Out of the Box Blog

Out of the Box

Can publishers learn from failure or should we just set the bar lower?

10 August 2010 · By Kylie Davis

Australian School of Business claims that news organisations will often embrace failure and rationalise it into success as a coping mechanism that justifies their behaviour.

There is a lot of talk about how newspaper companies are slow to embrace change, that we are laggards when it comes to adopting to new business opportunities and suffer as a result.

But new research from the Australian School of Business takes it one step further, claiming that organisations will often embrace failure and rationalise it into success as a coping mechanism that justifies their behaviour.

Is this what newspapers have been doing?

The research is called the Logic of Deliberate Structural Inertia by Gavin M. Schwarz from the School of Organisation and Management at the University of New South Wales. But it has a much catchier title in the online summary which is “Organisational Failure: How Lousy Results Become Optimal Outcomes”. It claims that failure is part of the life cycle of every organisation — and that rather than studying success, our attitudes to failure are more informative.

Schwarz argues that the bulk of organisational change research is based on the idea that businesses are rational and logical when faced with making changes, and will always make the decision that allows them to reach their goals and implement changes that are in their best interests.

“Positive thinking powers a lot of economic theory,” Schwarz says. “Striving onwards and upwards is the main game, although it does not always work.”

Some businesses suffer from “deliberate structural inertia” where organisations prefer not to change their tried-and-true methods. In risk-averse companies such as blue chip newspapers, this is common.

“They may not be nimble enough to keep up with the pace of change — and so they fail,” Schwarz says.

He quotes the example of General Motors which in 2007 announced a goal to make alternative energy-powered vehicles commercially viable by 2015. But within months, the company shelved its plans in the face of a record US$38.7 billion loss. At the time, the decision to abandon green power in favour of the fossil fuels they were familiar with was regarded as sensible and rational. But it came back to bite them when they filed for bankruptcy in 2009 — regarded as a dinosaur that had failed to embrace the future.

Are we monetising new platforms quickly enough, or will the decisions to “wait, watch and see” be regarded as a monumental failure moment for newspapers?

A co-author, Bernadette Watson, claims that while change starts hot at the top but loses heat as it filters through the ranks. “Inevitably there must be a champion — such as the chief executive — leading the change. If no one owns it, the groups will let it fail,” she says.

But what I want to know is what happens when the troops are rallying for change, but senior management won’t buy it?

Newspaper companies are full of enthusiastic proponents of new technology — staff who are hungry to embrace the new digital world and work on strategies to bring the dollars in and delight our readers and advertisers and who can see it’s potential. But the word from the top is to “wait”.

The research says “people are limited in their capacity to process information. Consequently they adopt spontaneous strategies to simplify complex problems and this allows failure to be rationally defended.”

Too many newspaper companies have done this over the past 10 years, claiming that the changes in mobile phone and online readers were niches that would never take off enough to justify us altering what and how we deliver content. They’ve preferred to wait until nimbler competitors proved that there really was a market there — and by the time we’ve tried to enter, the horse has bolted.

The Australian Business School research says that people tend to believe there is “safety in numbers and follow the group”. But it’s not just staff that follow the path of least resistance.

It’s time to fight the inertia. Otherwise, our decision to just go with the flow will be our greatest failing of all.

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About this blog

Kylie Davis is the head of real estate solutions, Australia and New Zealand, at CoreLogic, the world’s largest provider of property data. She was previously the network editor of real estate at News Corp Australia, managing editor of business development at Fairfax, and founder of The Village Voice group of newspapers. Follow her @kyliecdavis.


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