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Stop Giving the Newspapers Your Advice – They Don’t Need It

Speculation about the demise of the news business and advice about what they should do about it is everywhere. It makes for great, self-congratulatory sport but it won’t help the news industry.

Why?

Because the news industry doesn’t suffer from a shortage of ideas or possible revenue models, it suffers from a different but more acute malady: being an institution during a time of disruptive change.

While we have all been busy telling the newspaper institution what they should do differently we have missed one big point: Institutions are structured to precisely NOT do much of anything different.

The number one thing that ails newspapers? 70% of all costs lie in physical distribution and printing while readership and revenues have dramatically moved away from paper. This leads to a simple-minded but commonsense conclusion (and my superfluous piece of advice): maximize your online presence, build your online community, concentrate on journalistic talent, and jettison all costs associated with print; stop the presses.

Even if I you think I am wrong, just play along with me for a moment and, for the purpose of this exercise, assume I am right. If you can’t go that far substitute your own radical therapy (you know you have one!) in place of mine and answer the next question. Which major newspaper could have gone to its board anytime before 2009 and successfully proposed such a radical solution? The answer if you have ever worked in a large, “institutionalized” organization is zero. The scenario is so horrific, involves pains so great, outcomes so unknown and certain near-term revenue loss such that no institutional body would be capable of acting on it – much less restructuring around so medieval a remedy.

The failure of newspapers is not a failure of imagination or foresight nor is it a failure of individuals. This kind of failure is the hallmark of all institutions in the face of tectonic disruption. Institutions are a set of agreements that perpetuate a social order beyond individual intention or tenure. Changing those agreements is costly and time-consuming. So when the rate of change accelerates beyond the institution’s adaptive capacity – extinction follows.

The question is not “what should newspapers do?” but “how can a large institution effectively organize in response to disruptive change?” Taken thus, it is not only the fundamental question to ask of newspapers – but to ask of ourselves in relation to a host of big-ticket game-changers such as peak oil, environmental collapse and climate change that simultaneously require and defy our capacity for institutional response.

The stakes are much bigger than news. Let’s put our mind to that question instead of making more to-do lists. From the Radar audience I would like to ask for historical examples of institutions that have effectively responded to disruption? What are the lessons that we can draw from them?

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  • Emilie

    A cool next post would be the tech that’s looking to solve this problem.

  • http://www.hastingshart.com/ Hastings Hart

    You’ve brilliantly reframed the debate by asking a better question — how can large institutions respond to disruptive change? You ask for historical examples of institutions that have succeeded in doing that, which makes me think of the book Good to Great. There’s a lot there that pertains to this question in general and to the predicament of newspapers: getting the right people on the bus, confronting the brutal facts, the breakthrough point, the Hedgehog Concept, technology accelerators, a culture of discipline, and probably the most important, Level 5 leadership.

  • http://brianfrank.ca Brian Frank

    I’ve read in a few different places that the US military has become quite effective at recognizing and acting on the need for change. I don’t know a lot about it but there are a few areas (training, recruitment), besides technology, where they innovate quite aggressively and manage to adapt to some pretty serious challenges. Thomas Friedman described how they’ve gone from “killed in action” to “relationships built” as a key metric in Afghanistan.

  • http://www.megginson.com/blogs/quoderat/ David

    A few institutions that have survived dramatic social and technological change over centuries: governments, churches, universities, banks, armed forces, and the Masons.

  • http://bexhuff.com bex

    I’d suggest reading “The Fifth Discipline” by Senge… its a tad dated, but it has a wealth of information about how very large institutions are perfectly capable of surviving massive change.

    The key is to make sure “institutional learning” is a central part of your “institution.” If the set of rules, policies, and procedures forces the institution to take risks, learn from mistakes, and never repeat mistakes, then it will thrive.

    Brian Frank above mentioned the US Military was (usually) good in this respect. This is definitely true of the Army. They actually have a role called “Chief Historian” in the Army, to keep track of what worked and what didn’t throughout the Army’s history. This role is always filled by a General, and their advice is almost always heeded.

  • http://tomaltman.com Tom Altman

    Plus, it seems that a majority of the news people are not ready to make the shift – they have the wrong people making decisions.

    So although I fundamentally agree – the statement “The failure of newspapers is not a failure of imagination or foresight nor is it a failure of individuals. This kind of failure is the hallmark of all institutions in the face of tectonic disruption” is also a lot of talk from people who are ready – but not enough people moving forward on the ‘action plan’.

    Great article. Thank you.
    tom

  • Bryan

    Rob Patterson’s post on the FastForward blog concerning NPR provides an excellent overview of how NPR’s success to date in growing its audience has largely been accomplished through it’s respect for and engagement with such institutional dynamics.
    http://www.fastforwardblog.com/2009/08/18/npr-at-a-tipping-point/

  • http://www.peopleandplace.net/ Howard Silverman

    I second Senge. Also Dana Meadows’ “Dancing with Systems.”

    A classic story of navigating disruption is that of Royal Dutch/Shell in the 1970s, told for example in Peter Schwartz’s The Art of the Long View. There’s the case of the South African transition to post-apartheid, including the Mont Fleur Scenarios and the Truth and Reconciliation Commission. A great biography of “heroes of corporate change” is Art Kleiner’s The Age of Heretics.

    I recommend the article “Six Habits of Highly Resilient Organizations” by Peter and Trudy Johnson-Lenz, which includes the story of Stora Enso, the world’s oldest company. Full disclosure: on my own website.

    Historical examples of (not) surviving ecosystem collapse are covered by Jared Diamond. He emphasizes foresight, social values that are adaptable to change, and equitable distribution of wealth – so that leaders do not feel insulated from impending challenges.

    Resilient systems are characterized by diversity, modularity and feedback. I examine the application of these ecological traits to social systems (and add tech analogies) in the essay “Modularity: Small Pieces Loosely Joined”.

  • http://spot.us Digidave

    I totally agree.

    I wrote this back in January: http://www.digidave.org/2009/01/08

    News organizations suffer from inertia simply because of what they are: industrial age institutions living in the information age.

    A bummer – but I don’t know if there is much that can be done but start news institutions more equipped.

  • http://www.marccooper.com Marc Cooper

    This is a good catalyst to a broader discussion. But one thing is for certain. We are in a period of revolutionary transition and newspapers are institutions of the ancien regime. Like in any revolution, there will be blood, there will be casualties. Hi Brian. Hi Dave. Great minds think alike and wind up in the same place, apparently.

  • http://www.truckingtruth.com Brett

    Excellent article – right on.

    Could part of the problem be that large institutions are generally run by extremely rich, powerful 60 year old men who have been in management and off the “front lines” for 30 years and are so out of touch (even though they always have their cell phone with them on their yacht and the golf course) that they have no clue how to handle the changes? Of course.

    Could it be these rich 60 year old managers are paid with stock, and are afraid to even announce, let alone implement, any type of radical change knowing their precious stock may plummet before their (on average) 3 year term leading the company is up? Of course.

    I believe a lot of the problem lies with poor management which often times have very little incentive to attempt major reforms, and very, very little innovative, forward-thinking.

  • http://www.comradity.com Katherine WArman Kern

    IBM. Tranformed the company from a hardware business model to a service business model.

    P&G. Overcame new product failure rate that was eroding profit margins by going back to their roots: improving consumer lives and taking advantage of new technology to connect directly with consumer.

    The Railroad Industry. Transformed the business model from shipping freight on trains to being an intermodal service (seamless, integrated shipping from end-point to end-point)

    The Military. Transformed itself after Vietnam from being 4 siloed services (Airforce, Navy, Army, Marines) to being an integrated team through communications and training.

  • http://sethf.com/ Seth Finkelstein

    Umm, how about: Don’t give advice because the advice-givers tend to be pompous windbags who are either playing to the crowds (you’ve all got to be just like my fans!) and/or snake-oil salespeople trying to make a buck off FUD (give me a consulting gig! buy my startup!)?

    Is that at least a possible reason, as opposed the advice-subjects just being too darn stupid and hidebound to recognize the priceless wisdom (err, pricey wisdom) of the pontificators?

  • http://grafly.com Chris Ryland

    It may well be that the smaller, more local papers can survive the tectonic shifts going on, staying physical, as long as they can combine physical plus hyper-local news as championed by the folks at the Lawrence World-Journal.

  • Jason Catena

    I think we could probably learn a lot from criminal organizations. They obviously have some traits we’d be better off not emulating, not least brutal punishment of failure, and their actual line of work. But these institutions have been around longer than companies. They are more effective, robust, and persistent in the face of not only all the competition and personal and environmental problems companies face, but also official government persecution, and changing standards of what’s illegal. I’m not trying to defend them, or say it’s good they exist, but I do think they can teach us something about how to build institutions which react well to challenge and change.

  • http://www.opposableplanets.com Joshua-Michéle Ross

    This is a fantastic and rich set of suggestions.
    Don’t most of them however describe evolutionary shifts to businesses that were flagging; railroads had 50 years between the mass commoditization of the car and the Interstate highway system. – P&G overhauling their focus or the military reorganizing after Vietnam. IBM made a radical shift – but I am not sure that the the external pressures were nearly as drastic as what we see bearing down on the music/publishing arena now – though I could be wrong on that score. (with other industries set to get swallowed soon).

    @Jason you have totally opened my mind! I have read Senge (my father co-authored the 5th Discipline Fieldbook with him)and I know Art Kleiner (but haven’t read Heretics so I will pick that up ASAP) and some of the other books listed here – but the idea of exploring the durability of criminal organizations (esp. Chinese Triads that have operated continuously for 100s of years) is fascinating to me.

  • Ted

    The news sector (or rather the newspaper chain business) has traditionally enjoyed very high profit margins, compared to say grocery stores. One wonders how real is this crisis, and if it is so, the larger question is why isn’t everything else in the same boat. Let’s not just jump to geological conclusions, despite the seductive analogies that Tim, Clay and others feed us. From where I sit, the changes afoot across many sectors (Finance dropped in half over the span of one year) could mean many things are happening. The threads that connect us now feed information, fear, and perception so much more efficiently and rapidly than heretofore, that the systems, filters, and buffers that we have aren’t robust. The emblematic trend of today’s world is high-frequency trading.

  • http://www.positivesharing.com Jon Kjær Nielsen

    Example of succes:

    Danish hearning-air producer Oticon (top-3 on the global market) was in a death spiral 15 years ago, but the new CEO Lars Kolind managed to undertake a major revolution, killing the bureaucrazy and the hierarchy, and creating was was to be know as the spagetti, or matrix organiation (now textbook knowledge for business students).

    His book “The second cycle: winning the war against bureaucracy” details how he went about it. Just read it, awesome stuff. But bad news for the news industry: He does not offer advice on how to persuade the powers that be to take that first step and hire that revolutionary CEO to get things moving….

    Last note: Is the death of the news corporations a loss? They will die because new companies take their place – demand has to be met. Or…?

    Thanks for a very insightful post!

  • http://brianfrank.ca Brian Frank

    Wow – criminal organizations… so much I haven’t thought about yet.

    The first thing that comes to mind is that there aren’t many written rules but the organization is held together by a strict code, so it’s very cohesive but also very flexible and responsive to feelings and hunches, which (come to think of it, another military reference) can be incredibly accurate and difficult to replicate with formal processes.

    Then if you want to share your hunch and look into it further, a criminal organization is structured around deep personal relationships (i.e. trust & familiarity accumulated over the course of entire lives), as opposed to strictly outlined office-holder positions that people sit in just long enough to get promoted –which won’t happen if the you do something crazy like try to act on a hunch.

    Ironic that, in a sense, criminal organizations are more “humanistic” than newspapers or banks.

  • http://www.opposableplanets.com Joshua-Michéle Ross

    Jon -
    I am going on Amazon to find the book – thanks!

    Brian – I totally agree that a criminal organization by definition would likely have little formal process/procedures (and very little documented – “Vinnie is responsible for kneecapping and reports to Luca”)… they would run as an informal organization.
    It would be very interesting to see how organized crime reorganized in the immediate aftermath of the removal of prohibition – that was a highly disruptive event.

  • http://urbanmapping.com/blog ian

    education and healthcare; two industries less resistant to change then any other

  • http://twitter.com/Balaclava65 robbo

    It is hard for institutions to change because they are set up to produce identical products repeatedly. Process change is generally frowned upon. This makes it very difficult to think about doing things in different ways. You can see the same in the US Auto Industry, Newspapers, Broadcast Media.I think your analysis is pretty much spot on.

  • http://grandcanyonhiker.com Ken McNamara

    GE might be a good example. I can’t quote their transformation chapter and verse – but I’m pretty sure they had to retool their business.

    Another would be Microsoft when the internet came along. Gates managed that transition.

    In each case, the corporation had to recognize the coming train wreck and use the time remaining to focus on their real business.

    From what I can see, the real problem with the newspaper business is that the Journalism profession is turning out ‘Watergate Wannabes’ – instead of journalists willing to focus on their job.

    It’s as if Microsoft programmers were busy creating new ‘facebook’ applications and ignoring OS coding.

  • http://www.amalbala.com/ Amal Bala

    Good article. You’re asking the right questions, and I like the way you’ve framed this issue. As someone who works in the newspaper industry, I appreciate this topic, though it’s hard to digest.

  • Michael Skoler

    In my experience, the problem is that successful leaders of organizations are hobbled by the instincts they developed in making their organizations successful. Those who lead, say, radio companies, became big players because they purchased more terrestrial stations. Those who lead newspaper companies became big by consolidating and shedding the costs of original news coverage. They developed a complex set of instincts that helped them make decisions in the old system. I wonder if anyone can change the instincts developed over a wonderful career. I think the challenge for today’s news leaders is to recognize that their instincts are out-of-date and that they need to rely less on their business acumen and more on their managerial acumen. They need to hire and trust great young managers who have instincts for today’s environment. They need to support these younger managers and give them free rein to implement change. That requires impressive self-awareness and genuine leadership talent… which is rare. But that is what marks those companies that have adapted to disruptive change – the willingness to trust and invest in fresh talent.

  • Dan Kaplan

    From the perspective of having worked at several newspapers, and now at a magazine publisher, I actually see the problem as being first and foremost an advertising (economic) problem, with institutional quality issues being secondary (though important too). The advertisers who traditionally have supported nearly all the other facets of the print media have dried up because of the Internet, the loss of their own budgets, and growth of other media choices. Yeah readership has been declining, but not commiserate with the decline in ad dollars over the past couple of years. By the way, home delivery has always been a cost center, not a profit center. Without advertising dollars supplementing it, there would be no home delivery. Obviously newspapers and magazines have to convince their advertisers to spend the same amount of money on electronicly delivered products. So far that hasn’t happened. Any thoughts on that front would be appreciated. ;-)

  • AndreaF

    Sorry to be rude, but I hope they don’t pay you to write these articles.
    The problem is simple: costs exceed revenues and the gap is widening, has been widening for years. If you are a senior manager, a director of the board or a shareholder of a large publishing business you have to, you must take that into account whether it is 2009 or 2005 or 2000 and think of a solution. Unless you are brainless or evil, that is. Had they started early the shift would have not been so dramatic.
    This is basic economics, not science fiction and resisting to this trend is just idiotic not to say criminal.
    Being part of an ‘institution’ whatever that means is no excuse.

  • http://brianfrank.ca Brian Frank

    Re criminal organizations: You’re right that would be interesting — I might use that as an excuse to watch gangster movies all weekend…

    My guess is that crime organizations respond to disruption with very rapid “turnover” and secession — very Darwinian.

    Also, street-level/frontline members would be right on top of whatever new “business opportunities” are developing and many wouldn’t hesitate to get in on them, even if it means taking a huge risk. Then it wouldn’t take long for people successively higher up the chain of command to find out and take their cut.

    A verified non-fiction account would be nice. I suppose it would be asking a lot for a longitudinal study, or a mafia-equivalent to Peter Drucker.

  • ∞²

    When you have a change, where people would sooner pay more for something that comes free from their taps (water) than your product … the product is worth less than nothing.

  • http://www.smartpei.typepad.com Rob Paterson

    Great Comments and great question – I am with Michael Skoler here – like high jumpers before Dick Fosbury, we have “Muscle Memory” that prohibits this kind of change. Memes of what to do are so embedded as to make them our only reality. So the identity of the leadership is part of the traditional. They would rather die than change – like martyrs!

    I am not sure that any great institution can change fundamentally.

    I am seeing in pub media that the change that will make it is happening in stations where their own social circumstances are simply apocalyptic – Cleveland, Toledo, Las Vegas, Detroit etc – here the main meme of even what America is has been destroyed.

    This is fertile ground where there is a fissure in the crust and where the institution is aligned with its community – it’s so obviously not business as usual.

    My hope is that we can demonstrate the new here at the Early Adopter level – about 12% of the total system. That will give us a chance of Tipping the system.

  • http://twitter.com/tehuff Todd Huff

    My first time here… what a great article.

    I didn’t see Apple mentioned? Their comeback and re-invention is remarkable.

  • http://bluewolf.com Lou Fox

    Great article, and great question. What big organizations transformed successfully?

    There is a whole industry that has transformed before our eyes. Telecommunications. They went from selling phone service to homes, to phone, internet, cable, cell phone, advertisements. Hell, phone service is hardly anything to them. How did they do it? Examine them. How much does AT&T care about long distance service anymore?

  • http://seb.closs.free.fr/ seb closs

    One good company/institution I think is National Geographic.
    See how complementary are their website and their “so known” paper magazine..

    The website is appealing the online reader to read the complete article by buying the magazine..
    And see how in the magazine they say go online to discover more..

    I think National Geographic has understand all this problem, and how to resolve it..

  • http://www.gonzotrucker.com lance

    Great article i think newspapers will be a thing of the past.