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5 Business Lessons From The Debacle At The New Republic

2015 January 11

Leadership is a tough business, especially in the digital era. In earlier times, managers paid their employees to perform tasks and directed them how, where and when to do them. These days, however, professionals are paid to solve problems and think creatively about products, strategies and new technologies.

So the role of leaders has changed a great deal.  It is no longer enough to merely plan and direct action, today we must inspire and empower belief.  That’s how you attract the people, partners and customers you need to compete and win.

The failure to inspire and empower belief is what drove the recent debacle at The New Republic.  Chris Hughes, a co-founder of Facebook, appeared to be a savior when he first purchased the troubled magazine in 2012.  Yet last month he faced a full fledged mutiny.  The story highlights five important lessons for what it takes to manage an enterprise today.

1. The Greatest Threat To Quality And Integrity Is Running A Business Poorly

Hughes, by nearly all accounts, came to The New Republic with the best of intentions, but soon after the purchase was announced, early signs of trouble arose.  As Ryan Lizza reports, Hughes assumed the role of editor-in-chief—a job he had never done before.  Before long, there were lavish parties, increased travel budgets and palace intrigues.

Although it is certainly within an owner’s rights to make decisions about his or her business, it’s hard to see how any of these actions were designed to improve The New Republic’s profitability and that, as George Packer points out, is the true crisis in journalism.

In my career as a publisher, I had a simple rule: unless business side people want editorial staff commenting on ad rates and marketing budgets, they should keep their mouths shut when it comes to the creative product.  If everybody does their own job well, the enterprise will prosper.  When professionals start giving amateur opinions, trouble is never far behind.

And while Hughes was highly visible in his role on the editorial side, it is unclear what he did to improve the business and that’s  the greatest crime you can perpetrate against quality and integrity.  The formula is simple: more money allows you to do more great work.  Less money encourages people to look for shortcuts.

2. The Mission Drives The Strategy

While many see business as a cold, rational endeavor, in fact it is the mission of the enterprise that drives the strategy.  Business professors call this strategic intent, but more more simply put, a mission clearly defines what winning looks like.  It’s what gets everybody up in the morning ready to attack the day.

As Lizza points out in his article, historically The New Republic’s mission has been to “bring sufficient enlightenment to the problems of the nation.”  You could see how people would want to join and contribute that mission, just as it’s reasonable to expect that there is a viable market of people who wish to be “sufficiently enlightened.”

However, the new CEO, Guy Vidra, was focused on a very different mission: to create a “vertically integrated digital-media company.”  To be honest, I’m not quite sure exactly what that means, but I have a hard time seeing anybody devoting their professional life to it or how it would inspire any devotion from consumers.

To understand just how stupid it is, ask yourself this question: Could you imagine Apple or Google declaring their mission to be a “vertically integrated digital company?”  Not to make “insanely great products” or to “organize the world’s information,” but to be vertically integrated and digital?”

It boggles the mind.

3. The Product Always Comes First

For all of the hoopla surrounding the change in management at The New Republic, it’s hard to find any concrete action, except for expanding editorial budgets in the already struggling enterprise, that was taken to substantially improve the product.  That’s always a red flag.

When you look at successful companies—especially digital companies—the product always comes first.  In their new book, How Google Works, Eric Schmidt and Jonathan Rosenberg are so adamant on this point that they recommend at least 50% of a company’s top management be made up of product people.

When I took over management of Korrespondent, a newsmagazine in Ukraine, the editor came to me to discuss industry related supplements.  I asked him whether they improved the product and he told me “no, they’re for advertisers.”  We killed them, moved resources into investigative journalism and uncovered important scandals.  Circulation rose, ad rates soared and Korrespondent became the unquestioned market leader.

Great companies make great products.  Everything else is just optimization.

4. Tear Down The Walls

Another thing that Schmidt and Rosenberg point out in their book is that solutions can come from anywhere.  As I described in a recent post in Harvard Business Review, when company founder Larry Page posted a problem with Google’s advertising platform, it was the search engineers, rather than the ads team, that delivered the solution.

Every company has its issues with silos, but in publishing the practice of instituting strict “chinese walls” is especially problematic.  Innovation is essentially about connecting ideas and that’s nearly impossible to do if people don’t communicate.

Many publishers are beginning to realize this.  Even the venerable New York Times recognized the problem in its internal innovation report, (although initial steps seem to be confined to audience development).  The fact is that no business today can survive without trust between product and business functions and that requires effective communication.

This is  where management at The New Republic seems to have fallen furthest from the mark.  Lizza reports that at an all hands meeting Vidra enthusiastically declared his intention to “break shit” and “spoke in a Silicon Valley-inflected jargon that many of T.N.R.’s journalists found grating and bewildering.”

Make no mistake.  “Breaking shit” is not a strategy.  It’s a tantrum.

5. Innovate The Business Model

Times are changing and things move fast.  Today, every business needs to innovate its model. This is especially true in publishing and so it’s not surprising that Hughes and Vidra spoke with passion about the need to experiment and come up with new ways of doing things.

However, there are effective frameworks for innovating business models and management at The New Republic seemed to follow none of them.  Chiefly, you don’t experiment with your core product (by definition, most experiments fail) and alienate your staff with useless jargon.  Innovation is fueled by empowerment, not contempt.

And so, the debacle at The New Republic has very little to do with digital vs. traditional or old vs. new.  Rather, it is a tale of immature and incompetent management who ravaged a century old institution.  They came not to build, but to disrupt for disruption’s sake.

In that, ironically, they have succeeded.

– Greg

2 Responses leave one →
  1. Kenny permalink
    January 12, 2015

    I like this a lot Greg. As someone who works with Innovation efforts every day, this reminds me of some words of truth I heard long ago. Disruption without purpose is mayhem. Only disruption with purpose is innovation. Thanks for sharing.

    [Reply]

    Greg Reply:

    Nicely put. Thanks Kenny.

    [Reply]

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