A few years ago, I took a course at Harvard Business School where I was privileged to hear Clay Christiansen deliver a lecture on the “Innovator’s Dilemma”. What struck me was how in case after case, the managers of disrupted businesses repeatedly made decisions that appeared to be sound – they focused on their best customers, reduced costs, etc – but actually hastened their own demise.
The assumption was always that the disrupters were creating cheaper, inferior products and were scraping the bottom of the barrel for the least desirable, poorest, most unreliable customers – and good riddance to them! I mean, who wants to go in front of a board of directors and say “We’re going to invest millions to offer an inferior product to our worst customers!”
But the thing is, the disrupters always end up improving their quality and efficiency until they are able to offer something equal or better to that of the incumbent.
Last fall, I wrote a post about the lies newspaper executives were telling themselves. The post was born out of the frustration I was experiencing as I watched a group of very smart people repeatedly do remarkably dumb things, killing their businesses in the process. And now, more than a year later, as these same execs dilly-dally with pay walls and iPad apps, I can only say that things are getting worse, not better.
It seems to me that there are two camps of newspaper executives.
First, is the very small camp epitomized by the Guardian’s editor-in-chief Alan Rusbridger and JRC’s John Paton. These execs aren’t afraid to face an uncomfortable reality. The economics of media have changed. What was once scarce is now abundant. Large cohesive media products have become unbundled because the bundles no longer make sense. The mix of news, information, advertising and classifieds were simply the result of an industrial age manufacturing process. Or as Jay Rosen asserts, every process that is practiced at a newspaper can be traced back to the needs of the printing press.
The first thing a realistic news exec needs to do is understand their disrupter. And once they understand the Internet, they will know that their survival rests on becoming of the Internet, not merely residing on the Internet. That means becoming a platform. That means being open. The Internet is not just another content distribution method. It is social. It is collaborative. That means accepting that they are no longer publishers or broadcasters having a one-way “Gutenberg era” conversation with the masses.
Next, a realistic news executive has to admit that they don’t know where the business model is going. That takes guts. Especially in the boardroom.
As Rusbridger put it in a recent lecture in Australia:
It's developing so fast, we forget how new it all is. It's totally understandable that those of us with at least one leg in traditional media should be impatient to understand the business model that will enable us magically to transform ourselves into digital businesses and continue to earn the revenues we enjoyed before the invention of the web, never mind the bewildering disruption of web 2.0.
But first we have to understand what we're up against. It is constantly surprising to me how people in positions of influence in the media find it difficult to look outside the frame of their own medium and look at what this animal called social, or open, media does. How it currently behaves, what it is capable of doing in the future.
It takes balls to stand in front of a boardroom of mostly old men (why aren’t Rafat Ali, Mike Arrington, Om Malik et al invited onto mainstream media boards?) and say that the future is still concealed behind a dense fog.
They can’t tell the truth because the truth doesn’t have an obvious business model. Yet.
So instead, they do the easier thing, appeasing boards with business plans that look good on paper, especially to people who are not of the Internet.
So along come the steering committees, working committees, pay walls and subscription models and the dream that consumers will be willing to pay for their rarified opinions despite the countless free alternatives. And along come the $30 million iPad apps that attempt to recreate scarcity by rolling back the clock to when news was a once-a-day occurrence and the public didn’t expect to comment, contribute or find links.
It’s a colossal waste of time.
In the meantime, smart competitors are discovering new holes in the market and new needs to fulfill. Bloomberg Government, Demand Media (love it or hate it, it’s growing) and Flipboard are all products that could have been created by mainstream media companies.
We are officially in the post-Gutenberg era. A new kind of thinking is required. That is where time and money need to be spent. That’s where the media industry’s best and brightest should be.