Can the Newspaper Industry Stare Disruption

By Scott D. Anthony, Clark Gilbert

These are scary times for newspaper veterans. Hardly a day goes by without news about disappearing readers, shrinking revenues, declining stock prices, or looming layoffs. Tellingly, these editors and writers are just as likely to come across this news in a blog or hear it through a podcast as they are to read it in their local newspaper.

The newspaper industry is going through what we call a "disruptive" change, a phenomenon that has transformed industries such as retailing, computing, airlines and automobiles. The bad news is that when the dust of disruptive change settles, historically even the best-run companies typically end up in the loser's column. In the computing industry, for example, Digital Equipment Corporation missed the personal computer (P.C.) in the early 1980's, started to fall apart in the early 1990's, and got acquired by Compaq in 1998. Dell Computer's low-cost business model destroyed Compaq, forcing a merger with Hewlett-Packard (H.P.) in 2001. Dell's continued incursion into the P.C. and printing office now threatens H.P., which announced more than 10,000 layoffs last year in an effort to remain competitive.

There is good news: Lessons learned from past failures can help to ensure future triumphs. Even better, newspaper companies have real assets to bring to this fight, and a number of emerging industry experiments with new products and business models could point the way towards future success.

This article describes some reasons why powerful market leaders stumble in the face of disruption and describes a few simple tips to help companies avoid those pitfalls. Success won't come easily, but by following these tips, newspaper companies have a chance to successfully navigate through increasingly turbulent times.

Disruptive innovations typically offer lower performance along dimensions that firms consider critical. In exchange, new benefits are introduced along dimensions such as simplicity, convenience, ease of use, or low price.

In the media industry, blogs, Google, eBay, Monster.com, and freely distributed commuter papers each fit the pattern of disruptive innovation. Each emerging competitor lacks something that is core to most newspaper companies' value proposition. Some can't match a newspaper's broad distribution network. Others can't compete with the newspaper's detailed reporting capability or local reach. All, however, compete along dimensions of performance that are different than the traditional metrics emphasized in the print newspaper business.

Read the full article on Nieman Reports