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VISIONS & TRANSMISSIONS Printing – an industry in transition Jan-Olof Jungersten Written by and told to Jonas Löfvendahl


VISIONS AND

TRANSMISSIONS Printing – an industry in transition

Jan-Olof Jungersten Written by and told to Jonas Löfvendahl


Text: Jan-Olof Jungersten Text editing: Jonas Löfvendahl Design: Charlotta Rosell Printed on an HP Indigo Digital Press The cover is processed with Scodix Sense Binding: Göteborgstryckeriet The paper is supplied by Papyrus (cover:MultiArt Silk, pleading:MultiDesign Smooth) © Visutech Digital AB, 2014


1. Content

1. Content....................................................................................................................... 5 PROLOGUE 2. The not book.............................................................................................................. 6 25 YEARS OF THE GRAPHIC INDUSTRY 3. Visutech: The fourth transmission – how it all started ............................................ 9 THE GRAPHIC INDUSTRY TODAY – THE PRESENT 4. A falling market and immense overcapacity.......................................................... 21 5. Comfort zone and print-press-huggers................................................................. 23 6. An industry of generations...................................................................................... 27 7. Our challenge is spelled FUD – Fear Uncertainty Doubt..................................... 31 8. The current state is miserable................................................................................. 33 THE MEGATRENDS OF TODAY 9. The environment - more important than technology and always on the agenda.....35 10. Marketing communications through print on paper – one of many options.... 39 11. Newspapers, books and magazines – where are they heading?....................... 45 12. Photo – mega market underway........................................................................... 51 13. China produces to China – the trend is “homebound”..................................... 55 MODELS AND EXTERNAL FACTORS 14. Transmissions.......................................................................................................... 57 15. Economic cycles..................................................................................................... 61 16. ICDT........................................................................................................................ 65 17. External factors....................................................................................................... 69 18. The next society – the biological one.................................................................. 73 19. The slow-moving man........................................................................................... 79 THE GRAPHIC INDUSTRY OF THE FUTURE 20. Push/pull marketing.........................................................................................................83 21. What to do? Wider range and go digital!....................................................................87 22. The strongest brand wins................................................................................................91 23. Provide more than information – provide experiences...............................................93 24. Outside the box – rosh gadol.........................................................................................97 UPCOMING MEGATRENDS 25. Education.............................................................................................................. 101 26. Digital packaging................................................................................................. 103 27. Intelligent packaging........................................................................................... 107 28. Smartphones........................................................................................................ 110 29. Future printing...................................................................................................... 112 ONE FINAL NOTE 30. A bright future in sight......................................................................................... 115 EPILOGUE 31. Thank you............................................................................................................. 118

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PROLOGUE

2.

The not book regarding the graphic market in the Nordic country’s ••• The graphic industry is in crisis. It’s an industry that stumbles and falls. But it will come back, maybe in a new arena – definitely with new strength. ••• Today, commercial graphic industry has a murderous, six fold overcapacity compared to market demand. It is the buyer’s market. Volumes dropping fast, nearly 20 percent annually, the industry halved every five years. ••• The average profit within the commercial graphic industry is between zero and nothing. The number of commercial printers in the Nordic countries has fallen from 15 000 to today’s 1 500 and continues to decline, continues to consolidate. ••• Amidst all this, the graphic industry has enormous potential and a great demand to fill. The need from brand owners of more and effective communication that is flexible and measurable will create a new, profitable printing industry. ••• The industry now transforms from printing companies to providers of communication, both in physical form and linked to electronic services. We see a move from craftsmanship to a logistical process for efficient and flexible marketing communications surrounding the customer and their products and services. Value by overall solution. ••• The first step is of course to go digital. A shift in technology that makes it possible to give customers what they want, at the right cost and quality, in right time and in the right amount. There is

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2. The not book

a digital light in the dark tunnel that leads to profitability. Due to numerous events in previous recessions, it is only now that the industry finally transforms into digital mode. ••• Transmissions are created in recessions – and only in recessions. This transmission takes our graphic industry through its baptism of fire to the break of a new dawn. The difference now is that external factors as megatrends, and structural displacements, have completely changed the up-to-date need of the market ••• To be counted as a transmission, there must be a sufficient amount of losers – then the door will open up on the other side for new winners. The possibilities are major in industries where new technology enables a demand for new needs, while the craving for the old and existing ceases ••• In the following chapters, I have gathered thoughts about what has been and what is bound to happen within our graphic industry. But perhaps most importantly what will not (NOT!) happen – and why. Several factors will appear along the way to disturb the logic of business. The market moves quickly and we need further knowledge to keep up with the curiosity and desire of the consumer. ••• We must be updated on new values that make the marketing of our customers’ products superior, values that give them the edge. We must be prepared for the next golden market of the graphic industry – packaging. We need to know everything about why the industry is heading back from China and what it´ll mean for our customers in the Nordic. We must have a continued strong focus on the environment. We must have ICDT (Information, Communication, Distribution, Transaction) as a mantra for every new product-launch and marketing plan. We have to be able to survey and deliver results; what cannot be measured, does not exist. ••• Maybe the Swedish man from Småland, the ”Smålander”, was spot-on all along? He who invested a dime, made two, and thrived on the percentage. ••• Today, we know HP Indigo is the best digital offset press on the market. But it also requires the right surrounding. Compare with a glass of delicious champagne, served lukewarm in a plastic glass on a smelly toilet. Things could be better, right? Now, have the same champagne well chilled in a beautiful crystal glass in the pleasant company of positive and good friends. The difference is huge! ••• Visutech is trying to communicate a whole, an entire package. Don´t forget that the journey is often the case, tag along for the ride!

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25 YEARS OF THE GRAPHIC INDUSTRY

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3.

Visutech: The fourth transmission – how it all started I´m driven by a passion for transmissions, a form of market psychology. A transmission occurs when a market goes down – only to reappear in a different place. These are shifts that force companies to adjust their structure and change their way of business. Genuine transmissions become a reality only in a recession. In the days of an economic boom we are all far too busy with reaping what we’ve already sown. That is why I love recessions, at that point in time we’re forced to think outside the box and find new paths and rewrite the map. Within the graphic industry, the key to the transmission – which is finally happening – is new digital gear. It’s the road from print to marketing communications, the highway to profitability.

VISUTECH CELEBRATES 25 YEARS I started Visutech 25 years ago together with Lars Renneby, my colleague and brother in arms, who solved every single technical enigma – no matter how impossible. A common discussion in the office back then could go something like this:

Me:

– We’ve got to have this!

Lasse:

– But it doesn´t exist.

Me:

– But there is a huge need, customers would save lots of time and money.

Lasse:

– Okay. You sell it, I´ll fix it.

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25 YEARS OF THE GRAPHIC INDUSTRY

Today, 25 years later, we got a staff of 50 employees and we´re one of the largest suppliers of digital production printing in the Nordic countries. We started out back in 1988 by pure coincidence. The idea was to start working at one of the largest software companies at the time, Pansophic from Chicago. But Frank van Meeuwen, head of the company’s European graphic division, explained to us the only solution that would actually work out was to start our own business. Thanks for the well needed shove Frank; without you this story would have been completely different.

TRANSMISSIONS THROUGH THE YEARS The graphic industry became my fourth transmission, without doubt the longest and perhaps the most complex so far. My previous transmissions: 1. The first mobile phone (25 kg), MTD, in the late ‘70s, which sparked my interest in technical refinements that really can create big changes throughout the civic structure. 2. The first ”home computers”, VIC-20 and Commodore 64, that in the early ‘80s laid the foundation for what we know today as Word and Excel. The ”home computer” replaced both typewriters and arithmometers. 3. House satellite dishes/satellite-TV, the “everyman’s dish” turned up in the mid ‘80s. It was the first dish priced below SEK 10 000 (circa USD 1 500) and marked the end of the Swedish TV-monopoly. We went from two public-service tax-funded commercial-free channels to hundreds of advert-funded, commercial and pay-tv channels from around the globe.

FOCUS ON HI-TECH The main thread through the transmissions has been focusing on hi-tech. High technology solutions usually develop first to military use and gradually become available to the civilian side, as in mobile, computer and satellite communications, and now also in marketing communications; going from analogue to digital. The technique that was used to send pictures from the moon was later used to send pictures of different places on earth and became an everyday tool. I enjoy hi-tech and complexity. I don’t want things to be too easy. ”It’s supposed to be a bit hard, it shouldn’t be too easy. If it’s easy, everyone can do it. If everyone can do it, there won’t be any money in it.” In other words – it’s supposed to be somewhat of a struggle. The time came about for the digitization of image and information – as the name Visutech: visual technology. Believe me when I say this, the need is always the foundation of what we create as solutions. The graphic industry now began its transmission from a craft process into an efficient, profitable and measurable marketing process. In my eyes, it doesn’t get more exciting.

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3. Visutech: The fourth transmission – how it all started THE RADIO OF FARMERS Electricity & Telecommunications in high school was really my only education. You have to get a job, my old man used to say. I finished school June 6, 1976 and started at Handic AB three days later, first as a technician and then at several positions in various Handic companies over the next eleven years. At that time in Sweden a new law emerged, that prevented farmers from working alone out in the fields without communication. We created an agriculture radio where farmers communicated from the tractor cab to a central. Along came the mobile phones, and I also worked with big sound facilities at stadiums like Ullevi, Aby racetrack, Mantorp Ring and numerous churches.

THE BRILLIANT SLIDE RULE Eleven years at Handic was tough love, I learned things the hard way. A big “thank you” to Leif Pineus, a master of the slide rule that was an indispensable tool to calculate prices and making budgets at the time – you couldn’t rely on the calculator. Handic AB was later to be sold by the family Gunnar Wennerström to the public owned PK Bank and soon after bought by Datatronic and the IT-pioneer Mats Gabrielsson, today a prominent venture capitalist well-known from the TVshow ”Dragons’ Den”. Mats became a sparring partner with absolute focus on entrepreneurship and management. A new level of management was coined, above top-management in Gabriel’s company, “the real management”. Right or wrong? A demanding, challenging and evolving school of business nonetheless.

A TOUGH EDUCATION The time at Handic meant full throttle. It was right at the breakthrough of the VIC20 and Commodore 64, and our software products were in heavy demand. My life was in Stockholm with Europe as my workplace. Every day, a new country with trips at night and work all day. Friday nights I went home to Gothenburg, Saturday I spent washing clothes, Sunday I went back to Stockholm, spent Monday morning in the office and then flew out. The same procedure next week and every week. As a result I worked myself towards total exhaustion.

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25 YEARS OF THE GRAPHIC INDUSTRY

To summarize, it was a rough school. But I gained an experience that I live by still: the only thing that counts is the demand of the market. You have to deliver – everything else is unthinkable. I got some important lessons in free market economy and later market psychology, which still is my greatest passion – and the core of this book.

SPACE SHUTTLE EXPLODING The satellite industry collapsed in January 27, 1986 when the space shuttle Challenger exploded. All seven crewmembers died 73 seconds after launch, five men and two women. One of the women was a teacher with the intent to keep lessons from orbit. The launching of new and powerful satellites was down for several years after that. At the time I worked as a project manager for the “everyman’s dish” from Handic, that then received transmissions from the low-effect satellites Intelsat and Eutelsat which required large-scale antennas. The work was to prepare the market for the next – five times stronger – satellite from Luxembourg-based SES (Société Européenne des Satellites), which we

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3. Visutech: The fourth transmission – how it all started know today as the Astra satellite. This was before public TV channels yielded any money, so financing was shaped by B2B services for transferring images and information between business corporations. Back then there weren’t exactly any high-speed fiber around. The satellite was charged and ready for ascent on the Ariane launch site in French Guiana when the disaster of Challenger occurred.

COLUMNS AND CHARTS As so often in life, it was by pure coincidence that I ended up in the graphic industry, even though good relations from my time in satellite-business played a role. The two businesses remind of each other with digital technology and communications. If you aim to communicate and transmit anything via link or satellite from one place to another, and bring it back to a physical picture or directly to print, digitally based solutions regularly emerge as the only option. After leaving Mats Gabrielsson and Handic, I started out in a smaller technology firm with sights set on a greater leadership challenge. That ended when the company was sold to new owners. My close contact with some of the suppliers opened up an interest from the U.S. via Pansophic, then owned by two brothers from Chicago and the ninth largest software company in the world. At that time they were working with giant mainframe computers that filled up entire buildings. Pansophic had bought a number of companies that expertized in computer graphics, to be able to graphically view all of their numbers that had previously only been showed as digits on so called “pajamas paper”. They wanted to show graphs and diagrams both on paper, overhead transparencies, and video. It was called multimedia and was handled through large VAX computers while the PC was just around the corner. Soon after we started Visutech and begun working with Pansophic, one of the two brothers sold his share of the company to CA (Computer Associate) and the other brother had to follow suit. And there were we, justed started up with nothing to sell. We had already done all important investments like our first cell phones for SEK 35 000 (circa USD 5 000) each and we decided to keep moving – our only hope was a new transmission.

A HUGE NEED At that time you could only send text electronically. Telex (prior to fax) was a form of electronic Morse via cable that was inscribed on punched paper tape at one end and emerged via a typewriter at the other end. Images were something completely different, and the demand was huge in the media business. Pictures were expensive and contained enormous amounts of digital data.

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25 YEARS OF THE GRAPHIC INDUSTRY

Hasselblad was in the front line at the time, and reporters had to bring an image scanner into the working field and first develop the film (maybe in the hotel bathroom as a temporary darkroom), then install the negative in a diascanner, and finally send the image pixel by pixel through a bumpy hotel phone line. Hopefully the result ended up on a screen back home in the newsroom an hour later. Then the image was printed via a photo printer, a picture tube that shone back the pixels through a camera with filters for red, green and blue light (additive colors) that you later could develop and submit to reproduction for full-color printing: cyan, magenta, yellow and black (subtractive colors). We used a number of technical solutions from our satellite days to improve the process and increase the speed.

CREATED UNIQUE PRODUCTS Our first Visutech-product made it possible to get digitally scanned images on a printedpaper copy directly from a PC (Mac was yet to come) to a Canon color copier. It could then print five full-color copies per minute in 400 dpi. We also connected a computer between the scanner and the copy machine and were able to both scan and print. We got Stefan Andersson onboard and strengthened the organization so we could start writing our own programs for everything we wanted to do. We created custom modules and bought ready-made building blocks, glued it all together and made completely new solutions – unique products that saw the light of day for the first time ever. We did the first installation of an OPI system (open prepress interface) with a scanner that scanned at 300 dpi from the bag and 600 dpi from slide film to a Compaq computer with an Intel 386-25 MHz processor. We created a system for Volvo’s image catalog in 1989, with unique catalogs for each country with pictures of their new models. We mobilized lots of contacts and suppliers, who became our pieces to create an entirely new and complete puzzle. The operating system was Windows 2:51, the layout program came from Archetype, the image separation from Prepress Technology, the Rip from ColorAge, the image setter was a Linotronic 300. Then, Lasse Renneby literally hardcoded our network in-between the four PCs. Lantastic was at this time the only network on the market in 10 Mbps for large files that worked without intermediate storage via a server.

WORLD LEADER OF RIPS Visutech continued working with subcontractors to the previous Pansophic. For instance we did slides to presentation systems and sold technologically advanced graphic systems. First to PC, then to Mac when it entered the graphic business in the early 90’s.

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3. Visutech: The fourth transmission – how it all started When color copy machines came about we had vast visions. Our best-selling product in the early 90’s was the Rip-server. Rip (Raster imaging processor) is a translator from a layout program, complete with both image and text, to a bitmap-image for any kind of printer or print device. The first version of PostScript (level 1) came in the late 80’s/early 90’s. We created clutches between computers and printers, copiers and plotters, which gave organizations in our industry a brand new tool to work with. Our Rip-server DiamondPress was developed together with our partners in the US. This gave us great benefits, and swiftly a market share of 80 percent. Our Rip was installed in three out of four color copiers sold worldwide. Put simply, we made it possible to get proofs and short runs straight from the color copy machine before going into offset printing. EFI, an American competitor, went to the stock market with the same idea and got loads of money. Today, EFI is the world-leading provider of Rip to copy machines, but until 1993-94 Visutech were number 1 worldwide. EFI bought, on straight command from Xerox, our business partner in the US back in 2000. We then decided to close our Rip-production, in order not to fall into the clutches of the “enemy”.

INDIGO + VISUTECH = TRUE I met Benny Landa, an Israeli entrepreneur and truly “Mr. Digital Print” worldwide, at the Ipex trade fair in 1993. We hit it off immediately. Indigo, with Landa’s advanced technology and his visions, married directly with Visutech’s thoughts and ideas. All big organizations stood in line for the agency of Indigo but were beaten by the small company from Gothenburg, Sweden. We signed the distributor contract with Benny Landa in 1994. He later sold Indigo to HP in 2001 for 1 billion US dollars in total. HP has since then invested many times that amount, which has secured Indigo’s and ours position of today

VISIONS AND TRANSMISSIONS

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25 YEARS OF THE GRAPHIC INDUSTRY

ILLUSTRATIONS ON THIS SPREAD: JÜRGEN ASP

THE FIRST BOOK I wrote my first book between 1988 and 1994, a book filled with visions about upcoming trends in the graphic industry. I remember already in the early 80’s, how it was obvious to me that we in the future would use a computer to book and buy cinema and theater tickets. People thought I was nuts! I saw that corporate management of printed matters and information would change radically, and wanted to pinpoint the problem. The driving force behind the alteration was the benefits that would emerge through producing printed materials only when necessary, print-on-demand. I was also confident that technology and the environment must develop jointly. In the late ‘80s, no one was reflecting on the environment from a commercial point of view. The breakthrough came in the early 21st century. It has taken a huge amount of time to get people environmentally aware, something we today take for granted

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3. Visutech: The fourth transmission – how it all started THE FUTURE REQUIRES NEW TECHNOLOGY Sweden joined the EU and got a much larger and more complex domestic market. State borders were erased but barriers of culture, language and religion remained – maybe even reinforced. Organizations needed to adapt their communication strategy to new conditions, the printing industry needed to fix local language editions, local product variations, all made with cultural considerations. I looked into digital print archives, Visutech’s solution was called DiamondPress, and today we see JPEG and other compression algorithms everywhere. When I wrote my book of visions nothing was digital, everything was analog and physical. Today, “the cloud” is the big trend, centralizing is back and we return to the old mainframe computers but as an automatic and easy-to-use service to the customer.

20 years ago I asked myself: will yesterday’s technology satisfy tomorrow’s market? The answer was, and still it is, no. Traditional printing was large-scale and problematic concerning the environment. Composing rooms disappeared and prepress moved partially into the printing houses. Many struggled with old technology to bring economy into the short-runs, as was the demand from their clients. CTP came about and revolutionized the industry. The CTP-technology made it possible to go straight from computer to print, straight to plate, and then to physical media.

VISIONS AND TRANSMISSIONS

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25 YEARS OF THE GRAPHIC INDUSTRY

FROM CRAFT TO BUSINESS I realized early on that graphic industry was rigid and lacked swift and custom-built solutions. Consequently there were major efficiency gains to be made. Digital presses enable a fully digital production chain. The Internet has changed the playing field for all participants. It’s first and foremost about ICDT: information, communication, distribution and transaction. The bright future is within the four rooms of ICDT. That which cannot be measured does not exist! That is extremely important on the graphic industry’s route from craftsmanship to business enterprise. The visions I wrote about in my first book have all come true, and the urge to write a sequel about why things happen – or not (NOT!) happen – in the graphic industry has been in my mind for a long time.

PHOTO: BESSERMACHEN DESIGNSTUDIO, DENMARK

TWO CASES FROM REALITY Before we kick off, I want to demonstrate two cases that show how it can be done. They also illustrate where the graphic industry is heading and its great potential. Value-added packaging The company that offered a chocolate bar in its normal packaging got paid about 70 cents (Euro) by the market. A survey in Denmark shows that if one

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3. Visutech: The fourth transmission – how it all started were to do unique, event-made or locally adapted packaging – maybe for a contest or for collecting reasons – the market price will change drastically. The market is willing to pay up to 10 Euros. 14 times the value added! For identical content!

Big brand – with a plan When a large sporting brand makes a selling-in of the next shoe collection they make all the new shoes beforehand in the computer. A catalog is then printed to every area, with a collection that adapts to each region (Asia, North America, and so on). The region makes its selection, and then the collection hits every country, city and store. The stores place their orders and then – for the first time – the shoes will be manufactured. Only then will the shoes occur in physical form, never before. That’s manufacturing on order – not to stock.

VISIONS AND TRANSMISSIONS

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

COMMERCIAL PRINT – SALES AIDS FOR THE PRODUCT

INDUSTRIAL PRINT – A PART OF THE PRODUCT

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4.

A falling market and immense overcapacity • Commercial graphics = market print = printed matter for marketing communications = sales aid for the product = DECREASES! • Industrial graphics = process print = packaging, labels = a part of the product = INCREASES! • Conclusion = marketing communication will continue to shift and integrate more and more with the product itself. The market-oriented graphic segment with conventional technologies is declining by close to 20 percent annually, measured in monetary terms. We have seen the segment being halved in the past five years, and unfortunately there will be a continuation over the next five years. Paper mills sales of mainly bulk paper will in 2013 decline by 20 percent, while special paper increases marginally. The extreme decrease in both volume and value make it a six-fold excess capacity (theoretically measured with the possible to print volume of today’s machines in relation to demand) in today’s Nordic commercial graphic industry. In Europe, the equivalent is five-fold. So we´ve got a huge excess capacity both in Sweden and elsewhere in Europe. Small changes in the business plan therefore make little difference; a major transition throughout the entire setup of business is required.

UNPROFITABILITY IS STANDARD With this huge over-capacity, it’s difficult to find a business model that comes together. The average profitability in commercial graphic industry is currently zero percent. Unprofitability is standard!

VISIONS AND TRANSMISSIONS

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

Hence we see a severe marginalization of printing companies – both in the past, today, and in the future. There are significant structural changes in the making, a consolidation with companies buying each other right and left. The buyers only take over the costs and staffing and today you can buy printing companies for one (1) Swedish Crown – not even a quarter of an American dollar. The consequence is a significantly reduced number of printing houses, but also larger players on the market. The worst-case scenario is when a printing company takes over another, but none of them can afford the everyday business. Then you merge two companies that are losing money into one company, which in turn will lose even more money.

DEMANDS FOR EFFICIENCY Good examples are companies with substance that purchase competitors and their client-stock while simultaneously cutting and adjusting. Unfortunately they are the exception today. Far more common are companies that swiftly merge and do nothing about its cost structure, where every problem persist. They hunt costs (“lean”) but refuse change. A merger at least provides more customers and increases total volume. But sadly, probably not an increase per machine, not an increase per job – and still it’s a business in a dangerous downhill slope

”You better start swimmin’ Or you´ll sink like a stone For the times they are a-changin.” Bob Dylan

Digital technology increases the number of jobs from 5-10 per day to 50-100, with significantly shorter print runs. This places new demands on efficiency per job with more automation and shorter process time. A brand new way of thinking! It requires a new business model where you go from supplying printed matter to actively providing effective communication with major competitive advantages. We go from tons of paper to value added per job.

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5.

Comfort zone and printpress-huggers The number of commercial printers in the Nordic countries has fallen from perhaps 15 000 to around 1 500, and will unfortunately keep declining. With a quick businesslike estimation, the majority of today’s 1 500 print shops may close down pretty soon. Consolidation takes place and the big becomes bigger while the small cannot cope. And to put it bluntly: the prospect of this turning up exactly where it went down doesn’t exist! Today, virtually the entire industry agrees to move to new technology to create new value and new margins. But there are “print-press-huggers” standing about hugging their old printing presses until the very end. They want to remain in their comfort zone and cannot get rid of their old costs. They are going down with the ship while the band is playing, to the bitter end.

TIED-UP CAPITAL Why act like that? Why go at top speed on a one-way street – in the wrong direction? Well, many have very large restricted funds in leasing costs and the like, that is difficult to get rid of. There is a large installed machine park out there, and the owners don’t have anything profitable to put into it. They struggle to find something that can pay their expenses, their lease invoices. As a result the business model gets tougher to manage. To produce at a lower cost than what it sells for will be difficult. A great many companies today sell conventionally printed matter to a lower price than the costs of production. It reminds me of Saab, where the car cost more to make than what you were able to sell for. And we all know how the story of Saab ended. It’s not the strongest that survives, but the one who can adapt

VISIONS AND TRANSMISSIONS

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

”It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” Charles Darwin.

BIG NEED OF INVESTMENT Out in the harsh reality of the graphic industry entrepreneurs struggle frantically to try to keep their head above water. It’s a fight for survival. The truth is that many can’t actually afford to go into bankruptcy. People usually laugh at me when I say it, but it’s true nonetheless. Many printing companies of today have no money left to make a transformation. Often the business is guaranteed with private equity and maybe bailment. Thus, going into bankruptcy isn’t an option. Instead they allow the substance of the company to shrink and decline and eventually completely disappear. We see businesses slowly fade away – cause people still need their paycheck every month to cover rent. Today’s investment appetite is rather low, while the need of it is rather high. You want digitization but have trouble getting rid of existing costs. There may be leases on printing presses, staff, and offices in various places; a vicious circle. For example, if it’s impossible to escape a 10-year lease you have with an offset supplier – you become, unwillingly, a “print-press-hugger”.

THERE IS A LIMIT It also makes you become much less interested in explaining this to clients who might have appreciated other tools and other solutions. If the printing company hasn’t got the possibility to deliver the new goods they rather keep quiet. It takes a lot to tell customers that your stuff isn’t good enough. It’s the same feeling as when you buy a car, it takes long before you admit that it was a bad decision. It’s psychology all the way to the bank; you want to show the world that you made a good acquisition. It goes up to a certain point, to a limit. When the straw breaks the camel´s back, then you become anti for real.

MANY FEEL BAD Many people working at printing houses feel awful today. Their companies have higher costs than revenues and the owners pledge their life insurance to keep their bank loans, as they hope that things will somehow turn around. There is not much value left in the old craftsmanship, in machinery, or in personnel. Today’s digital technology can do several employees’ job with much less staff and in much less time. There is not as much paper around and print runs are getting shorter by the minute. This must be met with more and more jobs.

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5. Comfort zone and print-press-huggers Today, it is a factor of 10 or 20 to have profitability versus how it was before. The six-fold overcapacity originates from this. Of the total amount of prints today the digital volume tallies only about 5 percent, but the value is as high as38 percent

TILLVÄXTMÖJLIGHETER FÖR DIGITAL TRYCKTEKNIK 95 % tryckvolym fortfarande analog TRYCKVOLYM PER APPLIKATION (MILJARDER) 22 24

43

931

3112

6724

7464

24589

93%

97%

99%

99,8%

16% 100%

62%

74%

84% 38%

26%

7%

3%

DIRECT MAIL, BUSINESS FORMS, TRANSACTION MANUALS, ETC MAIL PRINTING

MARKETING COLLATERAL

SIGNAGE

<1%

1% PACKAGING

PUBLISHING

Analog Pages

Digital Pages

PHOTOS LF DESIGN RENDERING

Source: HP Internal Data

VÄRDET PÅ TRYCKET TALAR SITT TYDLIGA SPRÅK Digital produktion redan omkring 40 % av värdet på tryck TRYCKVÄRDE PER APPLIKATION (MILJARDER) 1,7 3,0

3,9

3,5

18%

26%

4,5

9,7

16,8

11,1

100%

100%

46% 62% 82%

79%

74% 54%

MARKETING COLLATERAL

SIGNAGE DIRECT MAIL LF DESIGN RENDERING

38%

INFORMATION PRINTS

PHOTOS

21% PACKAGING

Analog Pages

93%

7% PUBLISHING

Digital Pages Source: HP Internal Data

A PROFITABLE MARKET There is a profitable graphic market that will grow substantially for many years to come. It’s the market for printed matters that provide added value and experiences. But it won´t pop up at the same place as before, not among the old conventional graphic companies. It will pop up somewhere else. Why? The craft “printing” has switched to an industrial production and is today part of the process to market something. To succeed it requires a proactive communication company that creates added value in, for instance, physical formats.

VISIONS AND TRANSMISSIONS

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

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6.

An industry of generations Printing houses are often inherited, where the next generation takes over from the owner who goes into retirement. The alternative is a person who has worked a long time in the company, a skilled craftsman. This can create problems. Maybe the new leadership doesn’t have the appropriate education or background to take over the printing company and handle future challenges. Broad-mindedness is a must when an industry is being transformed from a craft to a process unit where operations are based on completely new demands and products from the clients.

FROM WORD TO EXCEL The transmission from a craftsmanship to a businesslike industry is the greatest and most important piece of the puzzle in order to advance and end up back on track. It can only be achieved through knowledge and education that will provide a greater understanding of what is needed to minimize the errors along the way, towards new market demands and opportunities of added value. Knowledge and education is the key to succeed in all transformations. Someone said that the graphic industry must move from a Word-profile to an Excel-profile. I do like the parable. • Word as the artistic craftsmanship, where you go on hunches and feelings and need to read between the lines, the ancient art of printing. • Excel as the market-based business form, processes that are related, motorized in style and totally correct if all boxes and cells are duly completed. The fact is that it’s difficult to obtain volume and fair payment from the craftsmanship today. The customer requirements for the graphic industry nowadays are strictly businesslike. The graphic industry must move toward the Excel-profile

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

BUMPS ON THE HIGHWAY When I look at the volumes of the graphic industry today, the conventional is still superior to the digital. The volume of the entire printing market, from packaging to business cards, is still +90 percent conventional and less than 10 percent digital. The old-tech of Gutenberg is unfortunately holding out – despite the fact that no one makes any money from it. The digital transition has been slow. Strong grounds for the snail´s pace are that this initially involves B2B, business to business, and not until then finds the path to the consumer. Transformations move fast (imagine Facebook) in the B2C, business to consumer-market. In the graphic industry one should therefore change the process of a service-selling firm who makes business with another firm – who in turn sells the product to a consumer. It provides many speed bumps on an otherwise straight and obvious highway

SUFFICIENT NUMBER OF LOSERS Meanwhile, there are now a sufficient number of losers in the business for new winners to emerge in other places. The transmission will take off. We see new values, where industrial process printing without doubt gets momentum. There will be more packaging, large format, books, photography and prints as part of the product of those who formerly only did commercial printing. There will be industrial process printing at commercial printing houses. Why? They got a head start, it´s where this way of thinking is already rooted. They are often already into digital flows and automated file management, they have increased their number of jobs, they have large and small print runs, and they have perhaps begun to participate in the client’s communication with their customers. Today’s conventional packaging printing houses are worse off. They have very few people who can even imagine the idea of a transmission. They often lack digital knowledge with respect to flows and will have a much longer starting distance compared to a commercial printing house. They must first find the right mindset, and then draw digital lessons. A long way to wander.

FEW BUT BROADER SUPPLIERS To a commercial printing house, it becomes much easier. They only have to embrace the industrial process as a new product to their existing flows. As an effect, you can work with both marketing communications (M) and product communications (P). M=c  ommunication to sell the product, for example by brochure, flyer, advert. P = communication directly through the product on the shelf, the package itself

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6. An industry of generations So-called ”city printers” have already started the journey of digitization as a complement to conventional printing. Now they completely move away from the conventional side and purchase that bit of business cheaper elsewhere, cheaper than what it would cost to produce. In other words, they earn money where they previously lost money. The major investment, the vast added value, is to diversify and to imbed the industrial process printing. Start off with a closer contact and dialogue with major customers – keep in mind that 20 percent of the largest clients usually account for 80 percent of the volume. How can you do more and better things for them? What other supplier are they also working with? What does the competition do better (not cheaper) than you? The trend among brand owners is crystal clear; they want fewer but broader suppliers that offer more. They seek a greater measurable value for each penny invested. Hence, there is more than the actual cost of printing to discuss.

AN ICEBERG IN THE BUSINESS Think of it as an iceberg. The visible rock above the water is the cost of the actual printing. The really big costs are hidden beneath the surface. If the printing cost is SEK 10 it will hide indirect costs below the surface of SEK 6080. Costs like distribution, versioning, traceability, custom flow, storing, tied-up funds, and not least the matter of discardation. Those who listen and can help brand owners to reduce the total cost – the whole iceberg above and below the water – can switch to bill added value instead of cost OPPORTUNITIES FOR COST SAVINGS

Traceability Series production Mass Personalization Version control Order Warehousing Distribution Customer / market requirements Discard

VISIONS AND TRANSMISSIONS

$ 10

Cost of printing and processing

$ 60-80

Cost of production

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

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7.

Our challenge is spelled FUD – Fear Uncertainty Doubt Our biggest challenge is summarized in one word: FUD F = Fear from ignorance. U = Uncertainty about what will happen. D = Doubts about how reality actually will affect me FUD is the common denominator among today’s printing companies, where there is fear, anxiety and doubt. Why? It’s all about ignorance. You know what needs to be done, but not how or when to do it. You want to pop up on the profitable side of the printing industry when everything has blown over. “How do I get there?” Visutech Digital Academy is playing an important role in all of this. Hopefully, it will contribute to increase knowledge with great added value in order to make more of the right decisions and less of the mistakes. Confidently, after the transformation, we all have built an extensive amount of intellectual capital – well prepared for new market requirements and demands. Again, those who adapt will survive and the rest will disappear. Remember the dinosaurs, they were big and powerful and yet extinguished. It’s not the strongest who wins but the one who can adapt.

INVESTMENT OR COST Several companies have chosen to buy a simpler form of technology from our colleagues, often because of a cheaper initial cost. Or as they put it, a lower price to be able to begin with that stuff that everyone is talking about (the digitization).

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

“We could not afford a real digital offset press, it sounded too expensive, because if it doesn´t work we might not survive. Therefore, we bought something cheaper.” The problem with that reasoning is that it confuses investment with cost. Why do that? It is because of a lack of knowledge. To many have taken that turn. Instead of changing course so that they’re able to afford, they bought something slightly cheaper which in many cases became a pure cost – for it did not address their customers’ needs.

MIXED QUALITY IS FATAL If a printing house also begins mixing qualities it soon turns fatal. If it blemishes customer brands, the customers will soon be gone – both small and large contracts. It’s impossible to overstate the importance of caring for ones brand. This is even more true regarding external communications, where you have to print professionally! To a company, its brand is generally the absolutely most important thing. All brand investment is important and needs to be of the uppermost quality, right in line with the visual identity of the company. Any difference from its identity is a lost bag of money. Today, flexibility is an important buzzword but never ever compromising the quality of the brand.

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8.

The current state is miserable The current state of the graphic industry is by many standards miserable. But amid the misery you have to be self-critical and constructive. You have to review the potential measures at hand to change the situation. Visutech has been on at the industry for the last 20 years and nagged about change, nagged about that you have to adapt to survive. Today, many are forced to changes the hard way – because they have lost their income. Overcapacity makes the industry very unprofitable and you can buy entire printing companies for a single dime. Then it is irrelevant if you lower or raise prices by ten percent, the problem runs deeper

TWO BIG REASONS The trouble is to get rid of the old costs. It is problematic when you are sitting on long leases and often too much staff. In addition, the enormous range of old machines dumps the secondary market. You can still get some payment for the machines on the Asian market, where the graphic industry is still growing, but otherwise it’s tough. Actually, a cleanup of the market ought to already have taken place; the “big bang” could come earlier. But two factors have been putting off an unpleasant truth. 1. During the recession of 2001 the major offset suppliers bought back their old presses to a hefty overprice and the printing companies then leased their new presses. That way, the printing houses got over-valuated cash accounts and made a balanced profit of presses. At that time a severe exclusion should have taken place within the Swedish graphic industry. Instead they got money to cope with the recession. Unsound? Of course! Like peeing in your pants, nice and warm for a short while then cold and

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THE GRAPHIC INDUSTRY TODAY – THE PRESENT

sticky. If we compare with Norway in 2001 we see a big difference. The Norwegians weren’t allowed to use the magic wand of leases, as was done in Sweden – a law prevented it. Accordingly many more Norwegian companies crashed into bankruptcy back then. That was what the market demanded and maybe needed. 2. And what happened in 2008-2009? Again, it´s time to pee in your pants! This time due to the fact that VAT on books was lowered to 6 percent. A rather populist move by our politicians. The printing companies could then require huge retroactive amounts from the government, a five-year book VAT refund. Millions and more millions paid out. The problem is that you are responsible for partially repaying VAT money to your customers. Some of the big printing houses therefore booked this money not as profit but as repaid tax, and still have funds to pay those customers who require a VAT refund. However, most booked it as pure profit, gulping down the money – not having a dime to pay if the customers decide to cash in. This offered no healthy business, just a temporary improvement. A few took the tax money, buried the company and got away. Maybe immoral towards those who would later be able to reclaim their tax money? But the framework is a bit sketchy and no one really knows what is valid. The VAT-story is not over yet and we’ll see where it ends up. These two factors have historically prevented us from changing our huge sixfold overcapacity. Otherwise, we already would have had a larger exclusion and a healthier market. What we are experiencing right now in our graphic industry is nothing but artificial respiration.

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9.

The environment – more important than technology and always on the agenda Megatrends are larger than business cycles. They sail over the curves in both rise and fall and can have a span of over 20 years. This of course affects the graphic industry and is something we must take into consideration. First, with a bold capital F, is the most important of them all, the one that is absolutely paramount – the environment. The environment is involved in everything we do. This is a constant fact for all who want to succeed in a business, regardless what industry. The graphic sector is no exception. It is important to remember that paper is not of fossil but recyclable. You remove a tree and plant new seeds. We have extreme amounts of forestry and wood lots in the Nordic region; it’s an important export product for the area. We must yield the forest, what else are we going to do with it? It’s important not to confuse this argument with the rainforest and devastation without consideration in sensitive areas, which is a completely different matter..

THE RECYCLING INCREASES Paper itself is not environmentally dangerous, for it gets recycled. Either as energy through heating or we print on it again. Today, recycled paper is only a few percentage of what we use as a whole and that share is likely to increase. Packaging materials are also available in different recycled forms, but most of it is recycled into energy and heating. Nothing wrong with that – the effect is decent and far better than before. An important part of the recycling process is to get the pigment to separate from the paper, so-called de-ink. There are various techniques that work on different kinds of printing and quality of paper.

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9. The environment – more important than technology and always on the agenda TODAY’S STANDARD PRINTING TECHNIQUES: • Offset – water or UV into the fibers. • Inkjet – water into the fibers, does not apply to HP where a protective adhesive can be added between ink and paper. • Indigo – a polymer, a form of plastic that is thinner than one micron. • Powder technology copy machines – a synthetic layer that melts through high heat to stick on the paper, up to six microns thick. A cold de-ink process is the most common today. It works okay on the large volume that still is water-based offset. A hot de-ink technology instead uses steam to get the ink off the fibers. Chop the paper down to fibers, then decompose and steam off the color. It will work on most solutions, except some of the Inkjets. With steam-tech you reach a better result that also operates well on more modern-day printing techniques. Paper recycling is a very exciting environmental issue. Today approximately three percent of all paper is being recycled back to paper. The big question is if you want to increase that number, or if recycled paper as of packaging materials, or clean combustion to energy, is the best economic and/or environmental solution.

SMALL-PACK OPPORTUNITIES Transport is another major environmental issue. Transporting less provides significant environmental benefits and the graphic industry can be involved in generating reduced transportation needs. Why print in one place and transport to another? It´s better to electronically distribute the information before we physically print it. The environmental impacts of consumption are an extremely important matter that steadily grows in importance. Eco is today a massive purchase incentive in the store, where households want to do their part. The trend also is “throw less in the bin”, especially when it comes to food waste. We cannot throw away food to the extent we do today. This factor will influence our buying patterns. We may not buy that big pack we don’t need when it’s becoming increasingly foul and more expensive to discard food. This trend will last long and provide great opportunities for our industry through different packaging, small-packs, shorter volumes, and so on. There is great value in meeting customers’ new insight and value-system.

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THE BIG FIVE COOPERATES In terms of environmental villains, oil-based plastic is a devastating monster. The problem is the breakdown-rate, which is way too slow. There are yet no degrading imperatives regarding plastic bags or plastic containers, as there is regarding the material you make funerary-urns of. The law states that the urn should be depleted within 25 years, while plastics and plastic packaging legally can be dumped in the ocean and swirl off our coast creating an ecological disaster. It’s said to float as much junk in the ocean as there are garbage dumps in the world. A dreadful truth that gives compelling reason to really change present and future packaging. The graphic industry will play a leading role in this much-needed transition. The major brand owners, the “Big Five”, have already teamed up to change their packaging from fossil oil-based materials such as PVC to more environmentally friendly material as PET. The idea of big players getting together to make a joint statement of this sort is unique, yet another proof of the environment as a megatrend. Other good examples are paper made out of rice and packaging from corn, exciting biomaterial that have a great future in the sustainable development of non-fossil materials. They are easy to reutilize or compost and plays a part in the big wheel of recycling. Back to nature!

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10.

Marketing communications through print on paper – one of many options If we look back, so much have happened. In 1973 there was only one option if you wanted to market your company: print! Ads, flyers, brochures, always print on paper. There was no other way to communicate. No television or radio commercials, no Internet or smartphones. It wasn’t until 1990 that we had commercialized TV in Sweden produced by TV4, something which TV3 began by satellite in the late 80s.

40 PERCENT OF THE BUDGET Today we live in a completely different world where numerous marketing channels compete about the brand owners’ money. The share that is being spent is the same now as before, roughly 40 percent of the company budget. Within the 40 percent all the costs gather that involve printing, packaging (product, display and transport packaging) and promotion. The quota of money is just as big, but many more actors play the game these days. It’s a constant competition and rivalry for this so called 40-crown, the 40 percent of the client’s budget. Which media channel gets which part? Who will be the winner and who will be the loser? It’s about the experience you can provide for each invested dime, ROMI – Return of Marketing Investment. Whoever brings back the highest value will acquire the biggest piece of the pie.

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THE MEGATRENDS OF TODAY

CMO – THE CRUCIAL ONE Formerly each 40-crown went into print of some sort. Today printed matter such as catalogs, magazines, newspapers all fight hard against TV-advertising, radio advertising, smartphone advertising, cross media, and so on. Therefore, the graphic industry must add value and offer more than ink on paper. It must show the vast possibilities of reaching out to several different senses, to provide experiences, to be both static and mobile, to bring new impressions to the table via aroma and vision, to design personal statements, etcetera. The more feelings a printed physical messenger can appeal to, the more value it will provide. It will offer new opportunities to recapture a larger share of the brand owners’ 40-crown. The CMO (Chief Marketing Officer) becomes a very interesting and crucial person. We must take into account that a CMO of today only stays 26 months on average at his/her position before he/she changes employment. Not even three years! The CMO is most likely to stay within marketing after the 26 months, but at a different location, for another brand. CMO is a transient position.

GIVE MORE THAN JUST INFORMATION What determines where the CMO will spend his 40-crown? How much of the 40-crown will go to attention and experience in relation to communication? How big piece of the action will graphic industry (physical media) get? It depends on the balance between attentiveness, experience and results. The value you can offer! The graphic industry must realize that the losers will be those who merely print and deliver information with no added value. The information segment will become electronic. We need to create products that provide consumers with new experiences. Can it be shaped individually? Can it provide a 3D experience (feeling), moving images, smell or taste? In the next four years we’ll see a lot of innovative and first-hand printed products and packaging, but more about that later.

MEASURE EACH PENNY INVESTED Different segments have different possibilities. The newspaper industry has many technical bits and pieces (and experiences!) to carry out if it is to turn the unfortunately steep downward trend. One of Sweden’s largest morning newspaper drops – at the time I write this – about ten percent of its subscribers a year. Counting that three persons read the same issue, it is a loss of about 54,000 readers every year. The value you can provide to a CMO is crucial! They crave new experiences for customers. It’s important for the CMO and their brand and they will cherry-pick the best offer. We need CMOs to measure every penny, but the tools available today are few and angular. There is much left to desire when it comes to measuring the effect on each invested penny. For example it is still difficult to measure what an ad in the paper really brings. For that we need more linkages and connections and for sure improved measurement tools.

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10. Marketing communications through print on paper â&#x20AC;&#x201C; one of many options

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TV-SHOP A SHINING EXAMPLE For example, TV-shop is the outstanding way to measure the return of every inserted dime. An advertising loop that runs on low-priced TV-channels in the most inexpensive time of day, outside prime time, with direct sales via telephone or online store. The result hits us within 15 minutes after the show and the cost of advertising can be directly measured against revenue. We made a profit? Here we go again! We won again? Run again and again. TV-shop is a perfect explanation of the engine in what we call the ICDT (chapter 16) and nothing but hardcore ROMI. For what cannot be measured, does not exist. What we can prove in ROMI, preferably in relation to our competitors, will pay our bills in the future. Itâ&#x20AC;&#x2122;s the key to the sought-after marketing money for all CMOs. For itâ&#x20AC;&#x2122;s the CMO who is budgeting and planning, always under immense pressure to constantly improve the outcome. The first question the CMOs ask themselves every morning is: how do I get the greatest value and the best impact from each penny invested? 

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10. Marketing communications through print on paper – one of many options NEW TECHNOLOGY SAVES YOU MONEY As for direct mail, surveys show that the effect is very low. For example, the Swedish food store giant ICA Maxi sends direct mail to all households within certain geographic areas, financed by their suppliers, at an extremely low ROMI. When they want to double the effect they use dead reckoning – simply doubling the amount of dispatches. It would have been much better to add intelligence such as range adjustment per store area, to be able to locally adjust prices and products depending on the region; there is not, for example, west-coast-salad in Stockholm but only on the west coast of Sweden. By the input of intelligence you create values that become much more personal and more attractive to the consumer. Without involving concerns as the addressed mailing cost, this is many times over a better ROMI. Why don´t everyone do like this, then? Well, because old technology doesn’t provide this advantage, doesn’t solve the task. Using conventional and old offset is still cheaper while handling really large runs, the “carpet bombing”. But new technologies such as Inkjet will provide almost the same cost as the conventional for this product, but many times greater in the aspect of value to the customer. The trend also heads toward solely addressed communication; some countries have already banned unaddressed advertising through legislation.

NO ONE WANTS TO PRINT FOR STORAGE Brand owners want stability in their trademark and invest big money to get that. However, to reach out to the consumers they continuously explore new paths, new trends. The graphic industry must keep up. Clearly, no one will use the 40-crown to print products for the good of storage. The cost is too great: capital investment, discardation, liquidity, distribution, inventory, and more. If the cost of printing is SEK 10, the hidden cost for the brand owner is between SEK 60-80. What if we could save half of these costs, then the cost of the actual printing would become a significantly smaller concern.

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11.

Newspapers, books and magazines – where are they heading? What does tomorrow’s newspaper look like? Will the paper survive? I live in firm belief that you develop and improve as a person and through the progress a certain change is in the bargain. But you cannot begin to alter and trust that improvement and refinement will knock on the door. It is the other way around! You must begin by adding value, and then a natural change will occur. Remember the iPhone; smartphones made life easier and more enjoyable for users – a refinement of the previous phones. Thereby smartphones also rapidly changed our habits. But when we talk about market trends and changes we cannot forget that we work with humans, habits and generations.

ADVANTAGE PAPER MAGAZINES Take a newspaper for example. An e-paper gives me (now over 50) nothing additional than a printed newspaper. It could provide the advantage of being cheaper, but isn’t today. Even if we remove the price from the equation the benefits of an e-magazine doesn’t outweigh the drawbacks for me today, and it all comes down to built-in old habits. A printed newspaper still weigh less, are easier to read outdoors, is larger than a computer screen or iPad, and does not require a charged battery. For people reading the newspaper while using the toilet, do you really take the computer to the bathroom? The printed newspaper has lots of other values. It should not be forgotten in any discussion concerning the newspaper death.

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THE MEGATRENDS OF TODAY

MAKE THE PAPER MORE LOCAL Today, dailies have a declining circulation and number of subscribers, while local papers and free sheets are increasing in numbers. They make money financed entirely through ads and highlight local suppliers and their offers, which attract readers. How local can a newspaper be? How much could revenues be increased? How much would it cost to make daily newspapers more local, with local advertisers in each area, district and block? And what kind of technology would you use? Old technology is not designed for this as it doesn’t fulfill today’s desire for added value. It is a sharp and well-defined technical limitation that can be transformed with the help of new technology. Without new printing technology (read Inkjet) papers instead need to push intelligence and create a new business plan. And all this while today´s local papers and free sheets becomes increasingly better at their end. Readers have grown an increasing need to know what is happening in their neighborhood, the trend goes along with the rising ad revenue we see at local-local newspapers in which certain kinds of advertising, previously too expensive, is well suited – unique from one area to another. Everyone could feature, the local pizzeria, realtor, store, laundry, and so on. A local newspaper provides more space for less money, a better outcome (ROMI). All this while readers applaud the local information.

REFINEMENT IS REQUIRED Why didn’t printed newspapers vanish and die when e-papers appeared, and why won’t they? The technology of today allows us to have newspapers in electronic formats (smartphone, e-reader, computer) but still only one (1) percent of the offering is read on screen. 99 percent remain as physically printed newspapers. This shows that this is essentially not a technical transmission but a transmission throughout generations. We are living longer per generation, four years per

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11. Newspapers, books and magazines – where are they heading? generation in the West and seven years globally, which alters patterns, routines and spending powers. Today, three generations live together in the same span and soon we´ll squeeze in a fourth one. Someone say that the first upcoming 200-year-old is already born! Is this contrary to what new technologies desire? The technology actually wants the exact opposite! Quality, added value, price (?) and distribution, everything speaks in favor for this already being completely digital. The “slow-moving-man” would rather not change behavior and wants things to remain the same. A refinement is required before there is a change, why else change behavior? We have a certain living pattern and that won’t change by technology. There is a processing point. I only read my morning paper online when I’m abroad. But at home, I want to have the physical paper. This is one of the external factors that disrupt logical thinking.

OLD PRINTING PRESSES Today, we have no problem printing a newspaper with new technology (read inkjet), either technologically or cost-wise (maybe I stick my neck out a year or two early). One of the brakes is that the large newspaper printing houses sit with investments of hundreds of millions in old-new printing presses, and the major newspaper companies are still investing hundreds of new millions. Everything with depreciations 12-15 years ahead – in technology that not even today meets the demand of the market! A full-blown disinvestment, right or wrong? But despite the dark cloud in the sky blackening for every day they still earn money. However, their numbers are declining at an alarming rate. After the next recession, 7-8 years into the future, the growth will solely be within the inkjet-based technology, which is well suited to the market and completely local. The problem is not only to implement new technology, but also to afford getting rid of the current equipment. This goes for most industries undergoing technological transmissions and the printing industry is no exception.

GRAPHENE – HOT IN THE FUTURE In fact, you can already let the reader decide the content of his or her own magazine. They can choose whether they want it with or without ads and pay accordingly. They can supplement with a few pages from the Financial Times, remove the obituaries, only have the culture pages in the weekend, or just having sports news about their favorite soccer team. The technology for this already exists. It will also be interesting to follow the developments surrounding new materials. Right now, graphene is hot. It is a graphite-like substance, very thin and yet extremely strong, where Chalmers University in Gothenburg is the world leader in research and development. With graphene, one can develop flexible electronics, including newsprint, and it offers exciting opportunities. It could become something that you

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THE MEGATRENDS OF TODAY

carry, but will it ever that durable, physical and inexpensive? To what value and degree of experience? Is there a demand? Should it replace printed or electronic items? I don’t see graphene as a competitor to the graphic industry’s physical printing but possibly complementary to the smaller segments that is now electronic.

SUMMER IN GOTLAND Smaller countries are both interesting and unique when it comes to the newspaper business, with small towns and small print runs. Take Norway for example, where you can’t drive between all cities – it is both expensive and impossible in the wintertime. Instead they´ve got printing presses in every coastal city and print on location. And this, with the number of copies being printed plummeting from maybe around 40 000 down to a few thousand. A Swedish counterpart would be the island of Gotland, where on daily basis an airplane flies in with newspapers from Stockholm Skavsta Airport. Economical? Yes, during the three months of summer. The rest of the year it is a pure cost for newspaper companies who satisfy the need of a few hundred subscribers in the winter and maybe up to 15 000 in the summer. Here is an excellent location for a local printing establishment. Just imagine the prospect of adding local values, information about Gotland and the residents, and not least local ads. What a source of income!

TOO MANY BOOKS If we look at books and publishing houses there are examples where only 3 percent of the titles are profitable and 97 percent are more or less pure cost. It’s the publisher, not the printing-house, who will take the hit. Publishers of today are more or less managed to deficit; they print too many books of too many titles. The printing-house cannot due to printing techniques produce smaller runs, which makes the cost per title too high. The number of best selling authors is nowadays easy to count, and yet the total amount of titles increases considerably every year. We read more than ever, various kinds of books on different matters, and the industry currently produces far too many copies and with that arises more and more book sales. This market is also in need of a consolidation, a transmission. For still only less than one (1) percent of all books are sold as e-books, 99 percent is still physically printed books. On this matter, many talk about the experience you get from having a book in your hand and on the shelf. But, says someone, e-books grow vigorously? Yes, but from very low numbers.

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11. Newspapers, books and magazines – where are they heading? SHORTER RUNS, MORE TITLES It’s time for another shift in technology. With new technology you can now go from a minimum volume of perhaps 10 000 books to offering a single book. Take Blurb or Amazon in the US, they use HP web inkjet-technology to print runs of between 250 and 5000, for the short stock. On Demand – with a delivery time of 4-5 days – is made in HP Indigo. Then you print the book at the arrival of the order. This means no or small inventory cost and furthermore sidesteps all unnecessary work; no need for a book sale, no need for storage or discard, and no detaining of capital. Maybe you earn less money per book – but you always earn money. Today nearly half of all books that are being printed are thrown away, book sale included. That is a gigantic mountain of books. The total amount of books being sold have declined while the number of titles keep going up substantially. Unfortunately the increase is due to returns, hence the growing mountain of discarded books. If half of all books are not sold, then of course every book – if you order what you need – can be twice as expensive (printing costs). Yet you´ll earn the same amount of money. The trend is clear: shorter runs and more titles. If you earn 50 percent on a book that sells out but only break-even if you sell half of the copies, then maybe it’s better to earn 25 percent per book – and always earn 25 percent.

MORE EXQUISITE COVERS When it comes to magazines, we see that the number of copies being sold remain quite the same. Today one reads more titles, but not more magazines – the same trend as in the book industry. What’s great to see, and what speaks for the digitization, are all new niche magazines. Science, history, fly-fishing, spin fishing, and so on. There used to be one magazine per sector, today it’s easy to find 5-6 different titles on the same subject and many more new matters. Many of them have unfortunately a huge problem: profiling themselves, something that is absolutely necessary today. They need to find their own personality and customer clusters. The customers scan the shelf with all the colorful weeklies and pick one. How do you become the best magazine, the one that gets chosen? Different formats will be easier through digital technology. Why should all be the same size? Blaming reasons of distribution or printing-techniques are hopefully a thing of the past. Digital technology provides the ability to brand oneself with different looks. Today, it is often the cover that sells the book or the magazine. The cover is also what is costly, often beautiful, embossed and varnished. When you stand in the airport shop to choose, or browse online to buy a book, every cover is fighting for your attention. This also applies to the feeling you get holding the book in your hand, the jacket and the total experience. Here, the creativity and added values of the graphic industry will play a very important role

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Photo â&#x20AC;&#x201C; mega market underway A hundred times more photos are photographed today compared to before. At the same time, we produce a great deal fewer physical photos (our memories). The industry is talking about a lost generation. 95 percent of all pictures taken today will remain in the computer or in any media that you think is safe storage (CD, DVD) or other backup. But the computer is just a time bomb until it breaks down; there is no computer that will last for 30 years. And what media is available today, older than five years â&#x20AC;&#x201C; and still readable?

AN EXPENSIVE CLOUD A generation will come and go before we realize that the physical photo is the only true memory that really lasts. First when the hard drive crashes or the CD/ DVD disc cannot be read, the genuine realization of the electronic vulnerability appears. It will be a rude awakening. Then people for certain will develop photos and make photo books as memories, perhaps with copies to loved ones. Using the cloud as photo back up? Sure! But can we afford it? If we look at Apple, the first 5 GB is free to upload, and then it costs money every month/year. A physical photo costs only once, and then the memory is secured. Looking ahead, consumers want to probably have both electronic and physical memories. Encouraging for the physical picture is that it is very enjoyable. Books, collages, scrap booking, etcetera, produce feelings, experiences and memories that are difficult to obtain electronically.

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RAPID GROWTH OF PHOTO BOOKS The growth of the photo through photo books – which continues to have an increase of over 50 percent annually – is fantastic. But there is a limitation, many feel it is too complicated and time consuming to create. There is facilitative technique on the way, solutions that are easy to use and come with a builtin intelligence. The customer simply takes a bunch of photos from a specific occasion, answer a few quick questions as to what kind of event, key players and quality. Next, the software makes a face-recognition and creates a finished proposal. It only takes a few minutes online instead of X number of hours. Printed photos (cut-sheets 4x6 inches) are also up in demand. Finally we can produce a whole automatic flow so that each individual photo coming out of the machine for certain goes to the right person. It was not possible before via automation, but now the technology has caught up and we solve the important integrity-part mechanically – Mrs. Smith won’t get Mrs. Baker’s pictures. The old central labs have vanished and new technology provides a brand new market, an effective, automated system that runs via the Internet to print to distribution to the customer. Moreover, the volume production price is far more inexpensive than previous “photo paper” and also made without lead and so a decent environmental choice. It gives the images a durability of over 70 years with no drop in quality, as our parents’ old pictures did. Managed properly, a giant market is emerging!

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12. Photo – mega market underway

ONE HARD DRIVE CRASH IS ENOUGH Photos also provide unique opportunities to create intelligent marketing communication. The photo is a memory of an expected experience and when buying something like a car or a book or a two-week vacation, it’s always about expectations. What does it take to sell the car compared to the competition? If we narrow it down to the bare corner stones it is relatively easy and give companies tremendous opportunities to present their products in different styles. Still, the photo plays a minor role in the graphic industry. In Scandinavia the physical photo stands for less than ten percent of the digital (Indigo) volume, in Europe about 20 percent. But it is difficult to obtain fair statistics on how the photo industry really is doing. The measurements made show that the industry is going straight down into the basement. But then you don´t count photos that are digitally printed, you only have statistics on photos developed the old fashioned way. Unfortunately, it is common with these gaps in the system when markets transform from one technique to another. Statistics can rarely cope with the pace of the transformation. But clearly not enough cut-sheets are being made today if we look at how super popular the photo is in the electronic world. Instagram, Flickr, Twitter, Facebook, all flooded with pictures. Obviously the photo will grow as a physical product, one hard drive crash is enough

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China produces to China – the trend is “homebound” Today’s trend is ”homebound”. More and more companies are setting sail back home after trips to low-wage countries in general and China in particular. This goes hand in hand with the increasing standard of living in China, wages are going up and the cost for producing there (including transport costs) is similar to producing in our own country. And with the incentive to outsource production to China subsiding – why should we not act locally

DOMESTIC BEFORE EXPORT China currently produces more and more to its own consumption; exports are not increasing at the same rate as before. We must not forget the history of China with Mao’s Little Red Book, where the Chinese people throughout the years have been focusing on work and even more work. It’s basically not a country that aims to export everything they create. Today the Chinese themselves consume and want to have what we in the West already have; big western brands are highly regarded among the Chinese. The country is investing heavily in Africa and sees this, after the United States, as its most important source of future production. As an example, China has previously exported 1 million farmers to Africa to produce rice for their own Chinese market. China won’t have its own production to meet future needs to feed its own population. Today there are 1.4 billion people living in China, more than 150 times the Swedish population and four times the entire European market!

GDP-GROWTH STAGNATES GDP-wise China “only” made an increase of 8 percent during 2012. The corresponding number halfway into 2013 showed a further reduction to

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7.5 percent; with the deflation-level horridly close at 6 percent. And that is, with Chinese eyes, an extremely low GDP figure – the lowest since 1990. Compare that to Sweden, we’re talking about a GDP boost of 1.5 or 1.6 in 2013. Meanwhile, the Chinese have a rapidly growing middle class who is queuing up to buy a car. China is today the one country that accounts for the largest duty-free sales worldwide (China obtains thus the largest repayment of VAT from when people shop during travels). They want what everyone else got! And remember – the people of China love western world brands.

FOCUS ON THE ENVIRONMENT The environment will quickly enter the stage. It’s about transportation, packaging, marketing materials, and customers who ask for the origin of every product. In the food-business the trend is crystal clear and the locally produced is spreading like wildfire through the industry. Same as when it comes to marketing materials and packaging where we see country after country act more locally. That goes for languages, messages, laws on table of contents, trends or not trends – think Findus and the lasagna horse-meat scandal of 2013 – people want to know what they are eating and preferably organic and locally produced. And event customization, as Coca-Cola with their personal and local names on cans and bottles, fits the bill perfectly. The consumer still wants a good deal and still wants the wide range, but if it isn´t cheaper to buy things from afar – why not buy it locally? More products are manufactured locally for domestic markets, based on increased communication and information. With today’s technology every consumer have access to information that enables significantly more knowledge than before. With our quest for knowledge constantly increasing and the more informed we will become, the more we will buy locally produced goods.

THE TABLES HAVE TURNED So: When it comes to printing, the trend has turned – we don’t continue giving as large printing productions to China and Eastern Europe as we used to. The demand decreases as the volume decreases. The reason is that prices ‘over there’ are increasing both on products and transport to our small Nordic region. The Chinese themselves have a faster wage increase than we in the Nordic countries and the gap will continue to close. We require smaller volumes by more expensive shipping and shorter delivery times. As a result it won’t be as profitable to produce in China. Plus: the client wants to know the origin, whoever is making our stuff; child labor concerns, ethics and morals are high up on the agenda. This means that the importance of locally produced products grows fast, and we’re able to maintain the quality and price competition.

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Transmissions Of course, new digital technology has been a significant engine for all ‘my’ transmissions. It’s the foundation of our changes, and the graphic industry will be my fourth and longest journey. For change to happen, it must provide added value sufficient enough to alter both our solutions and buying patterns. You measure the size and quality of a transmission by confirming the amount of losers. The more losers, the more opportunities open for new and profitable winners. We see this in the graphic industry of today.

ADAPT AND SURVIVE The difference between transmissions and the usual ups and downs (cycles) is that they don´t turn up where they went down. Instead they switch track and pop up in new places. We’ve seen how graphic entrepreneurs have waited too long for business to turn up again on the same spot – and gone bust. Unfortunately, that scenario will continue to happen. It’s usually only the economic strength that differs in when a company will crumble and fall in that situation; how big a loss one can cope with before it´s irrevocably too late. Fact is that Judgment Day will come if you don´t change, if you don´t adapt. The result is always the same, whichever industry is being transformed; only the ones that adapt will survive. The graphic industry in the 80’s was clearly alien from today. At that time it was very much a handicraft and very little communication between the client (brand owners) and the rest of the chain of craftsmen. There was a non-existent prospect of dialogue between the different professional groups as PR firms, ad agencies, typographers, composing rooms, film-composers, printing houses and binderies. It was often impossible for the customer to inspect and influence! Today, consumers demand speedier changes and modifications. The motto becomes flexibility, diversity and dynamics. It’s all about personal orders, short delivery time – and we print on demand, not for stock.

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TIMING AND EXTERNAL FACTORS Overall, transmissions are much about timing. Many emphasize the importance of getting a new product out on the market as quickly as possible, but that’s not always the best way. The trick is to introduce it at the right time! We can use the electric car as an example. The first electric-powered Swedish mail vehicle was called Tjorven and came in the 70’s. In hindsight, we know it was a total flop. The development was nevertheless logical since we knew that oil would run out. But external factors tripped an otherwise given development when the Arab countries protected their oil by buying up all the patents for new and improved batteries. Today, they can´t afford to do that. But will new external factors come into play? The Israeli actor Better Place, which provided an infrastructure for electric cars where you switched the entire battery at a station (much as a gas station) instead of standing still to charge, went out of business in 2013. They had in addition to their business partners in Israel also Dong, a major Danish electric company, as financier of the Danish market. But only one (1) car supplier went along with the solution and the whole thing collapsed. Was this due to the technology, external factors and/or wrong timing?

RARELY TOO LATE When is the right time to do something? When do all external factors point in the right direction? We don’t know. We just know that ideas using new technology often breaks too early and rarely too late. Most mistakes are made when you use new technology to start a transmission prematurely. One must carefully review the needs, the logical bits and why this will happen – as well as carefully analyze the illogical odds of why things will NOT happen (Chapter 17 – external factors). The illogical parts are always linked to an external factor, something that is often missed or forgotten. As examples there may be religion, patents, human habits, etcetera.

CURVES ARE BASED ON MARKET PSYCHOLOGY Market pros, the ones being best in the class, position themselves around the delta 7 on a scale of 10. They aren’t adventurers but follow a rise that has already started and leave before it peaks. They won’t reach either the bottom or top but make the most rights and the least wrongs, while amateurs and players usually make most errors in their quest for the absolute bottom or top. It’s like the stock exchange; there must be lots of losers for winners to appear. When the pros work they automatically create economic cycles, a lot of curves are based on psychology, and if many do the same thing it will soon become the truth. If everyone thinks it will go to hell, it will probably go to hell! It’s the backlash of today’s huge range of information and misinformation.

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14. Transmissions TRANSMISSIONS WITHIN THE GRAPHIC INDUSTRY History tells us that it’s about eight years between each peak and recession. Then phases occur to make better business – and maybe take a considerable leap over the competition. 1973.  Offset printing presses. Offset presses came earlier but their breakthrough was around -73. Everyone understood the urgency to leave the old letterpress for offset printing to keep up. Those who invested got a quality head start from those who chose to wait or not to invest at all. 1981. Four-color offset. Offered four colors in a single printing, instead of having to run through the sheets four times. You didn´t have to change color and plate but instead put each printing press tower after another. These came earlier (again!) but didn’t have their breakthrough until the recession after 1980. 1990. 70x100 printing presses. Provided full-frame B1, and up to four A3’s or eight A4’s fitted on a B1. The gain was the ability to use a larger paper per sheet. The work with for instance newspapers and books became much more effective. 2001. CTP – Computer To Plate. Was introduced back in -95 but had its commercial breakthrough in 2001, during the recession. The former image setter exposed every pixel and delivered a black and white film, four pieces for full color (cyan, magenta, yellow, black). They were then exposed in a light box on a light sensitive plate, which was then put to the printing press. A two-stage rocket. You assembled text and image by hand and struck on a plate, a true craftsmanship. There were major quality differences between different printing houses. CTP came along, and the craft became mechanized, with a machine that could expose directly on the plate without making film first. Those who won the CTP race were those who had their own sheet metal fabrication. Kodak and Agfa was good at this, they combined purchases so the customer signed a contract with expendable metal consumption simultaneously. 2009. The digital transmission. Time to go digital, but everyone couldn’t afford it and some printing houses unfortunately took the shortcut via color copiers. A technology that the client often himself had in his office and the added value – to pay more for the service at a commercial printer – was lost. 2017. What happens the next time the economic cycle hits a low? In the years of 2017-2020 packaging will break through as an integrated graphical product. Today it’s a separate branch, but modern technology will change that. Packaging has not been a graphical product historically, but will be. In Sweden we have the blue-white packaged groceries from Konsum and now also the red-white basic line from ICA. I hope the packaging industry takes a firm foothold in the process printing business. This means that you already need to start converting, adapting, planning and investing.

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Economic cycles As I said earlier, the transmissions of markets only occur in recessions. In an upturn – when everything goes up – you only want to do the same thing over and over. At that stage, there won’t be any changes. In a recession things need to change. We know that it’s roughly eight years between every dip and yet whole industries and their managers and leaders always get stunned. Same reaction every time! Without being morbid, I can honestly say I love my recessions. That’s when you change, that’s when you have the time to seek and find new ways. The thesis of the future is supported by history; there are cyclical curves that stretch from the 18th century up until today. They’re held firm for about 8-year-annual cycles, up and down. Check the “The Four Bad Bears”: Kreuger, oil, tech-bubble, and last the financial crisis – the four major crashes.

I LOVE A GOOD SLUMP A recession – hip hip hurray! Time for a transmission! I have received a lot of criticism for sticking my neck out about how negative everything is and simultaneously cheer when things go bad. But I stand by it, as it’s in a downturn that we are the most responsive. That’s when we listen and have the time to actually do something. That’s when we need to change course, not just a little – but considerably. Here too, it’s about timing. You turn too soon (before the crossroad) you end up in the ditch. The intersection arrives only in a recession and it’s of all importance to choose the right path. It’s essential to analyze your own strengths and weaknesses, but also to listen to your customers. Pick out the 20 percent largest customers, who often account for 80 percent of revenue, and figure out what to do better and (more important) supplementary to them?

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If clients will have fewer printing suppliers in the future, what products can you make instead of a competing supplier? How to become a larger, more diversified, and more dynamic contributor to the customer? FOUR BAD BEARS Crash of 1929

40%

1973 Oil Embargo

2000 Tech Bubble

2007 Financial Crisis dshort.com April 19, 2013

S&P (Standard&Poor) 550 daily closes. Note:The S&P 90 is used for the Crash of 1929 20%

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A CLASSIC DOUBLE-DIP We just passed a classic double-dip recession. The one that appeared in late 2008 (which began budging from the top a year before) and where the curve then went up too early without proper economic bearing, which meant that it turned down again â&#x20AC;&#x201C; a double-dip. If there´s not enough bearing when everyone wants a turnaround it will lift only temporarily and the market must once again bite the dust and pay the price. I usually compare it to the sight of everyone running out too early on a frozen lake when the ice is not sufficiently frozen; people collapse through the ice and get a very unpleasant bath. A freezing bath and a double-dip. The recent double-dip made this recession long and hard. Yes! Brilliant! Doubledips are good! Then the transmission will properly mount which will cater for a strong boom

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15. Economic cycles HOW THE CURVES AFFECT US Every recession is to me is a new opportunity, new fuel to new openings. It’s in the time of recession that the transmission engine starts. No one dares to change in a boom. You change only in a recession because then you have the time, motivation and drive to transform – a pure survival instinct. What impact does economic cycles have on the graphic industry today? Through access of capital! Obtaining venture capital is really our biggest challenge today. It’s easier in a boom, even if the capital usually is more expensive then due to higher interest rates. Today, the rates are low but investment money is more difficult to get hold of. If we look to the Nordic market it’s positive that Sweden has healthy state finances, “cash is king” and in that department Finance Minister Anders Borg has succeeded. Norway has still got its oil. Denmark is somewhat hampered by the locking of the Danish krone to the euro and Finland has, unfortunately, been unfairly tormented by its link to the euro crisis

WE’RE HEADING STRAIGHT UP Clearly, we are now – in the time of writing in the autumn of 2013 – on the way up again. We head into a thriving boom in 2013-2017. Those who haven’t had time to change until now are in a hurry; it becomes more expensive and more difficult the further into the economic boom we get. Choose your path now! The difference today is that no one any longer doubts the added digital value and its impact, which is pleasing for us who have nagged on over the years. Today people know that digitization is the only way to go, but not everyone has found a solution on how to get rid of their old equipment and costs – a must before moving on. Those who have already begun their transmission are well positioned. They are in different phases of the transmission; some have already made their choice of direction and seen the light, while others are just beginning the journey mentally. Ideally you should also have some money left in the bank. Most likely there is some substance left from an already accomplished consolidation, a downsizing where you have fired people or merged companies. Have you done both you’re probably in good shape and have a great deal of positive and constructive work ahead. Next you can start adding pieces of self-analysis and customer analysis to the big jigsaw puzzle. It’s about investing a dime and getting two back: ICDT; information, communication, distribution, transaction (chapter 16). That is what we’re going to do the entire ride into the upcoming economic boom.

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WINNER = DIGITAL PRINTING TECHNOLOGY This surge, this economic boom, will be amazing. Unfortunately for many, it won’t take the same route as before but find a new road ahead. Many in the publishing industry are, regrettably, just waiting. They believe that the good times will come back as they have done for generations. But this time it won’t happen, the mega trend has taken over and changed the buying patterns of customers. New digital technology solves most customer needs cheaper, faster, more flexible, and provides primarily a huge competitive advantage. The big trends suggest digital printing technology. While the size of projects keep getting smaller and smaller it becomes increasingly difficult for others to compete. Today, they don´t even get the contracts because they cannot deliver fast enough. And the big assignments that remain are getting fewer and fewer. Accordingly the graphic industry consolidates in a hurry as we speak. We stand at a crossroad. It requires both knowledge and coolness to make the right turn. But something must be done, as it will continue to be extremely difficult earning any money using old printing craftsmanship.

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ICDT model How does business work? ICDT – Information Communication Distribution Transaction ICDT isn’t a business plan but the foundation – the engine – of a business plan. I currently see a lot of marketing plans completely lacking this process and thereby miss target. Without ICDT model you first and foremost neglect the “not-factors”, why things will NOT happen. External risk factors must be taken into consideration as they can easily condemn a whole process, an opportunity or a business. Despite everything else looking spot-on.

EVERYTHING IS RELATED The ICDT model collects and proves this in four rooms of business (information, communication, distribution, transaction) – where it comes together as one. Everything is related! The effect of having ICDT as the foundation of a business plan is absolutely crucial for the quality of the outcome, but also regarding timing and which parts are NOT going to happen. Understanding these relations is crucial for all forms of investing money into ROMI (Return of Marketing Investment) or wanting to do as the “Smålander” – he who invests a dime, makes two, and thrives on that percentage.

THE FOUR ROOMS OF ICDT 1. In the first room of “information”, it’s about collecting facts and all forms of appropriate analysis of information concerning the product/service. The choice of information and its quality becomes crucial as a basis for the other rooms. What is unique? What needs are there in relation to existing supply? Which impacts are contributed? What will the effect be (positive

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and negative)? Add external factors (NOT!) and see what limitations you will find in areas as the environment, ethics and religion. Then coordinate with existing megatrends and monitor where we are in the economic cycle. Read more about this in chapter 17. 2. The second room is “communication”, where a lot has happened in recent years. Today, the choice of communication of the product/service must be far more measurable and contain more substantiated facts than ever before. First, be explicit and agree with what it is you are selling. Whether it’s B2B (business to business) or B2C (business to consumer), personal or general, cheap or expensive, volume or high margins. And obviously updated on the current external factors, which will add or limit the process (chapter 17). These choices will become the base profile and what characterizes the product – the brand itself. What you want to communicate. 3. In the third room it´s all about the “distribution”, selecting which channels to communicate through. In this room, graphical tools enter as part of the toolbox. Both electronic possibilities as television, radio, Internet, smart phones, etcetera, and physical possibilities as printed matters, ads, packaging, sales support materials, and so on, are available today. The social and biological networks play an increasing part of the distribution-room, influencing the buying patterns of consumers. 4.

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“ Transaction” is the fourth room, and a matter that too often is absent when launches are planned. To be able to measure a product from the stage of information via communication and distribution, but not daring or not having the ability to measure it in monetary terms is bound to fail. We must figure out how much money ends up in the wallet. That which cannot be measured does not exist! TV-shop is a brilliant example of how to quickly and easily measure the process of ICDT. Do your treadmill advertising and get all the answers on how business went within 15 minutes. Did you receive more cash than the total cost of the process? Then run the ad once more! A shining example of a quantifiable unit, and we need to pursue similar approaches in several areas of business and in our graphic industry. Imagine the impact of being able to know/measure the return on investment? Transaction is important also at the stage of planning; don’t forget the last room.


16. ICDT THREE EXAMPLES OF ICDT 1. Milk – customers of gas stations It’s a very small amount of marketing communication in the price of a carton of milk. The packaging is simple, very patented by Rausing – but simple. ICDT aims at the value of providing information, really on how it should be distributed. That milk became a product you buy at the gas station were initially unnatural, but developed into a real lifesaver for the stations. They made money turning into a grocery store, when the profit of gas lay still. How you ask the question is hugely important in this context. Ask the customer

– Would you like to shop milk at the gas station? – No, I do that in the grocery store. –W  ould you like to shop milk while filling up your car, if the gas station is open until midnight? –Y  es, that would be convenient at times when I don´t make it to the supermarket. 2. E-commerce – gave customers reasons not to shop E-commerce boomed in the 90s, but went up like a rocket but then crashed and burned. The reason was that it lacked several components of ICDT, including the transaction part. And if you don´t do every step (information, communication, distribution, transaction, and start over) – you’ll lose. In the early days of e-commerce, companies carelessly lost the distribution part. There was no contact with the product, everything was virtual, no physical evidence, and nothing to hold in your hand; the feeling and sense of security was all gone. This meant that consumers easily found reasons not to shop. And we are incredibly talented finding reasons for not doing something; our fear of change comes into play. Because subsequently, one doesn’t need to take a stand but can simply continue as usual

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3. Digital offset – the whole truth wasn´t told Why didn’t digital offset break through already in 1995? Again, we’re back to ICDT. The problem was that the industry communicated that digital machines would completely replace the whole offset market. A mistake! What happened? The printing houses picked lots of digital samples and compared them technically with conventional offset and asked their customers one question – is this something you want? The digital quality of that age was not completed and did not make as good quality as offset. But customers were never told about the digital benefits, the added value compared to ordinary offset printing. The question was never raised! Again, the way you ask a question is crucial. The lesson learned is that the client only responds according to the knowledge he or she has got.

– What are your future printing needs? – I’ll check my historical stats and order accordingly. – If you can order printed matters every month, without paying more, instead of ordering once a year. How much would you order then? – I didn’t know that option existed!

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External factors EXTERNAL FACTORS THAT AFFECT US

State of the market, cultural differences, language barriers, war and misery, ethical values, habits, religious differences, the law of Jante, megatrends, the environment, new technology, energy, generation, fashion/trends, integrity, gender, political opinion, social groups, sports/competition, popular movements, terror/fear, ignorance, poverty/debt, disease/pandemic, increased life expectancy. Let´s begin by comparing the United States and Europe. Two markets, by many enterprises treated equally. A huge and common mistake based on trusting the wrong information and using the wrong statistics. Unfortunately the right kind of information is often lacking, that kind of statistical business surveys country by country is rarely done. Overall, the data about specific markets is very inadequate. But that doesn’t mean you should make decisions using completely inaccurate facts. It is common for companies to take a shortcut and simply use the statistics they can get hold of. They often mix data from the U.S. and present it as something that will happen in our European country in a few years time. Totally wrong, and disastrous! One must be careful and scrutinize the sources of any statistic. Not even within the borders of Sweden the markets look the same. Stockholm-MalmöGothenburg all have great differences. Or compare them to the northern part of Sweden. People want to be similar to a few others surrounding them, but they also want to be unique, not like everyone else

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17. External factors THE U.S. AND EUROPE ARE DIFFERENT What develops a society is often free information and increased education leading to knowledge and a stronger community. Most institutions writing on this topic are located in North America. In the United States 50 countries – or states – form the U.S., sprung from colonies from France, Spain, the UK, Mexico and Russia, and the annexed Republic of Texas and the Republic of Hawaii. There are immigrants from most parts of the world, including Sweden, joined in a market with one language and a unified trading. The United States is today considered the most multicultural and ethnically diverse country, with only 200 years of history as a nation from the Declaration of Independence July 4, 1776, but over 300 million inhabitants. Compared to Europe, there are huge differences. Only in the EU, there are today 27 sovereign countries/states with 23 official languages, plus some 150 minority languages spoken by more than ten percent of the over 300 million European inhabitants. The cultures of Europe, unlike the U.S., are geographically separated and divided and also originated thousands of years back. They are now to co-exist within the EU as a common trade union. This means that conditions between these two trade areas differ considerably and even down to the heart and soul of each society. To believe that American trends and successes for sure will be the same in Europe is therefore a big lie or misconception. In the U.S., you can try a product launch in one state and if it turns out good – simply multiply everything by 50. In all probability it’ll be a hit all over the entire playing field. But a success in Germany is not a success in France; a flip in Spain could flop in Belgium. The external factors, the cultural differences, matter

FACTORS ALL OVER THE WORLD Americans enjoy seeing Europe as one country, one market. The material they present usually works well in North America – but nowhere else. Not even in South America, where business is made in a whole different way. The Asian market? Japan, China, and India all have large differences in terms of business culture. This is extremely interesting, and if you do your homework there are major benefits to be gained. You need to do the right things all down the line; relationships are built over time. Foreign companies have a huge challenge but also a huge possibility in the mega market of China, with nearly 1.4 billion people, 20 percent of the world’s population.

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For foreign actors, it will be easier said than done to do business globally while acting locally. “Think global, act local.” Now that China’s own consumption increases at speed, a local market leader in China have got four times more potential than a local market leader in the U.S

HP’S SQUARE BOX Take a global large cap like HP for example. They have built a global and square business box that clearly works and shows good results on the bottom line. But there are lots of things they could have done better and differently in various local markets, also here in Sweden. HP understands this, but still chooses in most cases to follow their fixed pattern. They currently lack tools ensuring that business will work different locally, seen on a global scale. Variations of the same products/services require new tools, maybe HP’s new CEO Meg Whitman, who comes from eBay, has the right background to enforce local changes – as other big brands already do. Coca-Cola’s advertising campaign featuring local names is an example where it immediately creates a local communication with the consumer

KNOWLEDGE – THE KEY TO SUCCESS The more knowledge, the better worldwide relations between different opinions and beliefs! Knowledge gives everyone a greater understanding. Keep in mind that large parts of the world population still cannot read and write. Religion and ethics affect our economic curves, why things happen and why they don´t. An external influence as to why a progress doesn’t always go straight as an arrow. Today, this is rarely or never taken into account. The American still likes to say: we are focusing on Europe. Now, things are more complicated than that. Just imagine a salesman from Stockholm beginning to work in Gothenburg. Or a Swede in Denmark, a Danish Sjællander in Jutland, an Oslo-resident in Bergen. Why do we have telemarketers from the Northern part of Sweden? Relocation money, cheap rent and a well-trusted dialect; someone has figured something out! Religion and ethics are becoming increasingly important in all corners of the world. The next world war, hopefully without bombs and grenades, will undoubtedly be about ethics and religion. It will affect our business and economy as one of the most important external factors. Going forward, it will be even more significant with knowledge of different cultures and languages, ethics and religions. These differences, and the awareness and knowledge of them, will separate winners from losers

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The next society – the biological one Sociologically, communities are described as a larger group of individuals who live united by a network of social relations more or less secluded from other shapes of society. Communities come and go over time and often adopt new forms after global crises. Around 1929-32 (the Kreuger crash) we left the agricultural society for the benefit of the industrial society. The industrialization, with improved infrastructure and urbanization from rural to city areas took off. The next structure became the communication society that started around 1973 with the oil crisis. After the dotcom crash of 2000-2002 we saw the emergence of the information society. A structure imbued with an inexhaustible supply of information. After the financial crash of 2008-2009, we entered the network society. A society characterized by networking with everyone and everything. We’re on Facebook, Twitter and LinkedIn. We are involved in associations and buy things that connect and fit together. If we buy a BMW we also buy a Boss suit. We “like” intensely, and want confirmation from as many as possible as soon as possible. We´re networking.

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STANDARD & POOR HISTORISK ÖVERSIKT: 1871 TILL NU Inflationsjusterade konjunktursvängningar Callouts show percentage gains and declines from previous lows and highs based on monthly averages of daily closes.

2000 +666%

1968 +413%

1000

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1937 +266%

Mar 2009 -59%

1982 -63% 100

1949 -54% 1921 -69%

1877 Low

The last monthly average is 98% above the 2009 low, which is 18% below the 2000 high.

1932 -81%

Real (inflation-adjusted) monthly averages of daily closes 10 1870

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THE HONEST ACKNOWLEDGMENT Self-affirmation is today something that costs a lot of money and creates very few new opportunities. We’re about to get tired of networking and the question is whether it has reached the end of the road. When we have bought the blog celebrity’s “own” brand of footwear and feel that it doesn’t really add anything, just stuff among other stuff. Is it even sufficient, as a trigger, to get 1 million likes on Facebook? Is it still “yes!” or is the feeling turning out more shallow and empty? Do we need a deeper and more honest acknowledgment? Prior to the next economic plunge our demands are built on the next societal basis, the biological society. We leave the network society to reach genuine affirmation, the biological one – back to the roots. The biological society is based on values surrounding ethics, culture, religion, kinship, family, origin and environment (locally produced). Where the choice of belonging (society) is the important one. If I’m a religious man, I´ll gather people who are religiously like-minded. Are we brothers, neighbors, or do we have another connection; it may affect my decisions and values. Ethics, morality and affiliation (genealogy) have more of a say when we choose what to buy and who to associate with.

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18. The next society – the biological one

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TO KNOW OUR ORIGINS Often the effects of the previous structure drive the next one. Usually things missed by the previous society, in this case more down-to-earth, physical and genuine values. Digital genealogy will grow stronger in future. Who am I, what is my history? A physical identity that today’s networking doesn’t fulfill. Maybe it’s about the multicultural view of society that exists both in the U.S. and in Europe, but with a major difference in origin; Europe has more than 4,000 years of history while the U.S. has just over 200 years and was created with lots of immigrants from the beginning. When you put paper into the Wailing Wall in Jerusalem there are ruins from the third generation of the temple wall. The wall extends 30 feet down, and below are two further ruins of former walls. In Jerusalem, it has evidently been wartime for at least the past 3,500 years (the first temple). Perspective? Does this change overnight or during a presidential term? The answer so far is no.

THE LOCAL BECOMES MORE LOCAL How will the biological society influence the graphic industry? Through the way we communicate! We must use this “customer knowledge”, this external factor when we form our business model. This will affect the choices we make between different channels and products before a launch. As will the fact that there are now more and more people who can’t speak Swedish in Sweden. The CMOs 40-crown (chapter 10) will be affected in the next social structure and we’ll have to take new and emerging values into account. A “Gothenburger” will be even more “Gothenburgerish”, a “New Yorker” will become more “New Yorkerish”. Religious groups will get even closer in their groupings. Basic ethical values will increase its worth to the consumer, and influence choices that are made.

GENDER WILL HAVE AN IMPACT Locally produced and organic products become favorites, a choice between right and wrong. The biological concept also embrace the value of being healthy, living longer, taking care of loved ones, and being in touch with Mother Nature. The status of PICTURE: HERRING OF THE YEAR. PHOTO: LISA NESTORSON

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18. The next society – the biological one jobs within the healthcare sector will escalate, as within the educational sector with the same arguments; increased value-system for our loved ones, children and grandchildren. Gender; she, he or s/he. Gender perceptions of different religions differ extensively and will have an impact when we switch from network to bio. Gender roles and equality will be measured and affect our ICDT, our way to create business. In the Nordic countries, this is as yet on a limited level but clearly increasing.

CUSTOMER KNOWLEDGE – THE BEST CURRENCY Information about customers, “Customer IQ” will be the best currency for future businesses. But receiving information about biological client groups is a sensitive matter and controlled by the PDA, the Personal Data Act. Today, the Swedish retailer ICA has come a long way in this area by the knowledge they gain through membership cards that register everything we buy at the ICA stores. For instance this knowledge can be used to send advertising about Libero diapers to someone who have shopped the rival Pampers diapers. This doesn´t directly concern the PDA, instead it’s an effect of the information in ICA’s database. More companies will follow, while “consumer knowledge” becomes even more worth in the biological society

THE WAIT WILL BE EXTREMELY EXPENSIVE It´ll be distinctive for customers to demand information about the origin of goods. Swedish Findus and their horse meat, Lidl and the goulash, similar “scandals” will come along more often. It’s a headache for the producers and perhaps not too easy to resolve. Shorter lead times in the industry require enhanced control and greater flexibility. External factors that directly attack a product or service must stand corrected immediately; the wait will be extremely expensive for brand owners. The longer the wait – the longer the time to regain their trust, if it’s even possible. This includes ethical values, where the graphic industry will play a greater role together with brand owners. Total commissions will grow, as will the possibilities of increased profitability, especially within services concerning logistics and flexibility. The importance of local presence applies here and becomes even more significant in the next social structure.

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The slow-moving man Some things don’t break through even though they should. Despite the fact that the timing seemed right, despite the fact that it was technologically possible and despite the fact that all arrows pointed in the right direction. Why? It’s the external factors that haunt us and alter logic; like the fact that human beings evidently live longer in every generation. We live seven years longer per generation globally and four years longer per generation in the West. Consequently, old habits will survive for a longer period of time.

AN INDUSTRY POWERED BY GENERATIONS The slow-moving man doesn’t want to change. We cannot forget that fact while we make and plan business. Despite everything being set and ready – there’s the natural foot-dragging. One example is the printed medium. Many have questioned if it will survive the shift that comes with receiving and reading information digitally. The technology is ready, but the slow-moving man still wants his newspaper in his hand, at the breakfast table. It’s a generational transmission that takes longer than expected, moving even more slowly thanks to the fact that we become older and older. Regarding generation-driven industries, as the graphic industry where managers and owners often inherit their company, they run a greater risk during a tech transmission. They are worse suited for change and may lack the necessary training that the current and future entrepreneurship require. Generation firms are over-represented in the graphic industry and turns into a virtual brake, inertia. We often see a skilled operator, who handle the printing machines and have been around for ages, overtake and manage a printing company. We can aslo see that a skilled operator doesn’t necessarily turn out to be a good business leader. It’s the same kind of logic we see in other positions, in sales for example where hungry and skilled salesmen rarely become good sales managers, that are supposed to lead the group and share with others.

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Some printing houses are still talking about having “better offset quality than the competitors”, which today feels old-fashioned. Here’s the shift. To leave the old behind and switch from the proud craftsmanship to become a supplier of communication, mostly dealing with logistics and increasing added values.

ADDED VALUE INSTEAD OF TURNOVER Printing houses focusing on the actual craft are rarely good at marketing themselves. To run a printing company today is a completely different industry than it has been historically. It’s another business promotion-wise, communications-wise and logistically. Today and in the future “print on something” is only a part of the product. Many have started implementing their technological transmissions but only a few have initiated the market-related journey. Where education and knowledge is the difference between profitable and unprofitable operations. It’s not until the customers become profitable, suppliers and sub-contractors get their money. It’s about delivering added value to a greater worth than the cost of production. “To increase prices is impossible”, one says in the industry and we’ll probably have to charge less money per job in the future – but hopefully at a lower cost. Maybe not per ton, or per invoice, but through more jobs and with greater value added. The graphic industry must begin to think “added value” instead of turnover. We´ll do this by broadening our customer deliveries. We’ll also provide superior experiences to clients and their customers.

THE DNA OF A PRINTING HOUSE The existing costs of a printing house is often way too high and a heavy burden to carry. Many years of poor profitability have left its mark. Even if one wants to change, the economic possibilities are often missing. To execute personnel transitions and various savings cost money before it has any effect. Today, merging with another printing company, buy or be bought (consolidation), is getting more and more common. But this doesn’t always work or have the desired effect.Many traditional printing firms that have existed for a long time – sometimes for generations – are having extra difficulties. The average age of owner-managed printing houses remain among the highest seen over all industries. In many cases, the history is actually a burden when one needs to change the most.

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19. The slow-moving man How can you eliminate or revaluate your staff, to whom you have such strong ties? These are persons who have always been there and perhaps stood by the machine while your dad controlled the company. It’s not easy. Everything is firmly rooted. It ‘s not just about personnel, but an entire culture, a behavior, the DNA of a printing company.

REFINEMENT THROUGH SMART PHONES In order to save money not only capital is required but also a change of route, a new direction. There is a transmission and we shall switch tracks. Successful corporations will not pop up in the same place as before but in new places. Here, the graphic industry must keep up. But one mustn’t forget that we are people – and our fear of change is very human. Man is not exactly prone to change. Company changes are often very painful and the staff might feel uncomfortable, even if it’s a positive change. Here, the concept of us as habitual creatures is very appropriate. We’re sluggish. Then, how will we ever change? Well, let´s start with a refinement. We change best through processing, where initially something positive happens. As for the staff, you can add the value of education, and in conjunction with the training also look at changing the task, which sums up to a refinement. A technical change that has been highly significant and had a huge ripple effect is the smart phone. We have now 6 billion cell phone users in the world, and roughly 2.6 billion people are online. Through a refinement of the ability to communicate, so much in our daily lives has changed. And this is only the beginning

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Push/pull marketing How often do you receive a so-called “carpet bombing” with flyers that fill up the mailbox? How often do you get annoyed and throw everything straight into the paper-recycling bin? Question is, who reads this vast amount of advertising? And which role does it play as an effective marketing tool? “Carpet bombing” is common, depending on the time of month (in relation to payday), major holidays and the ongoing season. There are eleven seasons per year, almost a new one each month, which is apparent in the amount of unaddressed direct mail.

MINIMAL MEASURABLE RESPONSE These are examples of “push” in marketing. It involves large amounts of widely distributed ads, but unfortunately only with micro parts of measurable response. One common approach to double its measurable response regarding “push” is to double the amount of messages/mailings. Have you sent one million, increase to two million. If the message and the quality is the same, the cost will statically follow the response and hopefully also the revenue, simple maths. One thing is for sure though. Consumer interest of more “carpet bombing” in the mailbox is low, to say the least. It never became a success story among the recipients, although you nowadays place paper in the recycling bin for it to get reprocessed or turned into energy.

PULL IS THE OPPOSITE OF PUSH “Pull” marketing is on the opposite side of “push”. “Pull” is things we ask for. Information and promotion that we actively seek through different channels, as memberships, associations, subscriptions or via the Internet. Things we choose to want to know more about.

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This sounds good, but in reality it is unstructured and not frequent enough – both in a positive and a negative sense. That’s because consumer prioritization and timing not always collide. A combination is needed to optimize the quality, the best of both worlds: “push & pull”. There, the perceived advantage of the benefit of marketing increases with the aim to boost the measurable added value. This reduces overall cost, while the value per response surges. The key is to add value while cutting costs. To lower the cost, we need to produce less – but increase the quality and value of the marketing we send out. And again: that which cannot be measured does not exist.

THE COMBINATION BECOMES CRUCIAL “Push & Pull” is about our endeavor to add intelligence to marketing. Today it is still “carpet bombings” (push) that apply in most segments, something that has not changed very much over time and is still being ruled by old market forces. 3.7 million Swedish households receive on average over 57 kilos unaddressed advertising per year, representing 54.7 percent of all our mail. 51 percent of the recipients throw this without reading it; however, the recycling is high – around 80 percent. New legislation is underway, the USO (Universal Service Obligation), where several countries want to completely ban unaddressed advertising. In Sweden, the industry’s own association SWEDMA is pursuing the issue. Consumers’ desire to decide for themselves is constantly increasing; what they want, when they want it, and from whom. The “carpet bombings” doesn´t meet new standards or add values that bring us into the next social structure, the biological society (chapter 18). We have a strong driving force to be both unique and still fit into different contexts. We want to mold ourselves but need inspiration. We desire new experiences where we progress from illusions to acquisitions, where we consume with the feeling that this is exactly what we want, that this is unique to me – this is I.

TWO EXAMPLES OF PUSH & PULL 1. ICA (a Swedish retail company) is a good example of working with both “push & pull”. When customers shop and register their ICA-card, they instantly give away the knowledge of their purchases. ICA pays back 1/100, one percent of the value of the shopping. The company uses the knowledge both to order the correct products and quantities to every store, and to marketing.

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20. Push/pull marketing Ten years ago they started using this “customer IQ” in a first attempt, where ICA split up a dispatch about diapers Pampers and Libero. They sold the same advertising space divided into those who bought Libero with ads from Pampers and vice versa. When this became known to the public – that “big brother is watching you” – it immediately was an uproar, well covered in media, and ICA backed off. The market wasn’t ready. When they started “My Goods”, a dispatch from ICA to all approximately 2.5 million members built on information from the customer cards, they continued on the course that they had entered upon. It was an outcry all the way to the TV-news. But this time around the storm subsided quickly and today “My Goods” is a long-awaited and well-liked product that arrives in the mailboxes of the members. It’s now more personal and has a greater value, a good example of increased communication between supplier and consumer.

2. Coca-Cola – ”share a Coke”. In 2013 the biggest digital campaign ever saw the light of day. Over 800 million Coca-Cola labels was printed with the most common first names per country. In 35 European countries 72,000 different names were used. Eight digital print houses across Europe produced 60 meters per minute in two-color printing, Coca-Cola red and black, for two months. There were just over 800 million labels (sleeves) in five different media types and four different alphabets. The campaign started out in Australia in 2012 with a sale-increase of 11 percent, an indication of how to use digital printing for increased sales and added value.

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“I LEAVE THE WELL KNOWN FOR SOMETHING NEW!”

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What to do? Wider range and go digital! Imagine the old days of Facit, the Swedish company that invested wholeheartedly in being world-leading on typewriters and calculators. What happened? Computers and digital calculators came along and Facit disappeared. It’s not always right to put all effort into becoming the best at what you do, just leaning your production. “Lean” (business concept where you line up, streamline and optimize production) has created just as much good as bad in the industry.

A DIVERSIFIED AUTOLIV ADDS VALUE We have seen the displacement of the number of suppliers for each customer in other industries, just look at the auto industry. Today the number of suppliers is significantly reduced compared to before. One example is the Swedish company Autoliv that started out making airbags. Autoliv now supplies the whole interior of the car, the entire dashboard. Not because they’re best at telephone communications or the technology, but because they had to diversify. Each supplier must currently do more and different things but also consort everything logically; there must still be added values. For Autoliv it’s logical that the airbag sits in the steering wheel, a part of the instrument panel.

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BIGGEST CHANGE SINCE GUTENBERG Printing houses are often just one of many suppliers to a customer, and unfortunately offering a very narrow range of products. This is extra alarming as the printing companies furthermore have put all eggs in one basket and “forgot” to adapt. Too large a proportion of business sits at too few customers; the 80/20rule is common, where 80 percent of revenue comes from 20 percent of the customers. The firms have plowed the same furrow for too long. Now, when the graphic industry transforms, when it’s going through its biggest baptism of fire since Gutenberg, the market will not turn up again at the same place as it went down. With that said, the need to inform, communicate, distribute and monetize (ICDT) better than the competitors is more important than ever.

HELP THE CUSTOMER STRENGTHEN ITS BRAND Brand owners are exactly that, owners of their brand. Our job is to help them with their communication. To make them visible, stand out, and be selling in a way that enhances their profile – and getting them to do all this superior to their competitors. The trend among brand owners is that they aim for fewer and broader suppliers who must be able to deliver more products and services without increasing volume or cost. Brand owners see today’s media landscape as a big jungle of companies. They want to simplify and interact with a few suppliers that can fulfill all their desires. Here, printing houses must adapt and use their imagination to see the opportunities in packaging, distribution and marketing.

“Logic will take you from A to B. Imagination will take you everywhere.” Albert Einstein

PRIORITIZE EXISTING CUSTOMERS With fewer suppliers per brand owner one must be able to deliver more products to get selected. To become “the chosen one”, the service portfolio as a communications provider must broaden and better suit customer needs. Subsequently, prioritize existing customers where a relationship and a degree of communication are already in place. Capturing new customers costs three times more than refining an existing one. How to refine? Learn more about what the customer is buying; they don’t only deal with you but with a number of suppliers. Is there anything you can easily implement in your own production? If the answer is yes, go for it! Why? If you’re already half digital you now have a digital mindset and perhaps the first few digital tools. Then it’s easy to make more applications and to expand, creating more jobs and becoming “the chosen one”.

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21. What to do? Wider range and go digital! Important issues for the graphic industry As a printing company of today’s Swedish graphic industry one needs to increase customer dialogue and ask some important questions: – How can you do more and create added value for the customer? – What products would suit both you and your customers? – Which synergies could this generate? – What do you need from the customer, and what can you provide? From such a process a closer cooperation will emerge, as will a deeper understanding and added value in what’s being delivered – and hopefully better margins. We need to go from 4–6 jobs per day to 40–60 jobs per day. In the next four years we need to increase our share among customers from maybe 10 percent to over 25 percent, depending on the brand owner. Who are we taking business from? Who ends up on the losing side? Well, those who remain in the conventional structure and are unwilling (or unable) to change. For those who haven’t even mentally taken the plunge, it’s urgent! They need to get moving. The cost of beginning to work together with customers rises as time goes by. Will there be more money in the future than right now, to enable a shift?

PHYSICAL PRINT AND DIGITAL ADVANTAGE Printed media is needed, whether physically or electronically. 25 years ago you could only communicate through the printed medium. Today that proportion of money has many supplementary channels – cross media – but only as an addition, not as a competitor. None of these channels can operate without the connection of physical printing. Many have tried but none have succeeded. Look at E-commerce; the market went straight up in the 90s and down just as fast. In that specific market today, the leading operator E-bay spends more than ever before on physical printed media in marketing their services.

Who wants storage today? It´s outdated! It costs money, both to create, store and discard. If digital technology is good at anything, it’s to store electronically and distribute when needed, where needed – and at the right amount for each region, country and language.

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The strongest brand wins Big brands play – and will continue to play – a leading role regarding the way we communicate. Giant brands and their partners set the agenda and determine how we communicate, what we communicate, as well as which physical products will become popular carriers. There is, in other words, exciting opportunities for the graphic industry.

THE TOOTHPASTE TUBE In the store, the consumer makes a decision concerning basic values on which product to buy. The most common choice is to pick the same as you have done before, we’d rather not change. Take toothpaste for example, on the shelves we find a plethora of different products to choose from. The selection seems enormous and all tubes say: take me! But the truth is that the hundreds of different tubes are made by only a handful of suppliers, such as Unilever. They’ll seek graphical partners who can make every tube of toothpaste unique to the buyer, which means lots of work and a bright future for the graphic industry.

IMPORTANT ALLIANCES Companies such as Coca-Cola, Ford, Heinz, Nike and Procter & Gamble are examples of multinational corporations that have joined together in strategic partnerships. Examples include the PTC (Plant Technology Collaborative) for packaging made from bio-based PET from plant raw materials. Coca-Cola already produces so-called PlanBottles in the U.S. and Canada. Heinz has started producing its ketchup bottles from the same material under license from Coca-Cola. It’s all big business – important collaborations craving environmentally sound choices. Another example is the factory that manufactures different brands under the same roof. Take Craft, Adidas and Nike – all made in the same factory. When it’s the same

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product, think of shoes or t-shirts, the cost can be very similar. The cost on behalf of staff and logistics are the same, but the brands are different. To the consumer Craft, Adidas and Nike mean a big difference in both price and experience. Customers choose the brand that suits them best. Experience, value or plain information – how do brands get paid so diversely? What can we learn from it?

A MAJOR EYE-OPENER Imagine 1 liter of milk. The main part of the price is the product inside the carton, the milk itself (if one disregards the Rausing patents). We can use perfume as the other extreme, where 95 percent of all costs may be marketing, distribution and packaging. This leaves 5 percent for the content, the actual perfume. This may work as an eye-opener. To really reflect on what kind of clients you have or want, and estimate their share of marketing, distribution and packaging. How can their value increase alongside their budget and goals? What other products do they buy from other printing houses? What can you do to offer a greater value and thus increase sales? And remember, if you don’t do it – someone else will.

A COKE IS ALWAYS A COKE The brand owner who wants a strong brand wants it to provide a greater value and the ability to charge a higher price. Coca-Cola for instance, is constantly working on their brand so it won’t blur or fade. They never rest, and ensure that a Coke is always a Coke. The difference in quality is not always the major issue. You pay for packaging, branding, marketing, added value, and integrity. “If I buy that brand, it’s the same brand as they have, or she has, or he has. I want to be associated with them, I want to choose my friends.”

THE BIG BECOMES BIGGER The social networks are playing a huge role regarding who we are associated with. The next social structure – the biological – will have a major impact on future trends and values. There will be a change from today’s network society, and we head back to our roots – wanting a more authentic confirmation than thumbs up on Facebook. One thing is for certain; big brands will grow even bigger in future. And the graphic industry has business to collect when companies want to win the race of having the best trademark. Here, printing houses must latch on and be innovative, as there are relationships to build and money to make.

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Provide more than information – provide experiences Printed information is a product of vigorous competition with different electronic channels. Internet via tablet or smartphone can readily display pure information. Manuals are a good example of products, unless state law requires printed products, becoming fully electronic. This includes the automotive sector where the manual will be obtainable directly through the car’s media center. There is perhaps no need to have it physically in your hand and this type of information fits electronically. The customers don’t require anything else. But what does printed medium have that the electronic is lacking? Are there any trump cards available? YES!

PHYSICAL PRINT ADDS VALUE The physical print can of course appeal to many more of our five senses, and it often determines what we buy – which acknowledgment we choose. It provides a completely different experience. The physical print is also continuously rooted in our daily habits (the slowmoving man) and provides added value. Not only in communicating information, but also through feelings and experiences. The printed physical product provides a higher added value – it provides a whole. This really is the core of the ICDT-process where one assesses how many and which channels are performing and providing best value per invested penny. If you make the ICDT correctly and build a marketing plan on that foundation, you’ll know what customers are asking for and wish to experience – expectations that make them choose your products over others.

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Again, it’s important to define customer needs and find out where their product is on the scale. Which part of the product only requires pure information? Which parts are brand, marketing, packaging and distribution? Obviously, what’s being written (copy) and how you make it out (layout) remains important. And one channel doesn’t exclude the other, but the value and the cost differs. Printed matter enjoys working together with the electronic – for utmost efficiency.

THE FIVE SENSES, BY HANS MAKART

STIMULATING THE FIVE SENSES Printing houses switching to the digital side is well positioned. Here, every opportunity to stimulate more senses is available. If only appearance will decide, there are quantities of companies that can arrange “best look”. But if the feeling matters, the competition is cut down drastically with fewer players on the field. In addition to appearance, we talk about emotion, 3D, smell, hearing, and taste, everything unique and personal. We’ll be able to affect more senses than ever. When the end-consumer purchases goods this will be extremely important and provide a competitive advantage that hasn’t even been possible before. We influence the consumer and become the only racer on the track; the possibilities are endless (chapter 29 – Future printing).

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23. Provide more than information – provide experiences Digital opportunities with Scodix Sense provides great business potential, where we can affect senses and evoke emotions with stamping, embossing, and more. If customers of the graphic industry want more and more products that stand out, that scream “pick me!” on a store shelf, and is looking to sell them through a unique feeling that appeals to more of the end-consumer’s emotions – then digital communication companies have tremendous opportunities. Imagine an electronic diploma on your iPad looking back at you from the screen. Compare with the feeling of a diploma in your hand, beautifully printed, embossed with a watermark, in a golden frame.

GROCERY STORES AND PACKAGING In the grocery store we find products that truly are subjects of constant competition. In 1979 Coop Konsum, an other Swedish retailer, launched its “blue and white” label goods. The idea was okay, the package would radiate simplicity and low cost, everyone should afford good food. The layout lost so to speak. Today, this has been replaced by an X-tra-logo, with the message “base products for a tasty and wallet-friendly living.” ICA, on the other hand, had its own chain “Netto” for low-price goods. When this was sold the low-price range Euro Shopper was replaced by the label ICA Basic. The only difference from Coop’s “blue and white” goods is now the color; ICA goods are red and white. The question is where the knowledge, the “Customer IQ”, went? ICA Basic range will show up on the best shelf placement each January, the most cash-strapped month of the year. Time will tell how this move will turn out.

THE TRAVEL INDUSTRY MORE LOCALIZED The travel industry is another extremely interesting market, where communication is very much about experiences. To book travels online are normal today but customers prefer to have a travel catalog to support the decision. The catalog determines your choice, the expected experience. You also want to confirm the experience with an instant memory, a photo book after the trip, to go full circle. Here’s plenty of potential together with the graphic industry. For example the possibility to easily localize offers depending on where the customer lives. To offer the correct fees directly in print if you depart from, for example, Gothenburg or Lulea simplifies decisionmaking and adds value, closeness and a sense of security to the customer.

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This is extra important to the older generation. “Air fares and flight times from Stockholm, how am I going to Stockholm, I live in Malmo?” This will become more localized, with smaller volumes and greater value.

ILLUSIONS CONTROL OUR CHOICES The sum of illusions creates impressions that together become an experience. There is a huge difference in how people perceive things. Take the example of champagne. Serve the world’s best champagne lukewarm in a plastic glass on a smelly toilet. The experience? Bad! Then use the exact same champagne, perfectly chilled, in a beautiful crystal glass, in the nicest environment, accompanied by the best people. The illusions and the impressions create the good memory and deliver a complete experience. That’s what we have to work with in terms of printed communication in symbiosis with the electronic. If it’s only information, the experience is nothing to talk about and it’s both cheaper and better adapted to present electronically. Q: – Why buy a watch for USD 10,000 and not a copy for USD 10 when no one (or maybe few) will see the difference? A:

– Valuation of the overall experience.

One of the world’s leading watch brands invests a lot of money and effort in combining the impression of the watch with various cool venues such as sailing and cars. This advertising creates the correct identity to the brand, an identity that the client wants to reconcile with. This occurs in today’s network society, the question is what will happen in the next biological structure? The illusion, the impression and the reward. The yearning for an experience, an adventure. The customer wants to show what kind of person he or she is, or wants to be. The illusions govern our lives.

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Outside the box – rosh gadol The graphic sector = today needs to think outside the box Rosh gadol = Hebrew for “large head, someone who thinks big” Rosh gadol, literally “big head” in Hebrew, is someone who is creative, driven and looking to find new solutions. It’s a positive term that signals that the wearer of this head is capable of seeing the big picture, taking responsibility and initiative, showing leadership, and going beyond their daily job description or call of duty. The equivalent is rosh katan, “little head”. This is also a positive definition; a person who is flexible but desires definite job descriptions and prefers automated work where each task or shift is a reward. It’s the opposite of gadol, where the reward is the effect of the work or the results obtained.

HELICOPTER VIEW NEEDED Rosh gadol heads/profiles are found preferably in salesmen, creative entrepreneurs and business leaders. It’s often missing in corporations that only work with “lean” – doing what you do only better and better from a process perspective – cheaper, faster, less errors and so on. There’s nothing wrong with it, but in a transmission to a new megatrend it becomes ruining. Remember Facit, that did everything right but drove straight into a brick wall. Their management lacked the profile rosh gadol, but had many skilled people with rosh katan. Working with “lean” and growing most in an economic boom – that’s when the need for a helicopter view (gadol) is most important. The question is what the next recession will present as megatrends, what will the market value higher and compete with in order to sell more of? Many questions, few answers.

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THE GRAPHIC INDUSTRY OF THE FUTURE

REMEMBER TO REJUVENATE The problem, to rather think inside (katan) than outside (gadol) the box, applies generally across every business. It’s certainly not only happening in our graphic industry. It’s fundamentally grounded in the restraint of us, old men and women, who lead the entrepreneurship. Man is not directly change prone (the slow-moving man) and the older we get, the less we want to change, right? The average age of owners and managers within the graphic industry is relatively high compared to other industry groups in Sweden. Sure, every industry requires motor skills and continuity brought by the senior experienced. But one cannot exclude the other.

– To let someone in with rosh gadol will hurt. – But it’s absolutely right!

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24. Outside the box – rosh gadol A NECESSARY EVIL Changes do ache and hurt, before it gets better. Changing tracks, leaving the well known, is painful, especially if it´s done very late in a transmission. 2013, with the economy on a rise after a tough double dip, it’ll require a serious effort not to become a new Facit or Nokia. But it’s a necessary evil; you must go outside the box to gather knowledge and inspiration. That is where new patterns of a new economy exist. If you already are both digital and analog, perhaps the right equipment and tools are in place. But do you understand the customers? Do you offer them a greater value than the competition? Or is it still only a price war – yet digital? Look around the sector. Who succeeds, and what do they do to create a larger space in between revenue and cost? Don’t let digital added values heal the overly unprofitable analog process. And measure each and every procedure.

VISUTECH DIGITAL ACADEMY CURES FUD Set the stage with knowledge, before stepping outside the box. Move away from FUD (Fear-Uncertainty-Doubt) via the knowledge-centre Visutech Digital Academy. There is plenty of FUD in the business today and the cure is education. Knowledge is power. Visutech Digital Academy marshals both knowledge and “Customer IQ” through seminars and workshops. Also sign up for the worldwide network DSCOOP, where already over 8 000 digital Indigo-members share this particular knowledge. Together we stand strong.

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25. Education

When my kids grew up, there were designated computer-classrooms at their school. Today, everyone has his or her own computer. Today’s students use the computer primarily as a reference book via Google and Wikipedia. They do better and more complex presentations thanks to the never-ending stream of information available online. But one crucial piece is still missing, where the graphic industry has a key role to play, and that is to combine printed matters with the digital world.

GIVE STUDENTS AN EXPERIENCE In the school context, experiences are still missing! Clearly we must give young people the chance of experiencing new knowledge. There is a difference between reading or experiencing information. Information is retrieved electronically from the computer, no doubt. But then you have to understand and maybe present it to others, a shared experience. The printed physical information has a huge advantage when it comes to understanding and it shortens the time of learning significantly. It appeals to more senses, increases the value and the prospect of learning. The time spent on a course is an important factor, as is the level of education. A lot of things are lacking in today’s educational system. What is, for example, the goal of each level (or kind) of school? Primary schools, middle schools, high schools, universities, and vocational education – you must define the target. Grades are all very well; of course there is a need to see results. But what is the objective of each student’s knowledge

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COMBINATION PRESENTS ADVANTAGE Those who’ve made the most progress on this matter, set goals in different parts of the course where students reach a certain level per subject, a certain competence. Then you can go ahead and spend time on other studies. Some students are good at math and maybe worse at learning languages. In mathematics there are easier and harder stuff. Of course you should put more weight on what the student doesn’t know, instead of spending too much time on what he or she already learned. Digital printing can play a crucial role in this progress. Both in making everyone achieve a given goal in the shortest amount of time, and (where desired) making students achieve the highest possible level of knowledge in each subject. The vast ocean of electronic information, combined with the printing experience, is a key competitive advantage for schools/institutes. It’s a matter of pushing intelligence into education and providing the best learning per individual.

THE JAPANESE CLASS A Japanese project I monitored in the late ‘90s works as an example. The school commissioned a course where the topic consisted of twelve books in order. Both the cost of printing every issue and taking the class turned into a fiasco. Wrong material, wrong students: we do not know. Instead they had the entire course digitized. They categorized the class and its materials in smaller chapters. Book 1 remained as complete as before, but now the students got to make a digital test proving the knowledge from the first book. The test responses then became the foundation of a personal book number 2. The course made an addendum where knowledge needed to be strengthened and cut down parts already achieved. In each book the content was optimized for each student by his or her knowledge and ability. The gist of the Japanese course was partly the saving of printed-paper, and partly the shortened time it took to complete the class. The difference was dramatic. In addition, the class got a good reputation and the number of students increased. Maybe this is something for our school to imitate. New external schools, private schools, establish themselves all over Sweden, which creates a brand new setup of competition that generates new opportunities where modern printing technology can make things better, faster and more economically. But here, one definitely got an entire culture to deal with. The school industry is conservative – not unlike our own graphic industry.

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Digital packaging The actual transmission within packaging starts outside all the major downright packaging-corporations. The market of how we communicate quite simply brings packaging with it as part of the marketing. The printing houses (commercial printing) that already digitally transformed and that offer measurable and targeted marketing communication to the brand owners, have a relatively easy way ahead complementing its product portfolio with digital packaging.

FULL FOCUS ON NEW MARKET The key is not the actual technologies, for there are already large numbers of both analog and digital solutions. HP, for example, uses tailor-made packagingsolutions, complete lines for both cardboard and flexible materials. However, a water based inkjet solution is still missing aimed at packaging, maybe it’ll arrive with Benny Landas investment in nanotechnology where sharp field-testing is scheduled somewhere in the first six months of 2014. Today there are growing demands on fast-moving production, which speaks in favor of digital packaging. Campaigns must be able to change rapidly, where time is short and critical between versions, languages, labels, tags, content, and more. Digital packaging is perhaps the single biggest new application, greater than when digital offset printing came, which now shall be transformed from an analog conventional process to a digitally driven marketing communicator. Many already talk about this and suppliers are sharpening their product collection. All the focus is directed onto the next big – really big – market.

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DESIGN PACKAGING NEXT The conventional packaging market has long since been consolidated. There are a few big players with a well-established collaboration with foil and paper manufacturers. This may in turn be a factor that could delay the actual transformation. The risk of a conflict of interest between already established relationships and new ones is high. We’re not talking about giant volumes immediately, but it’s competing with the old – not appreciated by all. If one differentiates the packaging industry, carton-packaging is the technically most advanced. It can easily be divided into several segments: protective packaging, decor packaging, thick or thin cardboard, direct or indirect contact with food, “second layer” – gross packaging of something that already have packaging, net packaging, etcetera. Closest to a commercial breakthrough as a product, is design packaging with no or indirect contact with food. That’s because it´s where there is the least of statutory regulations. Meanwhile, the exposure value is comparatively high and the demand of standing out and making a difference is high among brand owners. Some part of the lost 40-crown in marketing has already arrived here. Companies in the graphic industry already working with brand owners on marketing materials got an advantage. They move on from display PoS (Point of Sale) and PoP (Point of Promotion), to logically continue with packaging, from thin to thick cardboard.

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26. Digital packaging NATURAL MARKETING The Drupa fair in Düsseldorf 2016 is already appointed being the fair of digital packaging. It will shine through everyone’s message about where manufacturers want the market to turn. It’s both good and bad that Drupa 2016 takes place in the middle of an economic boom. We know that transmissions don’t occur or break through in a boom, which means that the large transmission probably will have to wait until the next recession around Drupa 2020. Regarding flexible packaging there are many more segments. Where do we draw the line between what’s label and what’s packaging? The development in the field of flexible packaging is currently at a tremendous pace. Obviously there are solutions for direct or indirect contact with food, barriers for smell, taste, heat, cold, and more. The need for more effective and attractive packaging that stands out is apparent. It becomes a natural part of the actual marketing.

A TIME CONSUMING PROCESS Technically, the printing itself is only a small part of the packaging process. As a whole, it’s both long and time consuming with many steps in the derivation and application to the finished product. This part of the graphic industry will, for many years, continue its structure as an industrial process, continuously characterized by great professional skill and craft, obviously linked to the market-oriented graphic segment. It will then take the next step and reach the applicatory companies (those providing content to the packages) and then start the transmission into a digital flexibility. This begins in the recession somewhere around 2028. Until then, it will rather be reflected by large or small collaborations between market-oriented graphic companies and industrial process-printing companies, than by acquisitions and mergers.

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27.

Intelligent packaging I love transmissions (as you probably figured out by now...) and it’s gratifying to see several exciting areas facing major shifts ahead. To be able to create drinkable water is undoubtedly one of the most important questions in the world today, and also a big upcoming transmission – perhaps the hottest one around. And the graphic industry is right on track.

PRINTED CHAINS PURIFY WATER HP Indigo uses polymer, a form of plastic. It’s an extremely thin film, less than one (1) micrometer, with exceptionally small pixels that create a mesh of up to seven layers of almost 1.5 million pixels per square millimeter. The more pixels, the finer the physical mesh. The mesh could purify water, where dirt and salt particles are caught in the netting because they are larger than clean water particles. Printed polymer chains (mesh) function as tiny kidneys. They cleanse the same way as kidneys purify human blood. Military tests are made where one flexes mesh in a tetra box from one diagonal to the other. They pour contaminated water in one end, and on the other end clean drops of water appear. The dirt gets stuck in the netting. But when is the time right for this transmission? Is it something for the graphic industry? When will the price of clean water be correct? And what different external factors will interfere? With intelligent packaging a significant new business market emerges – the question is when.

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SMART ICE CREAM PACKAGING Putting intelligence into packaging, “smart packaging”, becomes a logical step when you first transform printing on packaging and its finish with punching, creasing and processing to a finished product. Things quickly added are uniqueness and the security down to each package. It’s in heavy demand, and regulated, within the pharmaceutical industry where one must be able to track and follow packages both forward and back to the manufacturer, to avoid black-market imitations. To this, the digital printing company has several opportunities to supplement with security printing as invisible color (visible only with the aid of a UV lamp or UV scanner), digital embossing, 3-D barcode (2-D plus color code), holograms, and more. There are also other possibilities with paint or materials that react to light or temperature. Take ice cream packaging as an example, where it’s important that the ice cream doesn’t leave its frozen temperature during transport. Print the packages with paint that will react if the product on its way to the consumer is exposed to unhealthy temperature, where the color changes, signaling that the ice cream no longer is a safe product. An advantage for consumers (safer products) but probably nothing the manufacturers will implement voluntary.

FAIR EXPIRATION DATE The milk carton is perhaps easier to implement. You can use color with a built-in clock that changes at different speed depending on temperature. When the carton is in the fridge, the clock moves slower than if it’s on the table at room temperature. It would increase the use of milk and reduce the current waste when we throw milk away only because the date expired, a date that is printed on the dairy without a clue about how the milk will be handled later. Hopefully the next step is packaging that knows when the food should no longer be eaten. This without the customer having to feel, smell, read the small print, or simply guess if it’s still okay. Today there is already paint containing smell, used in packaging that shouldn’t be subjected to any damage and that emit foul odors if it is. Packaging with aroma-paint can guide consumers to choose a special item instead of the other. The U.S. clothing chain Abercrombie & Fitch sprays entire stores with perfume to broadcast their brand. This is yet the beginning of numerous exciting opportunities

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27. Intelligent packaging

WILL STRIKE SHARPLY When the graphic industry takes the digital plunge into the packaging industry, it will hit with significant force. Initially it will be about gross packs. Net packs could be the paper around a caramel, gross pack is the bag around all caramels. Not until step two, beyond 2020, the digital net packaging also transforms for real. All with major competitive advantages over the conventional, such as local, event or version adaptation with or without any special content. But once you start with net packages (direct food contact) you must take into account the complex and well-regulated legislation. Many external factors will delay a genuine transmission beyond 2026-28. Parallel to this, the packaging companies build up their needs from brand owners with the requirement that graphical print should become a part of the production chain. That desire, that demand, will only grow stronger.

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28.

Smartphones Our smartphones evolve more and more towards M2M, machine to machine. The phone of today works as a sort of communication center where we control TV, stereo, alarm, thermostat, car lock, blinds, and more. In the U.S., the broadband providers offer new services called “Connected Home”, it’s no longer only about the Internet, TV and VoIP but also a centralized control of the home while you’re away, connected to the phone of every family member.

DOCTOR VIA SMARTPHONE A smartphone with M2M and Near Field Communications (NFC) allows the transfer of small amounts of data via Radio Frequency Identification (RFID). These devices are finally starting to gain a foothold within banking and retail, so-called E-wallet. In this field new things emerge constantly, such as loyalty cards and training cards, and people stream music from Spotify and always carry their phone around. The area of use will widen. The phone will also play a new role in the medical area. Patients can easily be monitored from their home instead of being at hospital, they can share information with relatives, they can provide samples to the doctor for evaluation, and so on.

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28. Smartphones

PHONES IN OUR INDUSTRY The graphic industry will play a major role in the development that comes with smartphones. Social networks focusing on photo have an immense potential in printing with huge values added. This is undoubtedly a future cash cow that generally still is very untapped by the graphic industry – especially in Sweden. Today, many products associated with phone-pictures are too complicated to use. But there are technical solutions. As an example, walk past a “hot spot” somewhere and get a ping on the phone – “do you want to print your photos”? NFC straight from the phone, pick up at the store or have it sent to your home, the payment naturally made at the same time via NFC. With physical photos or photo books we preserve our memories. Compare with Facebook and Twitter, no real memories but of the present; post today and forget tomorrow. In the future picture-services will grow, including Cloud, and as the user-friendliness reaches the customer, it’ll be a smash hit.

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29.

Future printing The future brings visions, transmissions, cycles and structures that we must keep an eye on. The pace of change carries the prints of the future – and lots of new opportunities. •

From printed matter to added value. Check!

From graphic prints to communication. Check!

From a printing house to profitable communication. Check!

MORE DIALOGUE THAN MONOLOGUE A new generation creates their own patterns with changed values and different priorities. They see things differently than their parents, a new DNA structure. To this you should add where cyclical factors point, the effect of economic fluctuations, and the next biological society structure. Then add today’s networking with social media as Facebook, Twitter, Instagram, and others. All this, combined with a growing need for affiliation and confirmation, will make pictures, travels and experiences more important in the future. We’ll go from today’s monologue-driven communication to a more dialoguedriven communication.

BOOKS WITH MOVING PICTURES Looking ahead, printed books can also have moving images in much the same thin paper as today. The technique of leading/rechargeable color already exists but the impact may linger until after 2020, depending on when the market is ready. Companies of the graphic industry must complement the strictly electronic experience; the adventure must give more and appeal to more senses

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29. Future printing than in front of a screen. Products in physical format provides much better experiences, even if we talk about images through small screens in a printed book. The possibilities are amazing! Aroma that creates atmosphere, sound setting the tone, taste samples that elevate the mood. Certainly a development that also creates a reappraisal of what a book can deliver as an experience.

THE NEED CREATES NEW TECHNOLOGY How many times have technical limitations stood in our way of refining value? Imagine the business opportunities when a new use (that no one thought of before) is created. Take the phone with a camera function for example. From being a substandard product to being an absolute matter of course with a quality sufficient for many things including printed photos and photo books. The technical boundaries move further and further onward. It’s usually not the technology itself that restrains a progress, but the extent to which new needs are being created. Is there a need for something then the technology is often created around it in one way or another, not vice versa. It is said that technology is developing faster and faster, but with all credibility that’s not the case. The development is often determined by cyclical needs. However, new development occurs because of previous development and is therefore experienced as speedier. We’re carrying a backpack with experiences that cons our perception. A bit like experiencing time while getting older, it definitely feels as if it passes faster than when you were younger.

VAYNERCHUCK – GURU WITH AN EYE Gary Vaynerchuk, a guru of social media and best-selling author of several books on the subject, says corporations must start measuring their activities on social media. It’s not enough just being there, and unfortunately our old methods of measurement don’t do the job. How many readers do we reach? The old way of doubling the effect meant doubling the number of inclusions. Wrong! We must, and this applies to both social networks and physical products, make new demands on measurable results. It’s not good enough saying, “we’re also active on social media”, and it’s not good enough to simply buy banner ads on some site with plenty of hits. What’s the impact, what’s the response rate, including/excluding all those hitting the banner by mistake? According to Gary Vaynerchuck, the response rate of today in Internet advertising is barely measurable, perhaps less than 0.01 percent.

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PRINTING APPEALING TO MORE SENSES The winners in our graphic industry are those who work together with the electronic and social media. This doesnâ&#x20AC;&#x2122;t mean to start printing for Facebook, but why not? Social media is important as significant advertising and communication takes place there. Twitter has still got huge potential in terms of the graphic industry. As an example, imagine all who write #Volvo in a tweet getting a direct opportunity to create a dialogue that can lead to a physical contact, perhaps a personal and entirely unique offer. Everything is about getting access to the actual communication, to create dialogues. Push and pull with both new and existing customers. Today, itâ&#x20AC;&#x2122;s free via Twitter, you just follow the hashtag (#). The way to go? Connect all electronic benefits available, with all strengths and volume of information, to the physical power of a dialogue, acknowledgment, integrity and experience. Create a feeling that will appeal to several senses. The graphic industry presents: Communication!

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30.

A bright future in sight Generally, in the coming years we will see an economic upturn – the boom 2013-2017 – before it will turn down again. This is what we have to look forward to. COMMUNICATING THE CUSTOMER SUCCESS Hopefully, businesses that now face the upturn have had time getting rid of all the old cost. Away with expensive, long leases that no longer generate products where revenues are greater than the costs. Besides, they have already created several new value-added services – a must before facing the economic boom and new buying patterns, external factors and megatrends. The tools are now also flexible and well adapted to accommodate all variations of wishes from the customer, including short and rapid jobs where significant added value is provided. Everything is optimized to fit the new process, with effective production rates and continued best-offset quality. The organization is tuned, trained and now passionate to take on new assignments. There is staff longing to communicate the customers’ success stories – all the way from services, processes (prepress/press/postpress) and packaging, to logistics and distribution

VALID EXTERNAL FACTORS In the upcoming economic boom a shift in our purchase values is seen from a societal perspective, from the current network architecture to a future biological community structure. Among other external factors that become indicators for our buying patterns, the environment issues remain in focus. Locally produced, the issue of transport, food trends, organic, certification, and more.

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ONE FINAL NOTE

Cultures and history, linked to origin and confirmation, are new factors that if handled correctly absolutely can inspire a major growth market. Ethics and morality is burgeoning indicators of values. More and more companies begin to use this in their marketing, completely in line with the shift into the biological social structure. Religion comes into the same structure, but more internationally than locally in our Nordic area. Unfortunately it will segregate more than it will unite, but undoubtedly it’s something that cannot be excluded when making the ICDT (chapter 16).

NEW AND EXISTING TECHNOLOGY Soft trends as push/pull-marketing will play an even more important role, where everything is measurable. The correct penny invested into the correct marketing place. But unfortunately it’s a trend that needs more than one economic cycle to completely break through. The linking of products and services take time, and time is what‘s needed for it to become a product to process. Today, technical megatrends is often digitalized in some form. A single technology will still not solve all needs, but the very latest technology will continue to complement the existing ones. It will definitely provide different conditions when the market swiftly considers other matters, faster than it ever did before

BOOKS, MAGAZINES AND PHOTOS Within book production, technical limitations will disappear due to digital production. Both in terms of book of one (1), small editions and large quantities. All concurrently with the costumers and without the concern of physical storage. New newspaper formats is exciting and will definitely emerge in this economic cycle, mainly because of the steep downward trend we see today. There is almost no newspaper that today shows a profit without government subsidies. The downturn this year will be more than ten percent of the number of subscribers compared to last year and the plummet will increase if the media companies don’t act. The photo market is actually already in place. Both the need and the technology and everything in between are here today. In the Nordic countries, however, very few have picked up this product, either as a process together with any of the service companies or by going “all-in” on one’s own. Globally photo related products stand for more than 20 percent of all digital production, in our Nordic region it’s less than five percent. The upside is significant and the photo market will continue to grow as a digital product.

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30. A bright future in sight FOCUS ON PACKAGING Packages and wrappers will play a new and absolutely vital role in the graphic industry many years to come. It’s already time to introduce packaging and packaging-printing as part of our customers’ marketing of their products and services. At Drupa Trade Fair 2016, the world’s largest trade show for the graphic industry held every fourth year in Düsseldorf, Germany, packaging definitely becomes the next big battle. Even more packaging will headline Drupa 2020, then targeting flexible packaging. The economic pointers for the year of 2016 say economic boom, therefore no genuine transmission will take place then. It will automatically be delayed until the next recession – in time for Drupa 2020. Intelligent and smart packaging will probably have to wait yet another economic cycle with a breakthrough around 2028.

THANK YOU FOR READING – AND GOOD LUCK Fortunately there are numerous talented visionaries who prophesy what will happen in the future, and perhaps also why. I hope this book has provided a little more knowledge about why things won’t (NOT!) always occur and how, with the help of tools such as cycles, external factors, megatrends, values and shifts in societal structures, one can prepare for this optimally. Hopefully it will help you, who read the book, to make fewer mistakes in future, good luck.

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EPILOGUE

31. Thank you

The first book, which was published in 1994, was a mere coincidence. When we started out, ads were expensive for us and I met Thomas Svernfors who was then a freelance journalist for, among others, AGI. He did interviews about what we were doing and our vision of what was to come and not (NOT!) to come in the future. We sent these articles to the newspapers for publication and if they didn´t get into AGI, we sent them to the next paper on the list. A cost-effective way of getting publicity. One day in 1994, after 2,5 meter of small dictaphone tapes and countless articles, Thomas said he wanted to compile the best of what we had into a vision-book, or (as we called it) white paper. It was first considered as a supplement to our Visutech staff handbook so hopefully everyone would pull together. 1996 was the last time we changed and updated the text. We ordered illustrations by Jürgen Asp, because the content of the book didn’t exist yet. This is still the version of the vision-book available on Visutech’s website – almost 25 years of written history. The most amazing thing about Thomas was what he said after leaving everything, “I have listened to you for over two years, written article after article, and perhaps not understood a thing of all that stuff you said. Now after all this time, my penny finally dropped! That’s why I wanted to make this compilation.” Thank you, Thomas. Nearly a year ago the planning of Visutech’s 25th anniversary (2013) began. And in fact almost everything from the old book had come true – in one way or the other. In a slight moment of weakness, I then promised to update with a new book, with thoughts and opinions on how I look at things.

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31. Thank you My wish is that you, the reader, will find a certain form of usefulness, information, perhaps a bit of new knowledge and hopefully a lot of optimism in the text. I think the motor skill of the book may also help you in making fewer mistakes, even though the future means working outside the comfort zone. Maybe this book can work as one of many sources in making your own decisions about your own future. Working with Jonas Löfvendahl was a whole new experience. The past six months, he has pushed, coached and encouraged me when I’ve more or less given up. He made me sit down and collect my thoughts and deliver once again. He has not only been a shadow who writes but he has also, in an extremely short amount of time, picked up the essence of what I meant, what the first twelve interviews actually was about. At first I thought he was acting, a part of his job I supposed, but when question after question got the correct answer I realized that he was on top of things. Then the writing came back being what I hoped for, texts that conveyed something to the reader. And thanks to Charlotte, Lasse, Stefan, Karin and Mikael plus all others both inside and outside of Visutech who contribute greatly to how and why we look like we do today. Thanks to you all! Hopefully I’ll get a good reason to write more about our/your successes, passions and persistent journey over the next 25 years – together with you and together with our customers.

Tjuvkil in September 2013 Jan-Olof Jungersten

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THE NOT BOOK The book is originally narrated and written in Swedish and then translated into English. The graphic industry in the Nordic is in crisis. It is an industry that crumbles and falls. But it will grow back, perhaps in new places and definitely with new strength. Today, the commercial graphic industry has a murderous six-fold over-capacity toward its demand. It’s the buyer’s market. Volume is dropping like a stone with the industry being halved in four years. The number of commercial printing houses in the Nordic countries has decreased from 15 000 to today’s 1 500 – and continues to decline. At the same time, the industry has huge potential and a great demand to fill. The need from brand owners for more communication that is measurable, efficient and flexible will create a new and profitable graphic industry. Right now the industry changes from printing to becoming the supplier of communications, both in physical form and linked to electronic services. Moving from a craftsmanship to creating added value through integrated solutions. A digital future. Jan-Olof Jungersten has gathered thoughts and information about what’s going to happen, but above all what’s not (NOT!) going to happen, and why, from a Nordic perspective. Visions about transmissions and the digital transformation of printing houses. With a focus on environmental issues, as well as the new values in the marketing of clients’ products, packaging as the next golden graphic market, and why the industry sets sail home from China. It will be Jan-Olof Jungersten’s fourth professional transmission after the first cellular phone (25 kg!), home computer, and commercial satellite-TV. The most exciting, so far.

JAN-OLOF JUNGERSTEN After 25 years in the graphic industry, Jan-Olof Jungersten has written his second book explaining his thoughts on the development of the industry. A book of visions concerning the enormous potential of the graphic industry – in a changed world. Jan-Olof Jungersten is the CEO and founder of Visutech, today one of the largest suppliers of digitized production solutions for the graphic industry in the Nordic region. Visutech is based in Gothenburg, with operations in Sweden, Norway, Denmark and Finland.

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VISIONS & TRANSMISSIONS. Printing - an industry in transition  

VISIONS & TRANSMISSIONS. Printing - an industry in transition  

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