Friday, September 05, 2008

Lessons From War: Part I. Knights and Newspapers

I just so happen to be taking a class on War! this semester with a great professor on the subject, Ron Hassner. One week into it, I've already picked up many connections between the topic of war and the field of business.

Today's example looks at the introduction of the cannon into the field of warfare, which occurred in the early 14th century. At this time, armies were built around feudal knights, who were skilled with a lifetime of combative training. The introduction of guns and artillery changed everything though. A common man armed with a gun and a few weeks of training could now defeat a knight, meaning the knights had now lost their monopoly on force.

How did knights respond to this threat? "Stupidly" would be a fitting description. They decided to put on thicker and thicker armors, greatly sacrificing mobility for some safety. The strategy did little to help the knights, and their role soon diminished into nonexistence. But not before they suffered heavy casualties. Perhaps this inability to acknowledge reality is best seen at the Battle of Crecy, where a far outnumbered army of British longbow-men completely obliterate wave after wave of French knights and nobility. Afterwards people had no choice but to accept the new reality- after all, the knights of old had all just died.

To find a comparable example in business, we need an industry undergoing a dramatic shift in its business landscape. A good example is newspapers, and the introduction of the internet. The internet can do several things better than traditional newspapers. It is a more effective means of classified ads and it is a better source for information like weather, movies, etc. It has also introduced competition into a news field which had until then always been a local monopoly.

Newspaper companies, like the knights, were slow to react to this changing reality. By the time they realized the importance of the internet, their circulation was already in decline and they were too late to establish themselves as dominant internet firms. Some have tried to throw money at the problem, investing as much as they can now in internet projects to compensate for their past idleness. But I think the smarter ones will have to realize that the landscape has changed. A news company's only real asset is its staff of writers which collectively dominate the reporting of news happening in its locality. Whether that news will then best be transmitted on paper or on the internet, or whether it will be more subscription or advertising based, will have to be figured out. But there is still a place in the world for that company which aggregates and reports on local content- albeit, a smaller and more niche market with less attractive returns.


Tariq said...

I don't know if calling writers an asset for newspapers is correct.

Considering the fact that every few months you hear of a major newspaper employing buyouts (paying the writer off so that they'll quit) and plain layoffs, writers probably eat away at the value of a newspaper rather than enhance it because of pension and payroll costs.

In addition, when you start laying off writers, you end up having newer, less experienced writers, trying to cover more territory (or beats in newsman speak). A newsroom a decade ago may have had two times as many journalists as one does today, so the math is telling you that the quality of reporting will have to give.

When you have that happen, your core subscriber base falls and you have the potential of creating a vicious cycle (subscribers fall > journalists fired > quality down > subscribers fall > journalists fired > quality down, rinse and repeat)

That may affect views/hits too which will also negatively impact things.

Nnejad said...

There is a good probability of something like that happening. Still, people will want news about what is happening in their local area and their country, and I can't imagine people scourging the internet and trying to find that information from several different, unknown sources. Rather, it is more likely that they will have one main source they turn to get their news content, and the newspaper brands today will likely be that source. How much adjusting, layoffs, and bankruptcies are necessary before that happens is anyone's guess though.