Dickeson--Here There Be Dragons

Is there such a thing as "The Printing Business Model?" Not really, because printing—putting ink on paper—is too diverse to be defined by a single business "model." The business model that fits a plant with five heatset web offset and three gravure web presses certainly can't be used to characterize the DocuTech operations at Office Max/Depot or Staples.

"Obviously," you chuckle. "Can't compare them to each other." Yet we call them both "printing," don't we? Both are members of the 40,000 business entities that comprise the "Printing Industry" for census classification. What's the problem?

Between those extreme models of web printing and document copying lies a whole range of differences in focus and concentration on productivity and liquidity management. Both represent duplicating information onto paper. But that's as far as business similarity goes, isn't it?

Each of the 40,000 entities has a set of marketing, materials and labor patterns that comprise the culture, paradigms, set of habits and beliefs of the enterprise. It's the "way we do things here" for each company. "The way we do things here" and "The way we think about things here" is the individualized business model. And "Here Be Dragons," as ancient cartographers labeled the unknown areas on maps.

When we venture to modify the model or "shift the paradigms" we run smack into deadly problems. Let me illustrate: Acme is a successful commercial printing business with four sheetfed presses. It has a set of entrenched work habits and thought patterns that comprise its business paradigm or model. Acme decides to enlarge its business by installing a web offset press.

"It's still just printing, isn't it?" the Acme CEO asks blithely. Wait a damn minute, Mr. CEO; for a move to web, you're talking about "disruptive technology," to use Clayton Christensen's term from "The Innovator's Dilemma." You're shifting paradigms by moving from sheets to rolls. Here be big, fire-breathing dragons! Doubt it? Just ask any CEO who's made the move.

First thing you discover is a corruption of Gresham's Law that bad money drives out good money. Selling web jobs drives out sheetfed work.

Dragon 2 is called Liquidity. Suddenly great gobs of working capital are needed for roll inventories and accounts receivable.

Then comes Dragon 3: materials waste to gobble up all the margin of profit.

Dragon 4 is a family of web production beasts you never dreamed of with sheets: tension, web breaks, stops, butt rolls, makereadies that take untold hours, cocking plate cylinders, lifting forms to meet schedules, warehouse space to inventory in-process and finished goods, customers standing by the press saying "add some blue ink."

Dragon 5 is net count with signature overruns that create major dumpster demands and an underrun that can blow out the month's breakeven point.

Dragon 6 is your marketing environment: local work becomes regional and even national. That's just for openers on the pitfalls of disruptive technologies.

As Christensen observes, probably it's best to physically separate the businesses. Sheet people find it just impossible to shift their paradigms. If you venture into disruptive technologic shift, prepare to go broke, sell out or totally separate the businesses physically and managerially. We are talking BIG DRAGONS. Just ask around.

Multiply the illustrations by a dozen. Don't attempt major model changes without considering a set of risks with which you aren't prepared to deal. Many times you just cannot shift gears. You just can't get there from here.

Look at any change in market or production process and ask some dumb questions, like "Will my critical planning or budgeting assumptions still apply? Can I use my existing job cost tracking system?" Spend days making a List of Stupid Questions. Try to distinguish disruptive from sustaining technologic change.

We know that the microprocessor age has achieved its rank in our economy alongside the combustion engine and television. We can capture and process data. Processing speeds will increase just as gas mileage must increase. Sustaining computer technologies will do this.

The disruptive technologic impact has now shifted to bandwidth and storewidth—from the microcosm to the telecosm as George Gilder puts it in his reports. With bandwidth (transmission speed) increases on fiber optics, the entire contents of the Library of Congress can now be sent from Washington to Peoria in the blink of an eye—or less, if it were digitally stored and available at that Library and if Peoria had a digital storage receptacle to hold it on receipt. And that's the province of storewidth, the measure of digits that can be stored in a given size on a disk or cube.

Staggering increases are being made in storewidth, with more to come. This explains the bottomless demand for content that drives megamergers and the ridiculous and non-existent price/earnings ratios of the stock market for content providers.

Disruptive and sustaining technologic changes are now a constant in our business and production spectrum. We can't duck the issues, can't stop the world to get off. Who wants to anyway? Experience has taught us that the rising tide does lift the printing boat as well as the economy in general. Peter Drucker observes that printing—ink on paper—is in a great resurgence of books, magazines and catalogs. What happened to the paperless society once predicted? The opposite occurred! Face it. We cannot reliably forecast.

All you can do as managers and owners of ink-on-paper businesses is get as liquid as you can, just as fast as you can. Be ready financially. If you cannot shift your business paradigms to accommodate a new technology, then don't. Start over with a new business without a fatal legacy of "the way things are done here." Yes, dear colleagues, we're heading into uncharted seas. Here be dragons.

—Roger V. Dickeson

About the Author
Roger Dickeson is a printing productivity consultant based in Tucson, AZ. He can be reached by e-mail at Roger@prem-associates.com, by fax (520) 903-2295, or on the Web at http://www.prem-associates.com.