Tuesday, September 27, 2011

September Observations: “There Will Always Be a Need for Hard Copy, No Matter What”

also published in The Hard Copy Observer, September 2011

by Jim Lyons

[September 27, 2011] A quote like, “There will always be a need for hard copy, no matter what,” just cannot help but make someone perk up their ears and take notice, at least if that person is in the printing and imaging industry. This situation is just what happened to me the other day, when I was half-listening to the radio, with the other half of my attention focused elsewhere, during an interview on National Public Radio’s (NPR’s) Morning Edition. The host, Steve Inskeep, was talking to the United States Postmaster General, Patrick Donahoe, about some of the troubles that his organization, the U.S. Postal Service (USPS), has been facing lately.

Donahoe currently holds the top position (how cool to have a job formerly held by Benjamin Franklin, among others?) in what is now described as an “independent agency of the U.S. Government,” and his personal story about starting his career in a lowly mail-sorting position is inspiring. But he has a far bigger challenge these days, compared to figuring out those hand-scrawled zip codes at the beginning of his career. As has been well documented in the news recently, the U.S. Postal Service is facing huge deficits and dealing with the same issues as so many other businesses, like lower demand, higher costs, and labor unrest as the result of potential layoffs, not to mention the local-office closures which seem to so often bring out the NIMBY (Not In My BackYard) response among local citizenry.

So when I went back and listened to the entire Morning Edition piece, I found some very provocative and interesting material (click here to read the transcript). Donahoe starts by assessing much of the USPS’s troubles, at least on the demand side, with respect to the Internet and the conversion of households to online bill-paying. He tells NPR, “Back in 2000, about five percent of Americans paid their bills online. Today it’s 60 percent. And slowly but surely, that first-class mail volume eroded.”

As many in our industry are accustomed, our business categories are highly dependent on economic activity. For example, beginning with the downturn of the financial/mortgage/insurance sectors in 2007/2008, overall document printing volume fell sharply, and the correlation with overall unemployment metrics is irrefutable—people not on the job, particularly in an office, are not going to be printing and copying! The USPS sees this same scenario with first-class mail as well. Donahoe said, “The key indicator for first-class mail is the employment numbers. And we thought, by now, we’d probably see, you know, six to seven percent, versus nine percent unemployment.”

Direct marketing levels are also tied to economic activity, of course, and we often hear about bulk mailing as the real cash cow for the USPS. This segment is an area, too, where we see innovations in our industry (and indeed, reported right here in the Observer), that offer more efficient, more personalized approaches to this category. And while the NPR interview did not get into that side of things, Donahoe discussed other points about innovations and opportunities.


USPS Innovations

Before getting into specific recent past and future innovations, I wondered whether the sometimes-mocked USPS really has the DNA to innovate. In the History of the USPS,” a 2007 document on the organization’s past available on its Web site, the USPS states (with my emphasis), “The Postal Service has seized upon and immediately investigated new technology to see if it would improve service—mail distribution cases in the 18th century; steamboats, trains, and automobiles in the 19th century; and planes, letter sorting machines, and automation in the 20th century. Today, computerized equipment helps sort and distribute hundreds of millions of pieces of mail each day.”

Is the USPS really an innovative organization? Actually, we do not have to look too far within our own world of desktop printers to see recent innovations that the USPS developed via its own technology and with the cooperation of other firms to bring convenience to customers by letting them take more control of the printing involved in postal services. The USPS’s “click and ship” solution (***see illustration) has been available for at least a decade, arrangements with creative start-up companies like Stamps.comwww.stamps.com have endured over even a longer period of time, and more familiar partnerships include Adobe and HP.

Donahoe tells NPR (including context from before and after that column-leading quote above), “The Internet is the absolute—that’s the change…We think we are a business that’s got a very big future. Number one, there will always be a need for hard copy, no matter what…We also think that there’s a need for the postal service in the digital world. The digital world, right now, you know, bill payment, bill presentment, sending stuff through the Internet is the Wild, Wild West, truthfully. And I think that we will have a very interesting part to play there in the secure messaging environment.”

The broader printing and imaging industry can certainly relate to the USPS’s dilemma in dealing with changing consumer habits and the ongoing encroachment of alternate technologies, which is mindful of the old marketing myopia example of the railroads forgetting they were really in the transportation business and clinging to the notion they were all about trains. There are vital lessons here for all of us—and after learning much more about the USPS, especially in reading about its colorful and patriotic history, I must admit I am pulling for them to succeed.

Jim is a regular contributor of news and analysis and the author of a monthly column, Observations, for The Hard Copy Observer, a publication of Lyra Research. He also blogs and tweets on developments in the printer industry. In addition, Jim is a faculty member at the University of Phoenix, teaching marketing and economics in the school’s MBA program. Past columns, links, and other musings may be found at http://www.jimlyonsobservations.com/. Follow Jim on Twitter, @jflyons.

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