dual transformation: 2 routes to resilience - clark gilbert summit 2013

Dual Transformation:Two Routes to Resilience

Clark G. GilbertPresident and CEO

@ClarkGilbert

The Trusted Digital Voice

Trusted voices of light and truth reaching

hundreds of millions of people worldwide

Our Mission

3

“In the early 1980s AT&T asked McKinsey to estimate how many cellular phones would be in use in the world at the turn of the century. The consultancy … concluded that the total market

would be about 900,000. At the time this persuaded AT&T to pull out of the market.”

— The Economist, 1999

“The ‘telephone’ has too many short-comings to be seriously considered as a means of communication. The device is

inherently of no value to us.”— Western Union internal

memo, 1876


Sustaining versus Disruptive InnovationP

rod

uct

Per

form

ance

Time

Performance that customers

can utilize or absorb

New performance trajectory

Disruptive Innovation

Pace of Technological

Progress

Sustaining Innovation

Breakthrough

Incremental

Source: The Innovator’s Dilemma

EstablishedBusiness

EstablishedBusiness

DisruptiveBusinessDisruptiveBusiness

Net NewGrowthNet NewGrowth

Starts Outside

Established Business

Starts Outside


Displacement

Displacement

"Overall, the newspaper industry's involvement with the Internet has been one where it had a lot to lose and it's been trying not to lose it, as opposed to starting from scratch and having a lot to win."

--President of Online Newspaper Division

Finding New Market Growth


Newspapers: Familiar Pattern of Disruption

Separate Division, Separate P&L, and

Separate Team


AutoTrader Structure

Always Operated

Independently from


Like Defying Gravity

“Businesses Evolve, Business Units Don’t”

--Clayton M. Christensen


Dual Transformation: Two Transformations, Not One

Legacy Organization

Separate Disruptive

Organization

• Dramatically Lower Costs in the Core

• Reposition Core around a Post-disruption “Job-to-be-done”

• Create a Separate P&L

• Separate Management Structure

• Hire Disruptive DNA

Transformation A Transformation B

“Capabilities Exchange”

between Legacy Core and

Disruptive New


Transformation A

1. Step-change reduction in content costs

2. Differentiated Content: Invest where you can be “the best in the world”

Tranformation B

3. Digital only, not digital first

4. New Channels are Key to Disruption

3. Hire digital DNA

Dual Transformation in Content


Step-change Cost Reductions:The Huffington Post vs. NYT

New York Times

Huffington Post0

10

20

30

Unique Users

New York Times

Huffington Post

0

400

800

1200

Head Count


Significantly lowering cost per story in traditional news gathering, but . . .

Lega

cy N

P

Lega

cy T

V

Inte

grat

ed N

ewsr

oom

String

ers

Deser

et C

onne

ct

Enter

prise

$0

$50

$100

$150

$200

$250 $227

$143 $11

9 $75

$20

>$1000


“The web favors things that are narrowly

comprehensive. That is everything about

something. Newspapers, by contrast, are variety

shows; something about everything.”

– Lisa Williams, founder, PlaceBlogger

Differentiation: Where can you be the 'Best in the World'


• Strengthening the Family

• Faith in the Community

• Care for the Poor

• Values in the Media

• Excellence in Education

• Financial Responsibility

Differentiation: Deseret News Six Areas of Emphasis


Faith-based Segmentation of U.S. PublicSix Defining Factors Used in Segmentation

Segment 1Tolerant Believers

27%

Segment 2Devoted

Denomin-ationalists

16%

Segment 3Secularists

12%

Segment 4Fence sitters14%

Segment 5Humanists

18%

Segment 6Strugglers

13%

National Total

LDS Sample

Factor 1: Religious Devotion 5.80 5.82 2.37 4.37 3.74 4.95 4.72 6.08

Factor 2: Helping Others 5.56 5.15 3.82 3.79 5.02 4.80 4.84 5.36

Factor 3: Commitment to Marriage

4.79 4.42 3.47 4.22 4.82 2.95 4.26 4.79

Factor 4: Teaching Children 5.27 4.86 3.78 3.23 5.34 4.44 4.64 5.43

Factor 5: Decline in Moral Values 6.03 6.08 2.93 4.00 3.98 5.14 4.91 6.45

Factor 6: Many Religions Lead to Heaven

6.21 2.92 3.46 5.72 5.57 5.63 5.10 3.70

Source: DMC Research Panel, Cathy Chamberlain


Tolerant Believers27%

Devoted Denomina-tionalists

16%

Secularists12%

Fence Sitters14%

Humanists18%

Strugglers13%

56% “Niche” = Like-Minded Believers

Source: DMC Research Panel, Cathy Chamberlain

Like-minded Believers


Like-Minded Believer Job-to-be-Done

“When I am well informed I feel

more confident living my beliefs,

so I can make a difference

in my family

and my community.”


Family and Faith, Reported with Rigor


Deseret News Sunday National Print Edition

2012 Growth: Fastest Growing U.S. NP

-20,000 40,000 60,000 80,000

100,000 120,000 140,000 160,000 180,000


National Site Focused on Core Job-to-be-Done

2


Transformation A

1. Step-change reduction in content costs

2. Differentiated Content: Invest where you can be “the best in the world”

Tranformation B

3. Digital only, not digital first

4. New channels are key to disruptions

3. Hire digital DNA

Dual Transformation in Content


Digital Only (Not Digital First)

Source: Harvard Business School Newspaper Study*Unique Page Impressions/Circulation

0

20

40

60

80

100

120

0 10 20 30 40 50 60 70 80 90

Audience Penetration*

Percentage of Non-print Content on Site


•User-Generated Content

•Remote Contributors

•Web Curation

•Photo Galleries, Lists, Databases, Contests, Quizes

Web-Only Strategies

Newsroom

Remote contributors/Curation

User Generated

Content


Deseret Connect:The Power of Remote Contributors


Deseretnews.com a Top 25 Newspaper Site in America

EstablishedBusiness

EstablishedBusiness

DisruptiveBusinessDisruptiveBusiness

Net NewGrowthNet NewGrowth

Starts Outside


Starts Outside


Displacement

Displacement

Finding New Market Growth


Organizing around the Job-to-be-Done:Over 50 million Social Followers

4.5M Followers

2.5M Followers

4.8M Followers

3.0M Followers


Digital Media: Establishing Family Sites in English, Portuguese, and Spanish


New Channels are the Difference between Transformation A and Transformation B

Legacy Media Sales Channel Revenue Has More Than Doubled Since 2009

2009 2010 2011

Meanwhile, Dependence On Legacy Channels Has Been Cut By Half

2009 2010 20110%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$ UP% DOWN

Total $*

*Actual Revenue Numbers Not Disclosed

90%

55%

45%


Digital is now a foundational core business

Jan

Feb

Mar

chApr

ilM

ayJu

ne July

Augus

t

Septe

mbe

r

Octob

er

Novem

ber

Decem

ber

Total DDM Revenue

2009 Revenue

2010 Revenue

2011 Revenue

2012 Budget

Re

ve

nu

e


Hire Digital DNA: DDM Team did not Come to Work for a Newspaper


•Strategy is never more than 49% of the solution—Only special people make a special company

•There has to be an organizing mission and an organizing “job”

•Dual Transformation decouples:

•Transformation A

•Transformation B

• Exchanges Teams can work, but “buyer beware”

• This is the greatest leadership challenge in business

Concluding Thoughts

dual transformation: 2 routes to resilience - clark gilbert summit 2013

Technology

trusted digital voice

digital dnathe

digital voice2

trusted voices of light

dual transformation

content transformation

content costs

differentiated content