Clay Christensen taught me countless things, but there was one topic on which we always disagreed.
Clay, whom I worked with for six years, advocated that companies in the midst of being disrupted should separate out new business units that could freely respond using distinct business models. If those new units competed with the core business, so be it.
I’d tell him that was unrealistic – it’s a huge decision to make, it goes against many self-interests in a company, and it ignores the competitive advantages corporate parentage can bring.
With years of hindsight, I’ve come to think the right course is actually a mash-up of these approaches, and it’s been illustrated this week by the New York Times.
The Old Grey Lady, as staffers call her, didn’t respond to the internet disruption very well. But recent moves have been different. It’s built out – largely through acquisitions – new value propositions that work best online, such as with its product recommendation site Wirecutter, its word game Wordle, and its site for sports news, The Athletic.
Sounds like Clay’s suggested approach, right? Not really. While each of these sites can acquire subscribers directly, the Times has invested heavily in pushing an All Access bundle. And it’s working. There are now approximately 10 million of these subscribers, up about 1 million from a year ago. The goal for 2027 is 15 million. The newsrooms are distinct entities, but the monetization is done cohesively.
The Times also can make clear decisions about winners and losers in this set-up. This week, it closed its sports desk – a storied institution that covered the greats for over 100 years. Its 40 journalists were less than a tenth those of The Athletic, a site that wasn’t founded until 2015.
What are the lessons?
- When you’re being disrupted, sometimes the surest way to embrace the disruption is to purchase it or invest in it. This also avoids the internal battles of creating a new, potentially competitive, business unit organically.
- The advantages of corporate parentage can come a bit later, as you sort out how these business models can work best together. You should have the goal in mind from the get-go, but the implementation of these details can come over time.
- The best options may involve a combination of separation and integration, as the Times has accomplished.
If the Times is still called The Old Grey Lady, she’s certainly become a nimble one. Here’s to all our companies being so spry at 172-years-young!
Contributed to Branding Strategy Insider by Stephen Wunker, Managing Director of New Markets Advisors and Author of The Innovative Leader.
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