> > The Future Of Newspapers > > Clayton M. Christensen and Andrew B. Davis > > 10.11.06, 6:00 AM ET > http://www.forbes.com/2006/10/10/leadership-newspapers-media-lead- > innovation-cx_cc_1011clayton.html > > The Big Three U.S. auto manufacturers. Downtown department stores. > Video rental stores. Minicomputer manufacturers. All fell, or are > falling, in the face of competitors who used disruptive innovations > to change the game. Is there reason to believe that old-school > newspaper companies can survive? > > After spending a year studying the problem in the course of the > “Newspaper Next” project that Innosight conducted with the American > Press Institute, our answer is a resounding yes. > > Our belief is not an academic one. Over the last five months, we > conducted demonstration projects at a handful of U.S. newspaper > companies. Although it’s too early to point to billion-dollar > businesses, we have seen mind-sets shift and managers get excited as > they see the massive growth potential that still exists for the > industry. > > But success will not come easily. Driven by shifting customer > behaviors, the media landscape is changing at an unprecedented pace. > Fundamental changes are reshaping the media environment and are > sending waves of disruption throughout the industry. > > Newspaper companies do, however, have real assets to bring to the > table. Despite declining circulation, the daily paper still produces > cash flow that many other industries eye with envy. The core content > produced by newspapers is the basis for many of the industry's > disruptors. Without newspaper content, there isn’t much news for > television to report, bloggers would have less to blog about, and > Yahoo! News and Google News would be blank pages. Furthermore, > newspapers have strong brands and highly skilled employees. > > Newspaper companies have only begun to scratch their innovation > potential. To succeed, they have to learn to look at markets in new > ways. They must invest to create new capabilities and rethink the way > they work individually and collectively. > > The mind-set shift starts with how they think about consumers. For a > long time, newspapers stood by as readership slid. Print executives > tried to answer the question, “How can we convince more people to > read our paper?” But the question has to be “What indispensable roles > can we play in the lives of the consumers we want to serve?” > > Just as GateHouse Media New England is doing with WickedLocal.com > (one of our demonstration projects) and Cox Communications is doing > with Kudzu.com, newspapers must help consumers--especially those that > don’t read the newspaper--solve the pressing problems of their daily > lives. These solutions are likely to require new skills, such as > constructing databases of local information, tapping into the > “collective wisdom” of people who live in the community and building > platforms for communities to form. > > Newspaper companies must rethink their revenue equation as well. For > generations, display advertising and classified advertising have > powered the newspaper business model. The companies that place those > advertisements are--not surprisingly--called “advertisers.” > > Many newspaper publishers have fooled themselves into thinking that > the problem their business customers seek to solve is a lack of > advertising. That’s not right. Advertising is a compensating > behavior. In its demonstration project, the Richmond Times-Dispatch > interviewed more than 40 businesses that don’t advertise in the > newspaper. Not one said the problem they are trying to solve is a > lack of advertising. Instead, they are looking to build relationships > with consumers, create brands, attract employees and simplify back- > end operations. Those are the real jobs to be done. > > Newspaper companies must help current advertisers and businesses and > individuals that don’t advertise address these issues. They must do > so by finding ways that better utilize existing mechanisms such as > niche publications and special events. They’ll also need to tap into > emerging approaches such as paid search, consumer direct, targeted > advertising and lead generation. > > These aren’t pie-in-the-sky models. These are real approaches that > already are making many non-newspaper companies (and a few newspaper > companies) big bucks. Utilizing these approaches can enable newspaper > companies to reach business customers that historically couldn’t or > wouldn’t use newspaper products. > > Realizing this potential requires developing new capabilities. The > Boston Globe--one of our demonstration projects--sought to develop > new ways to reach small businesses that didn’t use any of the Globe’s > products. The Globe’s idea? Resell a “search engine marketing” > product from a third-party vendor. One key to success? Using low-cost > sales channels like telesales to reach the market. > > Newspaper companies shouldn’t approach the innovation challenge > alone. There are opportunities for companies to collaborate online in > powerful ways, particularly to serve national companies that want to > tap into the vast reach of the more than 1,400 local newspapers that > collectively reach more than 55 million consumers. > > There are dozens of other specific suggestions that appear in the > Newspaper Next report, including a step-by-step method for > innovation, a “game plan” for growth, a dashboard to track progress, > reviews of the demonstration projects, and the results of a survey of > industry leaders that indicates a clear desire for collaboration. > > Above all else, newspaper companies must commit to doing things > differently, and they must back that commitment with action. Business > as usual will not suffice. Cutting costs and hoping the current storm > will subside will not work. > > The payoff of all of this can be significant: Companies can launch > new offerings, grow in new directions and harness the disruptive > forces that have threatened the industry. They can move from > monolithic product offerings to a vibrant portfolio of products, > services and business models. > > The Desert Sun in Palm Springs, Calif., worked hard over its four- > month demonstration project to develop structures and processes to > make innovation sustainable. Its efforts energized the newsroom, > helped improve existing products and sparked innovative ideas. Its > newly constituted “Big Brain” panel helped to shepherd an idea for a > Web site where restaurants can post coupons for free, called > FoodPsycho.com. > > “Yes, these are challenging times for our industry,” Desert Sun > Editor Steve Silberman said. “But I also can’t think of a better time > to be a journalist, a more exciting time to be a journalist, where > there’s more possibilities and more hope.” > > Through its findings and initial implementation via the pilot > programs, Newspaper Next has demonstrated that through a process for > innovation-driven growth, the newspaper industry can not only > survive, it can grow and prosper. > > Clayton M. Christensen is a Harvard Business School professor and the > founder of Innosight, a Watertown, Mass., innovation consulting > company. Andrew B. Davis is the president of the American Press > Institute. Innosight and API collaborated on the Newspaper Next > project. The final report is available at www.newspapernext.org. >
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