While newspapers and magazines are being written off as dinosaurs from a bygone era, forms of information distribution whose days have come and gone, what if the problem is deeper? What if the problem is the owners?
The management trap of disruptive technology is insidious because, like all good traps, it doesn’t look like one at first. It looks prudent and fits a corporate culture of conservative, data-driven management. But incumbents can’t recommend change because it would mean recommending something less profitable, less accepted, and less proven than what they’re already doing.
And that’s the trap.
Disruptors have no such inhibitions.
Two stories illustrate the issue.
The first comes from a blog post by Stephen Baker on the Numerati, a blog supporting his book of the same name. Entitled, “Business Week Can’t Afford to Stay with McGraw-Hill,” the post flips on its head the notion that corporations have to look at their assets and drop those that no longer contribute enough to the bottom line. Instead, assets have to look at their owners to see if they’re in a good home.
McGraw-Hill is not a safe home. The company, for all its merits, is slow and bureacratic, and it’s painfully short on innovation and creative thinking at its highest levels. This is hardly the outfit to remake a business for the age of Google and Wikipedia. We need owners with faster feet and bigger heads. It is true that it seemed to be a luxury over the last several years to be owned by a patient investor, one who loved the brand and swallowed growing losses. But looking back, this reduced the pressure to remake ourselves. A sharper and more tech-savvy owner . . . would not have greenlighted extravagent and ill-conceived tech projects.
Baker also notes that while it might seem safe for McGraw-Hill to shed Business Week and return to “its safer businesses, including books and credit ratings,” even those are under assault.
Being in a deep, warm tar pit only provides the illusion of the spa experience when predators are about.
The journalism in Business Week is often cutting-edge, and their columnists are excellent. But their model is hemmed in by a corporate culture that isn’t innovating to match trending preferences for information acquisition. The magazine is fine, but it’s an entry point. I want to share, save, and link out of articles. Where’s their iPhone app? Their interactive data? The Business Week brand is too severely defined by the print magazine to survive.
So now we turn to SEED Media, a company that currently publishes a troubled magazine also called SEED. The Magazine Death pool recently gave that very print magazine (SEED) a 10% chance of survival, noting that the August issue hasn’t yet mailed. But SEED the company is also a fast-moving, tech-savvy information entity.
However, SEED is sticking with SEED, at least according to a blog post from the company posted last Friday. It will publish the print magazine less often, and with more online premium content.
Sounds like the same tired line about how print will survive.
But what sets SEED (and SEED) apart is the size (small), agility (quick), and aggressiveness (strong) of the overall organization. And their branding is a nice accident, since the organization can leverage the SEED brand with or without the print. While they dabble in print, they’re exploring robust blogging platforms, data visualization, conferences, software, and digital media with other brands under the SEED umbrella.
They are moving quickly, thinking on their feet, and adjusting as they go.
They’re embracing disruptive innovation.
So what separates the Business Week from SEED? Is it the paper? The ink? The editorial? All three are very good.
The difference isn’t the magazines — it’s the owners.
While two magazines await the scythe from the Grim Reaper, one is at a company that has over-invested in a losing proposition, lacked innovation, and created a cautious culture that has looks safe but is surprisingly risky. The other magazine is at a company that will only invest in print as long as it makes sense, is aggressively pursuing a digital strategy on many fronts, has a brand that isn’t tied to one medium, and has owners with “faster feet and bigger heads.”
Ironically, but true to the theory of the management trap, that magazine isn’t Business Week.
12 Thoughts on "Two Stories from the Management Trap"
I completely agree. The problems with BW, and Time Inc., and other large publishers are cultural/ They have offsites, and talk about change, but at the end of the day, they are afraid of technology, afraid of change and thus make their investments in direct mail, and chasing down advertising which they sell at 30% of published rates (when questioned they say “everybody does it”) and which is sold with a huge amount of expensive “merchansiding” which basically means throwing parties that no one wants to attend. The issue for SEED is content – Scientific American is not a competitor certainly, but the New Scientist has fabulous content.
I think there has to be a balance though–companies need to be forward looking, but at the same time, it’s very easy to spend massive amounts of money on cool and exciting new projects that have no business model or hope of adding to the bottom line. If Business Week continues to make a profit from their traditional magazine publishing, they’d be idiots to abandon it until that profit vanishes. But at the same time they should be taking cautious steps on other fronts.
That does not, however, mean massive investments in new technologies with a vague hope that they’ll catch on, and then some fuzzy ideas about how they’ll then be used to make money (creating a blogging platform and social network as one example). I think if there were an obvious path to follow, then Business Week would jump on it. But no one has found that next step to profitability for magazines in the digital age. If someone does crack that nut, then Business Week will hop on the bandwagon with everyone else (wow, I’m certainly mixing my metaphors today).
It’s interesting that much of what you note that SEED is doing is well outside the usual purview of publishing. Shouldn’t it be easier for a big company to bring in outside expertise to do things like run conferences or write software than for a smaller company with theoretically less working capital? That, I think is where the inertia becomes a problem, and the people who have a particular expertise start guarding their kingdoms against what they see as usurpers. Publishers don’t have a problem doing the next publishing thing, but they are endangered when a publishing company morphs into a software company and their expertise is no longer needed. That’s probably where the smaller shop has the advantage, there are fewer people trying to protect their livelihood.
I think the words that are difficult to reconcile here are “obvious path.” What happens in incumbent organizations is that the only obvious paths are well-trodden ones they have maps for. Meanwhile, an intrepid explorer or mountain goat might see a path they miss. Probing the way forward is key. Looking for obvious paths is important, but probably not sufficient for any business right now.
Well put. “Probing” is a great way to describe an appropriate strategy. It’s important to be prudent and focus on real pathways with real profit potential, rather than drinking the Kool-Aid and falling in love with new technologies for their own sake.
Great article. And I agree the reason for the amount of adaptiveness is the owner of the organizations.
Another aspect to consider for a future disruptive technology article is the human aspect of a companies survival. Changing technologies create much human emotion such as of energy, excitement, change, comfort, uncomfort, fear, overload, embracing, and a bunch of human emotion. All of these effect the production and thought of a company. Some employees can embrace the change, others get trampled.
Change is good for the consumer in theory, but the costs to get there are rarely discussed. How much is spent on training? Or did the employee do it all the learning on his own? Are hiring another new expert or outside consultant making existing faithful employees less comfortable and productive? Is the stress an employee endures to maintain effectiveness killing a companies quality?
I agree that disruptive technology is a major force. I have seen many articles and TV shows on how the steel industries and car manufacturers got pounded by the lack of change. But I have yet to see the costs paid financially and with the human cost in stress and emotion even for just the last 5 years of technology disruption. Or do we have to wait for all the hindsight articles after this tech industry is killed too? Maybe that is the real hidden cost.
I don’t think the companies that don’t change or change quickly are all that bad. They just need to be able to downsize gracefully without all the whining.
I think it’s important to underscore that one of the tenets of the disruptive technology framework is that disruptive technologies are relatively rare. Sustaining technologies (the move from lead type to phototypesetting to digital type, for example) don’t change the overall value chain but can change parts of it (print publishing wasn’t disrupted by how the type was set, to continue this example, but vendors like Linotype had to adapt). These can lead to their own issues with change management and other emotions (good and bad) within organizations.
If you want to see how the Internet is disrupting publishing, just look at the paper producers, trade publishers, printing companies, postal providers, and the like. They are being dropped from the value chain, and the carnage is pretty significant.