Urlocker On Disruption

Update: Satellite Radio Disrupted by iPod

2009-02-21T18:15:00-05:00

Update: Feb. 17, 2009

NYT: Sirius XM averts a close brush with bankruptcy, for now...

Things looked irretrievable only a few weeks ago.

Meanwhile, equity investors have already been effectively wiped out in the past two years, losing more than 95% of their value.

Original post: Dec. 5, 2006

Satellite radio broadcasters are reporting unexpectedly slower sales for Christmas, causing the stocks to continue their descent to earth.

In Contrast, Apple's iPod is expected to sell its best quarter ever, with 16-20 million units to be sold this quarter alone, which is more than the total 12 million satellite industry has racked up in five years.

Sirius Satellite Radio Inc. had this to say in the Wall Street Journal today to account for the slower outlook:

Sirius said it wasn't sure why retail numbers weren't stronger, given increased awareness of the product and more Sirius radios in stores compared with last year.

What's going on?

It would appear that the two satellite broadcasters, Sirius and XM Radio, are being disrupted by the iPod. After all, iPods solve the same problem, of providing a large variety of music content to people on the go.

Here are two important new indicators of the likely sustained success of the iPod:

70% of 2007 U.S. model cars will come equipped with iPod connectors
Six major airlines announced last month that they would equip passenger seats for iPod connection as well

Meanwhile the satellite broadcasters have each more than $1 billion in debt and are still losing money. Stocks are off 40-50% this year.

Apple's total cumulative iPod sales tracked on WikiPedia will cross 80 million shortly.

**Other Information**

Unless satellite broadcasters start by inventing new profitable niche services, they may not survive. Read my full column from the Financial Post, Satellite broadcasters face grave challenge from iPod (pdf).

Complete archive of On Disruption columns from The Financial Post.

The Cranky Consumer says the problem is that satellite radios are hard to install and suffer distortion.

PopSurfing says Sirius and XM need to merge, which echoes the public musings of Sirius's CEO Mel Karmazin last week but certainly won't solve the iPod problem.

Mergers are a typical warning sign of an industry in disruption.

Happy Bail-Out, Detroit. Sorry, But The Time For Action Was 20 Years Ago

2009-01-01T20:01:47-05:00

by Zack Urlocker

Zack Urlocker, a regular contributor to this blog and half of the creative team at the Disruption Brothers, offers his insights on the world of technology marketing and disruptive innovation.

I've been in Michigan recently and nowhere is the evidence of the the massive disruption of the US auto industry more obvious. There are a dozens of plants that have been shuttered in the North America in recent years --a sharp reminder of the decline and fall of what was a once great industry.

Now as the Big Three begin the new year freshly armed with a few billions in loans, I can't help but wonder if this is the right course of action. In Michigan and other auto-producing states and provinces, the effects of massive layoffs are significant. Job losses are never easy and there will be long running impact on the local economy. But, that doesn't mean a bailout is the right thing.

If a company or an industry can no longer be competitive, for whatever reason, then bankruptcy may be the best choice. Why invest taxpayer money in a business that is no longer working? The auto industry has a strong legacy, but there's nothing in the constitution that guarantees it's ongoing operations.

Consider the op-ed piece "While Detroit Slept" by economist Thomas L. Friedman for the New York Times. Friedman makes the case that a bailout is simply putting good money into an unhealthy business model --one that is destined to lose.

Someone in the mobility business in Denmark and Tel Aviv is already developing a real-world alternative to Detroit’s business model. I don’t know if this alternative to gasoline-powered cars will work, but I do know that it can be done — and Detroit isn’t doing it. And therefore it will be done, and eventually, I bet, it will be done profitably.

And when it is, our bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.

In the article "The Case Against a Bailout" by Jack and Suzy Welch at BusinessWeek, they make the case that the best course of action for Detroit is to go into bankruptcy in order to force significant change --change that will not happen with the "incremental" approach of a bailout.

A government handout, however, isn't the way to make that happen. Washington would impose conditions and promise strict oversight, but it simply can't push through the kind of transformative change the industry needs. There would be too much political opposition, and regardless, the bailout sums being bandied about—$25 billion of taxpayer dollars, for starters—would only keep the Big Three heaving along, basically as they are. It's a life-support solution, not a cure.

That's why the boards of the automakers should take the courageous step of putting their companies into bankruptcy... Talk about a fresh start. For more than a decade, U.S. carmakers have chipped away incrementally at massive legacy costs. But reorganization would open the doors to meaningful structural change through the renegotiation of contracts with creditors, dealers, and unions. And it would offer better odds of paying back taxpayers...

But for the U.S. industry to get from here to there—"there" being a globally competitive future—it has to get off the beaten path of incrementalism. With reorganization and a merger, a long and bumpy trip awaits, but the destination should make it worth the ride.

When a company or an industry can no longer be competitive the management and board need to make dramatic change. And let's be honest. It's not like this is the first time the U.S. auto industry hit the skids or that there were serious warning signs. Recall Chrysler? Remember the Japanese invasion of the '60s and '70s, led by Toyota and its innovative production system? Contrast that with the doped-out optimism of workers and managers at GM from that era.

Even Peter Drucker's classic 1946 study of General Motors, The Concept of the Corporation, hinted at the likelihood of failure ahead. As Drucker wrote in the preface to the 1983 edition of the book, "And the reasons for General Motors' fumbling and inability to pull itself out of the mire are largely the problems... pointed out fiftyyears ago -- for which act of high treason I then became a 'non-person' for most of General Motors' top management."

The biggest management challenge illustrated by Detroit's downfall is that, unlike relatively rapid competitive setbacks (think of Motorola or Palm), gradual, long-term decline is hard to diagnose and easy to deny. It's like the onset of Alzheimer's. Read the details in this tough insider's assessment of GM presented to the company's executive committee 21 years ago by Elmer Johnson, Executive Vice President and General Counsel. Particularly notable is Johnson's desire to act with "a sense of urgency" on what he identifies as the company's "seeming inability to execute." Six months later, Johnson left the company. CEOs came and went, but the fundamental problems remained unsolved.

Unfortunately, as we enter 2009 it has become too easy for CEOs to blame the economy, Wall Street, or other external forces, when in fact the only thing that is keeping them from success is their own lack of action. If you're in an industry faced with disruption, you better figure out a radical plan to change your business. Otherwise, be prepared for a long-suffering downward spiral. And don't expect a bailout will fix things.

Three important management questions arise:

Are any of the following industries facing the same gradual decline that Detroit denied for 35 years: newspapers, television, telecommunications, computing?

If you are a senior manager in an industry that might face a risk of disruption (denial may be a problem), what would be the warning signs you would watch for to signal emergency action is required?

If you or your management team were presented with the same kind of well-articulated and dire warnings that GM received from Elmer Johnson, how would the organization react?

More information about Elmer Johnson's career at GM is detailed in the 1995 book "Comeback" by Paul Ingrassia and Joseph B. White. You can read portions of this book on Google.

Zack Urlocker is a Silicon Valley software executive and regular blogger on open source technology at TheOpenForce and InfoWorld and about music at GuitarVibe.

Flip Video Kills the Camcorder

2008-08-24T17:00:52-04:00

by Zack Urlocker

Zack Urlocker, a regular contributor to this blog and half of the creative team at the Disruption Brothers, offers his insights on the world of technology marketing and disruptive innovation.

If you're into photography or high-end camcorders, you probably haven't heard of the Flip Video from Pure Digital Technologies. But for consumers who can't be bothered with complex camcorders and mind-numbing jargon, the family of Flip Video devices has become a major disruption in the photography business.

What Flip Video does, is go back to the basics with a low-end easy-to-use point and shoot pocket-sized video recorder that gives up on all the non-essential bells & whistles to enable consumers to do two things really easily: shoot video and post it on the web. Pure Digital's business model is a classic example of serving the underserved. They've focused on providing basic functionality and ease of use to appeal to consumers who want to get results without the complexity or expense of a full blown camcorder. In fact, 50% of Flip Video owners already have a camcorder, presumably in a closet gathering dust.

Since Pure Digital stripped their Flip Video down to the basics, it's also a heckuva lot cheaper than traditional camcorders which can cost close to $1000. You can get a basic model Flip Video for $100 on Amazon, an Ultra model with slightly better video and sound for under $130 and a smaller, lighter Mino for a street price of around $150. All models have software built-in to the device, so when you connect it to a computer with the built-in USB plug, you can quickly view, edit or post videos on the web.

Flip Video has become the second best-selling camcorder on the market after the Sony DVD610. Pure Digital has racked up sales of more than 1 million Flip Ultra, making it the best selling camcorder in America with approximately 20% market share. Now that Pure Digital's Flip Video has disrupted the market, it will be interesting to see how long they can hold their lead before the incumbents turn their attention to this rapidly growing market.

To really understand the Flip Video, it's better to think of it as evolving from a cell phone's built-in camera rather than from a traditional camcorder. But unlike cell phones, it's got 60 minutes of recording capabilities at 640x480 resolution and the audio and video quality are better. While the quality is not world class, it's perfect for YouTube and it's better than not having any recording, which is exactly the point. If you're looking for HD quality video, image stabilization, a 6x zoom lens, look elsewhere. But for recording something quickly and easily, the Flip Video does a good job.

As the New York Times columnist David Pogue wrote:

The lesson is one that the electronics industry seems to miss over and over again: that creeping feature-itis often impairs your product instead of improving it. In the Flip's case, the size, shape, ruggedness, low price and one-button simplicity take it places where no real camcorder would go. Purses, coat pockets, beach bags. Skiing, playgrounds, house walk-throughs, museums, casual interviews, YouTube stunts, classrooms, airplanes -- and, with the $50 acrylic sealed case, even underwater.

I've posted a couple of samples below from a conference keynote and an outdoor rock concert to give you a feel for how the Flip Video does in the real world. In fact, you can find hundreds of videos on YouTube and similar sites created with the Flip Video --proof that for many users, convenience and low price trumps complexity and even quality.

Zack Urlocker is a Silicon Valley software executive and regular blogger on open source technology at TheOpenForce and InfoWorld and about music at GuitarVibe.

Best of OnDisruption

2008-03-09T16:14:15-04:00

Guest post by Zack Urlocker

As you may have noticed, my onDisruption blog posts have become less frequent lately as I'm busy with other projects. I will continue to post the occasional article and provide updates to past stories, but these will be less frequent than before. For newcomers to the site, here's a list of some of the most popular postings on the site.

If you're new to disruption this is a good way to start thinking about your own disruptive strategy. And note that while some of these are classic technology disruptions, many leverage other forms of disruption, whether in distribution, packaging etc.

So don't fall into the classic Silicon Valley view that disruption is only about new, faster, more complex technology. Sometimes it's just the opposite. And while disruption is a good model, it's not the only strategy for success. Apple's iPhone is only marginally disruptive, but its still a huge hit for the comapny. But when disruption works, the gains can be impressive. And the benefits accrue not only to the company, but to the careers of the individuals who make it happen and to investors who spot the trend early.

As you formulate your own disruption strategy focus on the basics:

What problem are you solving?
How can you do it better than existing solutions?
Who is underserved by the incumbents and what are the unmet needs?
How can you deliver a "good enough" solution to a narrow but growing audience?

Let me know your thoughts on these and other articles. I hope they will inspire to you let a thousand disruptive flowers bloom.

Zack Urlocker is a software executive and regular blogger on open source technology at TheOpenForce and InfoWorld and about music at GuitarVibe.

Classic Disruption: Why Wal-Mart's Movie Plan Will Fail

2007-12-29T07:30:00-05:00

Update Dec. 29, 2007:

Wal-Mart shut down its video download service.

Original Post Nov. 29, 2006:

Wal-Mart joins the battle for online videos in a disturbingly familiar way.

In the worst kind of compromise, Wal-Mart is cramming the new thing, movie dowloads, into the old business model, retail store purchases. To download a movie at home, you have to buy a movie at the store, at least to start, according to the Wall Street Journal:

The service represents a sort of halfway solution: The giant retailer will require customers to buy a DVD before providing them a "feature sticker" with instructions on how to buy downloads.

As Wal-Mart explained in the NY Times, it wants to maintain the old:

“We feel like it is really important that the DVD business stays healthy and stays quite central to consumers’ lives,” said Kevin Swint, a divisional merchandising manager at Wal-Mart.

Cramming seldom works for disruptive innovation because it compromises on what consumers want and it restricts the growth potential of the new innovation. Whenever you see an incumbent supplier adopt a new innovation but in a way that severely restrict or impairs its use in order to preserve the old and expensive cost structure, you've got cramming. Look for words like 'hybrid', or 'best of both world's' as warning signs.

Microsoft's early efforts in WebTV and portable devices would be examples of cramming the PC operating system business model in places where it did not fit. Note the absence of success despite years of effort and huge expenditures.

In the case of video downloads, Wal-Mart's new competitors that are not in the business of operating retail stores would see no reason to restrict themselves with such compromises.

BitTorrent, a pirate download site which today announced legit content deals with Fox, Paramount and several other studios, and Apple Computer, which dominates the download music business, for example, won't worry about maintaining sales at retail outlets the way Wal-Mart does.

For examples of cramming, consider these:

No record company created a simple buck-a-song download service because they could not see a way to do this without hurting their retail sales. (Apple, free of this worry, succeeded despite the fact that its biggest competitors were free pirate sites like Napster.)
Nokia crammed wireless email, web, fax relay, phone, SMS and applications into the doomed Nokia 9000 Communicator, a brick of a phone that did nothing well and sold poorly in the early days of wireless e-mail;
Every major newspaper publisher created online websites that replicated their old business onto the web. Very few have achieved any success.

**Other Views**
Harvard Prof. Clayton Christensen is the pioneer on disruptive innovation and he outlines why cramming fails in this Working Knowledge paper.

The Disruption Group's site lists the benefits of disruptive strategy including higher-value to customers, new revenue streams and sustainable high return on equity.

Mathew Ingram says the BitTorrent deal is not important because there is no BitTorrent network to speak of.

GoodMorningSiliconValley says the transition from pirate site to legit business is a difficult one.

TechCrunch says BitTorrent raised $25M bringing its total capital to $34M. The company's big challenge is to stay on the right side of copyright owners.

SeekingAlpha says Apple will eclipse BitTorrent and Wal-Mart's efforts.

Don't bet on BitTorrent, says Andrew Chen. After nine months of trying to commercialize a download service based on BitTorrent, he says it's too complicated for mainstream consumers and it doesn't provide the instant gratification they want.

Heineken: Disrupting a Commodity Business

2007-10-23T06:03:00-04:00

This week, guest columnist Zack Urlocker combines two of our favorite topics: disruption and beer!

Most of the time when people talk about disruption they focus on high-tech companies: Google, RIM and others. Certainly these companies have used technology innovation to disrupt their markets and solve new problems. But sometimes disruption is about improving the experience, accessibility or convenience of a product through distribution or delivery, such as NetFlix did in the DVD rental business.

Changes in distribution or delivery can in turn can unlock new uses and expand the market; especially if the changes are difficult or expensive for competitors to copy. Part of NetFlix's success is no doubt because they got a very long lead ahead of rival Blockbuster which did not recognize the convenience introduced by using the post office as a delivery channel and did not want to undermine its core business.

In this example, we'll look at one of my favorite products: beer. Heineken competes in one of the most commoditized and conservative markets around. But instead of trying to innovate based on a new flavor or new style of brewing, Heineken focused on creating a packaging system that provides a better customer experience and likely increases consumption.

What is the Heineken DraughtKeg? From the consumer perspective, it's 1.33 gal (5 liters) of premium draft imported beer at a cost per serving that's just slightly more than a typical twelve-pack. That gets you around 14 12 oz servings, depending on how much foam you like. The price is just under $20.

What makes the DraughtKeg unique is that, as its name implies, it's real draft beer from a keg, only scaled down for convenience. Testers report that it tastes fresher than bottled beer, which is due to the way it is dispensed via CO2 cartridge --just like draft beer in bars. But unlike a normal 70 pound keg, you can get it at your local store without a pickup truck and a team of guys. The mini-keg weighs around 12 pounds (5.5 kg) and is fresh for 30 days after it's opened. So the Heineken DraughtKeg provide a keg taste experience without all the hassle and without the need to consume the entire keg in one sitting. (Though you can if you want.) No doubt the DraughtKeg will be featured at many home parties in the fall. It's perfect for watching a game on TV, an office party, or any other social occasion. The DraughtKeg has some novelty, which in itself add to the fun.

Development of the DraughtKeg took Heineken nearly 10 years and it cost them more than $15 million dollars to build a new production line. Because Heineken is selling a premium beer, the added fixed costs can be ammortized over the price of the beer at about a penny an ounce compared to bottled beer. This 8-9% the cost increase is not negligeable to consumers, but it is well within the reach of the premium beer drinkers Heineken is targeting. This turns out to be an important part of Heineken's strategy: it's not competing at the low-end of the market. As a result, Heineken is unlikely to be challenged by a low-end Budweiser Keg. The margins at the low-end are too thin to support this type of a delivery system.

Features or Convenience? If you're in a business that is increasingly being commoditized you might be tempted to try to come up with new features (or in this case, flavors) to stand out. But in a commodity market, that may be the wrong strategy, especially if the product has already surpassed the quality expectations of most customers.

The DraughtKeg is not a new trendy style or flavor of beer. In fact, it's the same Heineken beer they've been brewing for more than 100 years. What's new here is the packaging and the delivery system. In other words, they improved the experience in how their commodity is delivered to the consumer.

And since they did not change the proven Heineken recipe they reduced one of the key risks in consumer marketing that customers would not like the change. Of course, there is still risk in any consumer product changes, but not as much as, say, introducing a New Coke recipe or launching the Zima malt beverage. Both those moves cost their companies many millions of dollars in losses.

According to Forbes, the Heineken DraughtKeg provides the company not only with added revenues (estimated $300 million) but also better shelf space from retailers due to the higher margins. So it looks like this move will payoff for Heineken and help them stand out in a crowded market.

Questions to consider:

Are there barriers your customers have in accessing or using your product?
Can you improve the convenience and accessibility in such a way that customers will use more of it?
Are there new uses for your product beyond the mainstream that can provide opportunities for growth?
Are there ways you can stand out in the market without changing the product itself?

The Heineken commercial below clearly illustrates some of the perils of home-kegging before the DraughtKeg.

Zack Urlocker is a software executive and regular blogger on open source technology at TheOpenForce and InfoWorld and about music at GuitarVibe.

** Other Sources **

Forbes has a good article "The Keg That Scored" on the development of the DraughtKeg and the engineers behind it.

Established Magazines Sink But New Titles Bubble Up

2007-10-12T11:39:56-04:00

The game has changed for publishers of business magazines, as described in today's Wall Street Journal. The old days of selling (or giving away) subscriptions to well-heeled executives and piling on the ads for cars and financial services no longer seem to work.

Witness the declining ads at top-tier magazines like BusinessWeek and Fortune, as well as the thinning ranks of relatively younger titles with the demise of Business 2.0 and periodic reports of financial strain at Red Herring (again.)

Here are some of the warning signs of disruption that the Journal observes:

Established management playbook fails
Established suppliers continue to improve their product by old standards (redesigns and reorgs)
New entrants with strange business models make inroads (Internet)
New competitor takes share and is dismissed as 'inferior' (Conde Nast's Portfolio magazine)

Out With the Old...

I happened to be reading Warren Buffett's latest annual letter to shareholders yesterday and his comments on newspapers, including the Buffalo News, which his company owns, seemed relevant to magazine publishers:

"Eventually eroding fundamentals will overwhelm managerial brilliance. And fundamentals are definitely eroding in the newspaper industry, a trend that has caused the profits of our Buffalo News to decline. The skid will almost certainly continue.

Almost all newspaper owners realize that they are constantly losing ground in the battle for eyeballs. Simply put, if cable and satellite broadcasting, as well as the internet, had come along first, newspapers as we know them probably would never have existed. However, the economic potential of a newspaper internet site – given the many alternative sources of information and entertainment that are free and only a click away – is at best a small fraction of that existing in the past for a print newspaper facing no competition... the days of lush profits from our newspaper are over."

And In With the New...
Of course not all magazines are dying. And there are occasionally startups that show a path to a new emerging market.

Muslim Girl, published by ExecuGo Media strikes me as a new disruptive medium because:

It reaches a new market that was previously deemed unimportant to mainstream media: 400,000-500,000 Muslim girls in North America
It is global in its appeal
There is a worldwide shortage of popular media content directed at Muslims

One though: Disruptive products typically need disruptive distribution channels to establish themselves. The reason:Muslim Girl will struggle for space on news stands and will not initially be able to lure mainstream advertisers away from Seventeen, CosmoGirl and other established titles. Muslim Girl looks great in print and on the web, but wouldn't a mobile version on cell phones appeal to hundreds of thousands of teenage Muslim girls? Teenage girls and cellphones go together well.

WSJ: Wal-Mart Disrupted?

2007-10-05T08:12:18-04:00

The Wall Street Journal ran an eye-opening front page that explored the demise of Walmart (full story). It's a great read and the major points are:

Consumers are changing: Price may matter less
Quality may matter more
Big consumer goods suppliers are turning away from Wal-Mart
Growth at competing stores is outpacing Wal-Mart

And from an investor's point of view, two clear warning signs:

The stock has collapsed in the past five years
There's more downside

Is Wal-Mart being disrupted? Clearly the company has continued to play the same game in a changing environment. And the results have not come through. Here are a few questions for retailers to consider:

Is it time for a "Buy USA" retailer that supports domestic suppliers over cheaper, usually Chinese-made goods?
Are there signs that consumers are ready to move in that direction?
DId your view change following the Chinese-made recalls this year?

**Other sources**
Not everyone agrees that Wal-Mart is so easily undone.

SeekingAlpha has a good take with commentary.

Careers: Should You Pack Your Parachute?

2007-10-01T06:12:00-04:00

Following his recent article "Are You A Sitting Duck?" guest columnist Zack Urlocker shows the steps you should take to improve your own position if your company is being disrupted.

Just because it's time to pack your parachute doesn't mean you should jump immediately. But you may need to at some point. Let's face it, it's a heckuva lot more fun to be a disruptor than to get disrupted.

Five years ago, back when I was in the enterprise software business, I saw a repeated pattern whereby customers would go for the least complex solution using open source technology. Customers would readily admit that the open source solutions weren't as good as the commercial products we were trying to sell. But they still made their choice. I realized that there were several key trends in the software industry that were likely to wreak havoc on the old model of selling expensive perpetual licenses. (And let's be clear, it was a good model for 20 years!) The new trends were:

Open source software
Hosted software as a service
Distributed and offshore development

And even back then it was clear that the force of these trends would be unstoppable. Some companies would succeed and some would fail, but it seemed obvious that it was better to be competing with the force of change on my side.

While it's clear that jumping to a new disruptive company has its risk, there's also risk in staying with an old line business model. You don't want to be the last person selling IBM Selectric typewriters, no matter how good you are at the job. At some point, if you stay too long in the old world, you fail on the basic IQ test and are considered damaged goods. Many times I've seen hiring managers pass over the resumes of candidates that were in companies that were considered to be "the walking dead." You may think that 15 years loyalty to a company will impress a new employer, but not if its because you were asleep at the wheel.

And even if you don't leave your current position, you can be more valuable if you've got an awareness and understanding of what the disruptors are doing and how you can apply some of those techniques in your existing company.

Here's a set of steps you can take to improve your situation:

Make sure you're up-to-date with your skills. In many cases, disruption is based on a significant shift in the market place. That could be a technology shift or a change in market dynamics or distribution. The most important thing you need to do is make sure you have a real understanding of the underlying changes. You can't just be an buzzword compliant either. You need to have hands-on experience with the new way of doing business, even if it's on a limited basis outside of your main duties. In new industries no one expects you to be an expert, but they won't necessarily pay senior level salaries for someone with old school experience either. If there are courses or workshops available to help you learn the new skills, sign up. Even if your company doesn't foot the bill. After all, it's your career, not theirs.
Get involved in the disruptive projects in your current company. Many incumbents will experiment with disruption. They may kickoff a skunk works project or some kind of business partnership, licensing or reseller deal to get them in the game. Make sure you're a part of these efforts so you can get some exposure. By being open to trying new things, you may be able to help your company maintain its revenues by starting a new disruptive business inside the organization. Don't expect a lot of others outside the new group to go out of their way to help you. You may even view you as unwelcome competition. The likelihood of a disruptive business coming out of a large incumbent is not thigh, but you'll at least get some exposure that can be helpful. But make sure it's real action, not just a task force to study what disruptive firms are doing.
Start disrupting -- even if you aren't getting paid for it. If there's no sign of disruption going on in your company, it may be time to suggest to your boss that you kick something off. Don't expect that you'll get a cushy budget to make things happen. In fact, be prepared to do this on top of your current assignments and within your existing budget. And if you still can't get the approval to do it on company time, all the more reason to start doing it on your own. If you're in publishing get involved with new media. If you're in software, start experimenting with open source software like the LAMP stack (Linux / Apache / MySQL / PHP). Don't try to boil the ocean and change everything in your company. Rather, figure out how to take small, incremental steps that can help build momentum and experience in new areas.
Build a new network. Most likely your old contacts are going to be in the same situation you're in: trying to come up to speed in a new skills while putting on a brave face. While you don't need to abandon your old contacts, you will need to develop new ones. Get out to the conferences and seminars and start building bridges. Meet people from the disruptive firms. Understand what's going well and why. Don't be critical or defensive. And don't tell them why they've got it wrong or why they will fail. Ask lots of questions and you'll likely learn some ideas that will help make your current company more successful or may be useful down the road. If there are panel sessions on conferences that mix the old and the new, get involved.
Learn it, teach it, write about it. Even if you don't have the opportunity to take part in new disruptive efforts in your current position, you will need to demonstrate to others that you grok the new model. One way to do this is to explain the new model to others. You could become "the disruptive guy" inside your organization by helping explain to others. You don't want to be a zealot or naysayer about how your current model is broken, but if you can give input to others in the organization, that's a great way to build experience and credibility.
Do your homework before you jump. If you've developed an in-depth understanding of the changes that are taking place in your industry and you've got some visibility outside your organization, sooner or later you'll be in a position where you can cross over to the disruptive side. But don't just jump to the first opportunity. Make sure you evaluate carefully the risk in any new venture. You'll want to have a good understanding of their finances, existing customer base, as well as actual and projected growth. Talk to their customers, the management. These elements will help you get a feel for what stage the industry is in and whether the apparently disruptive play is really taking hold in the market. Most candidates will spend a lot of time negotiating compensation and trying to hold out for their "old school" salaries and bonuses. In my view, much of that is misguided. The biggest determinant in your overall compensation will be based on performance incentives (options, bonuses) that depend on whether the new business is successful. So you are better off spending time to assess the risk level of the firm rather than worrying exclusively about your compensation.

Zack Urlocker is a software executive and regular blogger on open source technology at TheOpenForce and InfoWorld and about music at GuitarVibe.

Disruptive Media: Newspaper Redesign

2007-09-28T11:02:44-04:00

Many major newspapers across the U.S. and Canada have redesigned in the past year to freshen up their look. It's part of the ongoing battle to win back readers or at least to offset declines vs. the Internet and other news sources.

But can an underdog newspaper redesign itself to be more disruptive?

The National Post, out of Toronto, is aiming to do something different with its new design launched this week:

Narrower page
larger typeface, larger line spaces
Shorter stories, more pull-out sidebars
More specific investment angles on business stories
Unusual vertical masthead

Some early reaction has been favorable, but to many readers, the new design seems like pretty mild stuff and not nearly as radical as the way insiders see it.

Seismic changes may indeed be what an underdog newspaper needs. But this goes beyond mere design and goes to the function of the newspaper as well.

A few months ago, I did an informal survey of Canadian investment professionals and it was clear that the National Post and its business section, the Financial Post, was less relevant to this group than it had once been. Also there was an increased perception that the newspaper was a pale imitation of its larger competitor, the Globe and Mail.

Clearly, a more disruptive approach is necessary, but has the Post been focussed enough in its new undertaking?

Experience in disruption show that the newspaper can achieve great growth and deliver high value to customers if it focuses on any these attributes:

solve important new problems for customers that they can't solve today
increased accessibility
increased customization

To the extent that the National Post helps readers solve problems, and is more accessible, it will succeed. Even a relatively small change, such as if the business section were to focus entirely on buy/sell ideas for stocks, would clearly differentiate the newspaper and help solve important, frequent problems for readers interested in investing.

What problems do readers need to solve that they can't solve today? Newspaper publishers (and most managers in any industry) don't normally think this way.

How far can a newspaper go with this? Here are four somewhat crazy ideas for new businesses, some of which lend themselves more towards new web services than printed pages:

Community-focused Medical Information: Help families find reliable, competent family doctors, specialists and physiotherapists. A Canadian version of www.RevolutionHealth.com
Family-focused Local Entertainment Services: Help busy mothers plan their days with activities suitable for toddlers through to tweens. An extension to informal “mommy blogs,” but created to be more consistent so that the service can be relied upon daily.
Rate my Broker: Help baby-boomer investors find reliable, trustworthy local stock brokers and financial planners. An investment version of www.RateMyProfessors.com
Desi Family Network: Help Asian families continue to hold multi-generational ties by sharing entertainment, social and family information.

**Other sources**

Newspaper Next is a joint undertaking of the American Press Institute and Innosight, Clayton Christensen's management consulting firm, to help revitalize the newspaper industry. Their industry report is available for download.

Some thoughts on newspaper redesign from BrassTacks Design. Highlights: Focus; Admit shorter is better; Innovate like you mean it.

Like all potentially disruptive innovations, redesigns are risky because they can alienate current customers. Here are some scary charts on newspapers which have seen circulation declines accelerate after redesign from newsdesigner.com, a blog that tracks major newspaper redesigns.

FYI: On Disruption, a newspaper column on disruptive innovation, appears in the Financial Post. Archive of articles.