In a week when The Biz Blog has been all about the pace of transformation in the newspaper business, I stumbled on some stimulating parallel reading:
Fortune's
current cover story by Betsy Morris on how Pepsi is changing with the times.
The gist of it is that CEO Indra Nooyi decided some years ago that this healthy eating movement was for real (kinda like digital news and advertising). Accordingly, spaced over a decade, the company shed its high-calories restaurants -- Pizza Hut, Taco Bell and KFC -- and reinvested. All of its new products -- some added internallly, some by acquisition -- have been in the "good-for-you" zone, including such things as baked chips, Tropicana, Quaker Oats, Aquafina and, most recently, pita chips and natural fruit drinks.
But Pepsi has not driven the bus over the cliff. It still includes in its lineup sugary Pepsi and Doritos, in fact getting 70 % of revenues from these old standards.
Nooyi, head of strategy and acquistions for years before becoming Pepsi's CEO in 2006, is a colorful character who started an all-girl rock bank at her Catholic high scbool in provincial India. She still enjoys belting out a tune with her COO accompanying on the piano. She is into the vision thing with such aphorisms as "I think we can liquefy snacks or snackify liquids."
The obvious parallel to newspapers' transformation challenge is how Pepsi geared up patiently and persistently "to pump out new prodcuts" as the Fortune piece puts it. But Nooyi, who acknowledges ambitions for an eventual Washington appointment, also positioned the company early as committed to sustainability. Newspapers are just beginning to keep an eye on how to get green -- if only to defuse the perception that print editions are wasting forests and cluttering landfills.
The Pepsi story led me to thinking about other models of companies successfully repositioning themselves as their main product became economically unviable. (Clayton Christensen offers several examples in
The Innovators' Dilemma, the book that is the intellectual underpinning of the
Newspaper Next project).
One of my favorites is Western Union. Telegrams went away for both personal and business use, gradually eclipsed by electronic alternatives. (They were not formally
removed from the market until two years ago when volume had fallen to 20,000 annually from a peak of 20 million in 1929). Nonetheless, Western Union has been able to stay successful by regrouping around one corner of its formerly broad franchise -- financial wire transfers.
Reaching even further back in history, Wells Fargo was poised for obsolesence as railroads and then cars erased the need for stagecoaches. After a series of changes, Wells Fargo reemerged as a durable regional bank. Oddly, as the company history notes, the bank now serves roughly the same geography (all through the West) as did the stagecoach network.
My takeaway -- from the Pepsi example particularly -- is that success at transformation requires steady, on-target focus, plus time, plus scale. Urgent makes sense for newspapers, flailing less so.
