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Summary:

Like other industries that have been disrupted by new forms of competition, Clay Christensen says that newspapers were almost incapable of taking the steps they needed to take — even long after the danger of not taking those steps had become abundantly obvious.

When it comes to digital disruption of traditional industries, Clay Christensen is a bit like the Oracle at Delphi, in the sense that the Harvard business professor and author predicted much of what we are seeing now in the media business and in fact throughout the technology industry. But even Christensen admitted in a recent interview with the Nieman Journalism Lab that he was surprised by just how quickly things fell off a rather large cliff in the media industry. And unfortunately for newspapers and magazines, there is no way of getting back to the top of that mountain — there are only alternate routes through the valley below, some of which lead to success and some of which are likely to be dead ends.

One of the classic lessons from Christensen’s seminal book “The Innovator’s Dilemma” is that companies with a commanding lead in their field, whether it’s hard-drive makers or steel mills, are almost incapable of taking the steps that need to be taken to survive a technological and/or behavioral disruption — even when the danger of not doing so is blindingly obvious. In other words, even when a company can see quite clearly that a freight train is approaching or a cliff lies directly ahead, it is still almost impossible to step off the tracks or do anything other than stampede over the edge.

Newspapers were doing well, until suddenly they weren’t

This has a lot to do with human nature and corporate culture, but Christensen also notes that industries like newspapers are often seduced into thinking that things aren’t as bad as they seem, because their traditional business often continues to do quite well — until all of a sudden it doesn’t:

“Even as the disruption is getting more and more steam in the marketplace, the core business persists, and is really quite profitable for a very long time. Then, when the disruption gets good enough to address the needs of your customers, very quickly, all of a sudden, you go off the cliff.

Even though managers realize that disruption is occurring — even though they know it’s happening — they don’t do it, because the data becomes clear after the game is over. They really have to act on the basis of theory, which I think a lot of people find hard to do.”

So newspapers have arguably seen the writing on the wall over the past decade or so, and yet making the kinds of decisions that were required to get in front of that wave of disruption was still extremely hard, since doing so would mean potentially derailing their existing successful businesses. Although Christensen doesn’t mention it, this is likely one of the reasons why the only newspapers that have made significant strides tend to be ones that have gone bankrupt or are close to it, like the Journal Register Co. — in the most obvious sense, they have nothing else to lose.

Interestingly, Nieman Lab founder Josh Benton also notes that newspapers with strong religious affiliations have made some big moves, including the Christian Science Monitor — which was one of the first to go digital only several years ago — and the Deseret News, which Christensen mentions as a pioneer (perhaps in part because it was taken over by one of his graduate students).

The other newspaper that gets high marks for adapting quickly, or trying to do so, is the Washington Post. For Christensen, the model that the Post pursued from the earliest days of online news — with the digital unit set up as a separate entity and even located in a different building — is the one that has the best chance of success, because then it is easier for the digital operation to pursue whatever steps it needs to in order to survive. This is why so many Washington Post staffers were disappointed when it seemed as though the “printies” had won.

Taking risks and learning to fail are necessary skills

The Post has also been one of the few major dailies to take some interesting risks in the digital realm, including the creation of its Trove news-recommendation engine and the launch of the “social reader” app for Facebook, which has driven a lot of traffic to the newspaper’s site but has also been subject to the whims of the platform on which it sits. And Christensen also gives the company praise for diversifying away from the news business and into online education as a way of subsidizing its journalism (although there are critics who say this model is working less and less well for the Post).

Although Christensen doesn’t mention it, the decline and now disappearance from print of the Newsweek brand name is another great example of the processes he is trying to describe. At one time, the aggregation of a week’s worth of news was a great service for readers — something they couldn’t get anywhere else. Now, that kind of thing is available in a thousand different places, and so the purpose of Newsweek has essentially been removed. Is there a purpose for The Daily Beast, the entity that merged with (and possibly helped to kill) Newsweek? That remains to be seen. Meanwhile, Forbes is another entity that gets praise from Christensen for trying to disrupt itself.

While the introduction of paywalls may be helping to delay the disruption, and prop up what remains of the traditional newspaper ad-revenue business, they don’t feel like a long-term solution to the challenge that Christensen is talking about, which is to develop a sustainable online business that solves a real problem for readers. Are readers suffering from a lack of paywalled content for which they can submit their credit cards? Probably not. It’s also interesting that the newspaper that gets the most praise from Christensen is the Post, which remains adamantly opposed to a paywall.

In the end, the only advice Christensen can provide for newspapers — or magazines, for that matter — is to aggressively cut costs in the traditional side of the business (the Deseret News cut more than 50 percent of its staff) while also investing in new digital-first businesses. So far, most newspapers are getting good at the first part of that equation, but not so good at the second.

Post and thumbnail images courtesy of Flickr users Zarko Drincic and George Kelly

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  1. The reason that most industry leaders are incapable of taking the steps to survive technological disruption is because the founders, who understood the technology, have been replaced by managers, who typically have financial or operations backgrounds. They are incapable of recognizing or responding to technological disruptions. This is a flaw in the entire publicly owned business model – shareholders rely on analysts, who have little experience running a company, let alone starting one, and analysts demand “mature” management. That is, people who focus on finances, not product.

    The best example of a technology company avoiding disruption is Apple with the ipod mini. They discontinued the mini, even though they were still incredibly profitable, because they knew there would be better devices out there. They didn’t wait until competition killed it, as most other CFO-dominated tech companies would have done, they obsoleted it with their own new product, the ipod touch, even though they could have kept selling both. A product and technology driven company will recognize the threat of new technology, but a finance-oriented company, or one that relies on its brand and channel, will believe it can withstand advanced competition, and not invest in the new products, nor stop milking the existing cash cow.

    When executives stop letting analysts influence their decisions, and focus on what people want to buy, rather on what they want to sell, they will be better equipped to survive technological disruption.

    1. The nano, not the touch, replaced the mini.

  2. Nicholas Paredes Monday, October 22, 2012

    Managing through such a change is difficult simply because the solutions require an essential business change. Becoming a successful business does not necessarily mean that a company will do it again.

    What shareholder is going to sit through a discussion where the need is to eliminate 80% of the physical plant (presses) in order to move to an unproven business. And, let’s not forget about the staff cuts. Marx — quite the astute economist — saw small companies as generators of new opportunity that large capital organizations would buy in order to innovate. In an age where the large capitalization efforts are not required — Huffington Post — how does an established company offer a vision that does not undercut their product offering?

    1. I think your question is the core of the problem, Nicholas — thanks for the comment.

    2. Very astute point…it all comes back to the nature of disruptive innovation as, well…a disruption. Thanks for your comment Nicholas.

  3. Same thing for all media: music, papers, books, movies and TV,games.All are slow to adapt (some slower than others). The real fun is when buying most objects becomes pointless due to 3D printing.
    ofc for news as you point out, the transition was faster because other entities were able to provide the content online while for other types of media the changes are a lot more painful for the consumer and the old model dies slower.
    In the end there is nothing new here ,look at watches,radio, Kodak and maybe soon Microsoft and Intel.
    Newspapers ,and everybody else, need to understand that convenience wins.There is no reviving the industry as it was ,no device will do that,no paywalls will do it,no new legislation.

    1. “The real fun is when buying most objects becomes pointless due to 3D printing.”

      Not going to happen.

      1. @Rich “Not going to happen” :) …now where have we heard that before?

      2. Thad, score lol

  4. ryandigitalmarketing Monday, October 22, 2012

    This is an interesting write up. I agree with the final point, cutting cost on traditional media and investing in digital. However, this cannot be accomplished until the more “mature” management can fully understand the push into digital. Those paper giants who still rely on subscription to stay a float will suffer an ugly demise. On the same point, those who promote a paywall will also see less traffic. The key to all of this (at least to the paper giants who will always be in that business) is to balance your print and digital by limiting cost on both print subscription and online subscription, as well as up your free content via digital media. The Washington Post I believe has done an outstanding job of this. Their website acts more like a CNN.com rather than a newspaper “paywalled” site.

  5. The original concept was impressive — the constant surveying of train wrecks is purely academic. If it ever moves beyond the post mortem analysis phase to the preemptive action phase, then I’ll be truly impressed.

  6. “Newspapers with strong religious affiliations have made some big moves.”

    Mathew, why is that?

    1. I’m not sure, but I think it may be easier for newspapers that have a strong leadership — and/or a reason for doing journalism that extends beyond just the profit motive — to make the changes that are necessary.

      1. Boy, *that* is ironic – the less profit motivated players are quicker to take the steps necessary to ensure their continued survival and therefore…profitability.

  7. Mathew, as you’ve said our former mothership G&M is paywalling this week but the walls and collapsing ad revenue won’t pay for the hired presses, paper & ink. The Newsweek example is an opportunity for that mag to re-invent, though. And there does seem to be market for a second look at last week’s news. Take the example of Felix Dennis’s The Week, which has a lively online presence 24/7 and claims to have turned profitable after 10 years of trying with its weekly printed edition, penetrating mostly of late, I think, the DC Beltway. So the print edition can be done.

  8. This summary, which appears to be based on a short podcast with the authors and the editor of the Neiman Lab, does not reference the longer article, which is well worth reading.

    It’s one of the more thoughtful, in-depth looks at journalism that I’ve read. Great food for thought for anyone working in a newsroom today:
    http://www.nieman.harvard.edu/reports/article/102798/Breaking-News.aspx

    1. let me read that Andrea…

  9. Mathew, this was interesting and a great write up of the podcast interview Christensen did. But did you see the actual article they were talking about? It seems there are a lot more there than just a recommendation to cut cost:
    http://www.nieman.harvard.edu/reports/article/102798/Breaking-News.aspx

  10. Richard Willner Tuesday, October 23, 2012

    I wonder how many newspaper companies have conducted internal reviews into their business. I don’t mean reviews into their work processes to drive efficiency; I mean a review into their actual business.
    When new senior managers are appointed here in the UK they are often appointed from ‘rivals’ so, therefore, are newspaper senior managers, not business leaders. They bring with them ways of ‘how it was done’ where they previously worked.
    How about business leaders being appointed and then conducting reviews into costs and benefits?
    It’s just a thought but the industry tends to be very insular – I bet most executives will read the Breaking News document, for example, and not make any changes.

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