Future of The NewsPaper Industry

Jeff Bezos has stirred up a lot of interest in the News Paper Industry by acquiring “The Washington Post” in his individual capacity. There are a lot of expectations now from him and Washington Post to define the future of this industry. If he succeeds to turn-around the loss making paper, that could pave the way for the other players in the industry to follow suit. If he fails to turn this around, people think that it could very well signal the end of an era.

As part of an experiment, I thought what would make me love my newspaper again and I came up with the following description of the newspaper of the future.

• The newspaper is not more than 10 pages long.
• It is personalized based on my preferences (which I can set-up online or through the app). I only receive the news that I want to know about (except for may be the first and last page).
• It is in color, has a lot of pictures, infographics and is a treat to watch and read.
• It also provides me an option to go online (could use QR Codes which I could scan using the app to dive deep).
• It also provide me an opportunity to interact with the colomnists and other readers with similar taste as mine (could be through apps or physical in-person meet-ups)
• Gives me an option to go ad-free (at an additional cost) or only opt for specific kind of ads based on my current interests.
• I get an option of the frequency of the paper (once or twice a day)

Now, to achieve this, there are many assumptions that need to be questioned and re-looked at:

1. Newspapers can’t be personalized as they need to be printed at centralized print facility and distributed
2. The control of what gets printed rests with the editor
3. We can only have daily, weekly or fortnightly editions
4. The layout of the newspaper changes depending upon the news stories, almost every day and which requires a team of people who could do that.
5. The medium is only 2-dimensional (Text and Pictures)

Assuming this vision is brought to reality, both the newspapers and the advertisors whom they serve will benefit hugely.

This is of course if profitability is the main goal of running a newspaper. There could be other reasons to run a newspaper, Shaping public opinion, being one of them. In which case, we need to re-look at the content strategy of the paper.

Currently, there are some interesting developments in the industry that would be worth following:

• Jacek Otko has been quietly leading the revolution of changing the design of the newspapers, to make them more interesting and pleasing to read.
• Times of India has an app (Alive) which we can use to watch videos and link to websites that we might want to explore if we want to dive deeper.
• There are others who are becoming more local and cover their local communities and depend on them for survival.
• Some like NYTimes charge the readers for online access.
• Almost all the newspapers have a digital version.

Another interesting dimension to this entire discussion is the future of advertising itself. The advertising industry itself is going through a fundamental shift and since advertisements constitute almost 70 – 80% of revenues for the newspapers, the shape that the advertising industry takes will have a big impact on the newspaper industry as well.

These are my thoughts. What do you think? Do you think that the vision that I have painted for the newspaper of the future is feasible, desirable? Please share your thoughts by commenting on the blog or by tweeting to me at @rmukeshgupta.

PS: Another thing that can really disrupt the entire industry and take it to a totally different direction is the availability of a smart material that could replace paper as the medium to be used for print.

TED Talk of Jacek Utko – Can Design Save News Papers

 

 

Lessons from a Failed (Billion Dollar) Business Model Innovation Attempt

In May this year, Better Place, an auto tech company filed for bankruptcy, burning close to a billion dollars. They had a brilliant solution to a complex problem.

Their idea was to replace fossil fuels with batteries – literally. What this meant was that as you re-fuel your cars with gasoline, you could get your batteries changed at a fuel station. This was in stark contrast to all the other start-ups in this space, who have been working on increasing the range of their batteries to go longer distances or increase the speed at which one could charge the batteries on-the-go. 

There has been enough written about their strategy and why it did not work. Some of the reasons that have been proposed for the failure of the business model are: 

• The most important cause was the fact that the very need to create a network of fuel stations where battery could be switched was very expensive and was a pre-requisite to start acquiring customers.
• They got too ambitious by expanding to other markets even before they won in their home market (Israel).
• They were not able to offer choice of different car models to their customers, which was a mistake.

However, no one has written about what would have given them a fighting chance at success.

I would like to stick my neck out and outline what I would have done if I were running the company.

I think that the business model that they were pursuing was and is still a great model. This ensures that the behavior of the end customer does not change and with the improving quality of batteries, my cost over time would reduce while my revenue would continue to increase, which is a perfect situation to be in.

One of the most important lessons that we can learn from this exercise is that the choice of your initial market is the most important decision you have to make. The choice of markets (Australia, California, Canada, Denmark, Hawaii and Israel) in this case was a mistake.

If I were in their position, I would have chosen a city based approach rather than pick a country as a market. I would have also chosen a city in densely populated area where, the populations do not generally drive very far (thus reducing the number of switching stations necessary to serve the market.

I would have franchised these switching stations (just like Shell or other Oil players do, mostly to the same franchisees) and signed a revenue sharing agreement with them, thereby eliminating a lot of cost in creating a network of switching station. Also, this would have been much faster and would have provided the momentum to the start-up.

Instead of trying to get Auto manufacturers on-board as a partner, I would have signed-up with them as a customer. I would have co-designed a few models along with the auto manufacturers and placed an order for these cars, thereby eliminating the risk for them, thereby creating choice for the customers.

Once the auto companies have made the models, adding or improving them is not much cost or effort and would lead to them developing more models by themselves (if the initial model was successful in the market).

I would then lease or if possible rent these models (co-branded with the auto manufacturers) on a rental based on either the kilometers driven or for every battery being replaced. This makes it more attractive for a customer to rent a car than to buy it (capex to opex).

This would have allowed me to win one city at a time and then expand to an ever larger network. Once the concept is validated in a few cities, I would then scale like hell and create a network (again franchised) across a nation. If the revenue sharing is fair for the franchisees, it would be easy to create a nationwide network.

This would have allowed me to iterate and learn about the operational challenge and find answers to these challenges with the least risk exposure and perfect the model to enable fast scale.

This would have also reduced my total cash burn and given the start-up a longer play in the market.

I believe 6 years is too long a time to prove your concept, which led to Nissan moving out and others not too keen. The key in this case was the inability to win a single market that led to the fall-out of the business model.

Also, I think that one of the key aspects of business model innovation is the velocity with which you are able to execute and validate your business model in the market, failing which you will find ever increasing resistance from the ecosystem and inertia will kill the project.

What would you have done differently if you were the CEO of Better Place? Do you think that someone should still pursue the business model that they were pursuing?

Let me know your thoughts by commenting below or tweeting to me at @rmukeshgupta. 

PS: Interesting news about speed charging your electric vehicle. 

Idea for a disruptive biz-model innovation for banks

There is a lot of discussions and activities around the revival of the good old ATM.

• Some are trying to make these machines more Customer-centric like Wells Fargo.
• Some are trying to improve the overall user experience of the ATM like Diebold.

However, the true question should be the following:

“Do we even need an ATM? Is there a better, easier, faster way to manage cash than via an ATM?”

The first bank to figure out the answer to this question has the potential to truly disrupt the banking industry from a cash management perspective.

One way that I think could be used is the small businesses that accept payments from a credit or debit card?

Can they not be used to function as a teller for the bank? The bank instead of charging a fee for the use of the card machine, can instead pay the business a nominal amount and convert them into cash dispenser.

All the technology that is needed to make this happen is already available. The only change is in the execution of the idea.

This is just one idea to enable this. There could be many more viable ideas.. The question is are we looking for them?

Do let me know your thoughts by posting your comments below or tweeting them to me at @rmukeshgupta.

 

People – to – People banking services by CivilisedMoney

The Crowdsourcing business model has been around for sometime now and has proven to be a good business model for independent artists to fund their projects.

Now, CivilisedMoney is trying to use the same concept to help peer-to-peer financial services in the UK.

CivilisedMoney’s was founded by Neil Crofts and Jason Scottgoal. Civilisedmoney will use people-to-people networks to create an ethical, transparent alternative to the existing financial services industry.

As they say – “It’s banking with people, not banks.”

The concept is very similar to the age old concept of a co-operative bank or a chit fund operated in India. The key difference from these models that I can think of is that this model is much more transparent and easier to operate due to their use of technology to enable these financial transactions. This will also make it easy for people to invest, donate, lend, borrow and transact money with each other directly.

This organization itself was crowd-funded to the tune of GBP 100,000 within 9 days in the on the crowncube platform.

I think the challenges for them could be the following:

• Achieving scale: Will they be to scale up. If they find out ways to continue to attract people to use their platform, this idea really has a great future and can have a big impact on the financial services sector.
• Remain a banking service provider: They need to be very careful about how they position themselves. There is a real possibility that they end-up being another platform for crowd-sourcing (like http://www.kickstarter.com or http://www.crowdcube.com or many other such platforms. They need to ensure that they continue to function like a bank, offer services like a bank and think like bankers, all within their definition of the business.

This sector is actually in need of an overhaul as we have only seen incremental changes with no major disruption. A disruption in the sector seems to be inevitable. The question is “Can civilisedmoney lead this disruption?”

I wish them continued success in this venture.

Disclosure: I have not invested in this organization and neither do I know the founders. I liked their business idea and want to spread the word.

 

How can Crossword compete with FlipKart.com?

The only thing I indulge myself is in buying andreading books. Lots of books! I love going to a bookshop, browse their bookcollection, read a few pages of a book and buy it if I like what I see. Thereare times when I got so immersed in the book that I read the complete book atthe bookshop itself. I loved the cozy chairs that these bookshops provided withso many books to browse and read.

Of late, I have seen that the stock of books atbookshops like Crossword has been on the decline. I also find myself and all myfriends (who buy a lot of books) buying most of our books online from vendorslike Flipkart.com. One of the primary reason is that we get good bargains(discounts ranging from 5-50%) depending on the popularity of the different titles.They ship the book almost same day to your home. They offer an entirely differentexperience to the shoppers.

What does this result in? You find that more and morebooks are being sold online. Though Crossword also has an online store wherethey offer equally compelling bargains, they are losing sales to Flipkart.com. Thisis because of the fact that these websites are considered a necessary way tofight the online bookstores but are not promoted the way flipkart management promotestheir websites (as it is their only mode of survival).

One possible reason why Crossword does not promotetheir online store could be that they perceive that this could possibly hurttheir sales in their physical stores. What they do not realize is that this isanyways affecting their sales of the physical stores and they are losing thesale to their competitors.

This same trend that happened in the US is beingrepeated in India.

Now the question is what could Crossword do tosucceed from the situation they find themselves in?

In my opinion, they could do one the following:

• Get out of the books business and re-design their stores to sell otherhigh margin products like kid’s toys, clothing, coffee shops, etc. 
• If Crossword wants to continue to sell books, then they need to change their business model & their Go-to-market strategy and could do the following:

• Convert the bookshops to coffee shops that stock books, have cozy seats where youcan sit, relax, have a cup of coffee and read a book for as long as you want to.Run a marketing blitz to promote the new model. Coffee sales in the storesshould be able to cover the cost of running the store. Install automated check-outcounters where customers can order the books they want from within the storesto.
• Only sell the top 20 best sellers at the store. Anything else onlyavailable for delivery. This allows me to come in, browse, read a few chaptersof a book, order a cup of coffee and decide which book I want to buy. I thenplace the order at the counter (could also be a kiosk) and go home. The booksget delivered at my home. I get the best of both the worlds. The comfy feelingof browsing for books the old fashioned way and ordering books with the bestdiscounts, the modern way.
• If customers don’t come to you, you go to where your customer is! Install kiosks at differentmetro stations, malls, offices, bus stops (near lifts) where people can orderbooks or magazines while waiting for the bus, train or while having some coffeeat the office cafeteria.
• If you can’t compete with them, join them! Close all physical books storesand become an online bookseller themselves and go crazy with media (incl. socialmedia) blitz.

The worst thing that they can do is not to doanything and continue to do business as usual. Because, it is end of Business as usual for Crossword and  will resultin only one thing – Slow & painful death.

Hope someone is listening! 

What can Business Model Innovation projects learn from Film making

I came across an interesting approach to business model innovation being promoted by the folks @ Board of Innovation. They use the analogy of making a film to a business model innovation project. I really like this analogy. 

 

The advantage of considering your business model innovation project as producing a film helps the project in the following ways:

1. Makes the entire process more fun and exciting.
2. Provides us a process to follow when the team falters.
3. As with producing a film, you need a team of people with a diverse sets of skills to come together and work to move a vision to the realm of reality and continuously work together to achieve the vision.
4. There is no ambiguity about if they will succeed. They work with a belief and certainty that they will finish the project.
5. As with producing a movie, you need to be vary about running over-budget or over-time. Both can be very harmful to the project.
6. As the success of the film depends on how it is marketed, so is the success of the innovation project dependent on how it is marketed internally.
7. As with any film, the financial success of the project is not guaranteed, so it is with the Business model innovation project.But you still put in your best foot forward and are prepared to accept failure.You learn from the failure and move on.
8. Films make money not only on the box office, but from merchandising, TV rights, DVD rights, streaming rights, music rights, etc. So, it is with innovation projects. You can almost always find different usage of what you have created or learned in the innovation project to some other project/division in your business.

You can find the entire process being advocated by the Board of Innovation below:

The most Awesome way to experience an Innovation project (by @nickdemey)

View more presentations from Board of Innovation .com

Saving the Nano….

After the fantastic launch of Tata Nano, the cheapest car in the world, we have seen that the fan fare and the interest levels have not kept up and there is a drastic decline in the sales of Nano and the Tata Motors management is working overtime to get this corrected and to generate interest. A big ad campaign has been launched. The results are yet to be seen. Tata Motors is trying hard to revive the fortunes of their Chairman’s dream project. 

1. Safe and Secure: No one wants to buy a car which is considered to be un-safe. The first thing that they need to do is to fix the issues that caused fire while driving and drive home the message that the vehicle is safe and secure to be used. Easier said than done. The message has to go across to one and all. The best way that I can think of getting the point across is by getting Ratan Tata to use the Nano for local transportation at least for a month. This will generate the buzz and news hungry media will do the rest.
2. Distribution strategy: Current Tata Motors dealers do not have much incentive to promote Nano as they have much more profitable products to sell. So, launch a series of exclusive showrooms for Nano, ideally in Tier 2 and 3 towns. Even better would be if they encourage people from within the Nano team to take up these dealerships and support them. No one can beat the enthusiasm that they will bring to selling Nano.
3. Business Model Innovation: Tata Motors can also think of newer business models in automotive business. The following models are worth a thought:
1. Time share resorts model: Customers do not buy the car outright but buy the right to use the car for a certain number of days in a year. They share the car with other similar customers.  This will solve the problem of them not needing to find space for parking and also reduce their total cost of ownership. Also, as per my understanding the model has never been tried in the automobile industry. Tata Motors can either float a completely new company to manage these operations or outsource them to new entrepreneurs – (Franchise it). This will give a huge boost for the sagging revenue for Tata Motors as the new franchisees will buy cars based on a pre-agreed basis ( for example, 1 car for every 4 such customers).
2. Mobile phone business model: Find a way to give the car away for nothing and charge the customers for the service they provide – transportation or miles driven. This could be achieved by partnering with all the oil companies and them charging a pre-defined amount above the prevalent fuel price. This is already being tried by BetterPlace for their electric car. This model is difficult to implement but can give huge competitive advantage to Tata Motors not only in the local market but also when they plan to start selling Nano in other markets as they can learn from the experiment in India and perfect the model.

These are just some of the ideas that I could think up. Is there anything else that they can do apart from just running advertisement campaigns? 

I would love to hear from everyone out there, about what else can Tata Motors do, in order to save the Nano. 

Does Google really need Sex ?

Paul Krugman wrote a post titled “Google Needs Sex” which was interesting to read. Lately, Google bashing has become fashionable. Everyone is complaining about the issues that Google has and why it is in its decline. I am sure that this will increase in ferver and quantity.

Everyone has been complaining about the quality of results of search being the trouble at Google.

My personal opinion is that the actual culprit is Google’s business model based on the Adsense program. It is because of this business model that the entire SEO industry cropped up and created a mess of their search algorithm.

In one of my previous blogs (Google on its way downhill?), I did mention that anyone who has to beat Google will have to do so, not only by technological innovation (aka better search) but more so by business model innovation. 

Now, it is up to Google itself to innovate on their business model in order to come out trumps. So, I think this is a wonderful opportunity for Google to re-invent their business model and continue their dominance in the search category.  

Meanwhile, Google is also coping with a lot of other issues like

1. Increase competition from the Facebook’s, Bing’s and other search engines in the market
2. Loss of talent to competition

No matter, what happens, this will be an interesting space to watch out for. 

Business Model Innovation: Learning from the peers

CISCO has been talking about Smart + Connected Communities which have a single intelligent common network backbone on which multiple services can be built and provided thereby increasing efficiencies and effectiveness of the services. 

They have been promoting this service for a reasonably long time now with some moderate success. When you think of the different challenges that CISCO has with regards to S+CC is very similar to the challenges that Sun Edison faced a few years ago. 

A little about Sun Edison:

They were an organization in the business of installing and maintenance of solar power systems for large organizations. They had considerable expertise in installing and maintaining these solar systems. They had customers who were interested in these systems as well due to different reasons like green energy, low long term costs, etc. But these installations were huge requiring very high capital expenditures upfront and their customers were not willing to commit to such high capital expenditures.

They solved this challenge in a very unique way. They did the following:

1.  Find customers (Example: Wal-Mart) who are willing to pay for the usage of the solar power once it is made available to them. They signed long-term power purchasing agreements (PPA’s) with this customer.

2.  Find investors who want reasonable long term returns on investments (For example Pension funds). They sold the PPA’s to these long term investors who were then willing to invest in the upfront capital expense and considered this as the investment on which they get stable returns.

3.    They also signed up with these investors for the maintenance of these installations.

4.    Majority of their profits came from these maintenance contracts.

CISCO can also benefit from a similar strategy with some modification/adaption to overcome the challenge of high upfront capital expenditure for their customers.

Sun Edison was acquired by MEMC in November 2009. Here are some links from Sun Edison site which explains their business model: 

– www.sunedison.com/faq–solar-energy-questions-answers.php; 

–  http://www.sunedison.com/solar-power–provider-solar-power-purchase-agreements.php

This again goes to show that there can be solutions to our challenges around us and it pays to research well whenever we face some very stiff challenge.