Disruptive Innovation Viewed as Good Risk Management

Costa_Rica_Surfing_650.jpg As expected, the FCC approved more media consolidation, this time of newspapers and TV stations. That’s one approach to disruptions in a market: game the regulatory apparatus to permit consolidation of two failing industries (even though one of them, the one being bought, newspapers, is still hugely profitable).

There’s another approach, from the wilds of south Georgia:

The statewide papers from Atlanta and Jacksonville have pulled out of this market back to their own communities leaving a void of state and national news from a print media. When I was growing up, The Atlanta Journal “covered Dixie like the dew” and the Atlanta Constitution covered Atlanta. Today the “dew” stops in Macon and the Journal is now just the Constitution. The Florida Times-Union several years ago started the Georgia Times-Union with distribution across the bottom third of our state. Now, with the pullback coming soon, their distribution will be limited to Southeast Georgia or east of Waycross.

From the publisher: Disruptions are opportunities, By Sandy Sanders, Valdosta Daily Times, Published December 09, 2007 01:28 am –

So what does this small city newspaper do? Run to Congress or the state legislature to let it merge with a TV station? Nope: it expands to take over the market abandoned by its larger peers.
Why did these state newspapers make this decision? Economics, fueled by gas prices, newsprint costs and less interest by local retailers to pay for the added coverage. Both of these papers have expanded their Internet sites.

While we will never forsake our local focus The Times is as of today expanding its pages for regional / state, national and world news. In the past the front page has been all local. You will now see a state or national story on the front or at least a headline referring you the reader to the story on an inside page. On our Internet site is Associated Press video of national and world news — updated throughout the day.

Losing a state newspaper for your daily reading may have been a disruption for you but our goal is to help you move to a state / national print source right here in your hometown.

The VDT publisher cites cell phones and iPods as examples of disruptive markets where there was nothing and a few years later everybody had it. Somebody is going to produce real disruptive innovation and make a bundle on it. It wasn’t the traditional record companies or the duopoly ISPs that produced the iPod: it was Apple. It probably won’t be the newspapers and TV stations that will be merging due to the recent FCC ruling, and it probably won’t be AT&T, the beneficiary of last year’s last-minute December FCC merger ruling. Piling on a losing game isn’t good risk management, as the and Sony are finding out the hard way. Suing your customers, sticking rootkits on their CDs, or convincing regulatory bodies to let your companies merge against the overwhelming opinion of their customers and of their oversight bodies may seem like innovation to somebody, but the results say such tactics are counterproductive reaction. There may be a common thread: giving your customers what they loudly say they don’t want isn’t good business.

It may be newspapers like the New York Times that tried a paywall and eventually discovered that giving away not only current content but almost all back content is a big win in advertising. It may even be the Valdosta Daily Times. Trying something new until you find something that works is good risk management in times of market disruption.

Surf’s up! Who’s got a board?