Disruptive Innovation

President’s Letter

The overuse of the buzzwords, “disruptive innovation” and “disrupt” and “disruption” is so prevalent that it has spawned a backlash. In June 2014, New York Magazine ran an article, “Let’s All Stop Saying ‘Disrupt’ Right This Instant.” The Seattle Post Intelligencer carried “Disrupt ‘Disrupt’: A moratorium on ‘disruptive’ hackery,” and many blogs have taken up the cry.

However, it looks like these terms are here to stay. This fall, USC began to offer the nation’s first-ever “Degree in Disruption.” And, the concept can be helpful in thinking about business. Much of the current usage grew out of work by Harvard Business School’s Professor Clayton Christensen, whose doctoral dissertation became the highly influential, The Innovator’s Dilemma. It was an important contribution to strategy; in 2011 The Economist named it one of the six most important business books ever written. Christensen was named the World’s Most Influential Business Management Thinker in 2011 and 2013.

In The Innovator’s Dilemma, Prof. Christensen showed how innovation affects companies. He distinguished several types of innovations, which vary widely in their effect. Sustaining innovations make existing products better, but disruptive innovations can destroy existing businesses. The innovator’s dilemma is that current customers typically are not very interested in the kinds of marginal products that often catch on and become the disruptive innovations that overturn businesses and, sometimes, markets.

In June 2014, The New Yorker carried a tough critique of the theory of disruptive innovation that questioned its predictive value, but even that article gave credit to the theory as a tool for understanding what happened in the past. One problem is that it is very difficult to know which emerging technologies will be sustaining and which will be transformative.

The magazine publishing industry offers special challenges to people trying to understand the different effects of various technologies. Like the film industry, it is made of many specialized disciplines. In addition to content creation (editorial), magazines require graphic design, advertising sales, printing, and circulation.

Unlike other industries, magazines are reporting on themselves in a self-referential cycle. When first the iPod and then streaming technology replaced the CD, outsiders (i.e., magazine writers) covered the developments.  But when new publishing technologies appear, the observers and reporters are among those personally affected. It is hard to be objective about the impact of technology when it hits so close to home.

How many times have magazine industry professionals heard that digital technologies are disruptive, and that the end of the publishing world is at hand? The term is often misused, and is often incorrect. Many innovations are sustaining, with benefits that go right to the bottom line of magazines. Easy examples include digital typesetting, digital layout and production flow technologies, and even CRM databases adopted by the sales department.

It must be difficult for a writer to be dispassionate as the jobs of colleagues are eliminated by technology. One employee can now do the jobs of several because of automation, and speed has increased throughout the organization. New technologies require new skill sets, and those who are slow to adapt face elimination.  

What factors are responsible for the current state of the magazine business? There has been some softness in advertising pages for many categories over the past few years. Why? Disruptive innovation is often blamed for that softness, but it could be a lingering effect of the Great Recession. 

Forecasting is especially complicated because many technologies seem so full of promise, only to fizzle when implemented. Only recently, publishers were rushing to add tablet editions. Many were driven by fear that print was on its deathbed. Certainly, some printed magazines have been replaced by tablet editions, but very few, if any, have shown that this strategy has been successful for consumer magazines. B2B publishers are different, and many have been able to make use of the new technologies to disseminate content more widely and save some shipping expense at the same time.  In any case, with the biggest tablet successes still below 10% of total circulation for magazines, it hardly appears to have become a disruptor.

Christensen’s prescription to help companies of all sorts to survive an onslaught by a disruptive innovation is this: they must develop a disruption of their own while still maintaining the legacy business that pays the current bills and which may remain highly profitable for years. In the December 2012 issue of the Harvard Business Review, Prof. Christensen and Maxwell Wessel described a method for developing and understanding of how dangerous a disruption may be to a business, by systematically assessing barriers to disruption. By understanding why current customers are buying now, and not only what advantages disrupters may have but also what barriers exist, strategists can predict threats to the current business model. Then business leaders can move to respond to those threats. For the full article, see https://hbr.org/2012/12/surviving-

Printed magazines still bring in the lion’s share of advertising dollars. Depending on the reasons that current customers read those magazines, it may be possible for many of them to continue publishing indefinitely. Readers have many “jobs to be done” (in Christensen’s parlance), such as tracking fashion or enjoying images of art, that many readers feel print does better than alternatives. Where that is the case, printed magazines are generally safe from disruption. In others, where an alternative such as digital or social media does the job better, the printed version may be vulnerable. That is often the case where speed is the primary factor, as it is for stock price information or news. It is very important for the publisher to understand what customers want from the media brand, and to offer products that satisfy those wants.

To quote from “Surviving Disruption,” “Accepting the existence of a new competitive paradigm is never easy.  It often forces us to acknowledge an inevitable loss of business. It may require us to develop disruptions that cannibalize our existing businesses. Failing to come to terms with these realities does us no service. But neither does prematurely convincing ourselves of the singular superiority of a competitor’s disruptive advantages.”

Over the past few years, I have heard much doom and gloom about the future of magazines. Somebody is always predicting disaster, warning of the boogeyman, disruption, and urging publishers to get on board with the shiniest new technology to save themselves. To be sure, in some sectors there is inevitable disruption due to innovation, and wise publishers will try to foresee and prepare for these disruptions when they cannot be avoided. On the other hand, many innovations simply help publishers do the jobs they are currently doing, but better. These sustaining innovations do not destroy the business model, but can be incorporated to improve it. It is essential to keep a cool head, study, and analyze trends, so correct understanding can  lead to successful strategy.