Timewarp at API

Have you ever wanted to take what you now know and go back ten years in time? I saw it done on Wednesday.

The American Press Institute, a training and think-tank institute for the American newspaper industry, warped time when presenting the second phase of its Newspaper Next project to transform that industry.

The project is being run by Innosight, the consulting company founded by Clayton Christensen (pointing at one of his slides above), the Harvard Business School professor who wrote the book, The Innovator’s Dilemma about the troubles established companies have facing disruptive change in the markets. Because newspapers are facing such a change, the API hired Innosight to help it.

Innosight’s presentation on Wednesday basically consisted of two parts: An explanation of what tends to happen when established companies face disruptive change and basically two recommendations what the newspaper industry should do.

Innosight explained how small, often unknown, competitors launch innovative and cheap new products or services that the established companies initially ignore as flawed or having profit margins that aren’t lucrative enough. Nevertheless, those competitors’ inexpensive products or services are ‘good enough’ for consumers to use, thereby gaining footholds in the market. As these new competitors continuing refine these products or services, the established companies tend to continue ignoring them until a time when these products or services before so entrenched in the market that the now well-refined versions of them suddenly leave no more market for the established companies’ products or services.

Innosight’s first suggestion was that the newspaper industry defend itself by utilizing a process in which it stops seeing its purposes as selling a printed product and instead look at how people ‘hire’ newspapers to do various ‘jobs’.

What exactly does that suggestion mean? Innosight used an analogy about fast-food restaurants selling milkshakes. Restaurant executives tend to think that consumers purchase milkshakes to drink. Innosight says its research instead indicates that most consumers tend to ‘hire’ a milkshake to perform either of two ‘jobs.’ Innosight observed that most fast-food milkshakes were being during the morning commute or in late afternoon, and it interviewed the purchasers. Those in the morning ‘hired’ milkshakes for the ‘job’ of providing them a drink that will last throughout their long commutes. Those in the afternoon were mainly parents who ‘hired’ milkshakes for the ‘job’ pleasing their kids. Innosight suggested that newspaper executives should investigate the ‘jobs’ for which people ‘hire’ a newspaper and develop newspaper services for that purpose.

Innosight’s second suggestion was that newspapers stop worrying about developing ‘perfect’ quality services or those backed by financially perfect financial projections; stop worrying about whether new services will fail; and stop taking years of internal reviews before launching such services. Newspapers instead should quickly launch new ‘good enough’ services on the cheap. As these services start to succeed or fail, the newspapers should quickly refine, revise, or discard the services. In other words, newspapers should emulate the startup companies that are launching innovative and cheap new products or services against them.

Innosight’s explanation and recommendations costs the American Press Institute $2.5 million. I’m currently writing this at a Starbucks café inside a Barnes & Noble in Syracuse, New York, where Christensen’s The Innovator’s Dilemma book costs $17.95 per copy. Had API simply send a mailed a copy of the book to all 139 attendees of Innosight’s presentation, it could have saved approximately $2,497,000 and saved a lot of time.

The advice Innosight gave would have been excellent advice for the newspaper industry in 1995, shortly after newspapers first began publishing online, before their printed product’s circulations began precipitous drops, and before the newspapers’ businesses began being eaten by small and then unknown competitors whose innovative and cheap new products and services newspapers initially ignored as flawed or not lucrative enough — new competitors named Google, Yahoo!, CraigsList, etc. Innosight’s advice has come ten years too late.

However, the presentation’s audience was largely comprised of newspaper corporation presidents and publishers. Not just suits, but expensive suits, inhabited by bodies in their late 40s through early 60s. People for whom 1995 was just yesterday. People who are still exercising unchanged whatever skills learned in the 1980s or early 1990s had brought them to prominence in the industry. The people who continue to exercise those skills unchanged despite their industry having lost nearly a fifth of its users since 1995 and nearly one-half of its market equity since 2000. Chief executives who still inhabit their offices but for all practical leadership purposes are lost in 1995.

Innosight’s outdated advice is still new to them.

Nevertheless, the newspaper executives did need the advice. It might have helped them realize that they produce a service for people, not a printed product.

But I had expected much, much more from the API’s $2.5 million, selkf-proclaimed “An Historic Moment for Our Industry” Newspaper Next “Blueprint for Transformation” I’d expected Innosight’s vaunted staff of Harvard Business School professors and alumni to provide the newspaper with a direction into the future.

Instead, the generic advice that Innosight gave the newspapers industry was how to run a ship, not how to navigate it. It told them to get in touch with their readers and quickly launch services that touch those readers’ needs.

Perhaps someone might call that navigation, but nautically it’s just how to proceed by taking soundings, an industry feeling its way around the sea. Innosight didn’t teach the newspaper industry how to use a compass or navigate by the stars. The industry is still adrift.

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