Two related sets of reasons explain why newsrooms have organized themselves in ways that produced too few general managers. The first are unique to the newspaper industry; the second common to any industry whose legacy players thrived under oligopolistic market structures only to get disrupted in serious ways.
The historic divide between editorial and publishing
This historic divide goes way back. In the late 19th and early 20th century, American newspapers moved away from their political origins into a more democratized and market-driven era. Eventually, standards of professional journalism emerged and, as is well known, the organization structures with high walls between the editorial and business functions served to protect the integrity of the editorial content from commercial and political interests of the enterprise (i.e. the influence of advertisers or people in positions of power). Under these structures, the two parts of the enterprise came together only at the top of the organization with the publisher – who was the single general manager of the enterprise.
Several assumptions underpinned this sharp divide between editorial and business:
- Editorial cannot operate independently in the absence of strong boundaries cemented by organization structure, the physical separation of people, and the functional division of planning and decision-making.
- The same degree of separation must apply to all types of newsroom content.
- The credibility and brand reputation of the enterprise depends on the public’s perception and belief that this editorial separation and independence exists.
- The edit and business functions can be separated without impeding the economic viability of the enterprise.
These assumptions worked in an era of high profits. The enterprise could afford the organizational costs –both monetary and in terms of lack of speed, flexibility and responsiveness. But today, the costs of internal separation have risen while revenues have plummeted making the structural division of edit and business highly questionable, even suicidal. In the current era of competitive digital publishing and loss of local market dominance, inflexible, unresponsive, slow and uncoordinated church/state structures condemn instead of sustain metro news enterprises. And do so needlessly because there are less crippling approaches for maintaining the editorial integrity on which audiences still depend for trusted, quality journalism.
The common issues confronting legacy organizations in fundamentally changing industries
From the mid to late 20th century, newspaper companies evolved in ways similar to other industries that had oligopolistic or monopolistic market structures. While the business-editorial separation was unique to newspapers, the functional organization structure was not. Like other large firms in stable industries having limited competition (for example, industrial and consumer goods, transportation, and telecommunications), common characteristics included:
- Managing the whole enterprise as “one big business” without any customer or product focused segmentation (for newspapers this meant providing general news for general audiences);
- Organizing along functional lines with functional positions (for newspapers: the business and editorial siloes further functionalized into circulation, distribution, and ad sales on one side, and splits such as reporters versus copy editors and separate desks for separate content on the other);
- Operating under one big P&L in which no one below the CEO compared costs and revenues (for newspapers: the publisher).
Many industries operated this way for decades (roughly from the 1950s through 1980s/90s). People in such situations got habituated to cultures in which everyone was:
- Used to operating within fixed functional structures, none of which had the ‘whole picture’
- Given to set ways of doing things grounded in an orientation toward functional and operational excellence
- Unfamiliar with working horizontally across the organization
- Deeply experienced in working vertically up the hierarchy of the organization as well as deferring to hierarchical decision-making
- Focused on accountability solely for functional responsibilities rather than any ‘whole business’ outcomes
These habits ill-served enterprises in industries disrupted by deregulation, globalization, technology, shareholder activism, financialization, socio-demographic shifts and the other forces that changed the rules of the game. Increasingly, senior management knew their enterprises had to shift course to overcome inflexibility, lack of responsiveness, ignoring the customer, inabilities to innovate and more.
One central response that happened across every single one of these industries involved reorganizing into business units focused on specific customer groups and/or products and putting general managers in charge. As a result, enterprises:
- Increased the number of general managers who paid greater attention to customers and/or product segments;
- Gave these GMs authority to ‘connect the dots’ of the functions needed for customer and product responsiveness and innovation
- Debottlenecked the enterprise so that planning and decision-making happened at lower levels in the organization closer to the customer;
- Integrated revenue and expense (P&L) accountability at a greater number of points in the enterprise
- Increased the use of cross-functional teams within and across operating units for both special projects and ongoing responsibilities
- Expanded and made more flexible the number and kind of roles for individuals whose personal development and career paths toward general management demanded a greater range of functional perspectives, skills and teaming experiences
Legacy newspaper organizations have been late to make such changes. Yet, all the benefits of shifting to more general managers and business units – customer focus, smaller cross-functional organizational units, decentralizing decision-making and accountability, and fostering a sense of ownership and entrepreneurship within a larger organization – are now essential to survival.