The Thinking Behind

Some Plain Talk About Networking

Thousands of U.S. businesses are looking at networking as a potential breakthrough marketing tool. Their hope is that can somehow use networking to reach other businesses with sales pitches and promotional materials. Currently, they have two unsatisfactory choices:

1. Establish proprietary networks that connect them with their customers and over which they can send sales promotions even as they use these networks to receive customer orders.

The only problem is that such restricted networks cannot reach potential customers because they can only reach current, "captive" customers. They also frustrate customers' normal urges to shop, whether such shopping takes place personally in a mall, or electronically over a computer network.

2. In the absence of a "universal" network, they can dream about using the Internet as a marketing vehicle.

But recent news about the Internet is sobering: Hackers breaking into university computers-some of them containing top-secret military information-have shown Internet security to be an oxymoron. "This latest breach of the Internet illustrates the hazards of doing business on a computer network that wasn't designed for commerce," says the article, "Internet Is Becoming a Dangerous Road," in the January 24, 1995 issue of the San Francisco Chronicle. This doesn't bode well for businesses that envision doing electronic funds transfers (EFT) on the Internet, despite the assurances that new technology waiting in the wings will solve this problem.

Even if security could be assured, marketing on the Internet would still be the equivalent of sending out thousands or millions of messages in bottles. Some people eventually will receive the messages, but will they be the people most receptive to the message or likely to respond to it? There is no indication that the Internet will soon be organized in such a way that marketers can use it for focused, "narrowcast" marketing.

Also, many people's way of looking at the Internet borders on the magical. For them the Internet is an entity that somehow exists out there on the ether, independent of cause and certainly of expense. The trouble is, as use of the the Internet grows far beyond the volume generated by its original academic users, an inexorable law of life on this planet comes into play: Somebody Has To Pay for the Damn Thing.

And once somebody finds a way of metering access to the Internet, either by fee or type of activity, the Internet will become something vastly different than it is now. Even then, the question will remain: Is a two-lane academic byway really a suitable candidate for transformation into The Information Superhighway?

Not To Mention a Conceptual Difficulty:

Beyond the problem of the unsuitability of current networks for true marketing, there's an even bigger problem: Most people view marketing networks as push-through, from-the-top-down setups that don't allow for true choice by customers. Very few see that the most efficient use of a network is the encouragement of unlimited commerce. In other words, a true network for the 21st century will allow all end users the means to seek out and compare different suppliers, not restrict them to to one source.

Introducing a Third Way.

There is a third network choice, and it's one that takes into account the market's need for a electronic version of the Yellow Pages and the telephone company. Its name is PrintNet and its core idea works in any industry.

What is that idea? Simply that networking should be as universally accessible and neutral as the phone company. Everybody should be able to access it and use it for any legitimate business activity that comes to mind. The "controllers" of the network should not belong to any of the industries they serve, and should not concern themselves with content. The only monitoring they do is to keep dishonest traders or activities off the network, and they make their money by charging a small fee for network traffic-much like how the Panama Canal operates.

In the case of the printing industry, PrintNet is offered as a means by which printers can take a technological leap that can help them keep current customers, reach new customers and keep both groups happy. 

Does the Printing Industry Need "Electronic Ordering?"

How couldn't it? The industry is a $190-billion-a-year behemoth poised at a technological threshhold where documents can be transferred directly from remote PCs to printing presses. Printers are eager to take advantage of any technology that can answer two problems: 1.) How to cut overhead by increasing sales and ordering efficiency while 2.) offering faster service in an economy where most customers regard printing as a commodity.

Networking seems to promise those answers. Most printers see the value in "wiring" their customers so that they transfer files electronically, a capability that promises considerable savings in time and effort. They can also see the advantage of having their customers use "E-forms"- electronic order forms-to request certain printing or design jobs. Some printers are already at work installing proprietary networks over which their customers can order jobs and transfer files. On such networks, they control what prices or suppliers customers see, usually as a means of preventing them from buying from another source.

Because most printers' idea of a network stops at a closed, proprietary setup, they don't see any benefit in giving their customers more than a limited amount of information. This outlook is based on a misperception of both what networking really is and the psychology of the people who are the ones who would naturally take to network usage the best: the customers. 

On Second Thought, Let's Call Electronic Ordering

"Electronic Shopping" (Because That's Where Networks Are Really Heading)

Electronic ordering, which is what some advanced networks are being used for now, will inevitably head toward "electronic shopping." In other words, end-user network use will shift from passive ordering over closed-in proprietary systems to free-ranging shopping over public-access networks. Some businesses will continue to try to limit customer access to information, even as most others come to the realization that open networks will create far larger potential markets than proprietary systems.

In the 1980s, American Gem Marketing System (AGMS), a California-based international gem trading network, found that some gem dealers did not like the idea of selling their goods on AGMS's "electronic trading floor." AGMS let them set up private channels where customers could log onto the network and go directly to a specific dealer's "office." The dealers who wanted private channels hoped that buyers on the network would simply do one-stop shopping.

Customers did shop often over the private channels, but not until they had logged onto the general network to do price and quality comparisons. The desire by private channel dealers to restrict consumer options folded before the market's desire for full information. AGMS network customers' ability to comparison shop brought a discipline to the market that kept private channel prices in line. Ironically, private channel dealers reported that the network became an important sales outlet for them, even though customers were receiving information from it that the dealers had hoped would not be revealed.

So, What's Wrong with Letting Consumers Shop?

The first reaction from many printers when they hear about the PrintNet concept is, "Why should I let my customers see my prices or have access to a list of my rivals? What possible good would that do me?"

There are several answers to those questions.

For one thing, those customers that shop on the basis of price can easily find out or already know any particular printer's prices. It's as easy as faxing a request for a quote to several printers or talking to the various printing salespeople who come through their doors every year. There's no way to hide prices from customers who are determined to find them out. Trying to hide prices is not only a losing cause, it's a futile cause.

Most people don't hold up price as the main criterion in how they choose a printer or related supplier. What they're really looking for is a supplier who has certain equipment or software, or experience with a particular process or product. As with consumers anywhere, print customers tend to trust suppliers who don't try to hide the existence or availability of other suppliers. They trust a supplier who doesn't shrink from the possibility of being directly compared to a rival. The most successful businesses are aware of this and use it to their advantage in creating a favorable public perception of their abilities. 

Finally, modern consumers simply don't like to have information kept from them. While they may appreciate the convenience of electronic order forms, they don't appreciate restrictions on the potential represented by those forms. In other words, what good does such convenient ordering do if the customer can only look at or order from one source? The factor of convenience is overcome by customer impatience with suppliers who deliberately belittle their natural curiosity and try to head off their access to the whole market.

Why a Printing Industry Network Shouldn't Be Run by Printers

The natural tendency for any industry is to use a new technology in a way that continues an old pattern of commerce. That's why almost all current discussion of networking in the printing industry discusses ways to use it to connect printers to suppliers and customers via electronic order forms. In other words, suppliers and customers use a dedicated, "captive" system to order new jobs or update inventory. There is no attempt to consider offering users anything beyond a very limited and restricted set of options.

This perception of networking is equivalent to a 19th-century department store insisting that all its customers' telephones be wired so they can only reach that one store. Such an insistence misses the point that a far-reaching technology like telephony (or networking) is soon driven by the market into becoming a universal service. Everybody uses it and becomes reachable by it, and everybody benefits from it-especially businesses. 

An example of this is that today no business in America considers the Yellow Pages to be a threat to its profitability. In fact, most businesses rely on the Yellow Pages for a significant percentage of their sales. Yet the Yellow Pages does exactly what PrintNet intends to do with networking: It gives customers access to one's business rivals. Yellow Pages advertisers easily get around this by differentiating themselves in their ads. They describe unique combinations of equipment, experience, location, hours, specialties or credit arrangements that allow readers to quickly determine who looks most likely to meet their needs.

Why You Can't Trust MIS People To Judge What We're Saying Here

In the days before businesspeople got rattled by high tech, heads of companies conceived, planned and set in motion a chain of events, and then analyzed the results. The analysis consisted of getting enough people to report enough accurate numbers to give the chief executive a fairly reliable indication of the consequences of his decisions. The person in charge of compiling numbers and writing them down was usually called an assistant, or secretary or vice president.

Then came the computer. Since computers were Special Things, they needed Special People to run them. And since computers were a great means of compiling and crunching information, the Special People who coaxed coherent data from them soon came to insist that their specialty be called Management Information Systems (MIS). That acronym soon mutated into a noun, so that techno-nerds whose only expertise was wiring together networks came to be called what they ran: MIS. Many of them were actually able to convince their bosses that they were also qualified to call the shots about a business's future. So executives who should have known better were turning to their MISes and asking them-instead of telling them-how to use networks to increase business. This was the equivalent of asking the chief mechanic how to position the auto dealership.

Almost to a person, an MIS will tell you that a network can only be helpful to a business if it is installed and run as a purely "business-centric" concern. The possibility of opening the network up to genuine interactivity with customers, or, heaven forbid, giving customers access to information beyond a business's own narrow interests, will be regarded with disdain. Another-unspoken-objection will be, "We can't use something that wasn't made here." Translation: "If we didn't think of it first, it can't be good (effective, useful, worth trying, etc.)" Imagine a telecommunica- tions specialist telling his boss that their company should only use telephones or switching equipment made on the premisses.