Tuesday, August 16, 2011

Newspapers need a jolt of Silicon Valley DNA

I started my career as a newspaperman, became a Silicon Valley CEO and work today as a consultant helping media companies understand technology and helping technology companies understand the media. Here’s what I have learned:

The talented people in these seemingly disparate industries are remarkably alike but the cultures of the businesses are completely different. And here is why this matters:

:: The tradition-bound and risk-averse nature of the newspaper culture is the single greatest reason publishers are losing relevance, readers and revenues while competing digital products run circles around them.

:: With new technologies, media formats and business models emerging at an ever-quickening pace, newspapers must learn to think and act like start-ups – or risk falling to the margins of the media world.

In other words, newspapers need some fresh DNA that will make them think and act more like techies and less like, well, newspaper people.

The good news for newspapers is they have an abundance of the most important asset every business needs: Great people.

Just like tech companies, newspapers are filled with exceptionally large numbers of highly intelligent, highly creative and highly motivated individual contributors whose ideas, talents and egos must be channeled efficiently into creating a product that not even the brightest among them could produce on his or her own.

Although the people working at newspapers and tech companies are more similar than you would think, their business cultures are polar opposites of one another.

Newspapers are all about faithfully and efficiently producing a well-defined product according to time-honored standards and procedures. In other words, the culture values tradition, consistency and predictability, which, by definition, are inhospitable to change – particularly the sort of disruptive change that the web, mobile and social media require.

Newspaper folk essentially come to work every day to do their best to fully optimize a product that serves a clearly identified audience, that has a clearly defined revenue model and that, until the last few years, has been a stunningly profitable business.

Tech companies – which are unencumbered by tradition, institutional inertia and frequently even a clearly defined product for the first few years – are created expressly to do something that no one else has done before.

When techies come to work, everyone in the company – from engineers to marketers to sales people – is eager to debate such fundamental questions as: What’s our product? Who will buy it? How will we sell it? How will we make money? The debate persists (almost to a maddening degree) until the product is launched – and generally continues afterwards, especially if the marketplace fails to embrace the offering with sufficient zeal. Techies will tinker until they either get it right or run out of venture capital.

Although everyone marvels at how Microsoft, Google and Facebook rocked the world and turned corporate masseuses into millionaires, the preponderance of tech start-ups actually fail, because they prove to be far less clever than the founders and funders thought they would be. But failure is an option in Silicon Valley, because you learn as much from hitting the wall as from your successes. Maybe even more.

It takes a certain mind-set to take the entrepreneurial plunge. Techies embrace uncertainty and shrug off failure in a way that would unhinge most ordinary people. They are perfectly happy blowing up what they did the day before to try a better (or at least different) idea.

This sort of restless and relentless experimentation has produced all the technologies that have changed the way consumers get and give media – and the way advertisers increasingly are attempting to reach customers. A good deal of the success of the digital media has come at the expense of newspapers, which simply have not acted rapidly or boldly enough to create products and services to meet the needs of modern readers and advertisers.

Publishers have not failed to embrace disruptive experimentation because they are not smart enough to do so. The video embedded below is proof that the folks at Knight Ridder in 1994 had a pretty good idea of what the future might hold. But the newspaper business historically was so successful that publishers didn’t need, or want, to change much about it. Consequently, risk-taking and experimentation took a back seat to business as usual.

With print circulation and advertising revenues falling to ever-lower lows for each of the last five years, newspapers now must find new ways to cost-effectively create content; build new web, mobile and social audiences, and monetize their traffic as profitably as Facebook and Google do.

To do that, they will have to bring the creative chaos of Silicon Valley into every corner of their businesses. This means launching multiple, carefully planned initiatives across the full array of print and digital media. To be sure, this must be done with discipline and care.

Sometimes newspapers will get it right. Sometimes they will get it wrong. And, every now and then they will hit a home run. But they won’t win if they don’t play.


© 2011, Editor & Publisher

6 Comments:

Blogger Jessica said...

Well said. The same can be said of other institutions resistant to change (such as non-profits). There are many lessons to be learned from the digital switch. Either you're in or you're out.

5:47 PM  
Blogger LocalNewsGuy said...

Excellent analysis. Best "reflection" yet.

The demand for news and information is insatiable. Perhaps you can next suggest to us why hedge funds and VCs don't support forward looking companies who would move the news organizations of newspapers forward into bigger profits?

9:25 PM  
Blogger Jane Poordoe said...

From a business perspective I would agree. But the "news" also provides the public with a service which is vital. If everyone shifts to the most profitable model then what happens to that service?

I suppose it could be said that the service isn't needed any longer if no one is willing to pay for reliability and the standard. Yet at the same time few people want to pay for government either and yet the service is still very important to the ideal of democracy.

11:43 AM  
Blogger Mike Nemeth said...

Interesting. Here's the latest from Roger Fidler, the guy highlighted in the video: http://www.rjionline.org/news/where-do-tablets-fit-your-news-organization%E2%80%99s-future

12:32 PM  
Blogger Mike Donatello said...

The sad thing is that we've been talking about the industry's need to embrace risk, become more audience-centric and innovate disruptively since 1996, at least. And where are we now?

Still talking.

10:11 AM  
Blogger John Reinan said...

I saw this resistance to innovation play out often in newsrooms, even when deciding which stories to cover or how to play them on a page. The safest route was usually the one chosen.

I always thought newspapers had remarkable freedom to experiment. They came out 365 days a year. If you tried something and it didn't work, you could revert back to the old way tomorrow, and nobody was likely to remember the failed experiment months down the road.

But a group of editors at a news meeting was almost certain to choose the tried and true solution to any question about what we should cover and how we should present it to readers.

That status-quo thinking obviously carried over into decisions on how to approach new technologies.

6:43 AM  

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