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 | Aug 6, 2009 | Current Affairs, Disruptions, In the Rapids, Innovation, Openness, Web/Tech
Today a colleague emailed me an article on Cisco. He used the Wall Street Journal "send this article" function. The email had his name, the article title, the link to the article and then this:
"The Wall Street Journal Mobile Reader for iPhoneTM
delivers the latest global news, financial events, market insights and
information to keep you ahead of the curve. Get the information you depend on
plus entertainment, culture, and sports coverage when, where, and how you want
it from the most credible source for news and information. Click below to
download the WSJ Mobile Reader for free from the iTunes App Store."
Another indicator of the trend – the shift – that is affecting publishers. And increasingly affects everyone. If you want to be "in the know" you'll be using different technology than ink on paper, or a laptop. And if you want to be competitively advantaged today you are thinking about how you can use this to grow your business:
- ads for the WSJ articles delivered to iPhone?
- developing an app for your technical materials to be read on an ereader like iPhone?
- creating a way for your customers to get updates on ereaders?
- using ereaders to update your salesforce? service force?
What ideas can you think of where this really cheap, real-time technology can help you beat the competition? How can you put ereaders (iPhone, Kindle, Sony, etc.) into your scenarios about the future? What are the leading edge competitors (like Pizza Hut's iPhone app) doing? How can you Disrupt your old business model to start using this lower cost information dissemination technology? How can you Disrupt the market to deliver higher value? What White Space do you have for testing the use of ereaders, learning about their benefits and getting closer to emerging market needs?
by Adam Hartung | Jun 1, 2009 | Current Affairs, Disruptions, In the Rapids, Leadership, Openness
June 1, 2009 will be remembered for a really long time. As I last blogged, I think the iconic impact of GM as one of the most successful and profitable of all industrial companies makes its bankruptcy more important than almost any other company.
As GM loses its market value, it was forced off the Dow Jones Industrial Average. In "What's behind the Dow changes?" (Marketwatch.com) we can read about how the Wall Street Journal editors selected Cisco to replace GM. I've long been a detractor of GM for its slavik devotion to its outdated Success Formula. For an equally long time I've long been a fan of Cisco and how it keeps its Success Formula evergreen. Cisco reflects the behaviors needed to succeed in an information economy, and its addition to the DJIA is a big improvement in measuring the American economy and its potential for growth.
What I most admire about Cisco is management's requirement to obsolete the company's own products. This one element has proven to be critical to Cisco's ongoing growth – and the company's ability to avoid being another Sun Microsystems. By forcing themselves to obsolete their own products, Cisco doesn't get trapped in "cannibalization" arguments. Management doesn't get trapped into listening to big customers who want Cisco to slow its product introduction cycle. Leaders end up Disrupting the company internally to do new things that will replace outdated revenues. It sounds so simple, yet it's been so incredibly powerful. "Obsolete your own products" is a statement that has helped keep Cisco a long-term winner.
Since even before writing "Create Marketplace Disruption" I've espoused that Cisco is a Phoenix Principle kind of company. One that uses extensive scenario planning to plan for the future, one that obsesses about competitors in order to never have second-place products, willing to Disrupt its product plans and markets to continue growing, and loaded with White Space developing new solutions for new markets. It's a great choice to be on the Dow – which will eventually have to replace all the outdated companies (like Kraft) with companies that rely on information – rather than industrial production – to make money.
