The Fall & Future of the Newspaper Industry

“Everything I thought I knew about leadership is wrong.”

  – Mort Myerson, former Chairman and CEO of Perot Systems

We’ve watched the newspaper industry fall for years now. I led transformative change at the Star Tribune newspaper in Minneapolis, MN in the years just before the industry and the Star Tribune crashed and burned. I came to believe that the newspaper industry would not change in the ways it needed to, and I left the Star Tribune in early 1994 to consult with leaders on transformation and to complete a Ph.D. in leadership and organizational change. I completed the Ph.D., consulted for 13 years, and have been a prolific writer about leadership and organizational transformation.

Here’s an example of the kind of real-life boardroom drama that must have played out one way or another at every newspaper in the country over time:

In 2011, Tim McGuire, former editor and senior vice president of the Star Tribune—and currently the Frank Russell Chair of Journalism at Arizona State University’s Walter Cronkite School of Journalism and Mass Communication—wrote in his blog, McGuire on Media:

The Cowles family imagined it [the drop like a rock in newspaper profits] and after years of strong stewardship decided in 1997 the old saw about discretion and valor made a lot of sense to the family. Early in 1997 David Cox, then Cowles CEO, commissioned the major consulting firm Booz-Allen to analyze the future of classifieds. I would dearly love to have that report in front of me now, but I vividly remember sitting through the excruciating pounding my beloved business got that day. While I only remember the broad outlines of the report I remember enough to know that as seers the Booz-Allen people were almost mystical. They predicted the classified demise with a precision that today strikes me as awesome. At the time I thought they were a bunch of negative doomsayers. Unfortunately, they nailed it.

There were two available reactions. Mine, which was “nothing could be this bleepin ‘bad!” In my defense, people like McClatchy’s Gary Pruitt and other newspaper buyers saw it my way. The other possible reaction was, “our entire net worth is tied up in this company and the risk is simply too great.” That was the Cowles family reaction and within months they announced they were going to research “strategic alternatives…”

In 1998 the Cowles family sold the Star Tribune to the McClatchy Company for $1.2 billion.

On December 26, 2006, the Star Tribune was again sold. The sale price was $530 million plus a future tax benefit of $160 million.

In January, 2009 the Star Tribune filed for bankruptcy.

This was a company—and an industry—in free-fall decline.

The change that overwhelmed the Star Tribune and the newspaper industry was different than normal revenue cycles or gradual readership losses. This was discontinuous change: It came without precedent or operating instructions, and fundamentally and forever altered life as newspapers had known it.

I sympathize with the newspaper people. Discontinuous change scares, confuses, and paralyzes people when it hits. Their underpinnings go out from under them. No matter how intellectually prepared one may be, no one knows this kind of change and how discombobulating it can be until it socks you in the gut. Did this cataclysm effectively end life for newspapers with no real hope for sustainability as an industry? Maybe, but people do not give up without a fight.

Despite the nature of change, industry leaders weren’t complete victims of powerful forces outside of themselves. Over the decades, they bore a fair share of responsibility for what befell them. They knew trouble was ahead of them, but they didn’t expect how much they got. Some ignored, others denied, still others minimized. Many executives got lost in the weeds and couldn’t see the big picture. Many clung to the way things were always done or to the ways that had made them rich. All were too timid. The truest voices were often shot down.

To have a chance, newspaper industry leaders, when the catastrophe hit, who hadn’t said it already needed to exclaim it now, “Everything I thought I knew about leadership is wrong!”

I can imagine a tough-love message to the industry, appropriate for a long time:

We are a haughty and stodgy industry with a moribund culture. We’ve lacked foresight and imagination. We are mediocre when it comes to utilizing people’s talents. We are far behind where we should be in adapting to a changing environment. We are in trouble. Maybe it’s too late. We have to put our self-importance aside, learn everything anew, and get comfortable with feeling scared and inadequate much of the time. We have to think bigger, differently, and change more than we ever imagined we could. We need to move fast. And even then, we may well not endure.

Executives in all industries often develop new strategies and do their reorganizations and other changes from the same beliefs and assumptions that may have served them well in the past but have now led to the problems they are trying to fix. Such change is like putting a new façade on an old building; it looks new and shiny. It will occupy and distract us for a time. But underneath it’s the same leaky plumbing and faulty wiring that will soon make things worse. I fear this is what the newspaper industry did in response to the crash: The recreated what they were trying to change.

Faced with an existential threat, newspapers had to do more than reinvent what they had always done. Newspapers needed transformation (fundamental change that cuts to the core of the company’s values, culture and operating methods.) and no one transforms anything by repeating their past. To transform, organizations need transformative leaders who see their environment accurately, learn new models for leadership and organizations, and creatively reimagine from new beliefs and assumptions the fundamental nature of their business: what their business is, and how they do the work of that business. Nothing is “not our business.” Organizations and industries then adapt continually in a symbiotic relationship with their environment, and they fundamentally change organizational and leadership designs.

Imagine a hypothetical newspaper that embraced transformation and went boldly into the future. What the process might have looked like:

Our imaginary newspaper began their journey with study and conversations. The leaders went through the early and difficult struggles and learned much new about leadership and transformation. Leaders applied new ways of thinking to vision, strategy, and business models as well as to operating units. Armed with the courage and excitement of new insights and creativity, they leapt into the future with a shared vision, strong values, and the noble purpose of the newspaper industry. All operating units felt great intensity for the challenge ahead. Instead of running fear-filled from the threat, people sprinted alive to a new future. They understood that such change did not come with a guarantee of success, but it improved the odds compared to continuing to do what no longer worked.

Many people throughout the newspaper had their personal inner shiftsand many leaders with new skills were empowered at all levels of the enterprise. Employees were fully engaged. Many obsolete sacred cows were painfully sacrificed and many new experiments tried excitedly throughout the company to find what worked for the future. The work was hard; the pain great at times. But people felt alive.

The ways things had always been done changed. Accountability became high: mistakes were allowed in this creative endeavor, and excellence was required; issues were surfaced and addressed directly, honestly, and openly. The newspaper became faster-moving, more creative, and people felt valued, involved, and informed. It took time, but new revenues were created. Suddenly the newspaper was transformed. It was still a newspaper but everything but its deepest identity had changed. The newspaper was alive and next time would understand that the time to transform again would be at the peak of their success.

“Easy to say, impossible to do,” you say? “Grow or die,” I reply.

What is the future of the newspaper industry? No one knows for sure. It’s late; maybe too late, and it is reasonable to believe that the cataclysm of the Internet and other threats combined with fainthearted leadership will destroy newspapers as we’ve know them, and that history will debate why the newspaper industry died.

Perhaps the industry will find the improbable will, creativity, and leadership to still transform and renew the industry in new forms.  Maybe Amazon founder Jeff Bezos who recently purchased the Washington Post can bring new energy into the tired industry. Or perhaps newspapers will muddle along—alive but never again what they used to be. Most likely, some will thrive, more will die, and many will muddle.

What might have been if the newspaper industry had heeded the voices of the future?

Excerpted from my e-book, Value Driven Leadership: A Story of Personal and Organizational Transformation.

3 thoughts on “The Fall & Future of the Newspaper Industry

  1. This is difficult. I realize there is a beginning and middle and end to everything. On the other hand, here is situation. How does one turn it into something positive and see it as an opportunity to create something better? Margaret Eubank

  2. Another thought: in this day of instant communications, too often have reporters and newspaper editors been caught peddling false or incomplete stories to further a point of view or a cause. That’s another reason why people are abandoning them, both in print and on television.

  3. During the peak of the Star Tribune’s demise, readers were cancelling their subscriptions due to “no time to read”. They told us their papers came in the door and went straight to the recycle bins. They didn’t like to see all the wasted paper so they cancelled. And why not…we all had computers by then and had other ways to get the news free. This was the first big mistake by the industry-giving away the talents of our journalists. When I raised this issue with our leaders, I was told it was out of the question to charge for online subscriptions because no other large newspapers were charging. It took until 2010 before newspapers finally started started charging for online content. They created their own problem by giving it away for free for so long. Readers have been slow to come back to paying for their news. In most cases, their newspaper habit had been irreversibly broken.

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