Howard Owens gives a great explanation of what makes his journalism venture successful. But he mistakenly extrapolates to some rules about what other entrepreneurs should not do.
I recommend reading Howard’s post Forget “value-added journalism” — Think, disruptive innovation and Kevin Anderson’s post Journalism: What added value will add revenue? Howard was responding to Kevin, so I suggest reading Kevin first, then Howard, then coming back and finishing this.
Howard understands correctly that his venture, The Batavian, is succeeding with a simple formula of providing lots and lots of community news. He isn’t “adding value” with many feature stories or investigative journalism that would take considerable time. Instead, he says, he is following Clayton Christensen’s disruptive innovation formula by providing just “good enough” quality, but lots of it.
To explain the “good enough” point, Howard links to a video in which Christensen explains disruptive innovation, using the example of steam ships. We’ll come back to the steam ships shortly and to The Batavian, but first, I need to explain what I know about Christensen and disruptive innovation.
Christensen, a Harvard business professor, is the world’s leading authority on disruptive innovation. His books, The Innovator’s Dilemma and The Innovator’s Solution, are valuable reading for any entrepreneur.
When I was at the American Press Institute in 2005, we entered a partnership with Christensen to help teach newspaper organizations how to apply his principles in developing new business models for the digital age. We called our project Newspaper Next. I read Christensen’s books, attended a symposium he led for newspaper industry leaders and a later workshop in which his associate, Scott Anthony, was teaching API staff how to teach the principles. I worked closely with Steve Gray, managing director of Newspaper Next, who spent most of a year working with Christensen, Anthony and other associates on the project. For much of 2006 and 2007 and the first half of 2008, my primary job was teaching Christensen’s principles to the newspaper industry at conferences and seminars and in blogging and a report.
Newspaper Next did not succeed in leading a transformation of the newspaper industry. I regard that as a reflection of the industry’s unwillingness to change, rather than our failure to teach or any weakness in Christensen’s analysis of the challenges and opportunities facing newspapers. I am certain of this much: I am quite familiar with Christensen’s principles. And Howard is overlooking an essential piece of his formula (at least in his blog post; I think he got it right in launching The Batavian).
Howard uses the steamship as an example of “good enough.” And yes, the early steamships were not yet a threat to the sailing ships on the high seas. They were good enough to navigate rivers and lakes, so that was where they started out. But the steamship’s formula for success was not simply “good enough” (which has a connotation of not being very good). The steamship added value to shipping with a power source that didn’t depend on the weather. It didn’t get by just on a good-enough formula. It revolutionized inland navigation with its added value, then revolutionized navigation on the open seas after it worked out those good-enough issues to become excellent.
Christensen likes to use the mobile phone as another example of disruptive innovation. (So do I, always crediting him, but giving it my own twist.) In the ways that we measured the performance of wired phones (reliability, audio quality, cost), the early mobile phones were just good enough, and, in truth, barely good enough. But from the first cell phones, mobility unquestionably added value. You tolerated the huge phone, dropped calls, lousy sound, lame battery and high cost only because of the mobility. Without that added value, all those good-enough features weren’t nearly good enough. You just had a crappy phone. Of course, as time went on, all those good-enough features improved significantly. And the phone makers kept adding more value: cameras, email, browsers, games, news, an endless stream of apps.
In fact, we saw the good-enough/added-value balance playing out again with the camera aspects of cell phones. The first cell-phone cameras produced mediocre photos, but they were good enough, because of the added value of always having a camera in your pocket or purse. And, of course, the makers of mobile devices (it’s just not accurate any more to call them phones) kept improving the good-enough qualities and adding value with video, cameras that face either way, photo-editing software and ability to post immediately to the web, choosing between large, high-resolution files and smaller good-enough photos you can post more swiftly.
The good-enough factor was critical: If the early phone developers had waited until they perfected all the features, their entrepreneurial efforts would have grown so expensive they would have died in the cradle. Good-enough lets the entrepreneur get started and in the game. But the added-value factor was even more critical: Mobility was the foundation of the business. And as the business matured, new value-added features (correctly described by Howard as sustaining innovations in Christensen’s terminology) built customer loyalty and disrupted lots of industries (land-line phones, cameras, wristwatches, calendars, the news business).
Similarly, with journalism ventures, you need to know what is going to add value (what is your “mobility” factor?) as well as where you can (and must) settle for good enough, rather than loading your project with killer costs trying to pursue top quality in every respect.
Howard and I argued on Twitter this week whether ESPN was disruptive. I remember some of the early broadcasts, which certainly followed the good-enough standard he espouses. But ESPN added new value for sports fans, expanding our selection again and again, and forever disrupting the broadcast networks’ control of sports programming.
Sports is just one of many niches where disruptors have launched businesses by figuring out how to add greater value in the niche than legacy media, particularly newspapers, can provide with their bundled approach of trying to do everything. From national players focusing on classified ads, weddings and obituaries to local players focused on restaurants and neighborhoods, entrepreneurs are providing value that people aren’t finding from traditional media.
Now, let’s look at Howard’s notion that his success at The Batavian is rooted in his good-enough approach, rather than in adding value. In other blog posts, Howard has written about the need to provide value for his advertisers and about his insistence in providing a more pleasant commenting environment.
In his good-enough post, Howard had this passage:
But I don’t think there is anything “value-added” about what we do.
We’re serving a market that wasn’t served before, and that market is the one that asked the perpetually unanswered question in most markets, “What’s going on in my community right now?”
How is it not adding value to serve a market that wasn’t served before? Howard’s giving his community news it wasn’t getting before. That’s a different value than Kevin was writing about (Kevin mentioned “smart analysis” as an example of journalism that adds value). But if people in Batavia weren’t getting sufficient basic news about community news, events and issues, about what’s happening in the community right now, The Batavian is a business based on providing new value.
If journalism is going to find a prosperous future, as I believe it will, that future will be built on multiple business models. Some will focus on basic community news, as The Batavian does. Some will focus on in-depth news, as California Watch does. Some will be nonprofit organizations. Some will be profitable businesses. Some will be small operations like The Batavian. Some will be larger operations like TBD.
And all of them will find success by balancing this dual challenge of providing good-enough service in some respects while delivering some type of value that is new to the marketplace.
[…] This post was mentioned on Twitter by Steve Buttry, NewsFuturist.com. NewsFuturist.com said: ‘Good enough’ and ‘value-added’ work together in entrepreneurial journalism http://bit.ly/gkduRr (by @stevebuttry) […]
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Here’s where w fundamentally disagree. I believe you’re misusing the term “added value.”
Added value refers to taking an existing product and giving the customer something beyond what was available before.
When fast food chains introduced the idea of “super-size,” that was added value. It was a sustaining innovation.
When newspapers started putting classifieds online, it was added value.
Added value is taking something from the “good enough” phase, or a phase or two beyond that and making it better.
Disruptive innovations start at the bottom of the market and relentlessly move up market. They’re not aiming at the top of the market, and when you see journalists talking about creating “value added journalism,” producing journalism at the top of the food chain … a product worthy of the New York Times, not a “get it done and get it out the door” approach.
Steam ships, early mobile phones, etc., are not in any way “value added” products in their early stages. They are disruptive innovations (it is impossible for any truly disruptive innovation to be “value added” — it’s an absolute contradiction in terms) that opened new markets.
If steam engines had been “value added” the incumbents would have quickly recognized the value and added it to their own product line.
In order for a product or service to be disruptive, it must:
— Be good enough, or be just as good as the competitor product, but at a much lower price;
— Fill an unmet and unrecognized demand (something the consumer didn’t realize he or she wanted), identify a job to be done;
— Going after a group of consumers that isn’t valued by the incumbent business (they don’t like our product anyway, or they won’t generate enough revenue to meet our needs);
— Producing a product or service that the incumbents can’t see as valuable (why is anybody going to read that, it’s not backed by our years in the community, our layers of editing, our depth of coverage, our brand).
And the last is key in regards to the ESPN example. ESPN wasn’t something that incumbents sat back and laughed at and thought, “who wants a 24-hour sports channel?” Everybody recognized the genius of it, just nobody did it first. It’s a great example of why it’s important to be first to market with a sustaining innovation, but it’s not an example of disruptive innovation. It is truly value added because it took existing services and made them better.
In the value-added journalism model, start-up journalists are aiming at creating products other journalists will admire, that people will immediately recognize as quality and think “of course audiences will like this.”
And maybe they will, but it’s an expensive route to take, and expensive start ups have much higher failure rates than lower budget operations.
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Howard, I don’t think our disagreement is as fundamental as you describe. I see “adding value” as adding value to the marketplace, not strictly adding value to an existing product, which is what sustaining innovation is.
You fill an unmet need or meet an unrecognized demand by adding new value (making a phone mobile or powering ships without regard for the weather). You are describing that process without using the term “value.” Otherwise, I think we are in pretty strong agreement.
Except that you forget how widely ridiculed ESPN was in its early days for its broadcasts of log-rolling shows and such.
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Steve, once again you’ve nailed it. I arrived at a news organization in 2007 that had just went through the Newspaper Next training in person. They had been shown Christensen’s ideas and most front-line journalists were excited about embracing them and adapting them at their newspaper. Upon my arrival, key leaders started questioning the Newspaper Next principles and whether they could “make money.” they took the ideas at the end of the Newspaper Next project as a punch list, but never tackled any of them. “NO one has made money off a “mom’s site” yet…” or “When we start making money off of online, we’ll start putting money back into it.” That wait-and-see attitude killed most culture change efforts, as it has at many old media outlets. I heard numerous times that quality doesn’t matter online, “good enough” will do. The talented journalists knew that didn’t sound right. That misuse of the term ignored the value proposition. That can’t be ignored by any legacy or entrepreneurial organization if they want to survive in a digital news and information ecosystem.
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An illustration of how a disruptor adds value would be in the obituary field. Legacy.com added value to the traditional newspaper obituary (and disrupted by meeting an unrecognized demand) by providing a place where people could share remembrances of the deceased.
And if anyone acts on my suggested “life story” model for obituaries and other life milestones, that would add value in a disruptive way.
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See, we are miles apart on the meaning of “value-add.”
Value-add strictly means adding value to a specific product or service for the benefit of defined consumers.
It’s not about adding value to the marketplace.
Legacy.com was a sustaining innovation, adding value to a specific product to the benefit of consumers.
I don’t see it as fulfilling an unrecognized demand. It was quite obvious that with online media you could improve the obit product to provide added value to customers and generate additional revenue for newspapers.
Who was disrupted by legacy? Not newspapers. It was essentially a newspaper product.
If somebody could come along with an online product that diverts obits and revenue from newspapers by offering a product that got the job done at a much lower price (even free), that would disrupt newspapers.
There’s nothing disruptive about legacy.
It’s a great example, though, of a sustaining innovation that is value-added.
And each new innovation Legacy adds (remember, when legacy started, it was just a database to manage obits, no guestbooks, etc.) it is offering up a value-added, sustaining innovation.
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I remember a slightly different take on the Christensen’s “good enough” concept you talk about above. Costas Markides taught a strategy class at London Business School that always stuck with me. He described it like this. He said that each product has a combination of qualities. That products tend for a long time to compete against what the established features of the leader are. The innovator comes along and says “My product is not as good as the No 1 on that axis that they and everyone else says is the most important (and which is now almost a commodity in the industry). But it is good enough. And it totally destroys everyone else on axis y, which my company believes will be important to consumers but the incumbents ignore” So with steam ships the point is that they were good enough at shipping goods, but kicked ass on reliability in poor weather. And as they got faster what did sail shippers do? – added more sails, because they were just unable to compete in the new environment created by the sudden importance of an axis that they weren’t designed to compete in.
Legacy wouldn’t be disruptive in this context. A DIY funeral service where you do all the, ahem, heavy lifting yourself would be good enough at cremating bodies but be much much cheaper and that would be highly disruptive to the exploitative overpriced funeral business which thinks that solemnity and the like is the real axis of competition.
For journalism, the whole citizen journalism experiment seems to have been about finding out what exactly is “good enough” on the axis of quality of content. A lot of failed enterprises couldn’t get to “good enough”. But it seems to me that there is a point below your local Metro paper that is good enough on quality of content but which costs much much less to produce and distribute. But I strongly feel that pro or semi-pro reporters will be essential to ‘good enough’ in some form. They just won’t be working for big news organisations.
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Yes, we are miles apart on “value-added.” And let’s admit that the phrase doesn’t even come from innovation at all, but from manufacturing. Adding value is what a manufacturer does in turning steel into automobiles, trees into furniture or cattle into steaks and leather goods.
I’ll gladly drop the “value-added” terminology if that’s confusing this discussion. But if you’re going to succeed at disruptive innovation, you damn well better be providing value, as steamships did with power and as cell phones did with mobility. Otherwise, “good enough” quickly becomes synonymous with “sucks.”
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John, I like how you expressed things.
There are lots of things that an online entrepreneur can do in context of competitive against incumbent news organizations that are disruptive, and they don’t necessarily include citizen journalism.
Digital media is, by its very nature, disruptive, which is why I encourage the start-up journalist to think disruption rather than sustaining from the get-go.
There is so much that can be done at a very low cost that a news audience will find of value, but incumbents won’t do because it doesn’t mean their standards of journalism.
If you took a panel of 10 city room editors and had them watch what we do everyday for a month, eight of them would write reports absolutely blistering us for this or that low-standard approach to journalism.
But it gets the job done, and the job is using the unique attributes of the web to answer the question for our readers as best we can “what’s going on in my community right now?”
That in itself is a highly disruptive question, because before online, no other medium could effectively answer it. Newspaper’s couldn’t because they came out only once per day (except in the earliest days of newspapers). Radio and TV couldn’t because of the financial necessity of abiding a predictable broadcast schedule. Only on the web can we answer that question at any minute where their is information available to fill the void.
And where a lot of traditional journalists trip up on this question is the notion of only publishing complete stories, or only publishing items that have risen to a certain level of newsworthiness.
We’ve jettisoned all of those false notions about news.
So what I encourage entrepreneurial journalists to do is not thing, “how can I make a news story better — more reporting, more and better multimedia, charts and graphs and databases — so that it is “value-added journalism.” That’s trying to compete directly with incumbents. You’re not providing a substitute for their product (another requirement of disruption), but something that only succeeds in the market place if the incumbent somehow fails. That’s a much harder way to build a market for your product or service.
Another important term for entrepreneurial journalists to understand is “competitive advantage.” You can obtain competitive advantage either through disruption or sustaining innovation, but unless you understand your competitor’s product, both its strength and weaknesses, you’re not going to be able to fashion a strategy that provides enough differentiation for consumers to be able to come to prefer your product over the other.
My thoughts are entirely narrow-casted toward the entrepreneurial journalist attacking a small local market, be it an urban neighborhood, suburb or rural community. Each of those markets, there is going to be some level of competition and market turbulence to account for and adjust a strategy around. Unless you are exceptionally well funded, you’re going to be looking for competitive advantages (if you’re smart) that fall on the disruptive end of the innovation spectrum, not the the sustaining. If you pick a sustain model (say, just trying to do great journalism), once you start to achieve success, if you do, your competitor can easily adjust. The disruptor is going to make it much harder for an incumbent make changes to adjust to the new competitive landscape (as John notes above, and expressed it better than I have).
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Fascinating discussion. “Value-added journalism” was originally about what qualities professional journalists could bring to crowd-sourcing, raw data or commodity news, and hopefully charge for. Think of journalists bringing their reporting to the mass of Wikileaks documents.
Here’s a good description, from 10 years ago, in the American Journalism Review. Philip Meyer of the University of North Carolina at Chapel Hill was quoted:
“Are journalists transporters of information, or are we value-added processors?.. As more data are routinely added to the Web, some have said that this is journalism at its most democratic, with every reader becoming his or her own editor. The counter view, and my own, is that the great surplus of information makes value-added processing more important than ever before. Let other people post lists. We’ll select, distill, interpret and explain them.”
Howard’s Batavian was started when the local newspaper was doing nothing on the Web. You could say it was doing “good-enough” news in a space that had none of that news before. Maybe it was adding web access to the traditional local news coverage and trading away some polish and reach. Now, The Batavian’s role is probably to be quicker, cheaper and more local in a narrower geographic area.
The most disruptive thing might not be the technology. What Howard does is not technically difficult. What’s disruptive is the revenue expectation. Craigslist exploited new technology, but what was most disruptive is that Craig didn’t have to make money from it. Howard’s disruption is that he can cover local news on a mom-and-pop scale — “good-enough revenue,” in other words.
I wonder what would happen if a traditional newsroom of say, 50 people, divided itself into 25 moms and pops? (It would have to get rid of the physcially demanding print process, of course.) Could you hire that many moms and pops with enough entrepreneurial energy (and would you have the modest “good-enough revenue” expectations) to make it work?
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Steve,
Thanks for following up on this. I have a blog post started in response to Howard and half finished, but rather than blog there, I’ll continue things here.
Howard, I think one of the issues why we’re slightly talking past each other is highlighted when you say this:
My thoughts aren’t. Certainly as someone who started off in local journalism and who still has a great passion for it, I do think about local journalism, but for more than a decade, I’ve worked for international news organisations. I quoted a piece from Australia saying that there was an opportunity to help people make sense of the the world. I was speaking of that in a global sense far beyond one’s own community. Of course, you don’t need to explain Batavia to Batavians. I wasn’t saying that you did, but by your own admission, you bring a particular focus to the discussion.
You make some great points about sustaining versus disruptive innovation, and I don’t disagree with them. As a matter of fact, I’ve blogged about them often. However, I don’t think you’re saying, and I wouldn’t agree with the idea, that the market opportunity for providing news for Batavia is the same as providing international news and analysis. As you say, you must understand your competitor’s strengths and weaknesses. We’re talking about different competitors and markets.
I agree with Steve in that I think the term “value-added” might be getting in the way of things in this particular discussion. A lot of what I was talking about is identifying a market opportunity. How you meet that that need is another story, and that is where the issues of disruptive or sustaining innovation comes in.
Howard, in your post you quote me quoting someone else almost entirely, however, you didn’t quote when I said that value-added journalism had almost become a cliché. I’m more sceptical of value-added journalism than you might have interpreted and definitely more sceptical than you presented. I’m also deeply sceptical of simple answers.
We can talk about sustaining innovation and disruptive innovation quite a bit, but one should never forget the role of execution. You’re model has been tried by many, but only a few have had been able to execute it successfully.
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[…] Meanwhile, British journalist Kevin Anderson wrote a post arguing that value-added journalism has to be developed with specific revenue streams in mind. Howard Owens of The Batavian countered that would-be entrepreneurial journalists need to focus more on basic local events journalism than “adding value” or analytical journalism, and TBD’s Steve Buttry tried to bring the two perspectives together. […]
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[…] should pursue several revenue streams, Entrepreneurial journalists need to master social media and ‘Good enough’ and ‘value-added’ work together in entrepreneurial journalism. For an earlier visit to the University of Iowa, I discussed entrepreneurship and […]
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[…] Be frugal. Most newsrooms I’m familiar with are way past frugal, so I have to reframe this. The problem The Daily had on this count was ignoring the frequent saying in business, “Fail fast, fail cheap.” But the mindset that led to this failure is well ingrained in newsrooms. Murdoch decided the future of the newspaper was in a highly formatted online product, so he threw a massive amount of money at it and tried to build Rome in a day. Didn’t work. I have seen over and over again that when an idea for something online is presented in a newspaper newsroom, the managers don’t want to do it unless they can make it pretty close to perfect; when moving to a new CMS, they will fuss over minute details and delay the launch; even redesigning the print product, they will agonize or argue over fonts. I would translate “be frugal” here as “be good enough,” using the phrase that in the mid-2000s the Newspaper Next project beat editors over the head with. I don’t think it took. (In 2010, Steve wrote a good update on the topic.) […]
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