use print if they could, and what other information distribution methods they need to tie into, has been hard for many printers to understand. It's essential to focus not on getting ink onto paper, but on translating client ideas into actions. It will be quite interesting to see how (or if) Harte-Hanks expands their services in this way. It will be also interesting to see how many printers also view this as a core strategy for their own businesses. There are hurdles: clients typically do not think of their printers in this way.
The Harte-Hanks article http://members.whattheythink.com/news/newslink.cfm?id=23239
