Over a 45-year career, if you keep your eyes open and don’t get too comfortable with where you find yourself, you can learn an awful lot about people and about the nature of leadership. And a lot about yourself too.
For much of that time I watched from a privileged vantage point as local newspapers grappled with the challenge of digital media. But this blog is not another self-important exposition from the end-of-local-newspapers meme. It’s over for local newspapers and I’m over that. To me what’s interesting is not that local newspapers are dead men walking but why they surrendered so abjectly to digital when they had all the leverage in the world. Their capitulation offers timeless insights into the tricky business of managing risk and dealing with change, and the evident danger of hubris and greed when they take root in company culture.
I regard it as a criminal waste of time to go through the slow and painful ordeal of ascertaining things for one’s self if these same things have already been ascertained and made available by others.
The other big question that interests me is what new forms of media are replacing daily newspapers in the digital age? How is the media business evolving? Where is the business of news headed? Who is leading the charge? What digital news companies are likely to win? Where will you get your news from? Why? What is the product format most likely to regenerate the consumption of news by millennials and Generation Z, audiences born not with a newspaper in the mailbox but a supercomputer in their back pocket? What role does local content play in that format? What does the financial return of such a product look like?
When the Internet proclaimed its arrival with the Netscape public offering in 1995, local newspapers were by far the largest advertising medium in the country. The year before, in 1994, total revenues were $43 billion. $36 billion of that came from advertising, which was more than television garnered that year, and more than any other form of advertising combined. They were deeply embedded in the country’s commercial and cultural life. Newspapers had always been America’s market, the place where homes and cars were sold, jobs found and attics emptied. They also connected us socially, they told us who was born, who had died, who was getting married and who had gotten into trouble. They told us what was happening down the street and around the world, and they told us what people were thinking about the great issues of the day — and why those issues mattered in the first place. All this was made possible for just one reason: For decades they had enjoyed ironclad monopoly position in their markets, with exclusive reach defined essentially by how far their trucks could get by sunrise.
The Internet blew that up.
Digital marauders quickly invaded their markets. Local newspapers suddenly had to compete for audience and attention with revolutionary digital products that promised new ways to consume the news, to find things, buy things, do things and interact. Their broad content offering was cherry picked — the classifieds were an irresistible economic target and they went first, but everything was up for grabs and it wasn’t long before the stock tables were seized, and the sports scores, the weather forecast, political coverage, news commentary, restaurant reviews, the retail advertising base, even the comics. The broad product offering was unbundled and hollowed out, readers and advertisers seduced away to faster, better vertical alternatives.
It’s human nature to relate the unfamiliar to the familiar. The automobile was the “horseless carriage.” Radio was once the “wireless.” Personal computers look like typewriters. For newspapers, the Internet meant simply their newspaper, online. Their slow, myopic newsrooms could not imagine irrelevance, let alone extinction. Trapped in the prism of print, all they saw was a chance to throw away the ink and paper and sell the trucks, the same product delivered at less cost. They put their newspapers “up on the Internet” — and that’s all they did. No search, no social, no new relationship with users, not even a user database, no original engineering, no disciplined, marketing-led process of new product development, not a single trace of digital sensibility — just a continuing belief that the best way to deliver journalism, even in the digital world, was via the newspaper bundle. It was an error compounded by the belief that national and international news could be bottled up in one place forever, and made still worse by the religious belief that their “quality,” “credible” local news made a defining difference. It didn’t. Local news is a weak differentiator. Always was. Even in print.
But in business, every threat masks an opportunity that should have been obvious. The Internet offered newspaper companies the rare prospect of reinvention an revival. But rather than riding the digital wave, most newspaper companies chose, Canute-like, to dismiss its significance, just as, in earlier eras, they had dismissed radio, then television. To media company executives and their publishers, the Internet was simply the means of squashing the newspaper down a coaxial cable. It was the answer to a bottom-line prayer.
Trouble is, to a user that was practically useless.
It was not just competitively inept. It was also self-deluded.
The dirty little secret is that the newspaper audience had been declining for 10 years before the Internet arrived. No younger readers were coming on board to regenerate readership. Extinction was already a matter of actuarial certainty, it was only a question of time. The digital distribution of a failing print product did little to slow the slide. Even online, the local newspaper audience skewed old, and older, and the “growth” of online editions proved to be the result of subscriber transfer from print rather than the capture of a new, younger audience.
The failure to build successful new digital products born on the web eventually left local daily newspapers with little choice but managing decline until the very last nickel is extracted. Many have fallen into the hands of private equity, known around here as corporate hospice. According to a study by the Associated Press, more than 1,400 cities and towns have lost their local newspaper in the last 15 years. As the cycle ends, consolidation will accelerate the fall. It’s inevitable, and it’s too late now to do much about it.
Now, you have a devil’s choice to make. Do you think this critical product failure was deliberate? Did executives and publishers take a look at the extent and expense of the product and marketing challenge, and decide to duck it? Were they afraid to ask their shareholders — private or public—to tolerate the cost of building new products that might produce lower margins and returns at the expense of the established, highly-profitable business? Wouldn’t you be afraid to do that, to put your livelihood on the line for such a gamble? Or were they, like the high priests in their newsrooms, trapped by self-belief and unwarranted faith in the fictional power of their mastheads, while underestimating the magnitude of the threat?
I know what I think. I think hubris is blinding and unbridled commercial self-interest can be deadly.
Doesn’t matter if you’re an incumbent or an insurgent, big or small, public or private, if you’re not vigilant, success can be fatal. It can breed complacency and aversion to risk and change. When a business model is tuned to drive recurrent profit, then the dividend, the bonus you can take to the bank and the reliable annual increase become the only things that matter. Everyone, everyone, becomes a co-conspirator in protecting the comfortable status quo. Stewards rule, innovators are muzzled. Innovation becomes a game of incremental process improvement rather than anything that might seriously challenge the status quo, until process after process is tuned and re-tuned and accreted like concrete — and that’s just the way we do things around here.
It’s no accident that the Fortune 100 today bears little resemblance to the Fortune 100 just 25 years ago. Value comes in 25-year cycles. If the source of it goes unrefreshed, companies falter. Just ask anyone at Kodak. This is why the thesis of disruption has fallen into disrepute. Economic determinism is profoundly un-American. Of course newspapers were “disrupted,” any Tea Party member of the flat-earth society could tell you that. The real issue is why they didn’t do anything about it. Newspapers had more than 35 years of second chances, and never took one of them. They were preserved in amber. Just like this
Why do some companies endlessly regenerate when most others have their moment in the sun, then sooner or later buckle under new competition and wither away? What is the elixir of business reinvention that some companies seem to have ready access to and others struggle to find? Can you bottle it? Does it take the natural-born leadership of a rare and especially forceful character to drive it through an organization — like Bezos at Amazon, or Nadella at Microsoft, or media greats Rupert Murdoch and the much less well known Koos Bekker — or can it be acquired and sustained through management practice?
I think it can be acquired through management practice, but only when a leader shows the way. I’ve seen it happen, in companies big, and small. Reinvention isn’t a magic formula, but it can be bred into any company’s culture to bring new energy and new thinking to employees nostalgic for the past or seduced by present success. This blog is as much about the human failings of people at all levels of the enterprise in challenging times as it is about the collapse of the newspaper business itself.
Any leader worried about the future must first build a culture that welcomes it. They must surround themselves with people who share their natural instinct for directness and urgency, who are curious, even restless, who question standard practice and loath bureaucratic process, who want their careers to matter, who remain passionately committed to a sense of the commonweal, who are always open to a new idea and who would never, ever let their own sense of self-importance get in the way of listening to it. People, in other words, just like them. And, since you’re reading this, like you, too.
This was never, you see, about the future of newspapers themselves. It was always about the search to discover assets within them that might prove useful for digital adventuring. The outcome of that search would depend entirely on a willingness to re-think everything about the business; the product, the revenue sources, the competitive fit, and the economics. But a search like that can be fruitful only when the right culture is in place.
How do you create a culture like this? How do you sustain it? How do you get managers at every level of the enterprise to commit to it and thrive within it? How do you find the right balance between stewardship and innovation, between short-term results and long-term positioning? How do you encourage risk-taking? How should a new business be positioned relative to the core business? What techniques can be used to efficiently test new ideas? Where do you find innovators, how do you interview and recruit them, how do you reward and keep them?
“There is nothing new in the world except the history you do not know.” Harry Truman
These questions are hardly original. But you might find that my perspective on them is. No matter where you work or what your title happens to be, I hope BlastofWinter will encourage you to think fearlessly and independently as you build your own career. And then maybe one day, when you find yourself in charge, you’ll know how to build a culture that is clear and strong, a culture that stands above any one individual, a culture that regenerates and wins, over and over again.