On Change: 2 (via Tertiarisation & Moore's Law)

Yesterday I offered up the first part of my keynote to BIC’s 2011 New Trends summer seminar, sliced into short posts. I began with two of five key observations about change (as it pertains to publishers and the supply chain). First, Change isn’t new, and second Change can go unnoticed.  So here goes for observations 3 & 4. No literary references today – instead we're skimming over some economic principles. I like to keep my frame of reference eclectic...

Observation 3: change happens

I grew up in the North East of England when the region was suffering an identity crisis of epic proportions. The traditional employers (coal mining and shipbuilding) were dying, resulting in social and economic pressures that culminated in the miners’ strike (immortalised in the musical and film Billy Eliot, and engraved painfully deep into the psyche of those of us who grew up witnessing the conflict and social schisms that accompanied the stand-off). In the following decades the employment profile in the area has migrated to service industries such as call centres and financial services (until the sub-prime mortgage market did for Northern Rock, in any case).

Those of us studying A’ level geography at the time learned that what we were witnessing was the economic theory known as “Tertiarisation”, or “the three sector economy” (developed by Jean Fourastie and Colin Clark) in action. Something that puzzles me about the Book Industry is that because we work with books – which have been around for so many centuries – we seem to see ourselves as insulated from the great economic trends that sweep the world’s economies. Publishers’ self-perception seems rooted in phase one of the three-sector economy (extraction) – extracting IP from authors, or possibly stage two (manufacturing) – making books as physical objects. Perhaps we’d all do well to take a running jump into the third sector – the service economy – because if we regarded ourselves as service providers – we might get back ahead of the game.

We are operating in a world where our product is rapidly uncoupling from its long-established delivery method (the book). Yet right now, revenue from those same books still forms the majority of revenues and cash flow for most publishers and booksellers (innovators like Sourcebooks being possible rare exceptions). Therefore we must buy ourselves time to invest in our future by making the process of obtaining physical books as easy and as pain-free for consumers as possible. That is to say we must invest in an efficient, effective supply chain that competes credibly with other offline and online consumer experiences in the service economy.

Observation 4: change is speeding up

Yesterday I was dismissive of a tendency to panic at the notion of change – however I do believe the pace of change gives us plenty to be concerned about - and Moore's Law is why I believe this. Wikipedia describes Moore's law as follows: 

“a long-term trend in the history of computing hardware. The number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years.^[1] This trend has continued for more than half a century and is expected to continue until 2015 or 2020 or later.  The capabilities of many digital electronic devices are strongly linked to Moore's law: processing speed, memory capacity, sensors and even the number and size of pixels in digital cameras.^[3] All of these are improving at (roughly) exponential rates as well. This exponential improvement has dramatically enhanced the impact of digital electronics in nearly every segment of the world economy.^[4] Moore's law describes a driving force of technological and social change in the late 20th and early 21st centuries.”

So not only have content and books moved out of their exclusive marriage into an open relationship that can include all sorts of other partners (web-based delivery, e-book readers, apps), but publishers and booksellers are operating their businesses within the context of an technological information infrastructure that is being propelled by laws of exponential change, with knock-on effects on the pace of change within our social and economic frameworks. The book is a product with a comparatively stable (if low) perceived value fighting for life in a dynamic, volatile world of constantly upgraded high-price consumer goods, free social media applications, rapidly changing social expectations and enormous peer pressure.

Moore’s law has made change exponential technologically, economically and socially.

That’s enough for one day, don’t you think? Observation 5 tomorrow…

On Change (via Dr Seuss & W H Auden)

In June 2011 I was privileged to be invited to give the Keynote at Book Industry Communication’s New Trends summer seminar. Peter Kilborn challenged me to talk about Book Distribution in a Changing World. I was delighted that Peter included the word “changing”, because endemic change is what makes the supply chain a fascinating place to work. Peter later told me that he had been expecting a “distributor-type polemic against change”. But that was not what I gave. I did promise to post the presentation here on my blog – but for various reasons including the fact that it is significantly too long to work online – I didn’t. It’s been suggested to me that I might do this in slices. Like a publisher I need to learn to slice and dice my content. So here goes: Slice One.

To understand and adapt to change we must ask ourselves many questions – but remember – as Dr Seuss famously said “Sometimes the questions are complicated and the answers are simple”. 

I should disclose that my professional life is currently engaged almost entirely with physical books and managing what is required to get them into the hands of the people who need & want them. You, Dear Reader, may well be far more engaged with the realities of new technology and digital delivery - but our commonality is likely to be the primacy of data. Product data is the engine of the business I manage, sales data is its lifeblood, and market data is something I spend a lot of time analysing for trends that indicate transformational change. It might also help if I pause and wind back for a moment to these words from one of my favourite poets, W H Auden in his poem Atlantis, which pretty much sum up how I felt on landing up in the book industry supply chain seven years ago.

Being set on the idea
Of getting to Atlantis,
You have discovered of course
Only the Ship of Fools is
Making the voyage this year,
As gales of abnormal force
Are predicted, and that you
Must therefore be ready to
Behave absurdly enough
To pass for one of The Boys,
At least appearing to love
Hard liquor, horseplay and noise.

I was very much a novice in a world dominated by enormous spaces, pallets, trucks, racking, process, standards and data (confession: I am one of the world’s least process-driven people). But looking in from an outsider perspective can make it much easier to identify change, and its impacts. So whilst I can occasionally pass for “one of the boys”, can hold my liquor and now know more about racking, fork lifts, carriers and pallets than I ever hoped I would – I have deliberately preserved my outsider way of looking at things, because it helps me to understand and manage change. As a result I have five key observations to make about change as it pertains to the book industry – and I’ll share the first two today

Observation 1: Change isn't new
Many people dislike change in their personal lives and in their professional lives. But the book industry has been changing ever since a scribe put quill to parchment (or stylus to tablet). The way in which the written word and ideas are packaged up has moved through scrolls to codex, mass manufacture of manuscripts, to print with movable type, cold type and hot type, There’s been artwork and paste-up, which is roughly the point on the time line where I entered the industry. I’m a dab hand with typeset text; a grid, scalpel and spray mount and I can even strip corrections into 4-colour separated film. Oh – and by the way – those are skills that are entirely redundant in the days of straight to plate technology. Change is very definitely not new.

Observation 2: Change isn’t always obvious
Whilst change isn’t new, it can sometimes be invisible. Publishers don’t spend a lot of time thinking about the changes that have taken place in how the books they publish get into the hands of readers. This is because the customer interface is largely seen as a back office or an outsourced task. Publishers like to think in terms of the “channels” that books are sold through – chain, wholesale, independent, library supply (if you are lucky). Only highly specialist publishers of very high-priced product think in terms of the individual customer.

The company I work for asks our client publishers to allow our customer-facing staff to attend their sales conferences – to improve product knowledge and build relationships. In the over 23 years I have been working with publishers in one way or another I have never once known a publisher ask to send any of their editorial or marketing staff to a customer service centre – to work on the phones, listening to customers and learning to understand the processes involved in getting books into customers’ hands. (If publishing office staff did so, they’d understand a whole lot more about the primacy of good bibliographic data.) In fact there seems to be a communal blindness to the enormous educative power of consumer interactions. (And I suggest you read HG Wells’ The Valley of the Blind for some insights on where communal blindness can lead.)

The fact that change can be invisible is how a whole revolution can have taken place in the supply chain without publishers noticing. For example, I am astonished to still be asked by some specialist non-trade publishers, “Who are the Book Depository?” (Note: I am not at all anti-Book Depository. They are a brilliant company – but their just-in-time-zero-stock-holding business model beautifully illustrates the way in which rapid data exchange, EDI and rising customer expectations have transformed the operations and fundamental premise of book distribution.)

So remember change is not new - and it is not always obvious - but that doesn't mean it's not important. Stand by for observations 3, 4 and possibly even 5 tomorrow.

On Experience

Although I’ve been quiet here (and elsewhere in social media) over the past six months, I’ve been thinking a lot about experience. Specifically it seems to me that those of us who sell goods – be they books, white goods, clothes or anything else – need to learn to think far more closely about the user experience. Designers of products habitually think about usage – and those of us who retail or are involved in the selling and supply of goods need to pay closer attention to design. But in our case it isn’t just the design of the product – but the design of the experience of purchasing and then interacting with that product (or service) – that we need to engage with, and do better at. My friend and sometime sounding board Brian O’Leary highlights these issues in his presentations Context First and The Opportunity in Abundance.

Of course this thought extends to selling services. And a group of people who are very smart about this are those involved at the high end of the entertainment industry. Last Thursday evening I took my daughter Hannah to the Royal Opera House in Covent Garden to see Federico Bonelli and Sarah Lamb dance in Romeo and Juliet. The ROH is an object lesson in purveying “experience”. (Whether it is a commercially viable one is a separate issue – let’s leave public funding for the arts for another day).

From the moment of greeting at the front door by the liveried doormen to the moment the last applause has ended – what one has purchased is an experience. Arguably in Hannah’s case it starts before that in that one has also purchased weeks of delicious anticipation – which certainly adds to the sense of value-for-money. Visitors to the Opera House enter a world where one is willing to suspend day-to-day life and enter the fantasy. Not just the narrative fantasy of the evening’s performance (and last Thursday that was a indeed lyrical narrative, powerfully but delicately performed) but the fantasy and drama of the opulent setting and the interaction with other audience members and the abundant staff. It's a truly immersive experience.

Imagine my horror – therefore – to find that though we had some of the best seats in the amphitheatre (that’s the gods to you and me) – we were directly behind a young lawyer who spent both of the intervals dealing with email on her blackberry. Walking out at the end I overheard her saying to another of her party “I just couldn’t stop thinking about work”.

It could just be that ballet is not her bag. Although given the intensity of the colour, light, costumes, music and the sheer breathtaking lightness of Lamb as Juliet, it’s hard to know how. Or could it be that – useful as it is – being constantly on line, and constantly available to a world outside our immediate locale is hardening us to something that most enhances life – human experience: direct, immediate experience of the visible, tactile, audible world around us?

Something in me is deeply disquieted – and somewhere in what my mother calls my "back brain” there’s a gnawing consciousness that as a society and in our businesses we need to prize experience. Not to do so will be to collaborate in a gradual deadening to what is physically immediate. I can't help wondering if the start of such a slow death is somehow bound up in the current woes of Western economies – whether it be in the retail sector where people simply aren’t parting with money on the high street (except – ironically – for the experience of drinking coffee in Costa, Starbucks and Café Nero) or in other struggling manufacturing and commercial sectors.

And the fact that it is lurking there in the background makes me think that experience is going to be my recurring theme for 2012. Let's hope I can be more than a Jeremiah on the subject - but somehow link together my thoughts and observations to some mutual use.

Let out of the Supply Chain Silo

After a few weeks confined to the Plymouth barracks (aside from a flying trip to BEA), I was finally out and about again this week. Peter Kilborn of Book Industry Communication (the UK equivalent of BISG) had asked me some time back if I would present at this year's BIC New Trends 2011 Summer Seminar, which took place on Tuesday afternoon at RIBA in London. Originally he asked for "something on the future of book distribution" to which a now ex-friend of mine remarked pithily "well that's going to be a short presentation, then". Fortunately my theme was later modulated to Book Distribution in a Changing World. Just as daunting, but a little less implied doom.

My presentation was on the long side - far too long for a blogpost - so I plan to break it into chunks for posting here next week. But before that I've come away from the seminar itself with some immediate thoughts to share. Some positive, and some scary.

On the positive side, I noted that four out of six presentations were given by women (Sarah Hilderly of EDItEUR, Ruth Jones of Ingram and Gabrielle Wallington of Waterstone's were the other three). When I first started attending BIC events ten years ago, then on behalf of the IPG, that ratio of women speakers on supply chain issues would just not have happened. I think it is indicative of the way in which supply chain issues  increasingly interface with new technology and product development that the balance is shifting, and I take that as a positive sign because it suggests that the group is broadening its expertise-base (not just because of a vested interest in shifting the gender balance for the sake of it). In the meantime 14 out of 47 attendees were female - so there is still some way to go on that score.

On the scary side I found myself deeply depressed that almost all of the attendees were either from organisations like Nielsen, or were the designated "supply chain" specialists from the large corporate publishers and distributors. Good that they were in attendance. But bad, and worrying, that the work of BIC seems invisible or uninteresting to medium sized publishers - who in many ways are the constituency with the most to lose by not being informed about the way in which data standards and systems are changing the ways customers find and access books (print and e). It was as if the occupants of the supply chain silo had been sent out on an afternoon trip all on their own.

My presentation - of which more next week - looked at how publishers have outsourced their customer relationships and whilst that scores high on convenience - and indeed keeps people like me in jobs - it leaves them badly prepared for an economy in which direct consumer interactions and quasi-social commercial interactions are a growing trend. Data and standards underpin the modern physical and digital supply chains, and I am worried that the majority of medium-sized publishers are not engaged with the work of BIC and are therefore not sufficiently aware of the power and implications of data and work-flow standards.

Gabrielle Wallington of Waterstone's (on the day the bookseller formally left the HMV Group and passed into new ownership - so  Gabrielle would be forgiven for having had other things on her mind) presented a pithy insight into price and availability codes. I can hear you yawning already. But as Gabrielle pointed out - there are no industry standards for the application of P&A codes - and that lack of standardisation leads to lots of confusion and ultimately confusion results in poor customer services. During a recession, and at a time when books have so much competition from other leisure and media choices, anything that results in poor customer service depresses sales and must be challenged.

Ruth Jones, Director of Ingram Publisher Services (formerly head of product development at the British Library), gave a disingenuously self-deprecating but most insightful and amusing commentary on the challenges of standardising digital workflows. Do I hear double yawning out there in the ether? If so, shame on you. Because effective, standardised digital workflows will (as Ruth said) help us out of the muddly quagmire that's currently impeding all of our progress. My key take-away from Ruth - and she will have to forgive me if I paraphrase incorrectly - was her quoting Faber's Stephen Page saying (during an airport lounge conversation when they were both delayed en route to a conference) "the metadata conversation is the new cover meeting". Which reminded me strongly of a phrase I overheard at last year's AAUP meeting: "Metadata is Marketing".

And that's why we should all care deeply about the work of BIC and BISG and take every opportunity to participate in it.

Post scripts:
1. BIC's Price and Availability Working Group holds its next meeting next week. Anyone interested in participating in this or any of the other work done by BIC can contact Peter Kilborn: peter@bic.org.uk
2. RIBA's HQ on Portland Place is in such an elegant and stylish building. Every time I enter its doors I wish publishing had its own equivalent.

Who wants what from whom..?

When I dipped into Twitter this morning, a blog post (from @wayzgoose) entitled What Publishers Want from Book Bloggers, Reviewers & Readers piqued my sense of irony. It's a good piece of writing and like the best blog posts, brief (something I rarely manage), on point and reasonable. But what prompted my own wry response is that last night I was reading Robert B. Cohen's recent book Changing the Face of the Internet. (Note to American readers: don't be put off by the mention of Europe in the subtitle: the content is still relevant). Cohen is an economist with a particular interest in the impact of the Internet and virtual worlds. Those of us who take the Internet for granted, use it in our day-to-day personal and business lives, but don't think much about how it will continue to change, and (more to the point) will continue to change us - would do well to engage with this challenging read.

Cohen points to the fact that developments in online technologies are fundamentally altering the ways in which people organise themselves professionally and socially - and are increasingly drivers to both a different kind of service economy and new, less hierarchical corporate structures. Until last night I thought of software companies as product manufacturers. Now I think of them as service providers. Cohen shows how cloud computing has given rise to SaaS (Software as a Service). A change in the ways users access and utilise software that has restructured the business models of software companies. Just two of the many significant economic benefits arising are (i) that the cost base (capital investment in I.T. infrastructure) of start up businesses will be substantially reduced and (ii) work groups from across the globe can work simultaneously and collaboratively.

So what, you may ask, does this have to do with a post about what publishers want from bloggers, reviewers and readers? My thought is, simply, that it is a question that spotlights the tipping point publishers are heading for in a digital world that challenges our old workflows and self-images. A tipping point that is going to turn the question the other way around: what do bloggers, reviewers, readers (our audience) want from publishers? It seems to me that the answer - as with the software industry - is going to be delivered, and monetized, as service, not product.