(Note: this post originally appeared on Medium, and it later evolved into a new piece on Harvard Business Review.)
I worked at The New York Times from 2013 to 2015. My job there was to lead a team in the creation, launch and development of a new revenue-driving product that would help restore growth to the company’s bottom line — which as everyone in the world knows, has been struggling along with every other bottom line in the newspaper industry since practically the advent of the web.
My two years there was fascinating. Prior to The Times I had spent most of my career at startups — starting off as a front end coder, gravitating towards strategy, and ultimately co-founding companies. So The Times was a wild trip for me. I learned so much — about how big companies work, how to play the so-called political game, how to properly manage teams, and how to manage upwards and laterally — something you rarely think about at startups. And I believe we got a lot of worthwhile things done while I was there.
What we didn’t get done however was to launch products that grew new revenue for the company, despite a lot of effort, a lot of money spent, and an awful lot of gnashing of teeth. One year after launching the much-vaunted new products from the Times, two of the three paid products had been spun off as free offerings meant to attract new audiences, the third had been killed outright, and the focus of the company had moved on from launching new products in order to grow revenue, to deepening audience engagement.
The Times, in the span of a few years, took a big swing at being a company that can innovate successfully, missed, and then quietly moved on to the next thing.
But you can’t move on as a big company in today’s world — you have to keep swinging, or else you’ll be out of business, done in by all of the Buzzfeeds circling overhead — or whoever is the equivalent in your industry.
So what should the Times be doing to successfully innovate its way out of the obsolescence and financial doom that looms in the not-too-far-off future? The solution is actually fairly straightforward. It’s the same recipe for every big company, by the way — which makes it nice and tidy, though not necessarily any easier for anyone to implement. Broadly speaking, there are three things they need to do:
1. Train (or hire) employees to think like entrepreneurs
The Times knows they need employees who think like entrepreneurs. They knew this before I started there — that’s why they hired me in the first place. Most companies these days know this, have heard it, believe it. But there’s a vast difference between knowing and doing. How do you implement the “entrepreneurial employee” strategy effectively on the ground? It’s tricky, to say the least. The Times, after hiring me for my entrepreneurial instincts, immediately began instructing me to be less entrepreneurial. The more entrepreneurial I was, the more I clashed with the way things were done.
So the question here is: how do you overcome the overwhelming big company tendency to want to put everything into a tidy, square peg management hole, stifling entrepreneurial impulses in the process?
The solution, whatever else it is, has to be systemic — you need a CEO who deeply understands the value of entrepreneurial thinking, managers who do the same, and a culture that is not just tolerant but supportive of it. It’s not enough to bring in a few outsiders, or train a few employees to create a crackerjack team — without broader understanding, those people will only create chafing within the larger organization.
2. Train (or hire) Senior executives to think like VCs
Okay, so let’s say the NYT figures out how to hire and really support entrepreneurial employees so that they thrive and are not pushed into square holes. That’s great. But it’s not enough. That’s only one half of the equation. The other half is that you then need senior execs who think like VCs and can evaluate opportunities in the same way VCs do — understanding when to fund, when to pass, when to cut, when to accelerate, when to hold. The Times didn’t know this when I got there, but by the time I left they were beginning to get an inkling of it (I certainly played as big a role as I could in making them aware of it). They didn’t really grasp it fully though.
These execs can’t just be SVPs with a pet interest in new ventures and a friend who works at a VC firm. They have to be really trained to see things from the VC perspective and to have VC instincts.
Once you’ve got entrepreneurial employees AND a team of senior execs who think like VCs, then you’re in business. And the next step is to create a portfolio of new products, and evaluate them by growth and revenue potential, using the same metrics VCs use, and green light or red light them according to how they perform at regular intervals.
Note that I said portfolios. It doesn’t work to do this sort of thing with anything less than a full portfolio of products. In Innovation and Entrepreneurship, Peter Drucker suggests companies plan and develop three times as many new products as they eventually want to see succeed. So if you want 3 successful new products in 2016, you’d better be developing 9 along the way. That feels about right to me. The Times, by contrast, came up with three ideas, put all of their eggs in those baskets, and then watched helplessly as none of them panned out, financially.
As with #1 above, the problem arises: once you know this, how do you do it successfully? The Times was not doing it successfully, last I saw.
And again, there is no simple answer, but I think it starts with training and changing mindsets. I think you train senior management deeply in the VC arts. You embed them in your favorite venture firm for six months. You hire from Andreessen Horowitz. You really mix up the culture at the top. Anything less feels like playing games, and will end badly.
3. Build a company that acts like an ecosystem, not like an organism.
The Times doesn’t know this yet. And most other companies don’t either. But it’s the third thing companies need to do in order to successfully innovate and grow into the future.
Organisms are how most big companies think of themselves. They are bounded entities, with (generally) non-porous boundaries delimiting inside and outside. What’s on the inside stays on the inside, what’s on the outside stays on the outside. The only way to get new ideas, new DNA, inside is to ingest them.
Ecosystems by contrast are boundless, constantly able to grow, absorb new entities, adapt, react, transform. They don’t absorb new ideas/DNA/value by ingesting, but by adding new components at the edges of the network. And when they do that, they create new value for the whole ecosystem.
When you adopt this model of company, your mindset shifts from one of stasis punctuated with occasional absorption events (i.e. we hire someone from a competitor, we acquire a team, we get acquired ourselves) to a mindset of fluid new value creation marked by continual change and growth. Instead of acqui-hiring someone to ingest their DNA, you partner with them to create one larger network/ecosystem that grows value for both entities.
That last part is still over the horizon for most companies. It will begin to come into focus for them soon.
When you stand back and add this all up, what it spell out is that successful companies in the future will need to look a lot less like the companies they are now and a lot more like…
The startup ecosystem.
Which makes perfect sense when you think about it: the startup ecosystem is something that organically arose in a few short years to take advantage of new opportunities for growth. It has proven to be the best thing out there for that purpose. It’s only fitting then that it would become a model for all new growth in this era.