The Blueprint

Will Printing Decrease?

Many in the industry are wondering if printing will decrease over the long-term.  I think most believe they know the answer.  I came from the manufacturing industry where we sold software that facilitated a decrease in centralized printing.  We sold document distribution software that was in many ways similar to planroom software.  We allowed end users (or document consumers) in the manufacturing plant to get web browser access to engineering content.  Once they had access to this information they could view it online, order prints from the central printroom or download and print it.  Once our software was installed the traditional processes of ordering prints from the printroom and "pushing" physical engineering drawings to the document consumers decreased substantially almost immediately. This caused a dramatic drop in the amount of printing being done in the central printroom.  So the printing decreased?  Not exactly.

Once the document consumers had more efficient access to the content they were more likely to print it.  There were times when a document consumer just needed to look up a dimension.  In this case they didn't print the drawings.  If they needed the document to do work they printed it.  In fact they printed it, used it, and threw it away.  If they needed the same document the next day they printed it again.  We didn't collect exact statistics on whether the net printing decreased or increased, but there were some undeniable facts:

• Centralized printing decreased dramatically
• Printing on demand increased dramatically (it was non-existent before)

The same trend is happening in the construction market right this minute.  Are you positioned on the right side of this shift?

Don't Be a Shrinking Violet

"You’ll find today is the best chance you have to start being unreasonable, to demand excellence, to drive change, to make everything happen." - Eric Schmidt, CEO Google

What Everybody Ought to Know About Market Segmenting

In a previous post I talked about the difference between fidelity services and convenience services.  In the AEC reprographics industry this is mostly divided between design (A/E), and construction (C).

A/E = Fidelity

C = Convenience

For the industry to be successful it is important that the services provided to these two different market segments be differentiated.  They should be differentiated by service, quality and price.  Here are a couple of comments I have heard within the industry over the past few years.

"We don't sell to contractors because they are too cheap."

"I was forced to lower the price with my largest revenue customer [Architect], because he found the price I was charging to another customer [GC]."

"My customer would never accept the quality from that brand printer because they have high standards.  I don't understand how the other guy gets away with it."

"We are losing bids because we just won't lower our price to the ridiculous prices that are being thrown around."

"I can't service the GC's at the cost structure I have in place."

"Those guys don't understand the value we provide."

"I just bought a shop in another city and they were selling the services for too low of a price so we went in and raised the prices to what they should be."

"I can't believe the other guy won a bid at that price.  How can he do work at that price?"

When you take a step back and say what are the market requirements of each of these market segments and are you matching our services and price to those markets?  

Quality - Architects and engineers typically demand high fidelity.  The documents produced represent their work.  They want it to look as professional as possible.  Contractors don't care about the quality.  They just need to be able to read the dimensions and understand what is expected of them.  To satisfy architects you should be producing documents on the highest fidelity 600DPI printers(at least).  To satisfy contractors you could use a lower quality 400DPI printer.

Service - Most companies who service architects and engineers spend a lot of time going back and forth with their customers making sure that all of the required files are present; making sure the right revisions are in place; and sometimes providing proofs to make sure the quality is acceptable.  Contractors usually require you to simply print the documents that they gave you.  There is very little back and forth and double checking.

Price - An architect or engineer is willing to pay more to make sure that their work product is represented correctly.  Since it is their name on the documents they do care about the attention to detail and service that is provided.  They are buying fidelity.  They want a "triple shot, extra hot, no foam, caramel macchiato."  The fact that they are often not spending their own money is also a factor.  Contractors are looking for convenience.  They want the drawings printed quickly and cost effectively.  They are generally not willing to pay extra for the attention to detail, at least as it pertains to quality.  There is value in the content management and revision control, but that service needs to be separated from the printing as they see printing as a necessary evil.  They just want a cup of coffee and they can't understand why anyone would pay four bucks for a cup of coffee!

Those who understand that they are not providing simply printing to the AEC industry, but meeting the unique requirements of specific market segments can find hidden profits.  Those who cannot differentiate between these market segments will be either overpricing their services and loosing business, or underpricing their services and losing money.  Either one means decreased profits.  In some cases you should be lowering your prices and in other cases you should be raising your prices, but you must also describe in detail what the differentiated services are for that price (i.e. resolution/DPI, quality control, turnaround time, etc.).  There are many details to be worked out and expectations to be set or reset with customers.  You also must have the internal process to make sure you can execute.  Sure some say "it won't work in our market".   What's the alternative?

Are You in the Right Place at the Right Time?

I just read the book Outliers, by Malcolm Gladwell.  It is a fascinating book.  The book is about how the supper successful achieved their success.  One theme in the book is that many of these people happened to be in the right place at the right time.  For example some of the most successful people in Silicon Valley - Bill Gates, Bill Joy, Vinod Khosla, Scott McNeally, and Steve Jobs were all born in 1955 or late 1954.  He shows how their age among other things created the perfect opportunity for these men.

Gladwell also talks about how Joseph Flom, of Skadden Arps Slate Meagher and Flom, led his firm to become one of the largest law firms in the world.  He describes how Flom and his partners were doing corporate lawsuits and hostile takeovers before it was popular.  When they started their firm it was seen as uncivilized to take on this type of work and unworthy of the premier law firms.  As the market changed and corporate battles became commonplace Flom's firm was well positioned.  They had developed a deep understanding of the process and unique skills.

As he told this story I couldn't help but think of the reprographics industry.  The reason I bought PLP was not because I saw a unique opportunity in large format printing, but rather I saw a market segment that was uniquely positioned for a much larger opportunity.  I come from the manufacturing industry where document control processes have reached maturity.  The construction industry is generally following the same path that as manufacturing companies - it is just many years behind.  Another difference is manufacturing companies set up processes and procure technology that last for years or decades.  They also purchase and deploy their own technology.  The construction industry is different in that most initiatives tend to be project based, and because of this technology needs to be deployed on a per project basis.  This also favors a pay-per-use or rental model rather than a purchase model.   Construction is also requires these services to deployed on a local basis.

As technology becomes more commonplace in the construction industry and technology in general becomes easier to deploy, the opportunity to provide local pay-per-use technology services will grow.  Pressure to reduce costs, compress timelines, and reduce errors demands more sophisticated document distribution processes.  Many of these services will require a local presence.

Another theme of the Gladwell's book is that besides being in the right place at the right time success of "the outliers" came from hard work.  At least 10,000 hours to be exact.  So those who have been spending a lot of time and money trying to figure things out - It's part of the journey. [An entrepreneur friend of mine just referred to this as "paying tuition"] 

Napster is to iTunes as FTP Sites are to Digital Services

Before there was iTunes there was Napster.  Napster was hugely disruptive to traditional music distribution model.  People getting  away music for free!  Even respectable law abiding citizens were downloading illegal music for free.  It wasn't just because the music was free.  It was convenient.  It was easy to search for the music you liked and get the instant gratification of a download.  At the time Napster came about the next best thing was going to the store and buying a CD.  What if I only wanted one song?  What if I wanted it now?  The cost of distribution was too high to get the song.  The old model was out of date and inefficient. 

Steve Jobs and Apple introduced the iPod and iTunes.  He offered the same convenience for a reasonable price - $0.99 a song.  For that price the law abiding citizens would rather pay $0.99 and be legitimate.  Would Apple have been a successful if they came out with iPod and iTunes before the Napster revolution?  Maybe, but it would have been a lot harder.  Napster created pent up demand.

Many people in the reprographics industry complain about the hidden enemy "FTP Sites and CD-ROM distribution".  Maybe some of your customers didn't find the cost of the convenience of your service desirable so they decided to invest in their own technology.  Now that they have tried to do it themselves are they more or less interested in digital services.  I would argue that many would not go back to the inconvenience of analog distribution, but are disillusioned with the headaches with performing and maintaining digital content distribution services.  To sell your digital services you can't lead with "why printing is better".  You may overtly or covertly get the door shut in your face.  You should lead with how you can perform the services more efficiently and more cost effectively than they can.  There is one important point.  The pricing will have to appetizing.  It has to fit the same buying mode as iTunes.  For example "for $0.99 a song I'm willing to NOT use Napster".  You customer will have to say "based on that proposal we are willing to NOT create CD-ROM's and hosting an FTP site".