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Commentary & Analysis

It's About Innovation

By Barbara Pellow March 15,

By WhatTheyThink Staff
Published: March 15, 2006

By Barbara Pellow March 15, 2006 -- This past week, I read excerpts from Harvard professor Clayton Christensen's books titled The Innovator's Dilemma and The Innovator's Solution. A number of companies, large and small, demonstrate an uncanny ability to meet the needs of their customers. They embrace innovative approaches to production, marketing and investment, and employ managerial principles that encourage continuous business improvements. Disruptive technologies result in growth and satisfy market demand at lower cost. The messages in The Innovator's Dilemma are especially relevant to the printing industry as it experiences rapid technological transformation. What Christensen describes as disruptive innovation is not unlike the digital transition taking place in the world of print. He says a disruptive innovation is something that brings the market a product not as good as the products currently available, so it cannot be sold to mainstream customers. But it is simple and it is more affordable. It takes root in an undemanding portion of the market, then improves from that simple beginning to intercept with the needs of customers in the mainstream later. Christensen sites examples including how minicomputers replaced mainframes, and PCs got so powerful that they dislodged the minicomputer market. And look at the impact that handheld wireless devices like the Blackberry have had on the notebook market. Christensen also points out that disruptive technologies result in growth and satisfy market demand at lower cost. When this happens, companies who did not invest in disruptive technologies are left behind. The graphic communications service provider needs to look at the market as more than just printing and have a clear understanding of the business communications infrastructure. When we talk about technology, no industry has experienced more change than the business communications market segment. As little as 10 years ago, your customers were limited to print, TV and radio as communication outlets to the masses. With the growing application of wireless and Internet technologies, communication options now include PDAs, electronic billboards, blimps, cell phones, iPods, and even display screens on gas station pumps. Your customer base is trying to leverage technology to effectively target more defined audiences with updated information and promotional communications. More than ever, the use of multimedia and cross-media strategies is critical to successful business communications. Accepting the Inevitable… Christensen does a terrific job of describing what happens when new technology is introduced. The new technology (i.e. Internet document distribution) threatens to cut the profit margins of the traditional product lines (i.e. printed material). Why did IBM ignore the personal computer for several years and come late to the market? It did not jive with its view of its cash cow--mainframe computing. What happened to Ken Olsen at Digital Equipment? Why would Kodak push for digital cameras when its real money was made in film? Your customers are still buying printed materials, but the question you need to ask is, "What will my business need to look like in five years and how do I start innovating today?" The question you need to ask is, "What will my business need to look like in five years and how do I start innovating today?" As I reflected on several of the progressive companies I have interviewed in the past several months, I saw senior managers that looked at where the market was headed and realized that innovation is the key to long term survival in the market. Start-up firms like VistaPrint are driving innovative technology into the market and re-engineering the way print gets done. With more than 6,000,000 customers worldwide, VistaPrint is a source for high-quality graphic design, Internet printing and premium service. They offer small businesses and consumers a convenient, high-quality solution for graphic design services and full-color printing in small quantities, without the premium price. VistaPrint delivers quality product affordably because it is innovatively leveraging technology. Historically, graphic design and custom printing have been hands-on, laborious processes for both the supplier and the customer. Inflated supplier costs resulted in high prices for the customer, especially for print jobs in very small quantities. VistaPrint's proprietary technologies fully automate not only the manufacturing of printing, but also the manner in which orders are created and submitted. The firm incurs lower costs, which mean customers enjoy lower prices for quality printing. VistaPrint also offers a satisfying customer experience without the requirement for expensive designers and print shops, or the frustration of print-at-home alternatives. Traditional firms are also looking at mechanisms to re-invent their businesses and become market innovators. Worcester, Massachusetts, based LaVigne Inc. has re-invented a traditional business through innovation. Print Solutions Magazine presented its 2005 Top 100 list of independent manufacturers in the printing and document management industry in April 2005. LaVigne Inc. ranked 41 overall in sales. LaVigne also ranked 10th in the Fastest Growing Companies segment in Fiscal Year 2003-2004 with an 18.7 percent growth. The challenge graphic communications service providers face is the reluctance to risk the cash cow and reallocate resources in a new direction. The firm invested in state-of-the-art technology and is an acknowledged leader on implementing variable data and JDF workflow. President and CEO Chris Wells realized that the future was not just about great-looking printing. He established the firm's mission as helping customers deliver the right message to the right people at the right time and the right cost. The challenge graphic communications service providers face is the reluctance to risk the cash cow and reallocate resources in a new direction. Every company likes to innovate; very few companies want to execute the plan to take a development and productize it. That's hard work. There are also internal barriers that graphic communications service providers build. Some of the simplest ones include compensation. How are you compensating the people that are getting you into new markets that may currently not be as lucrative as traditional printing, but will ultimately provide future growth? According to Christensen, "The real challenge in driving innovation in established firms is most organizations reward people for making their numbers, not for building new businesses." "The real challenge in driving innovation in established firms is most organizations reward people for making their numbers, not for building new businesses." While some of the large or small companies are implementing refreshing strategies, there are a number of printers that are still very protective of the past. They become very defensive in protecting their cash cow. Christensen describes the phases the defenders of tradition go through. They are not unlike the grieving process and include: Denial . "This new technology won't work (or is dangerous or doesn't conform to standards), and our customers don't want it!" Anger. "How dare our good customers (friends, fellow members of the club) give even a little of their business to these interlopers! Don't they appreciate the great service and support we've been giving them?" Reluctant acceptance. "Okay, there is some merit to the technology. So let's make it available--but only to those customers who want it and whom we might lose anyway. And let's tell them why they really don't want it, even though they think they do--and keep trying to sell as much of the older, more profitable product as possible." Capitulation. "Look, the market is moving away from us faster than we thought! We are horribly late! We either need to buy a company or invest quickly." The Innovator's Solution While the ultimate solution starts with management/owner commitment to be a market leader, Christensen's book "The Innovator's Solution" shared interesting perspectives on building and sustaining businesses. One of the most important conclusions was that innovation comes from looking at the problem differently. Customers don't really buy a product. They hire a product to do something for them. One of the best examples was that people don't want to buy a quarter inch drillbit. They want a quarter inch hole. Much of the art of marketing focuses on identifying groups or target markets of customers that are similar enough that the same product or service will appeal to all of them. Graphic communications service providers need to segment the markets to mirror the way that customers experience life. Managers need to realize that customers, in effect, "hire" products and services to do specific "jobs." Your value proposition needs to be aligned with the specific reason that a firm wants to "hire" a graphic communications firm. VistaPrint realized that small businesses and at home workers wanted to "hire" them for short-run printing in color. Whether the customer needs business cards, letterhead and brochures for a small business or 10 unique, custom printed invitations for a child's birthday party, it offers premium quality products and services at an affordable price…all Internet accessible. Customers don't really buy a product. They hire a product to do something for them. LaVigne Inc. realized that its customers were looking for better response rates and management of variable data campaigns. They "hire" LaVigne Inc. to deliver a Return on Communications Investment (ROCI), and this has extended its mission far beyond the pressroom. Innovation The biggest challenge is the identification of disruptive technologies. Markets that do not exist or are emerging are hard to analyze. And then, even with a great idea in hand, building a new business, especially inside of an existing organization, is a major challenge. Graphic communications service providers need to take the time to look around and understand emerging communication technologies, assess the potential business impact, make sure that they are not in "denial," and build innovative strategies for sustainable growth. Thomas Edison once quipped, "Opportunity is missed by most people because it is dressed in overalls and looks like work." In the world of graphic communications, it's time to put on your overalls.

 

 

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