Friday, April 10, 2009

PSPs, CRDs. Google and PBWIki are OPMs. MPSs, PSDs, Staples, Creatives and Prosumers are VARs

An OPM is an original product manufacturer. A VAR is a value add reseller. VARs are "market solution providers" or "solution providers" are any of the words that really mean VARs. Google's product is an amazing way to advertise. PBWiki's product is an amazing way to collaborate.

The reason that most printers are not going to be VARs is that it is not in their DNA. And that's a good thing. Product manufacturers are a combination of engineers, inventors, and craftsman-mechanics. They usually are happiest when things are moving nicely along, product is walking out the back door, and they are making a sustainable profit. They live in production space-time.

VAR's are always searching for the new opportunities. They take the best, leave the rest and mash things up to satisfy a client and want to move on to the next problem to solve. They live in business space-time.

For an OPM the last thing they want is the Next Big Thing. Managing the thing they already have is quite hard enough, thank you. Truly lean manufacturing with the minimum of drama is what they want. VAR's, on the other hand, love drama. Drama means a problem to be solved. If they solve the problem and make the customer happy, they are happy. If they make some money at the same time that's even better.

OPMs hate to sell. That's why printers don't like marketing. They don't trust marketing. They trust making stuff and getting paid for stuff. The best salespeople are in conflict with "the plant." Sometimes the conflict breaks out into a war, with mistrust and lots of useless posturing on both sides.

Trade printers live their DNA. They are OPM only. OPMs are only interested in service that increases the efficiency of manufacturing. Taylor Industries have the DNA of single purpose OPMs. Motherall Printing has single focus DNA.

Single purpose OPMs do well by dealing with "professionals." The reality is that many of those "professionals" are not really pros. They are merely untrained independent VARs. Now that purchasing print is easier and easier, the new market of VARs - mSB, designers, civilians - are now their own VARs. Trade printers like Vista have aggregated alot of that market as of today. Maybe MarketSplash, tomorrow.

The OPM thinks VARs are just blablabla. The VARs think the OPMs are backward looking and boring. In the previous ecology, they were both right. But when the VAR is a BPO, you have teams of pros working with other teams of pros. Inefficiency is driven out of the system. As MPS morphs into BPO and as PSD morphs into Staples, more inefficiency will be eliminated from the network. The survivors will make money and save money at the same time.

VARs create new value. OEMs help OPMs to capture the value created
VARs select the best and make it easy for a customer to make a choice. That's why Staples, Costco, my corner bodega and retail in general are VARs. It doesn't matter if the VAR is web based like Vista or MarketSplash or space based like AlphaGraphics, or person based like Adobe VARs or Google Apps resellers. They are all still VARs.

Designers, for example, select the most appropriate from the history of design, the latest buzz, the emergent memes, and the world of words and pictures to mash together just the right visual/word combination in just the right form - print/web/video - to solve the signal v noise problem. Designers like to solve communication problems. That's why they are VARs. OPMs like to solve production problems. That's why they are manufacturers.

Can't change DNA, but it can be recombined with better connections
What is overlooked is that DNA determines what you see. What you see determines what you think. That's just the way it is. No amount of marketing budget is going to change it. The real opportunity is to create teams with complimentary DNAs. That's actually how it works in biology. People follow the rules of biology.

Often teams exist in the same "organization." Most often not.

"Organization" is in quotes because this is a word that describes a world that evolved with asymmetric information. As that world is now disappearing, "organization" has to be understood for what it really is. An organization is just a set of legal contracts. You work X, you get Y. Organization was mistaken for a "thing" when information was trapped within those legal contracts.

Now that information is becoming free it's easier to see that an organization is an ever changing set of relationships between OEMs, OPMs and VARs. The internal implied legal contracts are being replaced with explicit legal contracts between well defined entities. Commissions are sometimes replaced by affiliate fees.

It's why for many OPMs the smartest thing they could do is to free their salesforces from their payroll. Make sure they have healthcare and some way to secure their pensions, and they will be very happy to negotiate a new deal. Help them organize into semi or completely independent teams of VARs. Each team needs a CSR, a biz dev person and a hunter. Each team needs clear standard ways of communicating with the OPMs.

It's why independent MPS, PSDs, printing brokers and creatives are the catalyst for crystallizing a network of OPMs and other VARs. It is only VARs that bring new money into the system. Everything else is a cost center.

With great power, comes great responsibility
An "organization" is just a collection of teams. Each team is a group of people. Some of the teams work well. Many of the teams are limited by the cultures of power and hiding information. The inability of teams to communicate is the source of big organizations inability to respond quickly enough to stay viable. This is described as "silos." The relationships between teams is determined by power. The power in a Public Corporation is the Board of Directors representing the stockholders. In a private corporation, the power is the boss representing the investors.

AIG had a small team in the UK. They were doing great within the rules of their own team. Any well functioning team will usually do great following their own rules. They were doing their jobs. The Board of Directors job is to make sure the CEO is keeping all the teams communicating. For AIG, the Board of Directors did not do their job.

Same story with GM. Firing the Board of Directors to protect government loans is just the tip of the iceberg. Next will come the financials. Sooner or later the institutional stockholders will start doing their jobs to protect their investors money. When that happens Boards of Directors will probably start doing their jobs. The CEO will do their jobs. The ever flowing networks of connections of teams will play nicely together.

Or the public company will be purchased by someone else. They will find a Board of Directors that stays focused on their jobs. Or someone else will buy them. It will keep going until the right Board of Directors is in place.

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