March 08, 2011
Christensen: News organizations, facing disruptive innovation, must rethink their “job”
By A. Adam Glenn
It’s been five years since the Newspaper Next initiative outlined the prospects for disruptive innovation in the traditional news business and encouraged newspapers to experiment with radically different products to their core print offering.
Since then, the pace of disruptive change has done anything but slackened.
Google takes in several hundred million queries a day and generate tens of billions in economic activity through its search and advertising services, not to mention purchased Youtube, which sees 24 hours of video uploaded every minute. Facebook opened its social network to all comers and has exploded to more than 600 million users. And Twitter launched and has gained nearly 200 million users sharing news and links.
Many of the ideas behind that Newspaper Next report - of upstarts disrupting the traditional news businesses by offering simpler, easier and cheaper services, or of mainstream media adapting with a focus not on product or customer categories but by understanding the “job” consumers “hire” news organizations to do - originated with the pioneering theorist for disruptive innovation, Clay Christensen.
During the last few years, Christensen has been in his own transformative struggle, surviving a heart attack, stroke and cancer.
But on March 4 he was back on the stump in New York, once again reaching out to media industry leaders, exhorting them to address head-on the challenges that have come their way.
Christensen, speaking at a local online ad conference sponsored by consulting firm Borrell Associates, warned that “the collection of news has become commoditized” and that the road to profitability must now come by helping users “find what they need when they need it,” much in the same way as when the component parts of mainframes became commoditized, computer makers sought to add value with the skill of their engineers better knitting the components together.
The Harvard Business professor added that companies don’t often think through all the hidden dimensions of how people use their products, such as the way drivers turn cars into mobile offices. At the same time, added Christensen, that means “the opportunity to solve customers’ end use problems is much greater than we’ve ever anticipated in our past.”
Not that start ups are always innovative, Christensen suggested. Probable failures can usually be spotted, he said, by looking at whether their business plans target product or customer categories rather than focusing on how to get a particular job done. He also suggested that winning start-ups often don’t go head-on with established leaders, but rather disrupt by “competing against non-consumption. ... In many cases, disruptive technologies go after a different set of customers - in new applications with new customers.”
It was mainly traditional companies in transition, though, that came in for a brow-beating during the March 4 morning program, with Christensen suggesting the firms often looked toward easy solutions to their challenges, Change cannot come either, he warned, by simply projecting out from historical data about performance or simplistic structural changes. Instead, it emerges from a forward-looking way of thinking about a company’s prospects, and one that’s shared among all employees, not just top management, via a common language and common way of framing the problem.
Newsroom convergence isn’t necessarily the answer either, he suggested. Christensen argued, rather, it is best to free companies from the limitations of their legacy businesses by creating wholly independent units to create new markets, such as by creating separate digital media operations within mainstream news organizations. He offered various cautionary tales of how the effort to create hybrid products ended in failure by trying to maintain legacy businesses while breaking new ground.
Conference organizers followed up Christensen with a case study for implementing change - a local news organization with separate digital operations creating new products and succeeding in audience and revenue was outlined in detail by Clark Gilbert, a former student of Christensen’s who is now CEO of Deseret Media, the media arm of the Mormon Church in Salt Lake City.
Gilbert explained the need for the digital media group to have not only a separate management structure, but a separate P&L and even physical location. “The power of an established business to frame every kind of logic in everything you see is so pervasive - it affects everyone, sales, journalists,” he argued. “[Those within] the legacy organization are intrinsically motivated to better the legacy product and to see ‘lousiness’ of the new product. It becomes a self-fulfilling prophecy.”
The media executive affirmed there are aspects of the legacy organization that remain highly valuable - such as journalists’ ability to cultivate a beat, interview, cross-check sources, or to write AP style, or sales teams’ relationship selling or their major market account management. He also acknowledged there are hybrid elements that all journalists need to do better on, such as leveraging brand and voice, writing SEO friendly headlines, tweeting/social media, and web research and roundups, and that sales teams need to improve on practices such as bundled selling, digital training and support or specific web targets.
But when it comes to enhancing key journalist skills within the disruptive arm of the organization, such as by developing user-generated content and databases, improving user interface, navigation and design, link-sharing and higher-level search engine optimization, Gilbert argued he “can’t expect my news organization to do [these]. I’m not going to change them.” Similarly, in sales, the digital media arm’s direct sales, telesales or self-serve advertising, all of which he said Deseret launched within the last year and are now seven-digit money makers, could not have been managed out of the legacy organization or a hybrid.
“The second you think there is a hybrid relationship, good luck with that,” he cautioned, “because it is just not going to work.”
A similar take came a day earlier in the three-day conference from Arturo Duran, executive vice president and chief digital officer of The Journal Register Co. The news organization has adopted what it calls a “digital first” approach - that he said is fasting making it a non-print company - by allocating resources to the creation of original content in the platform of customer’s choice, rather than via traditional print production modes.
As a result, Duran said, not only has digital audience grown 75 percent, but total audience has grown 20 percent as well. In addition, digital sales (overwhelmingly local) grew 82 percent year over year last December.
Other media group heads concurred with the need for a fundamental shift during the gathering.
Robert Prather, CEO of Gray Television group, who says the company’s big emphasis now is mobile, noted “If we don’t wake up to fact there is a new world out there and embrace it, we’re going to be left behind.” Peter Smyth, chairman and CEO of Greater Media, warned too of management stasis - “corporate truths become corporate traps tracts” - and agreed companies need to break out of old patterns, with leadership from the top and buy-in from the bottom.
More reticent was Kirk Davis, president & COO of Gatehouse Media, a newspaper publisher that has experimented with hyperlocal web site WickedLocal.com in Boston, said that while as a newspaper executive he wanted to “dispel the notion that we’re big elephant doesn’t see peanuts at our feet [and] there is a tremendous responsibility to move legacy business forward…we don’t want to disenfranchise 6k employees. But so much from their work we can apply and rapidly.”
Deseret’s Gilbert advised that many organizations see creative solutions to disruptive innovation clearly when they’re looking elsewhere, but adopt an “I’m different” attitude when it comes to their organization or industry. “I have never seen an industry that believes that more than the newspaper industry,” he added. “It’s like saying ‘Gravity really doesn’t apply to me. ... Patch, Huffington Post - that’s not journalism.’ “
“Nothing’s really new,” added Gilbert, of the five years that have passed since the Newspaper Next initiative. “We do see great peers around the industry who are doing this. But we also see lots of people who are stuck…who think they’re doing well while a much larger business is growing all around them.”
Concluded Christensen: “Disruption is never disruptive to customers. ... They don’t care, but will just go for what’s best for them. We need to recognize this.”
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The News Leadership 3.0 blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.
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