Archive for October, 2011

Digital disruption in action

October 19, 2011

This cute video making the rounds on the Internet that I’ve posted below is a perfect illustration of disruption in action.  Not only must print industries like newspapers and magazines grapple with digital disruption of their business models that has eroded competitive advantages in creation and distribution of news and information and advertising, but  they must also take into consideration the new customer segments digital technology has created.

As this video shows, digital natives are born with a “digital first” mindset.  They simply do not have the same affinity for print that previous generations may have had.  One of the early mistakes newspaper executives made with the Internet was to try to recreate the print product online, failing to ignore and capitalize on the advantages afforded by an interactive medium.  Almost a decade ago, when he was a Harvard Business professor, Clark Gilbert (he now runs Deseret Media), conducted a multi-case study of 8 different newspapers.  The vast majority of the newspaper’s online content (75-95%) was a recreation of the print product at all but one of the newspapers.

Newspapers have certainly come a long way since Gilbert’s 2002 study.  Now, wireless mobile distribution affords newspapers another opportunity to tackle digital disruption head on. Tablet devices like the iPad and smartphones like the iPhone and Droid devices afford newspapers the opportunity to create new digital products for digital consumers like this baby below.

Wireless devices disrupt newspapers

October 4, 2011

“The faster the disruption of print by tablet happens, the faster newspaper owners can jettison print expenses and get closer to sustainable (but not yet proven) mainly-digital business models.”

-Ken Doctor, newsonomics blog post

Newspaper executives and industry observers are starting to pay attention to two significant developments that are altering their business: disruption and the continued emergence of wireless mobile devices (specifically smartphones and tablet devices).

In a blog post on “the newsonomics of disruption,”  digital news analyst Ken Doctor writes about tablet disruption of tablet, tablet disruption of laptops, tablet disruption of smartphones and most importantly, local news disruption and tablet news disruption.

“Digital disruption is now increasing,” according to Doctor. “Audiences are even more up for grabs than they were a couple of years ago. Advertising and sponsorship dollars, pounds and euros, are also being more greatly swayed by these disruptive winds than they were in 2009.”

In an article first published in Editor & Publisher and republished on his Reflections of a Newsosaur blog, Alan Mutter writes that “publishers have not failed to embrace disruptive experimentation because they are not smart enough to do so. The video embedded below (note: also embedded on this blog) 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,” Mutter continues. “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.”

These newspaper disruptions brought on by wireless mobile devices is precisely what I’m looking at for my dissertation.  I’m interested not only in the disruption to newspaper business models, but what publishers are doing about it.  A good headline for an article about my work would be “Wireless devices disrupt newspaper business models, publishers respond.”

Here’s a brief summary of my ongoing dissertation research:

Firms are now operating in hypercompetitive, emergent, dynamic, unstable, highly volatile environments in which a sustained competitive advantage may no longer be possible.  Disruptive innovation (disruption) may alter not only business models, but the strategic processes used to address the disruption.

Disruptive innovation can either disrupt or sustain a firm or industry either through business model innovations or radical product innovations.  There is not one clear definition for business models, but revenue streams and consumer values are vital to most business-model concepts.  Circulation revenue and advertising in print have long made up the traditional newspaper business model now being disrupted by the Internet and mobile devices. Whereas the Internet served as the first wave of disruption to newspaper business models, wireless mobile devices represent a second wave of disruption.

Newspapers are now experimenting with emerging models for online and mobile content, but have a history of failing to act on risk-taking experimentation that brings about change even though companies like Knight Ridder designed a futuristic tablet nearly two decades ago that closely resembles today’s iPad, and other newspaper companies commissioned a group to address disruption.  Wireless mobile devices have emerged as a critical news delivery platform and offer potential to newspapers at the same time as they continue to disrupt existing newspaper business models.

The highly uncertain “emergent” disrupted environment, characterized by evolving business models, unclear industry boundaries, new competitors and consumer preferences that are not well known, can have a dramatic impact on the managerial process of newspaper managers.  Newspaper managers’ decision speed, participation, comprehensiveness, and perceptions of the environment can affect the business model implemented to address business model innovation in order to gain a competitive advantage.  My dissertation explores these internal strategy processes newspaper executives are using to develop strategies and tactics to address mobile disruption.