Commentary: On Fighting the Market . . . and Railroads

I had some thoughts on this blog post, which Bob Sacks included in one of his daily emails on January 6, 2010.

Using the railroad and buggy analogies, magazine/book/newspaper printers manufacture the medium with which people interact with content, typically time-sensitive content whose value decreases ever-more rapidly. They missed the boat when radio and TV emerged as media by not producing those sets. Such printers occupy a scary place in the supply/value chain because print volumes for such content are shrinking – and are expected to continue shrinking – in developed economies. In the new world, the printers’ value-chain position is less needed, less valuable, more vulnerable.

To stay in this value-chain position in the new world, printers would be producing non-perishable devices, which I don’t find promising. Why this time if they never built TVs and radios? A better bet for the companies to avoid dying is to build or buy expertise elsewhere in the value chain. Otherwise they die because the world simply won’t demand the volume of time-sensitive information in print to support the current crop of them.

They’re in a tough boat with the brick-and-mortar entities where people encounter and buy/rent content. What’s the market these days for manufacturing and distributing horse whips? Classic product-lifecycle theory suggests that this value-chain position for printers is in maturity, and that current players should (1) stop/slow down investments here so the inevitable withdrawal is less painful and (2) invest in higher ROI opportunities.

So, where in the value chain should the move? I’m not sure there’s a good fit to apply their expertise or core competencies for the same customers. They might need to rationalize in magazine/book/newspaper in developed economies, while focusing on other segments and/or developing economies. Or these printers could diversity away from printing, though this is also immensely risky. But like David Dodd says, “the riskier approach is doing nothing.”


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