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Change, the Conversation

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By Dr. Joe Webb
Published: April 15, 2010

“I talk to a lot of printers and they say they know that things are changing but it seems to me that they're really not interested in doing anything about it. They like staying with what they do, and not much else.”

“What do you mean? Printers have always been changing. Our industy actually has a pretty good history of change, but we don't get credit for it.”

“I'm not so sure about that. The printers I meet seem to be a bit stuck stuck in their ways.”

“Yeah, it may look that way, but if you step back, it's pretty amazing what's happened. A whole new industry started in the 1960s called instant and quick printing and it brought printing to the masses. Bigger printers made some major shifts in the 1970s as they left letterpress and went to offset. Some printers started to use web offset, and eventually pushing letterpress and gravure either out of the mainstream or into narrow niches. Today we're having a rather impressive shift to color digital printing technologies.”

“But wasn't that businesses just replacing old equipment with newer and better equipment? That wasn't really innovation.”

“You might look at it that way, but you'll miss how complex even small print businesses can be. Each of those purchases also meant that the printers had to make new investments in prepress and platemaking technologies. And that wasn't the half of it. They had to retrain their workers, start working with new vendors, and they even had to gain the interest and confidence of customers that the new technologies had benefits for them.”

“You mean they didn't just have to install it and start producing and selling?”

“They had to maintain their ongoing business, while coordinating their new capabilities without dragging their businesses down with integration problems. Let's be clear, though. Not all of these changes happened just inside their companies. Much of the industry change was traumatic because it was done through competition, but it made for better companies. This is how the industry, and an economy moves its resources around for their best use. It looks like chaos, and it certainly feels that way when you're in it.A letterpress plant would close, an offset plant would open. The same thing happened with hot lead typographers and the switch to cold type. ”

“What was that? I haven't heard of those examples before.”

Hot lead typography changed the world starting in the late 1800s. It created a burst of production productivity that the industry would not see again for decades. Hot lead was replaced by phototypesetting, and that in turn led to the desktop publishing revolution. We made a lot of money at the beginning of the desktop publishing revolution, then it led to the exit of many prepress specialists from our companies, eventually led to a lot of the decline in commercial print volume that we see today. Desktop publishing is one of the foundation concepts on which the Internet and all electronic media relies.”

“So what's the issue now? If hot lead typography expanded the market for print, how come all this new content that's being created today isn't doing the same thing?”

“Things are quite different now. Aside from exchanging information in conversations with the people around you, the way you used to find out about things was from newspapers and other reading you might would do. Publishers were the way to reach a marketplace. Broadcasting changed that. What's turned thing on its head nowadays is that those conversations with people that we used to have can be accessed by millions of people, most all of them strangers, on websites, blogposts, social media, video, and many other formats. It's changing everything, and no one really understands it all yet. We just understand pieces here and there. It's really fascinating.”

“But people will still be using print, won't they?”

“Yes, print will be around. The way we use it will change. We feel it in the mismatch between the kinds of equipment that our companies own and changes in the amount, size, and nature of printed things people use. This means that companies are forcing work onto equipment that doesn't result in the best cost, which reduces margins, affecting incomes of workers and owners. It's more clear than ever that the only thing companies can control is their costs. so if prices are being pushed down by the competitors to print, the lost margins are being made up by workers who don't see raises in pay, and owners who have no profits to reward them for the risks they've taken.”

“So doesn't that prove that printers are reluctant to change? They're keeping the same equipment they always had. If the situation is that bad, they should be changing things aggressively. Printers are afraid of change.”

“I think you're leaving out some important parts of the story. In the late 1970s recession, we were undergoing the digital prepress revolution, which was lowering the costs of printing and making it more effective by lowering the costs and other barriers of printing in color. The early 1990s recession was rather mild, but we were still benefiting from desktop publishing for the most part. The recession we had in 2001 was so mild, we shouldn't even call it a recession. But for those last real recessions we had new products that made us much more efficient and attractive to customers. That was certainly change!”

“There's a point to this, I hope. You're not answering the question and all you have are 20 or 30 year old examples.”

“Be patient. The latest computing and communications technology changes have been quite different. The technology changes I mentioned affected the way we did things. These latest ones put power in the hands of the recipients of information, and even allowed them to start creating and distributing their own content. Where information had to go through established distribution channels like publishers or had the costs and regulations of the mail, those barriers can now be bypassed and go directly to the target audience. Printers started to lose their role in information distribution when that happened.”

“You haven't answered the question yet.”

“I'm getting there. The point is that printers always knew that there would be print. They could even run their business by looking at other printers as examples and guidelines for their decisions. They could adapt what others were doing with slight changes for their own local markets, and be fairly certain what they were doing was right. It didn't mean that there was no risk to their decisions because they still had to implement them, and bad management can always make even the smartest idea toxic. The market's not that way now. It's really different. Printers want to find a way to change, but there is no clarity to what should be done. It's been really easy to mistake what's going on as being caused by the recession rather than the changes in communications.”

“So you mean they want to change, but they can't because they don't really know what those changes should be.”

“Generally, yes.”

“But things are changing so fast, aren't they just asking for trouble by waiting around to figure it out?”

“Definitely, but there's another problem.”

“What's that?”

“Things have changed so fast, that the equipment that people have bought doesn't fit the marketplace.”

“You already said that. They should just sell their unwanted equipment and buy something else.”

“Exactly. But to whom? Years ago when you wanted to get rid of something you could trade it in. There was a very dynamic market for used equipment, and if it was older, it could be sent to Asia, Eastern Europe, Africa, and South America.”

“Sounds like they should do it then. What's the big deal?”

“Sorry, those markets buy new technology now, and don't have much interest in other countries' older equipment. And these emerging economies can start with latest digital printing equipment. The same countries are experiencing all of the digital communications revolution, too. So there's not even an entrenched and diverse printing industry to displace like there was in the developed countries.”

“That's a problem, then?”

“Sure is. When a print business owner looks at the marketplace today, and the kinds of digital media opportunities they have, they have very constrained financial leeway. The financing for a digital media initiative may have to come from recover money tied up in their current assets. Some of those are still financed and have some years to run. This really limits the range of actions they can take to even consider changing.”

“This doesn't sound good. So you're saying they really want to change, but they're stuck and they can't? That makes it sound rather hopeless.”

“No, it's not, but it certainly causes problems.”

“What should they do?”

“They have to find an orderly way to do it. The longer they wait, the less control over it they will have. Consolidation is one of their options, and doing it by choice is far better than being forced to do it by a bank. Some companies may want to explore bankruptcy, not because their situation is hopeless, but to gain a better measure of control of their situation. Then they can make the forward-looking restructuring they need.”

“Bankruptcy has a real stigma to it. I'm surprised you brought it up.”

“It can certainly have a big downside. And competitive sales people use that as a selling point against you, for sure. The competitors who would do that may be at the same financial crossroads themselves, however. There is a risk that it may not work out as planned. No one should take the decision lightly. It can cause problems with suppliers and future financing. ”

“Is there a different choice?”

“Sure. There are some owners who do just want to get out rather than grinding things out. That's fine. They should work with someone and at the least, sell off their book of business. But there's a better situation.”

“You're making my day long here. Get to the point.”

“Now may be the time to consider closing, and reopening as a new business, in conjunction with one or two other print business owners.”

“You're actually asking people who have liked being in charge of their own businesses, developing their own way of doing things, to just shut down and then combine the business with someone elses? That's a recipe for disaster, isn't it?”

“Can be. It has to be planned, of course, and it shouldn't be taken likely. The key thing is to not get together to try to save two sick businesses that will keep doing the same things. You have to get together to do new and interesting things. Take the heat off the established business, but pool resources to start new product initiatives.”

“So you can self-finance change?”

“I would hope so. So much of our industry is being run by banks. Too many owners are under the illusion that they own their own business, but in reality the banks do. These are not easy times for sure. Change is always easier when an industry is growing and you can absorb some negative cash flows in a startup. But it's also easier when you're not being attacked by new competitors.”

“You keep drifting. Are printers resistant to change or not?”

“We still have an industry dominated by small and mid-size privately held businesses. No one gets into a business unless they want change. When print business owners started their business it was often because they could not do the things they wanted at the place they were working. They were frustrated by their inability to create change, and decided to take the risk of doing it their own way. They wanted to change the way they worked and change the way they lived. When printers would get their first customers, they had to convince other people to change their purchase decisions in favor of a new business. So they wanted change, and then they had to convince others to change too. Any time we train a worker on new equipment, we're creating change. When that printer grew and bought a new building, they often had to create and implement a physical workflow that was different than before, so they had to create and manage change.”

“So printers like change?”

“Ultimately, yes, but the way most people think of it. They like accomplishing things. You can't accomplish anything without making change. Owners like setting goals and doing what needs to be done to meet those goals. Don't mistake difficulty hurdling certain temporary barriers as a reluctance to change. Sometimes what looks like 'not now' is really a deliberation, as they figure out what needs to be done and how they are going to do it.”

“When will we see something happen?”

“For many of them, when they realize they have no choice but to act decisively. When the economy gets better, but the print businesses do not, maybe that paradox will force the issue. I hope it's not too late at that time.”

“Is anything growing at this time?”

“There's lots of good change around us. But we'll have to discuss that another time.”

* * *

Some have asked if the new book “Renewing the Printing Industry” is still available now that “Disrupting the Future” has been released. “Renewing” can be downloaded, and still has descriptions of strategy that can be a springboard for deciding how to restructure. “Disrupting” is available as a download, but the hard copy will be distributed at no charge by Xerox, and also Oce, at OnDemand, and at various events this year. Both books can be ordered at Lulu.com. Contact WhatTheyThink customer service for orders of 10 or more copies.

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink.com's Economics and Research Center.

What do you think? Please send feedback to Dr. Joe by emailing him at drjoe@whattheythink.com.

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