The Hive Think Tank: The Content Trap - Strategist's Guide to Digital Change

The Content Trap:

A Strategist’s Guide to Digital Change

Bharat Anand

Harvard Business School

The Hive Think Tank, October 5th ’16

@bharat_n_anand

2© 2016 Bharat N. Anand

What’s the Future? 1


Diagnosing the Problem: Newspaper Circulation

The online threat

News

Real‐time updating

Easier to search

Greater variety

Rich media format

Anytime‐anywhere

Interactive

Lower prices



Varian 2010; Newspaper Association of America



Varian 2010; Newspaper Association of America


News versus Classifieds

The online threat for different parts of a newspaper

News Classifieds

Real‐time updating

Easier to search

Greater variety

Video format

Anytime‐anywhere

Interactive

Lower prices

Revenue declines Small Massive



Buyers AdvertisersClassifieds

News

Readers Reader

Network effectsHub-and-spokeIndividual decision Connected decisions




Microsoft versus Applein PCs

Facebook versus Google+

eBay

Airbnb Uber Tencent

Pokemon cards Friends & family Trove

Connected Choices are pervasive




Source: Hall and Krueger (2015)





Microsoft versus Applein PCs

eBay

Airbnb Tencent

Pokemon cards Trove



Schibsted in classifieds


Schibsted in News


User Connections: Strategy Implications

Industry structure Neck-and-neck Winner-take-all

Growth possibilities Incremental Discontinuous

Customer acquisition Internal salesforce Customers are de facto salesforce

Product quality At a premium “Network” overwhelmsquality

Traditional businesses

“Networked” businesses


User Connections and Network Effects: Strategy

Industry structure Neck-and-neck Winner-take-all

Growth possibilities Incremental Discontinuous

Customer acquisition Internal salesforce Customers are de facto salesforce

Product quality At a premium “Network” overwhelms quality

Traditional businesses

“Networked” businesses


Diagnosing the Problem: CD sales and Piracy2


Diagnosing the Problem: Music Sales across Formats

Source: RIAA. Rebase peak sales for each format to 100


Concert Prices and Inflation

Source: Pollstar, Alan Krueger, BLS, CEA calculations, author calculations

Growth in Concert Ticket PricesIndex: 1981=100


Music industry in crisis?

(Adapted from Oberholzer-Gee and Strumpf, 2010).


Complements: Strategy Implications A customer values your product more when she has the complementary product

than when she has your product alone – Price of complement drops -> demand for your product increases

Complements create value and profit opportunities

Examples:– Hot dogs and ketchup– Cars and roads – Tires and restaurant guides– Hardware and software– “Piracy” and Silicon Valley – Theaters and ?


Complements and Product Connections: Strategy Substitutes should be expensive, complements cheap

– The battle between digital giants

Substitutes should be restricted, complements ubiquitous

Core competence versus complements– Narrow versus broad definition of business


Complements and Product Connections

Sony e-Reader versus Amazon Kindle

Complement: wireless


Complements versus Substitutes?

Radio and music

MTV and music

VCR and movies

DVR’s and advertising

Digital streaming and prime-time viewership

Free online courses and classroom enrollment


Complements versus substitutes

Can be affected by managerial choice

Print book E-book TV product Digital product


Product Connections: Strategy

Product connections are pervasive

A result of consumer choice as much as technology

Requires deep understanding of user experience

Large opportunities to create and leverage positive connections


Online strategy…

Strategic renewal

Schibsted Aggressive response Separate then integrate Hire outsiders Create new model for online Frequent updating Expand revenue streams (for eg., dating) Low fraction of borrowed content Aggregate content Many links to others Free

3


Online strategy…

Strategic renewal

Schibsted Aggressive response Separate then integrate Hire outsiders Create new model for online Frequent updating Expand revenue streams (for eg., dating) Low fraction of borrowed content Aggregate content Many links to others Free

Economist Slow response Integrate Staff with insiders Replicate print approach online Infrequent updating Similar revenue streams High fraction of borrowed content Produce most content internally Few links to others Paid

Connected Choices at The Economist


Functional Connections: Implications for Strategy

Context matters!– Customers, Competitors, Organization, History, Geography

Implications– Beware of best practice and indiscriminate benchmarking – Strategic choices have tradeoffs

And need alignment


Proceed from strategic direction to functional initiatives rather than reverse

A common approach:– “Discuss initiatives

Free model New products & services for print Stronger marketing in local areas Re-price Sunday paper Bundling analysis Rationalize newsrooms More features in sports pages

– Assign initiative leaders for implementation”

– Result: incremental, misaligned, undifferentiated

Functional Connections: The Initiatives Trap


Prioritize what’s most important to your customer

Strategic success comes from “saying no”

Functional Connections: Prioritization


Digital Transformation and Strategic Success

Traditional Mindset Offer the best quality product

Narrow product focus, core competence

Best practices and benchmarking

Digital success Networks and user connections

Complements and product connections

Recognize functional connections

Not Content and Product

But

Customers and Connections


Higher education: Digital Strategy?

“Will the classroom be abolished, and the child of the future be stuffed with facts as he sits at home?

–Bruce Bliven, The New Republic, 1924

Integration of online, hybrid, and collaborative learning…

Data-driven, personalized learning…

Intelligent tutoring systems…

Students as creators, not consumers…

Foundation Series


HBS: Digital Strategy

37


The Content Trap

38


HBX: Differentiation


Social Learning


Active Learning and Social Learning


Peer Help


Active Learning and Social Learning


“Online Cold Call”


Online Cold Call – and Learner Behavior


Peer Help: Geographic Distribution


Asynchronous Learning and Peer Help?

Ave

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Asynchronous Learning and Peer Help

Module Deadline

This is called PROCRASTINATION

Ave

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Asynchronous Learning and Peer Help?

What do the different colors represent?


Performance: Majors versus Non-majors


HBX and HBS: Complement versus Substitute

0%

2%

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24%

18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 >50

Per

cent

of l

earn

ers

Age (years)

June 2014 cohortHBS MBA


HBX and HBS: Complement versus Substitute

0%

2%

4%

6%

8%

10%

12%

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18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 >50

Per

cent

of l

earn

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Age (years)

HBS MBA

All HBX Cohorts


HBX


HBX


HBX Connext: From Online to Physical






Higher Education: Digital Strategy & Learnings

Connections, not Content

“Best Content, Star Faculty” versus Peer Learning– User Connections

“Is Online Better or Worse” versus Complementarities– Product Connections

“Create MOOCs – Now” versus Differentiation– Functional Connections


Higher Education: Digital Strategy & Learnings

Connections, not Content

“Best Content, Star Faculty” versus Peer Learning– User Connections

“Is Online Better or Worse” versus Complementarities– Product Connections

“Create MOOCs – Now” versus Differentiation– Functional Connections

CREATE TO CONNECT

EXPAND TO PRESERVE

DARE TO NOT MIMIC


THANK YOU

Marketing

The Hive Think Tank: The Content Trap - Strategist's Guide to Digital Change