Printing in the Blue Ocean

The idea of “Blue Ocean” and the strategy behind it is incredibly appropriate for the printing industry. Most printers live in the “Red Ocean” today, and are greatly suffering (and many continue to disappear) because of their inability to get out of it.

Blue Ocean is a term coined by the prolific authors, professors and business theorists W. Chan Kim and Renee Mauborgne in their book "Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant" (2005).

If you are in the printing industry, and are not familiar with Blue Ocean, I would highly recommended putting in some late summer reading— it’s a quick read, unlike many business books. A lot of people throw the term around loosely, but if you study it closely, it really is among the best of many popular business ideas that have emerged in the last 20 years or so.

The theory goes that in an established industry, companies compete with each other for every piece of available market share. The competition is so great that some firms cannot sustain themselves and stop operating. This is the state of companies living in the Red Ocean (as in blood red.)  At the risk of sounding obvious, firms in the printing industry are in this Red Ocean. There are many thousands of companies that are almost indistinguishable from one another.

The book contains several fantastic case studies of firms who clearly differentiate in core ways. These are firms who, by innovating and creating great differentiation, find their way into the Blue Ocean, where no firms operate, allowing the company to expand without competition. Examples in the book include Cirque du Soleil and Southwest Airlines. In the case of Southwest, at this point they’ve been copied by dozens of other companies… but they took many years to emerge, during which the company profited immensely.  In the case of Cirque, they arguably have remained alone in their unique market.

From the Cirque du Soleil film, World's Away, photo credit: Mark Fellman, Paramount Pictures

Some might think it is a stretch to compare printing to a circus, but there actually are parallels. The circus business, pre-Cirque, was in long-term decline. Alternative forms of entertainment—sporting events, TV, and video games—were casting a growing shadow. This is similar to what is happening to print in the face of digital media. Children preferred video games to circus acts. Marketers prefer digital media now, due to faster cycle times, lower costs and measurability.

An industry beset by decreasing audiences and increasing costs. In printing’s case, even without increasing costs, we are faced with price competition from weak and desperate direct competitors as well as from the easier and less costly digital media alternatives.

Interestingly, a new entrant to the printing industry would have a tough time in face of the existing competition, just like Cirque faced a challenge competing against the incumbent Ringling Brothers, who for most of the last century had set the industry standard. Cirque created uncontested market space that made the competition irrelevant. It pulled in a whole new group of customers who were traditionally non-customers of the industry—adults and corporate clients who had turned to theater, opera, or ballet and were, therefore, prepared to pay several times more than the price of a conventional circus ticket for an unprecedented entertainment experience.  

Southwest Airlines strategy, as articulated in the book, was not to compete head on for traffic from existing airline customers, but to go after people who normally could not afford to fly—to compete for business normally owned by bus and car travel instead. 

Both companies created new demand for their products. I can think of only a handful of companies in the printing industry who have taken this kind of approach.  There are a couple of ubiquitous examples who are "online printing companies”, or companies who solely do business on the internet, but whose products are tangible, print or print-related. There are also “brick and mortar” printing industry companies who have made the swim into the beautiful Blue Ocean of profits and growth.  

Can you name any of them?

Lob is disrupting the Printing Industry- one Poster at a time!

In a world where even Print Service Providers sometimes question whether the printed piece has the compelling power it once did, a two month old Silicon Valley startup is achieving success by making (gasp!) paper-based, physical products-- albeit selling them via the most modern of programming techniques.

After graduating from the University of Michigan, and stints on Wall Street, and at Amazon Web Services and Microsoft, Leore Avidar and Harry Zhang founded their company Lob, and were accepted into the well-respected startup accelerator program at Y Combinator just a matter of weeks ago—and they are already generating revenue from their service at a fast pace of growth.

If you’ve read this blog before, you know that among my favorite topics are cloud printing, integration and automation, so as soon as I heard about Lob I needed to know more about the founders, their idea, and plans. Lob specifically refers to themselves as "Cloud Printing for Developers".  I love it. I sent Leore an email, and we spent a few minutes discussing the company and their approach. 

The concept and execution are both compelling. They created the service as a solution for software developers who want to include printing and distribution capabilities with their web/mobile applications. Without Lob, this is hard to do, and expensive.  With Lob, it’s easy and priced competitively.

In terms of startups who work with Y-Combinator, Lob is one of the youngest companies. Their idea was to expose printing to developers via an API (Application Programming Interface).  It took them a week to develop the initial alpha API, and then immediately got started working with customers.

The technical challenges were one thing, but getting familiar with printing industry jargon, paper and ink choices, etc. also presented challenges. Lob initially produced their products with their own desktop printers. Now, the company manufactures and distributes through a network of printing partners to whom they route the jobs.  Many of their print partners are good at printing and reliable delivering on time, but don’t understand how APIs work, and don’t have programmers.  For such partners, Lob translates the order instructions for the job and delivery into human readable form, or helps the printer develop the integration.

Their first printed product idea was transactional mail—financial statements, bills, etc.  Almost as soon as they engaged with customers, they started hearing new use cases. So they turned their attention to other printed items. Turns out, other products were more desirable. Because they are an agile Silicon Valley startup, and using their API, they can create new products of virtually any shape and size, from the ground up, quickly.

Brace yourself: according to Leore, physical mail is making a comeback: open rates are up.  Email open rates are down. His customers want to engage with users via physical mail… when they buy a product or reach a certain milestone. I almost fell off my chair—I thought to myself, “I know this… what’s wrong with all the naysayers in this industry?”

And as it turns out, there are a couple of things wrong with the printing process, from a customer standpoint, that Lob is addressing nicely.  Print automation and personalization are really hard for people outside this industry. When Harry worked at Microsoft, he had a project where he needed to send a large number of printed pieces, each personalized with information about products, and each to be delivered to a different address.  As many have found before him, when it came time to have them printed and mailed, there was no good way to do this… and service providers were expensive. Instead, Harry himself and colleagues spent untold hours printing, addressing, stuffing and mailing the envelopes. So the idea for Lob was born.

Other product ideas soon flowed. According to Leore, posters are “killing it.”  And this certainly shouldn’t be news to most Printers-- on demand posters, sold on a partner’s website, with no inventory required, shipped directly to the ordering customer… are a money maker.

As the startup culture requires, a prospective customers simply reads the documentation for the company’s REST API, at https://www.lob.com/docs, then signs up and orders an item sent to their self.  Almost immediately, most such customers start running batches of real work for their own customers. Not surprisingly at least for now, many of the company’s customers are other Silicon Valley startups—who begin with small quantities of print, then grow their business. LOB has grown with them. It’s a great market and Lob knows where startups hang out.

In their very short existence, Lob already has hundreds of customers and is generating revenue, the founders say.  With an innovative idea and a great technical approach, along with great energy and passion, it’s going to be very exciting to watch their evolution.  I can hardly wait to see what they are doing a few months from now—it’s bound to be a great story.

Workflow Renaissance

Workflow has been an important topic in the Graphic Communications business since there has been "technology" involved. The modern definition of workflow kicked into high gear as desktop publishing came into commercial use.  Then it really became essential when Print Service Providers (PSPs) adopted Computer to Plate (CTP) in the late 1990s. 

So it's kind of fascinating that today, there is a workflow renaissance going on.  It's really interesting because it's primarily driven by print service provider needs that focus on making vendor equipment more efficient.  These demands have always been present, but because they didn't gate the hardware sale for the press maker, nor did satisfying them differentiate a particular vendor company from its competition, they were not top of mind for anyone. 

That has changed, for a number of reasons.  

First, Web-To-Print is maturing, and many more PSPs need super efficient workflows to handle the high volume of extremely short run work. Second, presses are bigger and faster, as well as more expensive.  So PSPs ramp up sales efforts to increase equipment utilization, to pay the press bills.  To make money, labor expenses (and as a result, craft), must be kept at a minimum and workflow software is the only answer.

The demands from PSPs are frankly greater than what most vendors are delivering. With some great exceptions, many of the workflow solutions in the market today can be considered "legacy software".
Two of the brightest exceptions today are HP SmartStream Production Center, and Enfocus' Switch line of products, which we aren't going to go into in detail here, but may in a future post.

Instead, for the moment, let's think about some of the things vendors need to address to take workflow to the next level, and satisfy the emerging requirements of PSPs for the next few years. I'm probably going to write some discrete posts on some of these topics in the future, too.

- Sell software standalone vs. bundling with hardware. 

- Make workflow software work well with other people's equipment, including competitor equipment.

- Package and describe workflow software in bite size pieces that directly address the MOST IMPORTANT customer/users needs directly. 

- Make the existing software modern with user interface enhancements.  Software that runs on Windows will soon benefit from the "Metro" interface.  Some of the interfaces of industry software just look horrible, and users have become accustomed to new, beautiful web interfaces they use in their life outside of work.

- Make workflow a sexy part of the print production story, with giant screens, visualization and data elements, ala Landa and HP Production Center.  

- One of the coolest things about the Landa launch was the Tablet device from which the operator could control 3 presses

- Appropriate parts of Workflow software should run in browsers, and even smartphones. Handheld devices are incredibly valuable for managing a large and busy production floor.  They are good for a small and busy production floor, too.

- Touchscreens everywhere appropriate. Command line interfaces are still important for the tech nerds, though. 

- Rule based automation should be defined either graphically, or by writing code, depending on how complex the rules, and how sophisticated the user.

- Run the workflow software in the Cloud, delivering it as a set of services at tiered monthly subscription fees. If Adobe can do it with Creative Suite, it can be done with workflow software, too.

- Larger customers today are far less concerned about whether something runs on a particular piece of hardware.  Smaller customers would also likely gravitate toward the subscription model. 

- Create better and more integration with MIS and Web-To-Print systems.

- Create better ways for customers to solve each other's problems and let customers enhance the software, ala Enfocus Crossroads-World community website. 

- Add "cross-media" or marketing services stuff, where it directly benefits the PSP strategy to drive pages and profits.

- Help PSPs show how print complements email--  which for a younger audience with money to spend today is important (i.e., not how email or "cross media" complements print-- that's a message from yesterday.)

- Increasingly, the assets customers use to create printed materials are stored in the cloud.  Workflow systems need to be able to reach into those systems (via APIs), and consume the assets to make print jobs.

In summary, we're talking about a whole new generation of print production workflow.  It takes into account the new environment PSPs are operating in. It makes it so employees (especially those new to the industry) will want to become or stay involved in print production.  It makes the company profitable, efficient and competitive. It remains to be seen whether this will be delivered by the existing vendors, or by the new vendors... but one thing is certain, it will happen!

QR Codes- Why, Why, Why?

Although the printing industry (or perhaps slightly more accurately, its consultants and journalists) seems to have latched onto QR codes in a pretty dramatic way, parallels can be drawn to the initial hype of VDP PURLs (Personalized URLs) that took place in the early 2000s. If you pick piece from a printing trade journal written seven or so years ago about VDP and PURLs, you could replace the acronym “PURL” with “QR Code”, and the piece would likely still have the same meaning; tell the same story.

In overview, the goal of QR codes is to enhance the user’s (i.e., reader or consumer) seemingly dull print piece with access to new, rich media experiences that complement the print piece. The flip side is the notion that the print piece is driving customers to the rich media experience waiting for them to view, to help “close the deal”. These are both worthy goals, but have encountered some challenges along the road to adoption.

For printers who have implemented VDP, QR Codes are technically just like implementing a PURL (Personal Response URL) on a printed piece—the benefit is that the recipient doesn’t have to type it in. This should increase the likelihood that the prospect will engage and see the additional content. That additional content to be provided via the QR Code’s link is often a mobile website these days, but can take other forms, like playing a video or showing a map. Like PURLS and other VDP applications, QR Codes can be “one to many”, where the same QR Code could be scanned by thousands of prospects, and they are all taken to the same unique content, or they can be 1:1, where each user gets their own personalized QR code, that takes them to some content that is personalized just for them. Printing QR codes is easy, and can technically be done by any Print Service Provider, using inexpensive and even free software.

One of today’s QR Code applications, readily seen, is on signs and graphics. The consumer at the point of purchase, or in the aisle of a retail store, is enticed by offer text and graphics on a printed piece; or the merchant wants to make a special offer on a particular product or add-on item.

QR Codes have appeared in many different shapes and sizes of printed products in addition to signage and display graphics. These include magazines and newspapers, brochures and datasheets, and even stationery including business cards. The results are mixed because of some obvious limitations of QR Codes.

The biggest obstacle is software that can read the code, which is relatively cumbersome to obtain today. This limits the audience for the code to tech-savvy consumers. While at this writing some 88% of smartphones have cameras, apparently only about 13% have software installed to allow them to read QR Codes. This special reader software must be installed on a smart phone to scan the code, and it is not included with Google’s Android smartphone software nor on the Apple iPhone and iPad devices. Until Apple and Google include native QR Code applications that automatically work with smartphones built-in cameras, QR codes will remain a curiosity that will only be used by technical and “bleeding-edge” users.

Another problem with QR codes is their size and appearance on the printed piece. To make them easier to scan, they are general fairly large on the printed piece. Making them bigger also makes them obvious to the user, because it’s a double edge sword—they are seen, but they are ugly (a bunch of square dots inside a larger square), as well as meaningless and unfamiliar to most consumers. All while taking up print “real estate”.

So although the QR Code is being touted by consultants and pundits in the printing industry, it has not achieved enough traction or “ubiquity” to justify the amount of attention it has received. Does it make print complement mobile? It technically can, but today the consumer has to be quite motivated (presumably by an enormously valuable offer) to act. While it could be said that this may be the problem, not the technology itself—i.e., the creativity and motivation of advertisers to actually use this new mechanism in campaigns— it’s kind of a chicken and egg thing, and if advertisers really saw the value in doing this versus alternatives, perhaps we would all be scanning QR codes multiple times a day.

There are other ways to achieve the same results that QR Codes are promising. A company called DigiMarc, based in Beaverton, Oregon (www.digimarc.com) has been creating what they call Digital Watermarks for many years. Their software accomplishes the same end goal as QR Codes, but without the visible barcode-style manifestation. The August 2012 edition of Seventeen Magazine makes extensive use of the technology. Similar to QR Codes, the company’s solution requires reader software to be installed on the consumer’s smartphone to activate the rich media experience (in this case, software that is proprietary to DigiMarc), leaving that hurdle for the consumer to overcome. Seventeen Magazine’s young readership may be a good test, because it “seems” likely they would engage and want to see rich media associated with the “fun” content in the printed magazine. We will stay tuned and look forward to seeing the results.

Image recognition technology is likely to become much more powerful in smartphones as their processor speeds and memory capacity increases. This will allow the phones to recognize images, and retrieve offers based on the actual image itself, without a code. Google has been working on such technologies for several years, and is likely to make this available as an adjunct to their Ad Words offerings in the future.

Voice Recognition software in phones is only in its infancy now with technologies like Apple’s Siri, but will very likely be used for advertising applications. Instead of having to scan a poster, for example, you could simply speak particular text from the poster (i.e., keywords) to Siri, and she would retrieve an offer for you on your IOS-based smartphone. Apple is making gigantic investments in mobile advertising technology, so we can expect this to happen sooner rather than later.

This is an excerpt from the paper entitled, "Does Print Complement Mobile Computing", by Chuck Gehman and David Uyytendaele, published in the TAGA 2012 Proceedings.