The CITE, a blog published by the National Association of College Stores, takes a look at the intersection of education and technology, highlighting issues that range from course materials to learning delivery to the student experience. Comments, discussion, feedback, and ideas are welcome.

Wednesday, November 4, 2009

Moving stores toward digital (or not)

Recently I had the pleasure to exchange thoughts with some of our industry leaders, including Stacy Waymire from ICBA. The move to digital course materials is a topic on many of our minds these days. In our opinion, while a number of college stores are engaging with digital change, and addressing the necessary evolution of the traditional business model, there are many stores that are not. My remarks below will seem controversial to some, but as a former faculty member I cannot on occasion help but to try to push those around me to think about what is happening in our environment from another perspective.

The college store market is reflective of higher education and publishing, the two mature industries which we intersect. As Stacy noted, “Resistance, denial, fear, withdrawal - we have it all. Our channel includes a high frequency of hostility to the reality of the shifting market, and to anyone who points out just how radical a shift is required by us to survive -- IF we can.” It reminds me of one of my current favorite quotes from Clay Shirky:

And so it is today. When someone demands to know how we are going to replace newspapers, they are really demanding to be told that we are not living through a revolution. [...] They are demanding to be lied to. There are fwer and fewer people who can convincingly tell such a lie.
We could just as easily replace "newspapers" with "bookstores" in the above quote and have it be just as relevent. Stacy remembered observing the deer-in-headlights looks in the room at a recent meeting of college stores when he said "it may be too late" for stores to make the changes required to survive. I had a similar reaction at another recent presentation where I thought some people in the room looked like they might need a stretcher by the time I finished. Particularly when I commented that in a NACS survey from earlier this year 3% of stores believed that digital would not impact their stores... EVER. I, of course, followed this by a remark that if one of those stores were in the room they should leave immediately because they cannot be saved. In that same survey nearly 31% of responding stores believed digital would not impact their sales for at least 4 years or more. I worry about that group's survival as well. Better perhaps to focus on the remaining two-thirds of the industry that is at least aware that their world is changing.

A topic that came up in our conversation about this point is the concept of asymmetrical competition. Asymmetrical competition is when your competitor refuses to compete in the traditional way, causing traditional organizations or industries to react to disruptive change. Frank Hecker has a nice paraphrasing of this concept which comes from the innovation theory literature (see also Clay Christensen’s Seeing What’s Next). He writes:

[A] classic disruptive scenario is when a market entrant introduces a disruptive innovation of some sort and incumbents are motivated to ignore the innovation, for whatever reason: For example, the innovation does not meet the needs of incumbents’ existing customers, or the incumbents’ cost structures or business models are such that they would be unlikely to make money in the initial market for the innovation. [In] this scenario the market entrant is protected by the shield of asymmetric motivation and has time to develop the sword of asymmetric skills that enables it to threaten and (in some cases) displace the incumbent.
Wow, do we sound like those incumbents at all? In the case of the textbook market, the example might be where competitors start by making some of our fundamental products free. I agree with Stacy’s observation that stores “need to consider the primary shift they are driving toward being less about preventing channel collapse, and more about abandoning the channel By which I mean, it is more about management needing to abandon their existing thinking and business model, and adopt a new approach in a market that may not even exist in total yet, and in fact may not gel for the next few years.” Wayne Gretsky might have described this as “skating to where the puck will be, not where it is.” In innovation theory we would describe this as “pursuing future profit pools.” We need to focus on where the future business will be, not where today’s business is. That may require abandoning some of our traditional practices and foci in order to survive the change to our industry.

About a year or so ago, when asked if publishing would move from print to computer, Bill Gates replied that it will leapfrog the computer and go directly to mobile. Cloud computing facilitates this. It is important to see digital course materials within the context that all of higher ed (indeed all education) is transforming. Look at Wiley Plus Wiley Plus, and the new Houghton announcement of their Learning Village deal with the Detroit public schools. Houghton will be providing a computer-based teaching system it developed with Microsoft Corp. that will connect teachers, students, and administrators. It's a radical shift away from the classic textbook publishing model and represents an industry transformation, as technology supplants books. "The textbook is no longer the center of the educational universe,'' said Wendy Colby, a senior vice president at Houghton, which is based in Boston. Wait until we hit reverse site licensing, where a university press gives all of its content away for free because the new revenue stream is a partnership with a learning system that will incorporate their content into a delivery and custom commons with a percentage going to the up. Or who knows what else?

For stores today, we must take on as part of our education and marketing the issue of "Why Free?", which allows us, as Stacy puts it so eloquently, to raise the idea that "our free has to be better than their free." We are challenged to design new business models that abandon our traditional legacy infrastructure, even while that infrastructure continues to support the existing channel. The textbook manager of the future will be as much reference librarian, helping faculty and students find the right content for the course, as a course materials expert who knows what products are available in what formats and with which associated rights. In making this shift, along with others, the college store can continue to add value, stake a claim and build market share in the new or emerging digital course materials channel.

I know -- heavy thoughts for the middle of the week. These are questions and ideas we must think about and address as an industry if we do not want to end up like record stores (and perhaps newspapers) before us.


Anonymous said...

I hope all is well. I enjoyed this post. I wanted to add some thoughts on issues I believe are also shaping this discussion. I am sure these items have come up at sometime before. Take care.

-The nature and scope of educational content across the expanding list of stake-holders

-New business models that are reinventing and evolving around the educational content industry (Higher Education/Advance Placement):

-Selection of appropriate content and applications that are cost effective and provide "added value" options

-Creation (developmental/editorial integrity)

-Peer vetting/quality


-Customization (or another term I also like to use on occasion, "micro publishing")

-Distribution/platforms (direct to consumer: student, faculty, and/or institution)

-End-user consumption preferences

-The digital gap (products and services) that is growing between the old approaches/models and new realities. This gap is being filled quickly by innovative companies (large and small). Many of these new entrants have popped up over the last couple of years. Many (if not most) have developed business models and strategic approaches that do not involve the traditional campus bookstore.

-New players (Microsoft, Apple, Google, AT&T, etc) from outside the industry are investing heavily in this marketplace to advance their core businesses, exploit new opportunities, and reach a very desirable consumer demographic (college students)

Anonymous said...

I’m not someone comfortable with posting comments out to blogs but I did want to let you know that the thoughts you shared in Moving stores toward digital (or not) really hit home. I immediately sent it to our store manager and assistant manager as “required” reading and will share it with my director. The statement that “We are challenged to design new business models that abandon our traditional legacy infrastructure, even while that infrastructure continues to support the existing channel” makes me think of today’s college stores as the sandwich-generation. The need to support an aging print-based business while trying to deal with an unruly and ungrateful igital teenager. Good times!

Anonymous said...

Mark Thanks for that refreshing and overdue reflection.

One must be living in a particularly dark and deep cave if they believe the fundamental shifts in our environment will leave the channel, let alone the bookstore industry, untouched. I say industry because while there are many individual stores doing fine work and are fully engaged however the reality is: 100 stores, even the largest, will not be large enough in combined market share to support a channel collapse, and in my view, its coming.

Here are the top reasons I hear in use to explain the glacial pace of our industry planning.

1. We are waiting for our system provider to provide the solution. hmm.... i've looked at the solutions. Compare any of them to the current Amazon reality " any book anytime anywhere in under 60 seconds." ....makes our current solutions look primative by comparison. And the Kindle reader is a Neanderthal next to the Entourage's Edge or the Nook. We are dealing with students in the year 2009 probably in the year 2029 - they are that far ahead on the tech curve. Is it starting to become more than a little embarrassing to hear the 40 year old's claim that digital wont work because in their bifocal futuristic vision of the reading world most of their contemporaries will dislike reading from a screen. We should know our customers starting with- " they are not us" or if you prefer "we are not them" .. any way we look at it really doesn't matter what we think , we are paid to understand what "they" think.

2. I'll be retired. Nice , really nice planning strategy. i have scores of employees to worry about, and besides what's the average age of a store director? Anyone looking for an early escape should check the equity markets. Furthermore ,our job is to safeguard our students from the potential abuses hidden in new models ...i like that job

3. We can sell insignia. I hope so- because there are more retailers with expertise selling apparel than there are retailers selling textbooks. Some minor names like Wall Mart , College Gear footballfanatics.com need only a license to become formidable competition on and off line. We sell insignia but we sell it because we sell course materials. We sell course material better than most. Do we sell apparel better than most?

4. Digital is currently a small part of my sales. One needs to read only one or two best selling business books about disrutive technologies or perhaps the article on the death of the music industry ,circa 1999 ; it's the one that has been in the dentist's office for a decade, to understand the problem with that d illusion. The loss of our sales to digital is a lot more than the 2 or 3 percent that is often quoted, we are loosing 10 to 20 percent per year to "free" to course notes on line , to open content and the list is long.

5. No worries ,our sales are even or up slightly because of enrollment increases. A little boost to enrollment coupled with the kind of price inflation possible only in the Wonderland we call a competitive marketplace may give us some time but it does not negate the tremendous and terrifying shift/loss in market share we face in the next two years. I recall telling Waymire, currently one of our best industry thinkers, that price inflation is the crack cocaine of our industry. It is altering our perception of reality. At the end of the day we can decide to harvest a mature market and sell the last book , half may be around for a while or we can try to remain relevant. We should decide and pick a path.

Turns out this is a rant , my two humble cents.