Innosight Blueprint to Reverse Newspapers' Decline

Clayton Christensen's firm Innosight and the American Press Institute worked a year to study  ways for newspapers to reverse their 40-year decline due to disruption. The result is Newspaper Next or N2, a new 96-page report and associated website  highlight some of the findings:

The game is changing before our eyes, and new competitors are scoring successes even before we see them coming...Caught in a massive wave of disruption, newspaper companies must learn to think and behave like disruptors themselves.

When half of the adult population no longer uses newspapers and shows high resistance to our best marketing efforts, it is apparent that newspaper companies must look beyond their traditional boundaries to find audience growth.

The report says newspapers must take a portfolio of services to ensure survival:

• print  or online,
• daily or nondaily,
• paid or free,
• mobile or email,
• virtually any other form — depending on the target user and his or her circumstances.

The report is well-thought and helpful. It may not focus in on the specific circumstances of some specialty newspapers, like the Financial Times or Wall Street Journal, but it serves as a starting point for general interest dailies.

It has some harsh words but it is also optimistic and is designed to help newspapers create new businesse growth. The report uses a framework to help managers identify and target new growth opportunities based on the disruption theories of Innosight founder Harvard Prof. Clayton Christensen. For example, it highlights examples of newspapers that have pursued underserved market opportunities:

• Non-consumer groups that could be targets for new services: time-starved working mothers; busy professionals; recent immigrants; young adults.
• Non-consuming opportunities with current customers: commute; waiting times; travel.
• Non-consuming advertisers: ultra local businesses; service businesses; national advertisers.

While we could argue these are small opportunities, the report also includes a detailed framework for newspaper managers to hone in on new services based on consumer activities.

The study includes a failing report card on newspapers today that should be seen as a warning:

• Recognize the need to change: A-
• Allocate resources to new growth: C
• Create new solutions users love: C
• Expand into new markets with non-consumers: C-
• Look beyond traditional revenue model: D+
• Avoid expensive innovation in areas that are already good enough: B-
• Assemble the capabilities to creat innovate solutions: C
• Create repeatable process of innovation: C
• Communicate the change agenda internally: C+
• Communicate the growth story externally: C

To disrupt themselves, newspapers need to zero in on the attributes that readers and advertisers value and pay for. To prevent further commoditization, newspapers must cease working on the attributes that readers and advertisers no longer value.

Managers who want to test whether their new business ideas are disruptive, may want to use the Disruption ScoreCard on The Disruption Group's list of tools for managing disruption. 

If disruption is of interest, but a 92-page report is not, take a look at the CEO Guide to the Benefits of Disruption (pdf) which serves as a brief intro to the subject.

**Other Sources**

Recent excerpt from Clayton Christensen & Innosight's newsletter, Strategy & Innovation, looking at four other industries facing disruption, by Michael Urlocker, CEO of The Disruption Group.

Archive of The Disruption Group in the news.

NY Times media columnist Richard Siklos, a former colleague,  wrote recently about the trap media companies find themselves in when they are publicly traded. He makes the astute observation that the public company structure and newspapers may have become incompatible. Some CEOs I speak to in other industries question whether any substantial innovation can be practiced within the public company strutcure because of the requirement for steady-growth, predictable quarterly earnings.

PaidContent.org highlights a Reuters report that newspaper website readership rose 31% in the first half of the year, based on a lengthy analysis from the Newspaper Association of America.

Metro International, publisher of a global free commuter newspaper, has daily circulation of eight million and daily readership of 18.5M according to its latest investor presentation (page 13.) This makes Metro larger than each of the top U.S. publishers listed in the NAA report: USA Today (6.9M), WSJ (5.1M), NY Times (4.7M.) Other highlights: $377M in annual sales, reflecting a 44% compound annual growth rate since 1995. Operating profit $22M, vs $5M year ago.

Bob Russel at MobileRead says disruption talk is "standard 'forward' thinking" for the news industry and puts too much emphasis on new media formats. This misses an essential element about the value of ties to the community through local content, he says.  

Jeff Jarvis at BuzzMachine describes the report as blather and evidence of the cultural problems of the industry because it doesn't pay much attention to interaction or collaboration.

Forbes has a guest column by Harvard Prof. Clayton Christensen on the API study.