Whether it is learning content, advertising, medical advice, text in a book, or sales enablement guidelines, most of Float’s clients would probably agree that having high-quality content is critically important.
And, everything that we as a company put out is carefully screened and edited to make sure that it is excellent throughout. We are pretty well agreed that when it comes to content, high quality matters to success in business.
Dr. Bharat Anand, Henry R. Byers Professor of Business Administration at the Harvard Business School, begs to differ.
In his new book The Content Trap: A Strategist’s Guide to Digital Change, Anand identifies the trap as trying to make the best content in order to stand out from your competitors. He argues that in the digital age, this is not what drives success.
Advertising, education, publications, apps, radio and television, and the Internet are all forms of “information goods,” says Anand, to which the same principles of business strategy apply. There are three main problems in selling information goods:
- The problem of getting noticed,
- The near-zero cost of propagation, and
- The problem of getting paid.
Surely anyone in one of the information goods industries will recognize solving these three problems as being central to success in their business. But, as communications guru Marshall McLuhan once explained, “We look at the present through a rear-view mirror. We march backwards into the future.” Because of this, we tend to impose present-day strategies on new technologies because that is what we know best.
Anand suggests that most executives make three fundamental mistakes in the content business:
- They obsess with isolated operations rather than take a holistic view by recognizing internal and external conditions that impact the entire business,
- They try to preserve content at all costs rather than seizing the opportunities around it, and
- They search for best practices in the mistaken belief that there is one right approach to confront the threats of digital change.
Most importantly, these three errors cause management to miss what is actually most important – connections.
Prof. Anand spends much of his book discussing three types of connections that are important to any information-based enterprise: user connections, product connections, and functional connections across an organization’s activities.
1. User Connections
Much of the first quarter of The Content Trap is devoted to “network effects” on the sale of information goods. “Product quality need not win,” warns Anand, “The strength of network effects can overwhelm attractive product features… Networks protect you from mistakes. They can also give you higher margins, deter competitors and lower the cost of goods.”
As an example, he cites two different periods when the New York Times tried to make money from their digitized content.
The first attempt was a digital subscription service called TimesSelect that the newspaper launched in September 2005. Certain types of content, especially opinion columns, were walled off from general readers, and were only available to subscribers. The rest of the newspaper was free. This turned out to be a money-losing proposition, and was abandoned two years later.
In 2011, the Times set up a paywall in the second attempt to make money from their content, charging a flat monthly fee to those who read more than 20 articles a month. At the same time, existing print subscribers were given full access to all digital content for free. This strategy both boosted print subscriptions and resulted in over $100 million in revenue in the first year.
2. Product Connections
Anand speaks about the concept of product complements.
Two products are complements if a user’s value from consuming both is greater than the sum of their value from consuming each alone.
- hot dogs and ketchup,
- music CDs and live concerts,
- tires and restaurant guides,
- iPhones and iTunes, and
- podcasting and book publishing.
Often the success of one product is the result of having great complements, even if one of those products is essentially free or even a loss leader.
The questions that must be asked are, “What business are we really in?” and “What is the total value to the customer of our product and its complements?” As Apple has shown, “insanely great” products are no guarantee of corporate success, as value can shift from a product to its complements.
Often complements are controlled by another enterprise, sometimes even by a competitor. Focus on great complements to your product for sales success, Anand advises, not great products.
3. Functional Connections
Decisions on business strategy are not isolated.
Instead, contends Anand, “Functional connections arise from the fact that the payoff from any single decision nearly always rests on other decisions.”
He warns against mimicking choices made by apparently successful companies, or those who advocate for “best practice” solutions. “Acknowledge the notion of complementarities and you see why best practice thinking can backfire. Mimic one choice without making the follow-on decisions required for it to work and you’ll be worse off than before.”
The essence of strategic positioning is to choose activities that are different from rivals and that make sense from your particular circumstances and context. There are no cookie-cutter solutions in business. “Organizational choices are connected. Functional connections amplify the impact of any single decision. As a result, connections require you to look beyond isolated decisions and toward the logic of the whole. And they make it hard for competitors to match what you do.”
Throughout the book, the author uses many case studies to illustrate successful and unsuccessful digital strategies for newspapers, magazines, book publishing, television, crowdsourcing, websites, music CDs and concerts, advertising, and higher education.
I found the entire book insightful and useful for anyone who is trying to manage the transition from analog businesses to digital enterprises. Anand summarizes his conclusions:
“Product quality, hyper targeting, user personalization, and customization are today’s prescriptions for digital success. And they may be precisely why so many companies find digital transformation hard, misdiagnose threats to the business, and miss opportunities. These prescriptions tend to lead firms to focus on customers one by one and missed the connections that arise from managing customers as a portfolio. They lead us to believe that content quality is the key to success – when connections are.”
Whether you agree with all his points or not, this book challenged my thinking, which is why I can heartily recommend it to anyone who is in a content business and grappling with similar issues.
Bharat, Anand (2016). The Content Trap: a strategist’s guide to digital change. Random House: New York.
(Image credit: karanja)