Commentary & Analysis
Ten Laws of the Modern World – as applied to the Print World
For those of us with a technical background,
By WhatTheyThink Staff
Published: August 18, 2005
For those of us with a technical background, and even some that aren’t, we always hear about specific “laws” that relate to technology or to business. Moore’s Law, further described below, is widely recognized, if not understood by almost everybody on the planet. Others are equally “informative,” although you may not have heard of them all. We began to wonder if we could look at some of these relatively well known laws and apply them to the digital print world, perhaps with a bit of humor. The following “laws”, or “conventional wisdom” that they suggest, should ring a bell with you:
- Moore’s Law
- The Corollary to Moore’s Law
- Metcalfe’s Law
- Andy & Bill’s Law
- Gilder’s Law
- Ricardo’s Law
- Drucker’s Law
- Ogilvy’s Law
- Wriston’s Law
- The Peter Principle
1. Moore’s Law: Most everybody has heard of Moore’s law. It is named after Gordon Moore, a co-founder of Intel who made this famous pronouncement about 40 years ago. He said that the number of components on silicon chips was doubling every year. In 1975, in a famous amendment, one that has been better remembered, he stretched this to two years. In current jargon, Moore’s law is taken to predict that all kinds of digital products from cell phones, to PC’s to iPod’s will get twice as “good” every two years. We also typically see that PC processor speeds will double every two years. But, it is also important to note that the things that interest us the most, digital printers also follow this same path. The higher priced, higher performance printers are getting faster and faster at roughly the same price points. As in all exponential expansion projections, a finite limit is seldom referenced. The obvious limit on print production speed, however, is the rate at which people buy printed material. Sadly, this is declining. Like the Concorde which would fly across the Atlantic at a speed no one really needed, is print speed the most important factor?
2. The Corollary to Moore’s Law: Another well known application of Moore’s Law relates to digital devices becoming 30% to 40% cheaper every year at the same level of performance. In the large format world, for example, newer printers are entering the market at reduced price points. Where flatbed printers were once available only for about $500,000, faster ones are now available from multiple sources for under $300,000, but slower (only by today’s standards) printers are now available under $100,000. Who ever thought you could buy a desktop ink jet printer for $50 with ink cartridges? Some suggest we can now buy a new printer every time we need new cartridges for less money. We wonder where the economics is in that marketing decision?
3. Metcalfe’s Law: Robert Metcalfe was the inventor of the Ethernet computer networking protocol. He suggested that the usefulness of a network was improved by the square of the number of nodes on the network. The Internet has become more valuable as more people began to use it. We are all familiar with the exponential growth of e-bay as a world wide marketing tool. In digital print, it seems that the more people that use digital print, the wider the acceptance and the higher the growth rate of new users. Since so few younger people read paper, we wonder if this trend can possibly continue?
4. Andy & Bill’s Law: This Law comes from aspeaker’s comment at a computer conference about 15 years ago. The message was that “what Andy giveth, Bill takes away.” Bill, of course, is Bill Gates, Microsoft’s founder and Andy Grove was the founder of Intel. The implication here was that whenever chips introduced more speed or power, Microsoft (software) improvements would use up the improvements in power. In the printing world, this is like the use of RIPs. As the processing power to RIP pages to print increases, so do the things we ask the RIP to perform. For example, we are now asking RIPS to handle large format printer “pages” that might be six feet wide by 200 feet long, and may comprise multiple rotated images to maximize print coverage and we still want this done faster than you can blink. Is there any limit to size? If they can print it, we will need it, seems to be the new rule.
5. Gilder’s Law: Gilder was a futurist whose contribution suggested that the best business models “waste the era’s cheapest resources in order to conserve the era’s most expensive resources.” In this era, the cheapest resources might be considered computer power and bandwidth. The most expensive resources might be people. In the real world, companies like e-bay use hundreds of computers to make it easier for people to find whatever they need, wherever it may be located in the world, in no time at all. In print, we have managed to get much of the production costs out of the print process, but the emphasis is now on workflow, to achieve further people time savings, and to increase efficiency. A logical application of Gilder's Law would indicate that as print production remains flat or declines and technology continues to "conserve" people, employment in the printing industry will decline even faster than productivity increases.
6. Ricardo’s Law: David Ricardo wrote in the 19 th Century that “the more transparent an economy becomes the more import comparative advantage really becomes.” In today’s world, this is part technology related and part business related as the internet levels the playing field and lets small companies compete against large. Within this giant window, if a firm’s value to price proposition doesn’t make sense, the whole world will know. In the print market, this is perhaps a major reason for premature price erosion to technology products, such as platesetters. Printers could see the technology, knew that there was very little production difference between the products, and could receive the prices and promises through the Web. That made it easy to start buying on price when the value proposition was otherwise just the same. As another example, one major digital printer manufacturer laments that he can only sell consumables for a while before the customer understands that he can buy it for less elsewhere and it will work just as well. So let’s see, we give away the printer for the cost of the cartridges, so the customer can then buy cartridges cheaper from somebody else?
Turning now to the pure business laws, we see:
7. Drucker’s Law: Peter Drucker is known as a great management Guru. His Law suggested that you should stop using the internally focused word “achievement” usually representing “things,” and to replace it with “contribution.” His thesis was that contribution was more outwardly focused and put the emphasis on customers, employees and shareholders, in that order. In the printing world, the companies with good customer service and happy customers seem to flourish, while those who seem more interested in getting paid for their help, always come off as wrongly focused, making more money from the customer, but losing orders in the intermediate term. We have all seen the difference in results from these two kinds of companies. A typical refrain from the wrongly focused ones was "Remember how well the product worked before the damn customers got hold of it!"
8. Ogilvy’s Law: David Ogilvy, founder of Ogilvy & Mather, the famous Advertising firm, is considered by some to be the greatest advertising genius of the last century. Ogilvy’s thesis was that each manager needed to hire people who were smarter than he was in their specialty. He wrote that whenever somebody was appointed into the home office, he would give the manager a Russian nesting doll. You have certainly seen these dolls, where you open up the outer doll and have a smaller one inside. This typically continues until the dolls can get no smaller. Ogilvy used to include a note which read: “if each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.” Companies who behave in the hub and spoke method of management, one boss and the rest implementers, force all decisions through one person. Distributed management allows a company to execute a vision and grow significantly. We have seen printer and RIP companies come and go as top centered management was no longer able to make everything happen. But, some of those companies do seem to last longer than we’d think.
9. Wriston’s Law: The late Walter Wriston was well known in the banking and finance world. About 10 years ago, he wrote about/predicted the rise of electronic networks and surmised that their effect would be to free capital (meaning both money and resources) to “go where it is wanted, stay where it is well treated, …” We can see the impact on our business whereby competition now comes from around the world, both in terms of producers of the technology and in the users of it. The largest growth is now in India and China. Very few manufacturers of printing related equipment are here in North America and many of our print jobs that are not time sensitive are moving to China. The good news, however, is that we are learning how to make short run print more useful and important. This is hard to export, and digital print remains a growing business area. We guess we’ll know that China has matured when they complain about only being left with digital print and all the offset work has been outsourced to, perhaps, Africa, or, if wages continue to decline here, to the USA!!
10. The Peter Principle: Wasthere a Peter?Anyway, we’ve all been led to believe that the Peter Principle related to our bosses who got promoted to the point that they no longer had the proper skills to contribute. Now, we’re learning that this principal may apply as much or more to products than to people. For example, does anybody know how to use all of Microsoft Word any more? There are so many features on MS Word that their utility begins to decrease. Few need them and new users may find it harder to start to learn. MS Word is equivalent to today's typewriter. Imagine typewriters on every desk, which the users barely know how to operate! Digital Cameras, the most ubiquitous new input device in our industry, and which most of us only began using in the last couple of years, are already outpacing usefulness with their features – voice memos, USB and Video outputs, multiple print modes, etc. We know that imaging power is moving back to the "originators", i.e. us, but have you tried to print the pictures you took on vacation, by bringing up each one on the terminal at your local drug store, adjusting color and brightness, cropping, and selecting a size for each one individually before having them submitted for one hour printing?