Vanity Fair’s piece shows how newspapers fall prey to the innovator’s dilemma

Michael Kinsley had a piece titled “The Front Page 2.0″ in Vanity Fair’s May 2014 issue.

While it is a nice read overall, what struck me was the part about how NY Times chief wanted to position the newspaper in an era of blogs and digital publishing proliferation. Here is the section that is extremely relevant for the disruptive innovation thinking:

In a couple of recent speeches, the C.E.O. of the New York Times Company, Mark Thompson, has suggested that the high quality of the Times’s content—the very quality that alarmists claim is becoming unaffordable as a result of bloggers and other cheap competition—will be the paper’s salvation, because people will pay real money for it. (He cautions that the Times is sui generis and that this high-quality strategy won’t work for ordinary, run-of-the-mill papers such as . . . any paper other than the Times.) With admirable, or possibly insane, frankness, he says the Times’s intention is to reduce reliance on advertising and to squeeze its most loyal readers as much as possible to pay for the content they consume.

See what is coming? Disruptive innovators enter a market from the low end. The incumbents respond by securing the highest-end of their customer base. Christensen lets us imagine how incumbents communicate internally when they discuss the innovator’s threat. Let’s satisfy better our most profitable customers. Let the innovator capture the lowest end. Those customers are not bringing that much profit anyway.

It is clear how the story goes on from here. Innovator captures the lowest end of users, and improves its offering to allure the next tier. And the next. Then the next. Eventually, the most demanding, most profitable one…

NYTimes CEO’s remarks are right on spot to become a disruptive innovation case study in business schools.

Minimally-viable vs. Fully-finished products

There are essentialists and there are perfectionists.

Essentialists essentially start with a minimal set of features to put a product in front of a customer. They validate whether there is anything useful in the new offering, and advance iteratively. When you behave like this, you are building a “minimum-viable product”.

Perfectionists carefully construct the entire package, mentally first and actually after. They put every piece, every feature in perfect order before the customer first sees it. They choose to stay in dark (i.e. with no feedback from the customer) for a long time and they are ok with it. When they launch, customer experiences a fully-finished, polished product.

The Silicon Valley culture cheers MVP approach, and they are not wrong; it helps a ton to pivot without incurring monumental costs. Yet, this doesn’t mean it is the only way. I want to celebrate three perfectionist projects from the media world in an era of MVPism.

Game of Thrones – every single detail, from the cast, to the costumes, to the screenplay are detailed, planned, perfected in advance.

House of Cards – almost everything that can be said about Game of Thrones, repeated.

The Porter magazine – a new fashion magazine by Net-a-porter group. 3 years planning. Perfect content, branding, distribution plan, digital footprint, advertisers, strategy connecting the core e-commerce business.

This is just another piece of the puzzle. MVP is not a rule. It is a choice.

Published on LinkedIn: Want real learning? Test yourself

I published my first post on LinkedIn earlier this week. My main focus was emphasizing the importance of testing in our learning process. After discussions with the commenters, I think the highlight reel for the piece would be this:

Practically, you are testing yourself whenever you force yourself to produce an answer, before you see the answer. Testing is the due diligence on our learning performance.

I am already looking forward to publishing my next post on LinkedIn. Hope you are too.

Want real learning? Test yourself

Stronger or smarter

Since I took my first biology classes many years ago, I have been constantly intrigued by the mystery about the human brain and why it evolved the way it did. John Medina provides snippets of answers in his book titled Brain Rules. I will probably post more, but this one sheds enough light on an important divergence.

There are two ways to beat the cruelty of the environment: You can become stronger or you can become smarter. We chose the latter. It seems most improbable that such a physically weak species could take over the planet not by adding muscles to our skeletons but by adding neurons to our brains.

This explains so much of what we are trying to do as humanity today; along with what we were able to achieve (space programs, nuclear weapons) and where we continuously fail (obesity, psychological disorders).

Disruptive Innovation at a glance

Not every innovation is disruptive. In fact, most of the innovation happening today should be classified as sustaining. Yet, many companies, especially startups, define their mission around disrupting incumbents and industries.

Clayton Christensen is the key figure when it comes to understanding disruptive innovation. I will use some quotes from him and his books to underline what makes an innovation disruptive.

Disruptive innovations don’t attempt to bring better products to established customers in existing markets. Rather, they disrupt and redefine that trajectory by introducing products and services that are not as good as currently available products. But disruptive technologies offer other benefits-typically, they are simpler, more convenient, and less expensive products that appeal to new or less-demanding customers.

In most cases, innovations lead to better-performing products, and established companies pour disproportionate amount of resources on extracting more revenue from their existing customers by offering them more sophisticated products. Disruptive players focus on the overshot section of the market: low-end, less-demanding customers, and even non-users of a category.

They [incumbents] are always motivated to go up-market, and almost never motivated to defend the new or low-end markets that the disruptors find attractive. We call this phenomenon asymmetric motivation.

If a disruptive innovator is trying to steal the low-end, least-profitable customer segment of an incumbent, it is highly likely that the incumbent will focus its efforts to protect its more profitable customer segments.

Then what: Cloud storage

Cloud storage wars are getting intense on the storage size front. A WSJ story on Box’s new offering describes what is to come and predicts marginal cost of storage reaching zero. When that happens, competitiveness will likely move towards the abilities of viewing and processing various file types.

Google currently has 2x high ground with:

  • Gmail. Users can perform “View in Google Drive” for email attachments.
  • Google Drive. Users can view and edit docs, spreadsheets, presentations on the web and on mobile. Collaboratively.

Dropbox has 1x high ground: Mailbox. Users will perform “View in Dropbox” for email attachments.

Box is at a disadvantage with no horse in mail apps. But, they partially mitigate that with a strong footprint in enterprise market.

Then what? Competition will go shopping to expand and enhance their file viewing and editing abilities. The shopping lists will likely contain Aviary, Goodreader, LiveLoop.

A Comprehension List for Entrepreneurs

Becoming an entrepreneur largely depends on being resilient and dealing with ambiguity. Being resilient is important because you are constantly in an uphill battle in customer acquisition, conversion, business development, PR etc. Dealing with ambiguity is important because you are in charge of creating something meaningful out of a large fuzzy cloud filled with pain points, customer needs, competitor offerings, monetization options, hiring challenges, patent possibilities and all.

This list is to help with the latter. Some thoughts, frameworks, mental models, suggestions targeted at decreasing the order of complexity for starting up.

One key warning. I don’t think reading a lot necessarily makes the entrepreneur better prepared. We are living in a world where the flurry of new content is paralyzing our ability to comprehend. So, my suggestion is to focus on quality rather than quantity on this. Spend 20% of your time on reading, 80% on comprehending.

On ideas

On building

On managing

On fundraising

  • in process