In her annual year-end letter to employees, Carolyn Reidy, CEO of Simon & Schuster, urged her colleagues to fight the price deterioration that has accompanied the rise of eBooks. Ms. Reidy wrote, "We must do everything in our power to uphold the value of our content against the downward pressures exerted by the marketplace and the perception that 'digital' means 'cheap.' "
Seth Godin took Ms Reidy to task in his blog. Godin wrote, "Hello? You don't have the power. Maybe if every person who has ever published a book or is ever considering publishing a book got together and made a pact, then they'd have enough power to fight the market. But solo? Exhort all you want, it's not going to do anything but make you hoarse. Movie execs thought they had the power to fight TV. Record execs thought they had the power to fight iTunes. Magazine execs thought they had the power to fight the web. Newspaper execs thought they had the power to fight Craigslist. . . Smart businesspeople focus on the things they have the power to change, not whining about the things they don't."
Hold that thought.
Over the Holidays, I found myself re-reading Theodore Levitt's classic article titled, "Marketing Myopia." "Marketing Myopia" was published in the Harvard Business Review in 1960, and it quickly became one of the most important articles HBR has ever published. Levitt argued that companies stop growing (and often go into decline) because their leaders define their business in terms of specific products or services rather than in terms of customer needs. In one of the more memorable passages in the article, Levitt wrote:
"The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business."
No one reading this post needs to be told that printing companies are facing unprecedented challenges. The media landscape and the very ways we communicate have changed dramatically, and they will undoubtedly continue to evolve. The new methods of communication have reduced the need/demand for many kinds of commercially printed documents, and that demand is unlikely to return. In essence, the market has decided that for some uses and purposes, other methods of communication are better or cheaper than print. Those are the facts. And they are beyond the control of printing company leaders. If Theodore Levitt was still with us, I think he would probably say that many printers are in trouble today because they "assumed themselves" to be in the printing business rather than in the communications business or the marketing business.
Printing company leaders cannot control how the market for print is changing, but they can control how they respond to those changes. The specific responses will vary from company to company. Most, if not all, effective responses will require that a company make significant changes to its business model and/or its product/service mix. Many responses will require a company to acquire or develop new business capabilities, and some will entail becoming a different kind of business. These changes will not be easy to make, and they are not without risk. But, for most companies, the far riskier approach is to do nothing.
Dr. W. Edwards Deming put it well: "It is not necessary to change. Survival is not mandatory."
Discussion
By frank wilner on Jan 04, 2010
Quite to the contrary, railroads are not in trouble today. They are, in fact, one of the most profitable of American industries, and the largest of the U.S. railroads, BNSF, was just purchased in its entirety by Warren Buffett's Berkshire Hathaway at a notable premium above market price. Privately owned railroads exited the passenger business in 1970, which is now a socialist enterprise under the name, "Amtrak."
By Mark Kolier on Jan 06, 2010
One critical factor is that the age of owners of 'traditional' printing companies. Even if they understand the need to change their businesses actually doing things to affect that are really difficult for owners. Yes printers are in the communications business but most lack the marketing expertise to be anything more than a strategic partner.
By Steve Gardberg on Jan 06, 2010
Using the railroad and buggy analogies, magazine/book/newspaper printers manufacture the medium with which people interact with content, typically time-sensitive content whose value decreases ever-more rapidly. They missed the boat when radio and TV emerged as media by not producing those sets. Such printers occupy a scary place in the supply/value chain because print volumes for such content are shrinking - and are expected to continue shrinking - in developed economies. In the new world, the printers' value-chain position is less needed, less valuable, more vulnerable.
To stay in this value-chain position in the new world, printers would be producing non-perishable devices, which I don't find promising. Why this time if they never built TVs and radios? A better bet for the companies to avoid dying is to build or buy expertise elsewhere in the value chain. Otherwise they die because the world simply won't demand the volume of time-sensitive information in print to support the current crop of them.
They're in a tough boat with the brick-and-mortar entities where people encounter and buy/rent content. What's the market these days for manufacturing and distributing horse whips? Classic product-lifecycle theory suggests that this value-chain position for printers is in maturity, and that current players should (1) stop/slow down investments here so the inevitable withdrawal is less painful and (2) invest in higher ROI opportunities.
So, where in the value chain should the move? I'm not sure there's a good fit to apply their expertise or core competencies for the same customers. They might need to rationalize in magazine/book/newspaper in developed economies, while focusing on other segments and/or developing economies. Or these printers could diversity away from printing, though this is also immensely risky. But like David Dodd says, "the riskier approach is doing nothing."
By Michael J on Jan 06, 2010
What I think is confusing about the conversation about what printers have to do is that it tends to ignore the defensible value of printers. They can print, on time, on spec and at scale. While this may seem commonplace to us as printers it is hard for any enterprise without the equipment and the expertise.
In my opinion the calls for printers to change themselves into something else is not helpful. While there are a few printers, primarily with direct mail dna, who have been very successful that just doing what they always done, but with better technology.
What is under appreciated is that printers who have focused on improving their craft have actually done ok given that we seem to be just emerging from the greatest economic crisis since at least World War II.
Vista Print keeps expanding and seems to be doing well. mimeo.com embraced print as a commodity and keeps growing. I'm sure there are many others who have stuck to their knitting and are making it through.
The irony is that with the Google v Apple fight for the cell phone space in addition to the telco fight, it's crystal clear that the mobile web is what's happening.
The technology of 2d codes, either QR or GossRSVP or Microsofts entry make it pretty obvious that print connected to the web is where it's at. Add to that robust distribute and print networks that have grown up in the last few years. Donnelly of course. But more interesting to me is Consolidated which has 70 shops each managed by not a corporate dna, but by printers.
Not an accident that they did the personalized covers for Nat Geo. I bet there will be lots of new opportunities for distributed manufacturing and serving niche and geographically distributed markets.
My point is that "marketing service provider" is no longer a helpful way to look at it. Inventing new ways to use print is a much better approach.
By Michael J on Jan 06, 2010
Steve,
Here's where I have to disagree magazines and newspapers produce "typically time-sensitive content whose value decreases ever-more rapidly."
Actually books are not time sensitive. Except for maybe the celebrity best sellers. Harry Potter? Are posters time senstive? Turns out that one of the biggest revenue sources for musicians is selling posters and t shirts.
Consider photo books. They're value is that they capture a moment of time and preserve it. In compliance situations and contracts there is no real substitute for un changing typography on paper.
Print is an infrastructure business. Yes we are in the communication business. But we are not the communicators. We make communication better and more effective.
In fact the value of print is exactly that it stands outside of time.
Discussion
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