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Out of the Box

Why newspapers need a second cycle

17 March 2010 · By Kylie Davis

Author Lars Kolind with his book, The Second Cycle: Winning the War Against Bureaucracy I have fallen deeply in love with Lars Kolind. This will probably come as a surprise to my husband, who while well prepared for the possibility that if Clive Owen looked my way, I'd be out the door in a shot, is not expecting me to leave him for a balding, 63-year-old man from Denmark. (It's OK. I know that if Australian supermodel Megan Gale smiled at him, I'd be a single mum quicker than you can say David Jones. And hey, I'd support him in that.)

But sometimes you read something and you see stars. There is a crashing in your ears, a pumping of the heart and a sense of revelation so profound that the feeling is very much like falling in love.

There are many management accolades that Lars Kolind holds. He is the chairman of the Grundfos Foundation, a billion dollar corporation that is the world's second largest maker of pumps. He's a serial entrepreneur who transformed a Danish company called Opticon, which is the world's largest manufacturer of hearing aids and he has written a book called , which was reviewed in the Australian Institute of Management magazine, Management Today.

Don't get me wrong. It's not the pump making or the hearing aids that got me interested. But it's Kolind's thinking on established companies and their approach to innovation that got me all hot and bothered.

Here's a summary. Kolind argues that mature companies behave like they are deaf when their fundamental beliefs are questioned. The more successful they are, or have been, the worse their hearing becomes. He claims that mature companies suffer the ennui of bureaucracy. Size, age and success make them unable them unable to hear the signals of their own decline.

“Successful organisations become deaf because they increasingly attribute success to their specific approach to business, both towards customers and internally,” he writes on his web site.

“They overlook the massive goodwill that has been built up during decades of previous success and which may be the main explanation of their current business success. They believe that it is the current management and the current products and marketing concepts that constitute the main source of their success, which is often not the case. Long after current practices have become obsolete, organisations celebrate and market them as their unique 'way' of doing business.”

Sound like any industry we know?

Kolind argues that mature organisations also become stuck in a “mental model” (ha! loved that phrase!) which includes a failure to discover changing customer needs, being bound by sales and marketing channels that are becoming obsolete, and sticking to product concepts because they fit existing business models.

Combine it with extensive management layers, multiple departments, rigid procedures, routines and traditions, and you have a mature organisation that's an easy target for the virus of failure, he claims.

“Mature organisations are highly experienced in the way they do things, but they lack the capability to question whether they do the right things at all,” he writes in the MT piece.

Are newspapers deaf and overly bureaucratic?

Sure, there are examples a-plenty of newspaper companies trying new stuff online, of creating “newsrooms of the future” where the desks all radiate out like a spoke, but have we really done anything more than writing stories to fill a new void, and move around the furniture?

Although he's been a CEO since the age of 27, Kolind believes that transformations from deaf to hearing need to come not from the top-down, but from below-up. It is up to visionary leaders to inspire their peers and associates to break the rules of the business, he says, but it's the energy from the bottom that will push it through.

Mature businesses need to stop seeing themselves as linear structures, of hierarchies and silos and embrace instead a new framework that encourages collaboration. We must move from an industrial era model to a knowledge-based society of networks.

Isn't it time for newspapers to embrace a second cycle? Who knows, it might just be true love.

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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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