When do you kill a business?
Killing the Grey Lady
Netscape impresario Marc Andreessen makes an excellent point in this Portfolio (via Wired) interview — which I recommend you read in full:
If you were running the New York Times, what would you do?
Shut off the print edition right now. You’ve got to play offense. You’ve got to do what Intel did in ’85 when it was getting killed by the Japanese in memory chips, which was its dominant business. And it famously killed the business—shut it off and focused on its much smaller business, microprocessors, because that was going to be the market of the future. And the minute Intel got out of playing defense and into playing offense, its future was secure. The newspaper companies have to do exactly the same thing.
Once upon a time I covered Intel for Hoover’s. (That duty now falls to Jeff Dorsch, who knows more about the chip business than I ever could.) During that time, I came to appreciate what a breathtaking move it was for Intel to abandon memory chips — but I hadn’t thought of the comparison to the New York Times or other papers.
The Monitor chooses the online option
An addendum to the interview notes that Andreessen said what he did before the Christian Science Monitor announced that it would stop printing its daily edition, so it’s clear that at least one old-line newspaper company is on the same, uh, page with Andreessen. The CSM’s decision was covered in another Wired item, which includes this choice quote from CSM advertising director Bob Hanna:
“Maybe the reason newspapers could go out of business is because they think they’re in the newspaper business instead of the news gathering and dissemination business. To hang on to a two century old technology just because that’s the way we’ve always done it, that’s a recipe for failure.”
This agrees with my own long-held view, which I expressed in a post in April of this year:
People in the newspaper business have made the fundamental error of thinking that they’ve always been in the news paper business. In fact, they’ve always been in the news delivery business.
Should Motorola kill handsets?
All of this was in my mind when I came across this GigaOm piece, in which Om Malik covers the horrific returns of Motorola‘s handset business — $2.625 in losses since the start of 2007. After a commenter offered a mostly sensible-sounding prescription for restructuring the business, Malik responded thus:
My fix for this division – shut it down, save the money and move on to become a smaller and a better company.
The messages that Andreessen and Malik are delivering aren’t easy for their targets to hear, especially because both the New York Times and Motorola have such long histories of making lots and lots of money by doing things a particular way.
Old habits die hard. But sometimes you just have to put a business out of its misery.
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Related links:
- When is it time to kill a project?
- The news delivery business versus the news paper business.
- Marc Andreessen and Charlie Munger walk into a bar . . .
- “Circulation falls at many major newspapers.”
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Photo by Mark Coggins.
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The New York Times has actually made some pretty impressive investments in digital media and technology. It appears someone internally “gets it” but the lunatics in charge have too many sacred cows to slaughter and too much internal politics staying their hands.
“Maybe the reason newspapers could go out of business is because they think they’re in the newspaper business instead of the news gathering and dissemination business. To hang on to a two century old technology just because that’s the way we’ve always done it, that’s a recipe for failure.”
Hit the nail on the head. When television first came out, the movie industry was scrambling; they were about to be slaughtered by this new television tech and were panicking! How did they survive? They realized that they were not in the “movie” industry, but in the “entertainment” industry; thus allowing them to expand into new fields and survive to play another day.
Yeah i very much agree ….
once the people actually realize where they belong … things do change for the good ….
but the actual realization is what takes time … and usually happens when there is another threat looming large…
It’s all about SWOT analysis. Strength Weakness Opportunity Threat. You must find your weaknesses and discover how to make them strengths; find the threats looming out there, and figure out a way to convert that threat into an opportunity.
Devin — SWOT analysis is highly useful, but note that, in very many cases, “You must find your weaknesses and discover how to make them strengths” is not only unfruitful, but in fact actively damaging to your potential.
By all means, you should identify your weaknesses so that you can minimize the damage they do to you. But in most contexts, trying to make something you’re bad into a strength is a fool’s errand.
This is not, by the way, an off-the cuff opinion of my own — it’s been studied extensively, e.g. by Marcus Buckingham.
I’ll write more about this in a follow-up post, because I think it’s a vital issue to explore and understand.
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