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

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-spoke
Individual decision Connected decisions

Microsoft versus Apple
in PCs
Facebook versus
Google+
eBay
Airbnb Uber Tencent
Pokemon cards Friends & family Trove
Connected Choices are pervasive

Source: Hall and Krueger (2015)

Microsoft versus Apple
in 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” overwhelms
quality
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 Piracy
2

Diagnosing the Problem: Music Sales across Formats
Source: RIAA.
Rebase peak
sales for each
format to 100

20
© 2016 Bharat N. Anand
Concert Prices and Inflation
Source: Pollstar, Alan Krueger, BLS, CEA calculations, author calculations
Growth in Concert Ticket Prices
Index: 1981=100

21
Music industry in crisis?
(Adapted from Oberholzer-Gee and Strumpf, 2010).

22
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 ?

23
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

26
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

27
Complements versus substitutes
 Can be affected by managerial choice
Print book E-book TV product Digital product

28
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

36
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

37
HBS: Digital Strategy
37

38
The Content Trap
38

39
HBX: Differentiation

40
Social Learning

41
Active Learning and Social Learning

42
Peer Help

43
Active Learning and Social Learning

44
“Online Cold Call”

45
Online Cold Call – and Learner Behavior

46
Peer Help: Geographic Distribution

47
Asynchronous Learning and Peer Help?
AverageHoursperStudentDuringTime
Slot

48
Asynchronous Learning and Peer Help
Module
Deadline
This is called PROCRASTINATION
AverageHoursperStudentDuringTime
Slot

49
Asynchronous Learning and Peer Help?
What do the different colors represent?

50
Performance: Majors versus Non-majors

51
HBX and HBS: Complement versus Substitute
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
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
Percentoflearners
Age (years)
June 2014 cohort
HBS MBA

52
HBX and HBS: Complement versus Substitute
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
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
Percentoflearners
Age (years)
HBS MBA
All HBX Cohorts

53
HBX

54
HBX

55
HBX Connext: From Online to Physical

56

57

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

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

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