The Table Stakes are part of the winning playbook – but not all of it.
Figuring out the rest demands innovation – identifying, experimenting and learning whether possible approaches work.
Innovation is most likely to succeed if you know what you’re seeking to accomplish. For example, when the computer scientists at Xerox PARC embarked on experiments that would lead to personal distributed computing, they started with a question: how can we convert computers from machines that calculate into machines that also communicate? How might we recreate the pencil, paper and telephone in the form of a computer?
To them, winning looked like making computers into communication machines.
Here’s what winning looks like for you and your colleagues:
- Geography once again is a source of competitive advantage. Today, geography is a source of competitive disadvantage. It’s an anchor weighing you down. You cannot win the scale and reach game against competitors who are not stuck within a geographic footprint. There are exceptions. If you have a brand that travels well, you can and should explore specific products and services whose customer base is not geographically confined. Miami Herald and El Nuevo Herald would be wise to embark on strategies grounded in Miami’s status as the “capital of Latin America.” But, be careful about this. It’s unusual for metro, local or regional legacy news brands to have Miami’s opportunities.
You must reverse what has happened over the past couple of decades. You must find ways to make geography a competitive advantage. That means identifying, experimenting, learning and expanding on as many ways as possible to convert your local presence, information and knowledge, convening authority, data, and relationships into products and services that big scale players cannot match no matter how much data they have, no matter how inexpensively they can operate, and no matter how powerfully they are branded.
- You create substantial local value that is not an undifferentiated commodity. You must create and deliver unique, not easily replicated value. In market economics, commodities are fungible: a ton of sand, for example, is a ton of sand. Competitors in fungible commodity industries work hard to use price, service, information and other things to differentiate their offerings. Your enterprise must avoid “news as an undifferentiated commodity” because you cannot win a commodity battle. Identifying and delivering local benefits to local audiences is key to de-commodifying what you do.
- Your enterprise purposes go beyond providing content. Content matters – a lot! Especially content that adds local, differentiated and not-easy-to-replicate value because it helps local audiences and enterprises navigate, survive and thrive locally. But content is not likely to be enough. You and your colleagues are more likely to win if, in addition to content, your purposes also extend to fostering experiences, connectedness, conversations, convening and community problem solving. Local audiences, for example, gain more value when your journalism initiates and sustains conversations as opposed to one-time reports (even one-time, major and insightful investigative or enterprise reports).
Technology that is always on, always searchable, always social has altered when and how folks seek answers to the problems in their lives. Imagine a family buying a home for the first time. They have school age kids. They must find an affordable home in a safe area that has good schools and within reasonable commutes from the parents’ jobs. A metro news enterprise’s 2014 investigative report into local unaffordable housing, 2013 report on the crisis of leadership in the local school board, and 2015 toxic paint article – however amazing – do not serve this family very well. An ongoing conversation that is persistently updated and connects the dots across schools, housing, crime and more serve them better.
The disruptive forces that have destroyed the oligopoly or monopoly market position of your metro, local and regional news enterprise also have transformed how people live and enterprises operate in localities. These forces have emptied out what “local” means and how it is experienced – and left a range of serious problems in their wake. Many folks yearn to connect with others, to experience some form of community – of ‘we’ together. Your news enterprise’s odds of winning go up when you purposefully choose to respond to these needs – both because the need is so markedly unfulfilled and because scale players like Facebook, Google, the Washington Post and others cannot efficiently and effectively serve such needs in every locality on the planet.
- You weave together what happens in real and virtual life with what is local and social in as many ways as possible. Imagine a study that records where and how people in your metro or local area spend their time. How much of each 24 hours do people spend in virtual as opposed to physical reality – where virtual means connected to technology (including radio and TV and not just the Web)? This blend of virtual and real is where you must compete to win by creating and delivering value in local experiences, connectedness, problem solving, conversations and convening – as well as content. Recall the 2016 viral phenomenon of Pokemon Go. It operated simultaneously in the physical and virtual worlds. It was social. And it was local.
- You have many brands, products, services, revenue streams and business models – not just a few. “What’s the new business model?” is among the most asked questions about news over the past decade or so. And, it’s the wrong question.
Metro, local and regional legacy newspaper enterprises have lost their oligopoly/monopoly market power. No business model, however sophisticated, can replicate the profitability that comes with oligopoly or monopoly economic and market power. Facebook does not mint money because of its advertising dominated business model. It mints money because it has oligopolistic control over distribution.
A better version of the question, then, is “In what ways might your metro, local or regional news enterprise regain the oligopoly and/or monopoly market power you have lost?”
The answers lie in figuring out how to make what you do indispensible to those you serve and un-replicable by potential competitors. When and as you do that, you’ll regain the pricing power of yesterday’s print economics.
Another version of the question simply adds an “S” at the end of business model. Instead of asking, “What’s the new business model?” – and boxing yourselves into the delusion of a monolithic, single answer – ask this: “What portfolio of profitable business-to-consumer and business-to-business productS, serviceS, brandS, business modelS and revenue streamS can sustain us and those we serve as we navigate the profound changes afoot?”
- Local audiences and enterprises pay you for the value you create in many ways not just a few. Funneling lots of people and enterprises into paying you for content is essential to winning. But it’s likely not enough to win. You need lots and lots – not just a few – ways for folks and organizations to pay you for what you do. You need as many revenue streams as possible – for example, subscriptions, memberships, eCommerce, ticket sales, one-time sales of products, fees for services and more. Yes, you have to avoid unwieldy complexity. And you have to make sure the economics of any particular product or service are profitable and sustainable. But you will not win if you get stuck in the classic two-cylinder engine of newspaper profitability: subscriptions and advertising.
Winning also means that private, nonprofit and governmental enterprises pay you in many ways – not just a few – for access, data, technology and other services. Yes, these include advertising and sponsorship – and in many forms (e.g. native ads). Winning, though, goes beyond advertising and sponsorship to include monetizing data, licensing technology, providing digital marketing and other services, partnering in eCommerce and more.
- Your enterprise costs are lower, more flexible and variable, and shared. Neither you nor your colleagues nor your shareholders/owners will win if your enterprise strategy relentlessly reduces costs to stay ahead of declining revenues. Your owners can profit this way. They can take cash out of the business. And you and your colleagues might hold onto your jobs for some time to come. Eventually, though, your news enterprise will fail.
Winning demands changing how you think about and incur costs. For example, you must lower your average cost of content while simultaneously increasing its value to those you serve. You need to migrate away from costly print and print related distribution. You need to make your costs as variable and flexible as possible – for example, through using independent contractors and aggregation, licensing instead of building technology and tools, shifting at least some folks’ compensation to include incentives, outsourcing work to others and so forth. And for reasons spelled out in Table Stake #6 about partnering, you must figure out how to share costs if you are to increase the odds of staying technologically relevant while simultaneously lowering the costs of risk taking.