Historical trends show innovation spikes during recessions. Is that fueling MPS growth?

[#1]

In the past two days I’ve heard two different things that have got me thinking about interesting dots to connect. 

Yesterday, I listened in on a presentation about innovation delivered by a Chief Technology Officer with HP’s Imaging and Printing Group.  He showed how over history the biggest innovations have occurred during recessions.  He shared a statistic that on average 40% of the top 100 companies in an industry are different following a recession than going into one.  It makes sense – it’s easy to be complacent in good times.  Tough times force new thinking and new solutions for new problems -- which of course drives innovation. 

Today I read an article In terms of revenue, Europe set to become world’s largest managed print services region by MPS Insights.  The article cites a market forecast by Photizo Group which projects that by 2014 the European Managed Print Services market will surpass North America. 

“The MPS market is rapidly building momentum in Europe and this has been fuelled by small and medium business adoption,” Ed Crowley, CEO of Photizo Group said. “Unlike large enterprises, small and medium business will turn to the channel for these services.  A shift in consumer demand has made it essential for the channel to reinvent their business model from a hardware-focus to a service-focus.” 

MPS has historically helped enterprise-size organization save costs, time and the environment.  We’re seeing small and medium sized businesses now leveraging that best-practice into their businesses as well and that trend is helping to fuel the overall industry growth.  As stated in the MPS Insights article reference above:  On average an end-user organization will cut costs by 30 percent after they first implement an MPS program and reduce hardcopy fleet carbon emissions by 60%. For those companies with the strategic vision and foresight to think beyond the short- to medium-term benefits, it can also pave the way for real business change at a grassroots level.

So – back to those dots I was trying to connect at the beginning of this article.  Given that the economic climate is even more recessed in Europe than we’re facing currently in America, it makes me wonder if that’s the driving factor in the accelerated adoption they are seeing of managed print services.  Is it ultimately the immediate necessity to reduce expenses that is driving the trend?  What do you think?

Regardless, MPS looks to be a rapidly growing solution worldwide, to help organizations improve their productivity while reducing costs.  There are many lessons to be learned from the best practices of industry leaders such as Merck, General Mills, 3M, and Disney who have all reaped substantial savings by evolving their imaging and printing environments into a Managed Print Services model.  Check out their stories and consider what MPS could do for your organization!

[#2]

This is a very interesting thought!  I definately believe the negative economic climate has significantly increased the focus on turning over every stone in organizations in order to save money.  And clearly, with most organizations still having unmanged environments, there is 'easy money' to be found in implementing an MPS engagement.  Nice blog posting!

[#3]

Cara,

I applaud your enquiry. The IT Industry has too narrow a view of the world and so to start looking at the dots requires a wider context to be considered.

What some organizations do is build scenarios of the future around fact and trends interpreted from the past. As the future unfolds they dismiss some scenarios as being unlikely and start to see the ones that are more feasible. The time horizon for this can be 20 to 50 years ahead. Then a subset is developed within this that looks 5 to 20 years ahead. This is done in the spirit of Karl Popper’s “Bold Conjectures” grounded in a scientific approach within a highly uncertain environment. Such is not possible in the IT Industry which believes 5 years is a long term horizon.

The history of humans is the story of game changing technology. From Stone Age through Iron Age to Steam Age in to the Information Age and now starting in to the Cyborg Age, we see how core technologies disrupt social and political systems. That is what is going on right now. The Internet is game changing the structural foundations of society and making globalization more and more necessary.

Value from the likes of managed print are side shows to the main technological game changer.  I appreciate they are very important, especially to those working in that field. To excel in such spin-offs we need to understand how value is created and more importantly for the future, how new value can be liberated.  That value is not in a thing; that’s the illusion needed by pricing models. Value actually exists in the relation between things and people and notions of ‘worth’ change depending on the particular context. This is worth pondering as it opens the possibility of creating new experiences and new value for people. Reducing cost is but one way to improve profit but such a strategy is disastrous if all firms pursue it at the same time as the easiest asset to get rid of to reduce cost is people, but it is people that spend money buying products and so a vicious cycle can be triggered if we are not careful. So I am really glad to see you question the wisdom of a cost reduction only strategy.

You point to Europe and here is a case in point. The only way for Europe to survive under a cost cutting rationale is for closer political and economic integration. However, that means European nations must give up sovereignty. There is another way and that is to create new surplus value through innovation.

My frustration is the IT industry can only see innovation in the context of instruments, devices and software. It does not understand the bigger picture and so is ignorant of its role in the formation of new societies and history.

For example, the IT industry would seek to automate a Supply Chain in order to reduce costs and in so doing shove new technology off shore.  This eventually reduces the disposable income of consumers in the home market and there is hard evidence to show how economic convergence will soon become the story of the Western World’s decline in terms of prosperity.

So what could be done differently? If the IT Industry understood itself in the context of an unfolding story of human progress it could learn from its history. What if the IT Industry took as an ambition the challenge of creating new modes of supply and production that meant customers could have bespoke products as mass manufactured prices. For example, what if we tried to recapture the clothing industry using scanning technology that measured someone for a suit, allowed them to pick a design and style, then cut the cloth and had seamstresses finish things off. There would be little inventory cost, proximity to real customers would undermine the ‘at a distance’ production models from the Far East and new industry models could create new surplus value. Such an approach would offer a different possibility for the likes of Europe and mark a return to classical economics in a Knowledge Economy.

My question is this, “How do you get an industry whose comfort zone is selling near to hand products to become a strategic value creator that drives societal progress?”

Maybe we need a couple of guys marginalized by today’s industry culture to start doing something special in their garage (;-) Where are the creative thinkers that can bridge the gap between what new modes of business could be and how IT could enable that which simply does not exist today?

[#4]

I love philosophical discussions so thank you for the thoughtful response.  I wish I had a specific answer to your question about driving societal progress ---but the points you made helped raise even more questions in my mind. 

Looking beyond the IT industry – how much is IT and society as a whole influenced by the short-term thinking of Wall Street analysts where the mentality is ‘what have you done lately’ on a quarter-to-quarter basis and the measure of success is shareholder value vs societal progress.  Economic success in our society is recognized and rewarded each quarter and as a result I suspect it’s forcing an imbalance between short-term and long-term thinking.  In a long-term view, I believe that shareholder value and societal progress are closely linked because an industry or company influencing societal progress is arguably relevant, adapting and surviving over the long-term and thereby delivering value over the long-term. 

So – if you buy into the idea that short-term measures of success are influencing the industry negatively, the question becomes, how do we change the success metrics to drive longer-term thinking and behavior?  How do we inspire and motivate visionaries like Bill and Dave, who as you mentioned, created something special starting in their garage?