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?

Vistaprint

Recently, a partner company we are working with at SR tried to compare us to Vistaprint in a slide deck talking about an upcoming project.  They got the comparison completely wrong. In fact, there is no comparison to made between our two companies, whatsoever. When I worked at Mimeo, people were always trying to compare us to VistaPrint, too-- also two companies that could not be more different.  The only thing the three of us have in common is that we do manufacture print, and we all do business via the Internet.  It's like comparing Yahoo, Google and AOL... there are certainly dummies out there who think those three companies are roughly the same.  But those who are students of the Internet know they could not be less similar.

I am a big fan of what Vistaprint has done. Even without the aforementioned ignorant comparisons, this is a company that is really misunderstood inside and outside the industry.  Here is an answer I just wrote for Quora. Since many of my friends and colleagues don't "do Quora" (yet), I thought I'd push it over here as well. It's about one of the differentiating factors that Vistaprint possesses.  Though actually, both SR and Mimeo have great power in this area, albeit serving different markets and using different techniques and technologies.

Is there anything unique about Vistaprint's actual printing process that enables it to print more efficiently than others?

There are several things that make them unique.  

The printed products they produce are constrained in shape, size, material and graphic layout.  They offer these discrete products only via the web.  Most printers, in contrast, attempt to print virtually any shape and size. 

The reason they can do this, unlike other printers is because they have a laser-like focus on their target market.  They test when they add new products, and they know people will buy them. So they can invest in the automation to produce those products.

Their equipment is deployed and used in a standardized way across their manufacturing footprint, and they've automated processes to the point where all the "manual" tasks are cleverly prescribed and performed by the minimum number of humans. For example, when producing business cards, the person who loads paper onto the press is also the person pulls the trigger on the imaging of the next set of printing plates for the press.

The automation results in few touches.  They run multiple customers jobs together, and then cut and sort them, and send them down conveyor belts to a logistics area where they will await other order items, or simply address them and send them to the trucks waiting to send them on their way to the customer. Practically no one in the printing industry has this level of automation across jobs.  Only elite printing companies have this kind of automation for single jobs, for single customers.

They also have some patents.

So, in summary, the answer is a resounding yes.