Friday, May 8, 2009

Datapoint: Art Post says "Who's Afraid of the Xerox Color Cube?" . . .and the waste of human capital

To get his view from the ground, take the click . My view, from 30,000 feet, follows.
Print4Pay Hotel's "MFP Solutions Blog"
"I'm not sold yet if this will be a game changer, with print for pay pricing coming in at under .005 for black and .05 for color, I see further erosion of cost per page pricing in the mainstream office. I guess you would have to be a big user of a little bit of color to make this work for you. We'll see right!"
Will the ColorQube win? Maybe. But I can't forget the VHS v BetaMax story. BetaMax was the better box. It lost. SONY continues to make awesome products, but they continue having a tough time. Like Microsoft they have product DNA. Product DNA is slow to get the signal that the margin producing value is in the network, not the product.

In any case it's pretty clear that the margins are going to be squeezed, again. The challenge for all the globals and the independents is how to wrap the boxes and clicks into a new value that has minimal marginal cost and maximum marginal value.

In a value chain economy the way to embed value was by putting the logo on the box. Enough people gladly paid a premium for a Xerox box or a Canon box or xyz box. The value was created by advertising and marketing. In large organizations the value presented as "Nobody ever got fired for hiring IBM." But as the folks at IBM could probably tell you that advantage is eroding every day. Credibility and thus the trust that is worth the higher margins is now earned by what a company does every day.

In a user network economy it's even harder. The critical point for a buyer is now the expectation of seamless improvement going forward. That's one of the secrets of Google, Apple and Amazon. And one of the problems of Microsoft.

Google makes continuous seamless improvements to all their products. For Google the difference between beta and ready to scale is a continuum, not a single point. Amazon has released three upgrades of the Kindle since it was first released last Christmas. Apple has released iTunes, iPod, nano iPod, iPhone 1, iPhone 2 and if rumors turn out to be true, soon we will see an iPhone that is really a tablet computer.

What stays the same is the network. The value of buying a box is the entry into a network.

Seamless improvement is made possible in a network. The expectation of constant seamless improvement is the value that customers will pay for. The new opportunity is that in a network the marginal cost of seamless improvement is very low. Low marginal costs make healthy margins possible.

The old rules were you are only as good as the last thing you did. The new rule is you are only as good as what you are going to do next.

Higher margins come from human capital. "Morale" is the metric.
Mr.Akira Ishida, Chairman of Screen in the company's mission statement has it just right.
"It is our desire to contribute to the development of society with a view to the coming era of ubiquitous connectivity."
"Contributing to the development of society" is a good reason to do your job.

Good reasons to do your job is called "morale" in the military, educational enterprises or globals. It is called "taking care of your people" in small business. It is called "passion" in micro business and every creative part of any business. In the our last election, it was called "Hope we can believe in." On Wall Street, it's called "confidence." But whatever you call it, it's the secret sauce that creates wealth in a networked society.

The irony is that the unanticipated consequences of reducing headcounts to lower costs is the destruction of the morale that enhances shareholder's value. Those that figure it out will win. Those that don't will lose.

EPI Companies just closed the doors after 40 years in business. Anderson Litho just closed. They were winning until they started to dismantle their human capital in the service of ROI and paying off debt. Check out the May 7th comments at the EPI Closes It Doors or Cenveo Closes Anderson Litho to get the signal from the ground. A thanks to PrintCEO for enabling these conversations.

My bet is that the same conversation is going on in most departments of most globals, colleges, high schools, newspapers, publishers and auto companies.

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