On transformative innovation with Yellowwood

I was honored to speak at the recent launch of Yellowwood’s white paper on transformative innovation in Johannesburg and Cape Town. Here’s my talk.

[youtube http://www.youtube.com/watch?v=iSSR4j8nL7w]

 

Introduction

I used to be a textbook publisher for two multinational companies. And when you’re a book publisher you realise pretty quickly that you either make books for rich people, or you sell cookie-cutter textbooks to government. Most people in the world – perhaps six or seven billion – could never buy the books you make. Most South Africans, we can be fairly sure, live their entire lives without owning a book.

Take all the knowledge and experience in your brain that you got from books, and imagine you’re holding it here like a little package. Now, imagine you just threw it away. Gone. What’s left is a life without books. Maybe six billion people live like that, and that is a frightening waste of human potential.

So why is the world like this?

Traditional publishing

Well, all traditional publishing works like this:

  • The publisher develops a finished product, based on their best guess of market needs.
  • Then manufactures it.
  • Stores it.
  • Ships it.
  • Then a retailer displays it.
  • Sells a few copies.
  • And returns or destroys the copies not sold.

This is very expensive: not only are there multiple links in the supply chain adding costs and very little value, but the risk of getting the initial product design wrong is high. Many publishers will tell you that only one in ten books makes money. So, as a result, the industry’s customers must be wealthy to pay for all this, and its retailers must be located close to those wealthy consumers. This is as true online as it is in bricks.

The industry can’t expand beyond these little clusters of wealthy consumers. It’s stuck. And in this form it can’t even live up to its name, ‘publishing’: to make public, and so to spread stories and education and professional knowledge. It’s a problem that, in South Africa, we might call the trap of very exclusive books.

Only a disruptive innovation could solve this problem. And in big publishing companies that would be hard to achieve, because of what Clayton Christensen famously described as the innovator’s dilemma: big companies must meet current customers’ needs, and this prevents them from investing in disruptive innovations, especially in low-margin markets.

And since most of Africa is made of low-margin markets, we need disruptive innovations more than anything.

In 2006 I had left big publishing to start Electric Book Works, a small consultancy that would set examples for innovative publishing, with a focus on technology.

Over the next few years, we failed again and again at creating good examples of inclusive books. It took several years to realise that the innovation we needed would not come from a new, first-world technology. New technologies require disposable income and new behaviours, and human beings are stingy and don’t change quickly. For example, even in the US, fourteen years since ebooks became widely available, and after seven years of massive investment and ebook cost-cutting by Amazon, still fewer than 30% of books purchased there are ebooks.

And given the ecosystem of devices, data, support and credit cards that they require, ebooks are just as exclusive as traditional books.

So I realised we wouldn’t solve the problem in South Africa by throwing ereaders at schoolchildren, or asking everyone to read their textbooks on tiny feature phone screens. We needed something simpler. Something that required no new infrastructure or technology. Something that built on the energy of entrepreneurs and small businesses. It had to work for established publishers, but not rely on them to change much at all about their businesses.

The answer: copy shops

When the answer finally arrived during a research project, it seemed blindingly obvious: there are thousands of photocopy shops around South Africa, printing CVs and flyers and booklets, and photocopying books every day. These shops are in city streets, townships, and rural villages. They’re in schools and churches, at the backs of hair salons and in converted shipping containers. We only needed to harness their power, and make it legal and easy for them to print and sell books.

The key is ‘legal’: copy shops have long had a reputation for copying and selling books illegally. Where that is true, it’s because they are meeting the needs of their communities in ways the formal book industry can’t. So you might say we wanted to turn pirates into partners: to bring an informal market into the formal distribution chain, for everyone’s benefit.

So in 2011, with the Shuttleworth Foundation as our investors, I gathered a team and began building Paperight: a network of independent copy shops that print books out for customers quickly and legally.

Our B2B site, paperight.com, enables any business with a printer and an Internet connection to print out and sell books, paying only a small licence fee per book from a prepaid account. Amazingly, publishers can make the same margins that they do from their fancy editions, and still the total cost to the customer is usually less than a traditional book.

More importantly, the customer just walks to their local copy shop for it: no long trips to the bookstore to discover they’re out of stock, or waiting weeks for a delivery. No need for a credit card.

The copy-printer as intermediate technology

Our innovation is built on what EF Schumacher, over fifty years ago, called an ‘intermediate technology’: a technology that’s more advanced than the poor are used to, but cheaper to set up than the first world’s cutting-edge stuff. Base of pyramid initiatives will always rely on intermediate technologies to be sustainable.

But it takes humility to innovate with intermediate technologies. In this way, ours is a humble innovation. It is not sexy to sell printouts from copy shops. But the power of Paperight is in that simplicity.

Africa as a whole needs more humble innovations using intermediate technologies, or we will continue to limp forward through the rubble of a thousand failed attempts to roll out fancy technology that existing economies can’t support.

Intermediate technologies work today. Our member copy shops across the country have delivered thousands of books, many in places where no bookstores exist, like Peddie in the rural Eastern Cape, and the CBDs of Khayelitsha.

While we’re still small, the potential impact is immense. We’ve just signed an MOU with copier manufacturer Riso, whose low-power, high-volume machines are perfect for schools. Any school that leases a Riso machine will be able to print books from as needed, and Riso will contribute to the licence fees. This could change the face of schoolbook distribution forever, completely sidestepping the problems of textbook shortfalls in classrooms.

And it can all be done with good old photocopiers.

How we innovate

We believe that when innovation is humble, it becomes very straightforward: you simply focus on finding the real problem and solving it today. You can waste a lot of time innovating around the wrong problems, or on tomorrow’s problems, sticking glamorous technology where it isn’t appropriate.

We also believe wholeheartedly in the value of openness: transparency and sharing is built into our team’s DNA. The company is fully transparent internally, right down to knowing each others’ salaries. We’re open-sourcing our code. We love sharing stories of failure as much as success.

This openness many benefits: we waste no resources trying to keep secrets; we are forced to confront our failures bravely; and others share with us and trust us.

Openness helped us overcome our first big challenge: getting traditional publishers on board and willing to work with copy shops that they’d always mistrusted.

Challenges and bright spots

We’ve won a bunch of awards and accolades around the world over the last year. But quite frankly, what really matters is whether our model is delivering books. Which it is, of course, but we’re impatient, and we want to deliver far more books much faster.

So we’re continually looking for partners, specifically organisations ready to invest CSR or enterprise-development money in getting books to needy schools and early-childhood-development programmes, and in supporting small printing businesses.

It’s still early days for us and for truly accessible books, but as more and more partners join us on the journey, the better the chances are that we’ll look back in ten years and say that together we fixed a dent in the universe, and put books within walking distance of every home.

Thank you.

3 thoughts on “On transformative innovation with Yellowwood

  1. Hello, I just read yet another of your very much interesting presentations as myself I am looking for a genuin publisher in order to share my last paper that is still in the making though. I am very much interested in all you sent as the publishing world is a mystery of sort to me and before committing myself to the printed world I take advantage of experience you so generously share on line. Best regards
    Jan Ciechanowski
    skarbien@intnet.mu

  2. Pingback: Launching the anthology, mapping outlets, and a big win | The Paperight Story

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