The NY Times was in the news yesterday – this time, a docile development related to its web site leadership. The Times was nominated for several Webby awards. In fact, the company has the largest presence of any organization with nine nominations, including the following categories: Best Visual Design, News, Newspaper, Best Copy and Best Practices.

Good news is a welcome relief at The Times. The “nation’s paper” is no stranger to front-page storylines. It is the center of several dramatic circumstances that involve controversy over future business direction. In a quick recap, there’s been shareholder discord over share price performance, governance structure (dual-class stock) and future strategy in response to the quickly vanishing newspaper business model. These issues are inter-related because different groups (broadly management vs. shareholders) hold different views on how the address the current industry climate and whether the corporate structure needs to be amended to respond decisively and effectively. Recently, hedge funds were successful in securing two seats on the company’s Board through a settlement with management.

With traditional offline revenue declining at a steady pace (January print revenues were down 9.8%), the foreseeable future does not look promising for overall financial performance. But is there light? In other words, as the core declines, how quickly is the revenue loss replaced by the digital business? Clearly this is a question of rates of change. Currently, the company does about $750mm a quarter in total revenue and about 90% is print. If the digital base, which is about $85mm per quarter, continues to grow at 15% annually while the core continues to decline at 10% annually, online will overtake offline 9 years from now. Can you say web 4.0? Even at 20% online revenue growth, we’re talking about 7.5 years for equivalency. Certainly a long way off and sufficient cause for shareholder anxiety. Read more »

• 12th Annual Webby Award Nominees
• NY Times CEO - Bear Stearns 21st Annual Media Conference
• Shareholder Dissent Peaked Last Year
• Newspaper publishers skid painfully into 2008
• Michael Wolf on the The Times
• Boards Give Up Taming Act

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Many large companies find themselves launching new businesses at unprecedented rates in an effort to maintain growth profiles, margins and leadership status. When a company pursues new markets, that can include a variety of corporate initiatives which are distinct from each other. At the highest level in terms of potential value creation is the process of vying for a new category. I call this category-creation or entry. Category-creation is different than finding a new market for an existing line of business.

In the latter case, an existing product or service is re-oriented from a positioning, capability and/or distribution standpoint beyond existing customer focus into distinct and additive customer groups. This can be a complex activity for an established business because success often leads to inertia. In other words, it’s hard but necessary to unlearn certain aspects of an existing success formula in order to make the business mix work for new sets of buyers. Expansion of existing products lines into new customer groups holds a lower risk profile than the pursuit of a new category because some aspects of these new markets leverage existing capability. But product line expansion to new segments also carries lower magnitude of order growth potential. Only truly new categories move the needle in breakout ways.

These two growth strategies are equally important — one should not exist without the other. But it’s far more likely that a company is proficient at market expansion than market creation and development. That’s why I’m going to share some thoughts on the category-creation process. Read more »

• Reinventing innovation at consumer goods companies - McKinsey Quarterly;
• How companies approach innovation - A McKinsey Global Survey;
• The Granularity of Growth - McKinsey Quarterly

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As reported in The Week, an online magazine called Pasadena Now has “hired two reporters to cover local government who have never set foot in Pasadena, and may never.” The reporters, who work from Mumbai and Bangalore, cover the beat by participating in webcasts of City Council meetings (open to all) and sorting through publically available archives on the web. In an era of email and Skype, it’s not hard to imagine sprinkling a story with quotes here and there from local politicians and stakeholders. The publisher describes these resources as “efficient” which “means he can pay his new hires $10,000 a year to generate 15 local news stories a week.”

Here’s an example of labor arbitrage impacting the frontline of journalism albeit on a small scale. The natural question is whether this is a one-off or a broader trend. What exactly is the latent arbitrage opportunity amongst other media jobs, especially those in the upper-echelons of journalism?  The Week seems to be fairly resigned about the matter: “if you think you’re job is safe, ask yourself if somebody in India, Pakistan or Indonesia could do it for less.” Read more »

• Exporting and Re-Importing The News
• Outsourcing Journalism?
• Reporting from Afar Might Work
• Good Capitalism/Bad Capitalism

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