If journalists can’t make the business case for journalism, then who will? Belinda Alzner talks with Canadian Nieman Fellow David Skok about his research on disruption and innovation in journalism with Harvard Business School’s Clayton Christensen that gives journalists and news managers a new way to look at the challenges facing the industry.
Journalism may be a profession that many undertake with a sense of purpose, but it’s still a business—one that looks vastly different than it did mere decades ago and one that is figuring out how to deal with new technology and new competitors, but a business, no less.
And as David Skok says in a recent report from the Nieman Foundation for Journalism: “If we [journalists] can’t make the business case for journalism, nobody else will.”
The report, which was produced by Skok during his Nieman Fellowship with Harvard Business School’s innovation expert Clayton Christensen and Forum for Growth and Innovation Fellow James Allworth, aims to give journalists and news managers a new way of looking at the changes that have taken place in the industry and the new challenges that exist.
“There has always been and will always be reporting so important to the functioning of society that no price tag can be placed on it,” Skok, who completed the fellowship during a sabbatical from his position of managing editor of GlobalNews.ca, wrote in the introduction to the report. “This fact makes it all the more urgent to meet today’s revenue challenges.”
As part of his Nieman Fellowship, Skok spent five months working with Christensen on disruptive innovation in journalism. It’s a topic not unfamiliar to Christensen, who was part of the American Press Institute’s Newspaper Next project – intended as a blueprint for the newspaper industry – in 2006.
“There’s been a lot of change in the industry since [then], obviously,” Skok said in an interview with J-Source. So, after taking Christensen’s class as part of his fellowship at Harvard, Skok approached the innovation expert about working on a new piece on disruption in journalism.
Disruption theory in journalism
Sometimes, the question is raised: How did journalism get here? Disruption theory, the report argues, is applicable from industry to industry. “New entrants to a field establish a foothold at the low end and move up the value network – eating away at the customer base of incumbents – by using a scalable advantage and typically entering the market with a lower-margin profit formula.” (Think Japanese automakers that were once considered a joke and now challenge the best that Europe can offer, the report says.)
The journalism examples of the classic disruptor are The Huffington Post and BuzzFeed, they argue. These new outfits haven’t invested in the expensive overhead of legacy organizations — they have, instead, “invested in only those resources critical to survival in the new world.” And because they started off as aggregators, providing content that daily newspapers and evening newscasts had no interest in producing – such as pictures of cute cats – these “new-market disruptors” initially weren’t a threat to traditional media, Christensen, Skok and Allworth explain. But while the incumbent media was “[staying] the course on content, competing along the traditional definition of ‘quality,’” the new-market disruptors were delivering content to an audience which isn’t traditional consumers of daily papers and evening newscasts.
“Once established at the market’s low end, the disruptors—by producing low-cost, personalized and, increasingly, original content—move into the space previously held by the incumbents.”
Traditional journalism, disrupted.
As the report says: “The question of how best to survive in the new world will not be answered by hoping for a return to the past.”
Unlike Newspaper Next, the Nieman report lays no blueprint for the future of the news industry.
“What we really wanted to do in this was ask questions and provide a framework and a lens to look at your business through,” Skok says.
“It’s not up to us to tell you how to run your business. You know how to run your business,” he continued. “But what we hope to achieve is giving you the questions you can ask and a lens to look at your business through to help you answer those questions in a more deliberate way.”
What it does do is lay out a framework for boards and media managers to look at their businesses.
The first part of the framework considers the audience first and looks at their news consumption habits through the lens of “jobs-to-be-done” theory. “People don’t go around looking for products to buy,” the report explains. “Instead, they take life as it comes and when they encounter a problem, they look for a solution.” A news organization that has been successful in terms of this theory is Metro. The free daily has more than 67 editions established in 22 countries while most other newspapers have seen readership decline, and has done the “help me fill the time while commuting” job well, despite being “vastly inferior” to incumbent newspapers, the report says.
When I asked Skok about the level of disruption in print versus that of broadcast or other platforms, he was quick to stop me.
“News and information doesn’t differentiate between platforms,” Skok said. “One of the things we’re trying to do is say ‘no, it’s not about broadcast or print or online, it’s about how people fulfill jobs in their lives when it comes to news information.’”
The jobs-to-be-done theory applies to paywalls too. If you are successfully fulfilling jobs in peoples’ lives, they will pay for it, Skok says. They specifically looked at The New York Times’ paywall, which needs to look forward, though it may be working at the moment. “In order for the paywall to continue to be successful it needs to fulfill additional jobs and new jobs that we don’t know exist yet,” Skok said. It is the jobs that future readers will need fulfilled that will be important in attracting new audiences that will then pay for your product, he continued.
The second part of the framework looks at the ability to adapt and change your business along with the times.
“The wealth of information available almost instantaneously has lowered the value of the general interest news story such that it’s often less than the cost of production,” the report states. “The value for news organizations now increasingly lies in providing context and verification—reporting the “how, why and what it means”—and facilitating communities around that news and information.”
The authors continue. “Aggregation or ‘linking to your competitors’ may be viewed as antithetical to the values of traditional news organizations, but it doesn’t have to be.”
They reference changes that Forbes made to its editorial structure and the success of The Week, a curation-based website founded in the United Kingdom.
One reason the report gives for news organizations to adapt: “To those worried about cannibalization, we would say: If a company is going to cannibalize your business, you’ll almost always be better off if that company is your own, instead of a competitor.”
Culture change is a phrase not unfamiliar to anyone in the news industry, and a newsroom’s ability to change can be affected by three things, Skok, Christensen and Allworth say: Resources, processes and priorities.
Resources are the tangible people, equipment, technology and budgets, and the less-tangible relationships with third-party vendors and advertising agencies. Processes are the way that employees perform tasks. And priorities are the standards by which something is deemed attractive or not.
If … a company’s cost structure requires it to achieve margins of 40 percent, then a priority or decision rule will have evolved that encourages middle managers to kill ideas that promise gross margins below 40 percent. Such an organization would be incapable of commercializing projects targeting low-margin markets … even though another organization’s priorities, driven by a very different cost structure, might facilitate the success of the same project.
“The third section on culture – that’s the one to me, as myself, being a managing editor— is the most salient, because it really strikes the heart of most incumbent news organizations in Canada today,” Skok said.
“I have come to the realization that while the technological disruptions facing our industry are 50 percent of the challenge; the other 50 percent is on us,” Skok writes in his introduction to the report. “We have failed to foster a newsroom culture that rewards innovation and empowers the younger generation, that can readily adapt to the new media world around us, and that is willing to experiment with the diversified revenue streams right in front of us.”
The section of the report that discusses this changing culture has been warmly received, Skok says, because it is the one section that makes some tangible recommendations for how to really change a culture. These include creating new capabilities internally – that is, creating new team boundaries to achieve certain tasks, rather than expecting the tasks to be completed with existing processes – or creating a spin-out organization to take on a project that the existing company might find unattractive under its current priorities.
One of the difficult things in presenting this information, Skok said, is that news managers aren’t used to thinking about things in terms of theory.
“You’re asking an executive or a publisher or a manager to look at the theory to tell them what’s going to happen next, rather than looking at what your profit and loss statement is telling you,” Skok said. “And that’s hard for a lot of managers to do—to not look at the numbers.”
“The numbers are actually backwards-looking; they’re telling you what happened last year or last quarter. They’re not telling you what’s going to happen next quarter.”
I asked Skok about the difficulty of switching from a journalistic approach to research to an academic one. “It was hard,” he says, simply.
“You know, journalism for me isn’t a profession, it’s a calling,” he continued. “It was hard at times, to clinically look at the business like any other business.”
But what helped him was realizing that journalism isn’t the only mission-driven business that is experiencing disruption. In hospitals, there are disruptive technologies that allow nurses to do work that would have previously been reserved for doctors. In academics, the rise of e-learning and non-accredited teachers is resulting in tensions.
“When you start looking at it through that lens, you see that journalism is no different – we are all going through this disruption. And while certainly, most journalists are mission-driven, we’re not the only ones. There’s a lot of internalizing that needs to take place there too.”
Even though the goal of the report isn’t to lay a blueprint for saving the industry, Skok still hopes the piece will prompt news managers to think about their businesses.
“The goal with this was for me personally, being the Canadian Nieman fellow, was to help Canadian journalism,” Skok says. “I hope that this piece is resonating and I hope that it has a long-tail effect where people will think about these things in their board rooms and take it to heart because I personally believe there’s a lot there that’s of value and I hope that others will see it that way as well.”
The full report, produced by David Skok, Clayton Christensen and James Allworth for the Nieman Foundation of Journalism at Harvard University, can be found here.