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Commentary & Analysis

It's the Output Business

By Michael Josefowicz "

By WhatTheyThink Staff
Published: September 12, 2005

By Michael Josefowicz "We may not be happy about it, but it is the reality we are facing. As better functionality is built into desktop software, the reality is that we are becoming an output device for our clients and their designers." Greg Hill, Sandy Alexander, Inc., in a letter to ODJ, May 17, 2005 Whether we use toner or offset ink to is much less important than the fact that the origin of the information is in digital form. September 12, 2005 -- In the August 11 edition of WhatTheyThink, columnists Steve Aranoff and Robert Fitzpatrick asked the central question: "What industry do we call ourselves?" They conclude, "[Whether you decide that] 'Graphic Arts' is an old, obsolete and declining industry or an expanding, innovative and opportunity-filled one does not depend on your level of optimism or negativity. The answer – and business strategies that will be based on the answer – will first be determined by your definition of the business." My definition of the business is the output business – we are the hard copy output engine of the information ecosystem. And everywhere I look I see an "expanding, innovative and opportunity-filled" future. The internet will continue to generate the greatest explosion of accessible content in the history of mankind. Never before has there been this much content that wants to be output. The enabling technology is digital printing. In a very real sense all printing has become digital printing. Ever since offset moved to CTP, most output products start their life as a digital file and involve a laser creating pixels. Whether we use toner or offset ink to complete the process is much less important than the fact that the origin of the information is in digital form. And now we are getting the standards, the RIP's, MIS systems and business processes that allow us to output a digital file on the most efficient device, based on the customer's requirements. Toner, whether dry or liquid brings a new, truly revolutionary capability to our output systems. For the first time in 500 years, we are not trapped by run length or the need to create a fixed master for reproduction. This is truly a sea change. With the advent of design-quality digital print, we can bring the powerful tools of the design craft to communicate with audiences of one, ten, thirty or 100. At the very same time, communicators are realizing that is exactly the context in which the most effective communication takes place. VDP and customized marketing tools are only the very tip of the iceberg. They supply great new solutions for an important, but still relatively small part of our industry -- the direct marketers serving corporate organizations. Keep an eye out for the killer apps of true database publishing. As it becomes more commonplace to output well-designed hard copy directly from the same databases that drive the internet, much larger opportunities emerge. My own favorite so far is indicated by the use of 24 iGen3's in Japan to produce credit card statements with full color contextual advertising messages. The first release of over 50,000 books led to a 15% increase in student performance. Our society runs on documents. It's been estimated that a large percentage of our education, health and government budgets are tied to the movement of documents. They have to be created, stored, accessed, and output. Adobe and Xerox, two important players in the output industry, are focused on this problem. My understanding is that it is the fastest growing part of their businesses. The pressure to increase efficiency and drive cost out of these sectors will not abate. Once we deploy the innovative output these sectors need very large applications will emerge. Digital Publishing Educational publishing is already a well established, profitable industry sector. There are many output innovations waiting to be deployed that will significantly increase effectiveness in education. My favorite example is the work of the Grow Network, a division of McGraw Hill, that has produced totally individualized workbooks based on students' results on standardized tests. Each students book is different, providing remedial exercises specifically targeting their areas of under performance. The first release of over 50,000 books led to a 15% increase in student performance. Grow Network is now doing the test score reporting for most of the large school districts in the nation. That's a killer app. Advertising & Marketing Advertising, traditionally a mainstay for the printing industry, is going through its own sea change. It's clear that more advertising dollars are going to different media. But it is also evident that event marketing, word-of-mouth advertising, customer loyalty programs are growing quickly. As the advertising industries find new ways of building communities for loyal customers, they are looking for innovative hard copy output solutions to leverage their efforts. My current favorite example of this is a program put together for the US Army that allows a local recruiter to order event related materials over a website for delivery anywhere in the country within two days - banners, posters, leaflets and brochures all customized for one event of a couple of hundred people. Keep asking yourself "What if....? and fill in the blanks with possible outputs that would make your experience as a customer better. And then there is the explosion of small business. As Dr. Joe Webb is fond of pointing out, the growth of small business is constantly ignored by government statistics. In his August 12th column on WhatTheyThink he says, "And it seems that only I track this: net new businesses up yet again, now running at +72,333 net new businesses per month, an annualized rate of +868,000 annually. That's 12.5% higher than it was July 2004." Parts of our output industry see the opportunity very clearly. FEDEX/Kinkos, PrintingForLess.com, PSPrint.com, VistaPrint.com – all seem to be doing very well selling commodities for the SOHO market. Try it Yourself Here is an exercise to prove to yourself that thinking of your business as part of the Output Industry can lead to new products that you can profitably offer to your existing clients. Have your salespeople spend at least an hour looking at your clients' web sites. (The communication ecosystem has now developed to the point that almost every client, large or small, has a web site – a very big change from five years ago). Look at the web site as if you were your customer's customer. Keep asking yourself "What if....? and fill in the blanks with possible outputs that would make your experience as a customer better. Don't worry about the "how" of whatever you think of , only about what would be cool to do. This is an exercise that I regularly use with my students at Parsons and with clients who are focused on innovation. It's pretty amazing what they come up with. I tell them, don't worry about the "how" of whatever you think of , only about what would be cool to do. The good news is with all the tools for output now out there, almost any "What If..." can be delivered. And with open source software, and the abundance of software experts, it doesn't have to be all that expensive. The bad news is that any particular printer, no matter how large, does not usually have all the skills in-house to execute these innovations. Unless they have internalized the culture of networked business relationships, with the trust, transparency and accountability necessary, they cannot execute fast enough to reap first mover advantage. Almost any one organization is too slow. Only the network has the resources for real speed. This is the real secret of the innovation of the internet. Innovations will succeed by exceeding customer expectations, and getting to market in Internet time. The logic of the marketplace is moving inexorably. If a product can be clearly defined it will become a commodity. Innovations will succeed by exceeding customer expectations, and getting to market in Internet time. The only question is exactly when and where this logic will affect any particular business organization. Some will look honestly at their market, and make painful adjustments before they have to, Others will continue to thrive in small protected niches. Still others will see the opportunities and courageously invest the time and attention to take advantage of emerging opportunities and become the major players in the consolidating output space.

 

 

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