Thursday, June 15, 2006
The Change-Resistant Printing Industry? I Don't Think So.
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.