by Adam Hartung | Apr 20, 2010 | Current Affairs, Defend & Extend, In the Rapids, Innovation, Leadership, Openness, Television, Web/Tech
News Corp. executives (and shareholders) need to be worried. Really worried. While they are busy trying to Defend their newspaper approach, including the planned move to charge everyone a subscription fee to access the Wall Street Journal on-line, there is a competitor ready to eliminate them. Of course, if you've read the WSJ for years you may think this sounds ridiculous. This competitor is vying to do the same to the Financial Times, a newspaper much more popular in Europe than the USA, which already charges for on-line access. But this competitor is serious, and just might pull it off.
According to BusinessInsider.com, "Bloomberg Redesigns Web Site as it Tries to Kill Journal." Hiring an executive from Yahoo, Bloomberg News is "pulling the gloves off" and preparing to take on old-line competitors as it steers a course to being #1. And the odds are looking good for its success.
The market for business news has been shifting for years. Once this market was dominated by two delivery mechanisms. One was very expensive, costing thousands or hundreds of dollars per month, driving information to terminals sitting at desks of traders and brokers. The other was a daily reporting of business news through the traditional business newspapers mentioned above. Both businesses were very profitable.
But today, almost everyone can get almost everything the expensive terminals had simply by scanning the web. And if you can get news real-time, why wait until tomorrow? News Corp. bought Dow Jones and has been trying to Defend the terminal business, in the face of intense Bloomberg competition for traders desks and much lower cost competition for everyone else. In an effort to shore up the P&L at Wall Street Journal the company has announced it will reverse all industry trends and start charging for WSJ content on-line. They still haven't figured out how to effectively take advantage of Marketwatch.com as a viable delivery mechanism for WSJ content. An admission they don't know how to develop a robust advertising model on the web and mobile devices that will support the publication.
Don't forget, News Corp. was early to the on-line world with its acquisition of MySpace.com. But instead of letting the people who run MySpace.com do what they needed to do to become Facebook – or possibly to become the next Marketwatch.com – News Corp. leaders interceded. They helped "manage" MySpace and applied News Corp. Success Formula parameters to it. MySpace was not allowed to operate as a White Space project. Now MySpace is a narrow site mostly for musicians and artists – missing the big opportunities in social media, business/financial news or even traditional news dissemination. Had it been given permission to do whatever it needed to succeed, permission to create a new Success Formula, who knows what MySpace might have become?
Today's marketplace will not produce acceptable returns for the old Success Formula. But the value of good business news is growing, as all investors want to know what traders know as fast as they know it. And that is where Bloomberg.com is headed. It is squarely directed at building a new business that is advertiser supported which will deliver the right news to the right place fast enough to capture those who want business news.
Bloomberg is now running 2 separate businesses. They continue to allow the terminal business to work hard as possible at defending its turf. Simultaneously they have established a White Space project that is designed to eventually obsolete the old business. In the process they will cannibalize the terminal business. But they also will very likely drive less agile competitors Dow Jones and Financial Times out of business. In the process they could capture significant ad dollars while learning how to dominate the mobile device market as well as the traditional web.
When markets shift, nobody can win by trying to Defend the old. Customers move on, and they abandon old solutions. Returns decline. The winner has to use Disruptions to overcome old Lock-ins to do whatever is necessary to profitably grow! (like having a web site that looked like an old terminal screen with amber text on a black background) and establish White Space with permission to do what is necessary to succeed! Even recognizing this may create cannibalization – but in the process learning how to earn high rates of return while crushing competitors.
Kudos to the management at Bloomberg. They are going for the jugular in the business news marketplace, and doing so by moving where the market is headed – while other competitors are trying to Defend & Extend old ways of doing business. It may not take Bloomberg long to create serious damage to the old institutions in business and financial news.
by Adam Hartung | Apr 19, 2010 | Current Affairs, Disruptions, In the Rapids, In the Whirlpool, Lock-in, Web/Tech
Is news dying, or are newspapers dying? That's a critical question. Most of us know the demand for news is not dying – and if you needed reinforcement a recent McKinsey & Company study verified that the demand for news has increased (McKinsey Quarterly "A Glimmer of Hope for Newspapers"). And a lot of the increase comes from people under 35 who are escalating their news demands. Of course, most of this increase is coming from the web and mobile media.
Too often, however, we don't see our business growing. Instead, Lock-in to old definitions make us think our business is shrinking when it is actually doing the opposite! And that's the Re-invention Gap. Manufacturers of small printing presses said demand was declining in the 1970s, when in fact demand for copies was exploding. Only the explosion was from xerography instead of presses. So A.B. Dick and Multigraphics, small offset press manufacturers, went out of business when demand for the output of their product was exploding! The market shifted, but it kept growing, and they missed the shift.
Today we see this behavior in most news publishers. Those who print newspapers and magazines are talking about how horrible business is. Only the demand for news is growing more quickly than ever. It's just not demand for print, which arrives too late for many customers. And because print is too slow a distribution method for these customers, advertisers are abandoning print as well. But only if you're Locked-in to printing do you say the market is horrible. Because with demand for news growing, if you reposition yourself to serve the growing part of the market you should say business is great!
Tribune Corporation, owner of The Chicago Tribune newspaper is still in bankruptcy. And its future relies entirely on how well it will serve the needs of on-line news readers. According to Crain's Chicago Business, in "Former Sports Editor Bill Adee Steers Chicago Tribune's On-line Strategy" print advertising revenues fell by 9% versus last year in the most recent quarter. And according to a quoted investment banker, nobody would have much interest in the value of a print newspaper. That business is destined to keep declining.
But simultaneously the volume of on-line ads tripled! And that's what a business has to do to cross its Re-invention Gap. It has to move from the old business into the new business – from the declining elements of its business into the growth elements.
What most businesses do wrong is try to apply their old business model to the new business. The old Success Formula has Lock-ins to metrics, schedules, processes, frequent decisions, decision-makers, strategic plans, etc. which the leadership tries to apply to the new business. For example, most newspapers are used to selling ads for several thousand dollars, based upon the number of subscribers. These are pretty large price points. But on-line, ads are sold per page view or per click. Now we're talking pennies sometimes. And to make money, you have to get a lot of views. Likewise, newspapers work on a 24 hour cycle of news accumulation and publishing, whereas the internet is 24×7 with the opportunity to change headlines and what's reported continuously. If a newspaper tries to apply the old Success Formulas related to sales, pricing and editorial process they fail.
And that's why crossing the re-invention gap requires a big Disruption. You have to get the organization to understand that while you are managing the old business, it is destined to eventually go under. So you have to be prepared to Disrupt the Lock-ins, to discover a new way to do the business. And that can only happen if there is a White Space team dedicated to building a business the way the new marketplace will pay for it. Totally separated from the old business. And exactly the opposite of what Tribune is doing by placing the team in the middle of the old newsroom!
At Tribune, one of the big problems is not only the ad pricing model and news scheduling, but the fact that the leadership is still trying to drive content like they did at the newspaper. Over a decade ago Tribune took a direction of accumulating less news on its own, and as a result it republished lots of content. But now on the internet republishing (or content aggregation as it is called on-line) is far less valuable because readers can go to the source. There are thousands and thousands of aggregators – making competition intense and profits negligible. Why page view a Chicago Tribune web page that's feeding info from the New York Times or Marketwatch or MSNBC when you can go directly to the New York Times or Marketwatch or MSNBC and get it yourself – possibly with other interesting sidebars? Succeeding in the new market requires developing an entirely new Success Formula – which Tribune Company has not done. It's still trying to find that magical "leverage" which will allow it to preserve its "history" (its old Success Formula) while tiptoeing into the new marketplace.
I don't know any newspaper or magazine publisher that has really attacked its Lock-ins, really Disrupted, or set up a true White Space team to explore how to make money in the growing new news market. News Corp. had the chance when it bought MySpace.com, but failed as it destroyed the MySpace business by "helping" its leadership. This market requires understanding how to get the news and report it cheaply and very fast, to computer and mobile device users. That is necessary to obtain the traffic which would be valuable to advertisers. And simultaneously the new team must package ad sales so as to maximize revenues from page views. Most are far too reliant on single ad sales, and not effectively linking the right ads to the right pages to generate more click-throughs as well as views.
Re-invention Gaps emerge because we let Lock-in blind us to growth opportunities. We define the business around the Lock-ins (such as printing a newspaper) rather than defining it around what the market wants (news.) Then when revenues stumble, starting a growth stall, the energy goes into preserving the old Success Formula (and its Lock-ins) first with cost cuts, and later with efforts to "synergize" or "leverage" the old Success Formula into the new market. And this never works. The growing part of the market is entirely different, and requires developing an entirely new Success Formula. That's why even in growing markets businesses fail, unless they commit to Dis
rupting the Lock-in and using White Space to move back into the growth Rapids.
by Adam Hartung | Dec 30, 2009 | Defend & Extend, General, Leadership, Openness, Web/Tech, Weblogs
As we enter 2010, is your business expecting a very different future – and have you started planning to implement new approaches based upon a different future? For example, how do you plan to acquire new customers, employees and vendors in 2010 and beyond? Do you still rely on traditional advertising? Do you use a web site? Is most of your on-line IT budget still dedicated to web site development? How much of your plans for 2010 are extensions of what you've been doing on 2009 – or maybe an ongoing trend from much earlier in the decade?
According to the Wall Street Journal in "Linked In Wants Users to Connect More," the number of Linked in users almost doubled in 2009, from 31.5M to 53.6M. And to drive additional user traffic the site is working hard to add applications which can help companies with recruiting, marketing and other business functions. With users jumping, and time on site increasing, is your company blocking access? Or is it figuring out how to leverage this leading web site to find new customers, recruit aggressive new employees and build a stronger business?
But Linked-in is considerably less successful than Facebook. Do you still think of Facebook as a site for college kids to plan drinking parties? If so, you've missed a tsunami in the making. Facebook's user base, at 350 million, is over 6 times Linked-in. According to ReadWriteWeb.com "It was a Facebook Christmas; Site Hits #1 in U.S. for First Time." On 2 days Facebook actually had more site hits than search giant Google! And Facebook was the #1 Google search in 2009. Facebook use is exploding. The average Facebook user spends over 3.5 hours in a session. Many Facebook users log in daily to keep up with their network and what's happening in markets of interest to them.
Increasingly, people don't do web searches to find out about restaurants, movies, products, services – or even jobs. They go to social media sites like Linked-In, Facebook and Twitter. If you depend on people to use your web site to learn about your business – that may be too late. When referred by a friend, what is the first impression a potential customer (or recruit) gets when reaching out to your LInked-in, MySpace or Facebook page? What applications or groups do you support to demonstrate your business and your ability to grow? How are you reaching out through these environments to meet the people who should be a customer, employee or vendor?
Increasingly, people don't even make their first touch with your business via your web site. iPhone users, and the soon-to-explode Android phone users, as well as all the other "smartphone" (or mobile device) users learn about your business from a very small screen that brings in small bits of information that is largely text. They often go to a PC and search a traditional web site only every few days. So how is your information presented? Is it largely graphical, with embedded objects that don't show up well (or at all) on a mobile device? Is it lengthy HTML pages that requires scrolling on a phone?
Increasingly, people looking for you will blow off traditional web pages in favor of easier to access and read information. You may hate the 140 character Twitter limit – but it's becoming a standard (the new "elevator pitch.") So is your on-line impression being driven by web developers, or by mobile device developers? Is your on-line environment all about driving people to your web site – which may never happen – or are you effectively connecting with them via Facebook, et.al. and informing them without asking them to go to your environment? Are you letting users control their access to your information, making it easy for them, or are you trying to control their behavior — and putting off many?
There are many reasons to think that in 2010 how people acquire business information will shift from traditional web sites to social media sites. First impressions, and a lot of the decision making process, will come from Facebook, Linked-in and Twitter. Is your business positioned for this shift?
Pepsi recently made a decision that appears forward-focused rather than following tradition. Pepsi is abandoning Super Bowl ads in favor of spending more on-line. MarketingDaily.com reports in "Compete: Pepsi's On-line Push a Smart Play" that Pepsi is reaching more people at a lower cost by investing in on-line marketing. Despite the historical role Super Bowl ads have played for big consumer products companies, Pepsi's decision is positioning the company to better connect with more users and drive more sales. Coke's decision to remain with traditional advertising looks increasingly expensive – and out of step with how people really make purchase decisions today.
Smart companies are already making changes to reach the tidal wave of people relying on social media. They are building a strong impression, and business applications, that help them grow using environments like Linked-in, MySpace and Facebook. And they employ people to keep their Twitter communications clear and strong.
So is your business taking actions – making implementations – that will support where the market is headed in 2010? Are you putting yourself where the customers and recruiting targets are? Or are you trying to do more of the same better, faster and cheaper?
by Adam Hartung | Dec 26, 2009 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Web/Tech
The business media get really excited about acquisitions. And it is clear that many executives still think acquisitions are a good way to grow – especially when wanting to enter new markets. Even though all the academic research says that acquirers inevitably overpay, and that almost all acquisitions don't really have "synergy." In fact, most acquisitions significantly reduce shareholder value. While this doesn't keep execs from going forward, if we understand why acquisitions go badly better performance can be obtained.
As reported at Financial Times in "The Rise and Fall of MySpace" the problem with acquisitions is very tied to the "owner and acquired" thinking that emerges. NewsCorp wanted to get into social media, so it moved early. And the investment looked brilliant when a quick deal with Google appeared to make payback a year from new ad revenues. MySpace was an early social media winner, and it looked to be potentially transformative for NewsCorp.
Until NewsCorp decided that things were too undisciplined at MySpace. NewsCorp thought, like almost all acquirers, that it was more "disciplined" and "structured" and could apply its "better management" to the growth at MySpace. Of course, all of this is code for pushing the NewsCorp Success Formula onto MySpace. What was acquired as White Space was quickly turned into another NewsCorp division – with the decision-making processes and overhead costs that NewsCorp had. Quickly Behavioral and Structural Lock-ins that were prevalent in NewsCorp were applied to MySpace in management's effort to "improve" the acquisition.
But applying the acquirer's Success Formula to an acquisition soon removes it from White Space. Even though NewsCorp felt sure that it's higher caliber IT staff, big budgets and strong management team would "help" MySpace, it was robbing MySpace of its tight link to a rapidly shifting/evolving marketplace and replacing that with "NewsCorp think." Quickly, competitors started to take advantage of market shifts. Facebook took advantage of the now weighted-down MySpace to rapidly bring on more users, while the additional ads on MySpace simply frustrated formerly happy customers more than willing to trade platforms.
Scott Anthony on the Harvard Business Review blog "MySpace's Disruption, Disrupted" points out how in just 4years MySpace went from market leader to almost irrelevant. MySpace lost its position as market disruptor as it increasingly conformed to demands of NewsCorp. As the NewsCorp Success Formula overwhelmed MySpace it stopped being a market sensing project that could lead NewsCorp forward, and instead became a now money-losing division of a newspaper and TV company. NewsCorp started trying to make MySpace into a traditional media company – rather than MySpace turning NewsCorp into the next Amazon, Apple or Google.
If a company wants to acquire a company for new market entry, that acquisition has to be kept in White Space. It has to be given permission to remain outside the acquirer's Lock-ins and separate from the Success Formula. It has to be allowed to use its resources to develop a new Success Formula toward which the acquirer with migrate – not "brought into the fold."
Unfortunately, acquirers tend to think like previous century conquerers. In Gengis Khan fashion they almost always end up moving to change the acquired. Often in the name of "discipline" or "good management practices." And that's too bad, because the result is a loss of shareholder value as the investment premium is dissipated when the acquisition fails to reach objectives. Acquisitions can be good, but they have to be kept in White Space — like we see Google doing with Facebook!
by Adam Hartung | Sep 28, 2009 | Current Affairs, Defend & Extend, General, Leadership, Lock-in, Television, Web/Tech, Weblogs
Lock-in causes us to keep moving in the same direction, to continue behaving the same way, even when competition and market shifts makes it a surety that the direction we're heading will produce poorer returns. Blacksmiths who ignore the shift to automobiles. Printers who ignore the shift to photocopiers. As I often point out, unless something attacks the Lock-in, we are amazingly able to keep right on going the same direction – blithely ignoring the inevitable problems.
"I read Playboy for the articles" is a Harvard Business School Working Knowledge article which outlines just how far we all will go to avoid dealing with internal conflicts caused by undertaking behavior we know is unjustifiable. (Download full pdf text of White Paper here.) According to the article:
- Because people do not want to be perceived as (or feel) unethical or
immoral, they make excuses for their behavior—even to
themselves.
- People cope with their own questionable actions in a number of ways by rationalizing, justifying, and
forgetting—a remarkable range of strategies allowing them to maintain a
clear conscience even under dubious circumstances.
Which leads me to the #1 excuse I hear. "I don't get it." I bring up to people – especially those who are over 35 – the power of modern technology tools. For example, ask a 40 year old why two 20 year old girls sitting across a table will text each other and the answer is "I don't get it." Tell them you know teenagers who spend more time at the computer monitor on-line than watching TV and the answer is "I don't get it." Hear someone say "my cell phone is more important than my car" and you hear "I don't get it.' And the biggest one of all, tell this person they need to open up accounts and go everyday to Facebook, Linked-in, Twitter, MySpace and Plaxo and you hear "you're kidding – right? Why anyone spends time on those – I don't get it."
Every time I hear "I don't get it" I wince. Because that person just admitted "I'm willing to get out of step with the market, and risk having my skills become obsolete. I'm happy doing what I do, and I don't see why I need to doing something new and different. I'm sure the world is not evolving away from me, and I've chosen to remain Locked-in to where I've been rather than learn what's going on with these new solutions." See what I mean? When you read my interpretation makes you wince, doesn't it?
Our parents used to tell us when we talked on the telephone "Why don't you just go to their house, I don't get it." When we listened to rock-and-roll "Your music makes no sense, I don't get it." When we thought everybody needed a car they'd say "We always walked, why do you need a car? I don't get it."
"I don't get it" is the proverbial excuse justifying Lock-in. It allows us to walk away from a shift that's right in front of us, and remain stuck. It allows us to feel like we're OK to remain – well — ignorant.
So, the next time you hear yourself saying "I don't get it" it's time to stop, Disrupt yourself, and find some time to get it. It's time to review your willingness to remain Locked-in, and invest some resources in trying new stuff instead of Defending & Extending. Because if you do create some White Space you can learn – and the first who "get it" will be the ones who do best in the market, getting the best results.
PART 2 – a personal extension for those with time to read.
When my son died last week, at age 21, he left a brother age 20 and a brother age 18. He also left hundreds of friends his own age. These people shared what all of us shared at that age – a deep desire to talk to each other, to communicate, to cry in groups, to grieve, to find things in the past that made them happy. To capture time in a bottle by reflecting on Alex's life. And they also shared the simple fact that they have almost no money, precious little time, and a host of responsibilities to school, family and work.
30 years ago my generation would have made a few phone calls. Maybe a few of us gotten together for an hour. But our talks would have been mostly a small group, and for a short time.
The last week I've been living on Facebook, Linked-in, Twitter, et.al. I have used all these tools for at least several months, and in some cases years. But I used these through the filters of my history. I saw them as extensions (D&E) of old ways I communicated. Finally, now, I get it. These communities are an entirely different way of communicating. I different way of building a community. And in many ways, it is MORE vibrant and more honest than anything ever before. LIkewise, it is real time. And it is open to everyone. It is extraordinarily effective. And it is unbelievably healthy.
For those who question their child's life on-line, you are looking from your historical reference. What happens in this environment is incredibly open – thus very informative. It is remarkably honest – in ways everyone finds very hard to be face-to-face. And it is very fast. There are no boundaries – no race, no origin questions, no location questions, no income questions. It is the most egalitarian, comprehensive method of creating a self-forming community to accomplish a goal I've ever seen. Way beyond anything I've ever seen my generation accomplish by developing plans and subsequently focusing on execution.
Within hours, my son's friends found out he had died 500 miles away – and his Facebook page exploded. It became a central hub to exchange information of all kinds about his accident, his life, his funeral. Within hours almost his entire world new what happened – far faster than any "family call chains" we ever created. As they searched to learn more, within a day someone found a video of the accident scene and the helicopter whisking him away —- something that would have taken my generation weeks to find (if at all) and share. And the videographer was put in contact with me, able to give me first-hand info about the accident scene.
His brother created a new Facebook site dedicated to honoring Alex the next day. Within hours 200 people were hooked up. Before week end the number went to 400. This became universe central for this topic. There was no CEO. No Director of communications. Just a self-organizing activity that brought together hundreds of people who wanted to talk about Alex. Very effective discussion.
Since Alex's 22nd birthday is 9/30 – some spontenous person said a birthday party should be thrown. Within hours an event had been created, and hundreds were talking about whether they could attend or not (by the way, it's going to be on 10/2 in Chicago.) All kinds of talk about who had to work, who could come, what to bring. Again, self-organizing and spontaneous and remarkably effective.
By the time the newspaper published an article on the accident, and my son's obituary, it was so old news I don't think anybody cared. And certainly the only people who learned this way were those who were – over 40.
If you aren't using these tools – if you don't "get it" – this is one place I would recommend some personal White Space investment. If you do, the payoff is extremely high. If you don't, you're likely to find yourself as out of date as cobblers and blacksmiths faster than you think.
