The Boston Globe is now a week into its epic delivery mess. You could blame digital disruption, but you’d be wrong. The Globe’s management did this to itself.
First, let me single out the Globe’s journalists for praise. In the wee hours Sunday morning, reporters volunteered to help deliver papers. (I love Hiawatha Bray‘s caption for this photo from his Facebook feed: “Here are a few of the journalists who will be delivering your paper this morning. And why not? They wrote the bloody thing.”)
Why I blame Globe management
Another thing the Globe’s reporters did is to report on their own crisis. Kevin Cullen described the experience of delivering the paper in darkness in the Boston suburb of Malden. And the paper also reported on its dispute with its new distributor. Here’s what’s clear from this reporting.
- The Globe did this in part to save money. “[New distributor] ACI also brings a ‘material’ cost savings, [CEO Mike Sheehan] said, which Globe owner John Henry had intended to put back into the operation.”
- The Globe ignored warnings about how bad the disruption would be. Globe notices before and during the switch to ACI, said the paper was hoping for a “seamless” transition. But as ACI’s president now says, he warned the Globe. “I used the expression ‘massive disruption.’ . . . You’re going to get thousands of calls, e-mails — social media is going to be blistering you.”
- ACI was completely unprepared, without enough drivers in place. And astoundingly, as Cullen’s account confirms, they have no tool to create efficient delivery routes. Reporters helping out just got a few hundred papers and a list of addresses. ACI could learn a thing or two from UPS and its routing software.
- Failing to beef up customer service when you do this is just dumb. You could call this “a simple business mistake,” as one of my Facebook commenters did. But if you’re going to make a change this risky, you’d better invest in the call center and Web site to deal with the challenge. The Globe didn’t.
Why not just go digital?
Go ahead, call print delivery an anachronism. You’re ignoring the business reality.
Imagine that John Henry said “As of this moment, we are a digital paper.” Instantly, most of the paper’s advertising sales would vaporize. A huge portion of its subscription revenue would, too.
The Globe is the dominant paper in Boston. It has outsourced its international and much of its national coverage to The New York Times, The Washington Post and AP. The classifieds are a joke. But as a package, it’s still relevant to several hundred thousand paying subscribers. It’s relevant in print, and its digital product is pretty good, using a single responsive design to adjust to phones, tablets, and computers.
John Henry is rich and he didn’t get that way by being stupid. His people have done the math and know there is a subscriber number at which point it pays to kill the print paper. But until subscribers drop to that number, the print edition still makes economic sense. Nobody at the Globe is hoping against hope that print will rebound. They’re just calibrating the curve to see what comes next.
Understanding digital disruption
In Clayton Christensen’s classical theory of disruption, a cheaper, inferior product starts to eat away at establish players’ share. The established players do nothing, because they’re entrenched in their model. Eventually, the inferior product gets better and destroys the paralyzed market leader’s dominance.
Christensen has endorsed James McQuivey’s analysis of digital disruption, which explains why this transition happens so much faster now.
Faster, though, does not mean instantaneous. If you are the big company that’s threatened, you have to do more than cut costs. You have to invent the future and cannibalize your existing business. You have to find new ways to stay relevant. And you have to milk the revenue from the existing business to finance all that.
That’s what IBM did with the transition from hardware to global services.
It’s what Microsoft is doing with the transition from desktop applications to cloud services.
It’s what Walgreen’s is doing with the shift to mobile photo printing and prescriptions.
And it’s what the Boston Globe is now doing with news.
Sure, some companies are stupid and they imagine that, somehow, their existing business will prevail against digital headwinds. Those companies are doomed.
But the ones that invest to build for the future must keep the old business running in parallel for a while, to generate cash. Shutting it down is suicidal.
So don’t blame John Henry for staying in the print newspaper delivery business. Just blame him for screwing it up so badly.