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30 Jun 09
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There are two common explanations for the disruption of industries like minicomputers, music, and newspapers. The first explanation is essentially that the people in charge of the failing industries are stupid.
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The second common explanation for the failure of an entire industry is that the people in charge are malevolent.
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even smart and good organizations can fail in the face of disruptive change, and that there are common underlying structural reasons why that’s the case. That’s a much scarier story. If you think the newspapers and record companies are stupid or malevolent, then you can reassure yourself that provided you’re smart and good, you don’t have anything to worry about. But if disruption can destroy even the smart and the good, then it can destroy anybody.
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Some people explain the slow death of newspapers by saying that blogs and other online sources [1] are news parasites, feeding off the original reporting done by the newspapers. That’s false. While it’s true that many blogs don’t do original reporting, it’s equally true that many of the top blogs do excellent original reporting.
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The problem is that your newspaper has an organizational architecture which is, to use the physicists’ phrase, a local optimum. Relatively small changes to that architecture - like firing your photographers - don’t make your situation better, they make it worse.
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The result is that the newspapers are locked into producing a product that’s of comparable quality (from an advertisers point of view) to the top blogs, but at far greater cost.
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The only way to get from one organizational architecture to the other is to make drastic, painful changes. The money and power that come from commitment to an existing organizational architecture actually place incumbents at a disadvantage, locking them in. It’s easier and more effective to start over, from scratch.
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The reason is that those organizations are large, complex structures, and to survive and prosper they must contain a sort of organizational immune system dedicated to preserving that structure.
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The result is that the people who add the most value to information are no longer the people who do production and distribution. Instead, it’s the technology people, the programmers.
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When new technologies are being developed, the organizations that win are those that aggressively take risks, put visionary technologists in key decision-making positions, attain a deep organizational mastery of the relevant technologies, and, in most cases, make a lot of mistakes. Being wrong is a feature, not a bug, if it helps you evolve a model that works: you start out with an idea that’s just plain wrong, but that contains the seed of a better idea. You improve it, and you’re only somewhat wrong. You improve it again, and you end up the only game in town.
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