Stability in Times of Change: Trends in Newspaper Executives’ Attitudes towards Digital Media

The rationale for online publishing is the main topic of the present article, which explores Norwegian newspaper executives’ perceptions of the strategic role of their online newspapers. I discuss the situation after two decades of online news publishing within the theoretical framework of strategic management, applying Miles and Snow’s classic model for the analysis of the strategy, structure and processes of organizations

Raymond E. Miles and Charles C. Snow initially published the book Organizational Strategy, Structure, and Process in 1978 through McGraw-Hill, New York. Twenty-five years later, it was republished in the series “Stanford Business Classics” by Stanford University Press.

These words concluded the analysis of the 2005 survey of Norwegian newspaper executives (Krumsvik 2006)

This article is an update of Krumsvik (2006).

Eight years later, the survey has been conducted five times biennially. Again, the question being asked is: What is the strategic role of online newspapers?

Companies’ adjustments to altered external conditions constitute complex and dynamic processes (Picard 2000, 2003; Kolo, C. and Vogt, P. 2004). In order to analyse such situations, Miles and Snow developed a model called “the adaptive cycle” (2003:21–28), an attempt to generalize the psychology at work in the behaviour of organizations. Three main problems of change are identified: (1) The entrepreneurial problem (domain definition), (2) The engineering problem (technology), and (3) The administrative problem (structure, process, and innovation).

A process of adaptation is likely to work sequentially throughout the three parts of the cycle, but processes of change may be triggered within all three. However, in the studies conducted by Miles and Snow, it appears that the fastest and most efficient adaptations occur when the right administrative changes are made.

By studying different industries, Miles and Snow identify four types. Each of these has its own strategy for responding to changes in the surroundings, and its typical configuration for technology, structure and process consistent with its strategy. They name three stable situations as “Defender”, “Analyzer” and “Prospector”, where the company is competitive over time if organized according to its strategic type. The last category is called “Reactor” and represents an unstable situation (Miles and Snow 2003:29):

Defenders are organizations that have narrow product-margin domains. Top managers in this type of organization are highly expert in their organization’s limited area of operations, but do not tend to search outside their domain for new opportunities. As a result of this narrow focus, these organizations seldom make major adjustments in their technology, structure or methods of operation. Instead, they devote primary attention to improving the efficiency of their existing operations.

Miles and Snow (2003: 93) identify three main reasons why an organization acts as Reactor: (1) The top management may not have clearly articulated the organization’s strategy; (2) The management does not fully shape the organization’s structure and processes to fit a chosen strategy; and (3) There is a tendency for the management to maintain the organization’s strategy-structure relationship despite overwhelming changes in environmental conditions.

The model developed by Miles and Snow was an important contribution to the development of strategic management as a field of study. It was founded, among other things, on the work of Alfred Chandler (1962). Chandler’s analyses of large American enterprises documented how changes in strategy are followed by changes in structure. Miles and Snow’s contribution has been vital in the formation/development of what is known as “the configurational view of strategy”, which explains that there is not an infinite number of alternative routes towards the goal, but rather a handful of fundamental alternatives to choose between in order to achieve what one wants. Porter (1980) is among those who, following the typologies developed by Miles and Snow, has presented his set of generic strategies (cost leadership, differentiation and focus) (Hambrick 2003).

My chosen model of analysis is developed to understand companies within an industry, and it might therefore be problematic to use it in analysis of the newspaper industry at large. In order to deal with this problem, I will attempt to identify some typical traits in this industry and regard newspapers as players within the total media industry, that is, within a competitive market where different media compete for readers/users and advertisers.

The core activity of a newspaper company seems basically to correspond to the defender category. The focus is on publishing a newspaper, and the top executive is usually an expert on precisely that, besides having worked a long time in the business.

The executives do not actively seek opportunities outside of their domain or line of business, and the main focus remains on improving management of the core activity. The large investments that have been made to digitalize the production process seem mostly to be about producing the same thing in a more efficient way (Krumsvik et al. 2013).

However, the digitalization of production, storage and distribution of media content paves the way for a new understanding of the line of business within which one operates, and the competition one partakes in. In this situation, the papers have an advantage because of their rich content and well-established channels for marketing new products and services.

The establishment of online newspapers can be seen as a shift towards the category analyzer, with operations in one relatively stable part of the market and one rather unstable. In the traditional line of operations, the focus is on routine and efficiency, whereas in the new line of business one seeks to adopt good and promising ideas.

However, the analysis of the 2005 survey concluded that Norwegian newspapers were not analyzers, but rather had indications of being reactors due to lack of clarity in the strategic role of online newspapers (Krumsvik 2006). In a 2008 study of online news production at Cable News Network (CNN) and the Norwegian Broadcasting Corporation (NRK), both cases were found to be defenders (Krumsvik 2009) due to the focus on centralized news production and the distinct supporting role of the online platform in relation to the traditional broadcasting operations. A later study of two Scandinavian tabloids in 2013 classified the Swedish Expressen as analyzer and the Norwegian Dagbladet as reactor, based on variation in the strategic role of digital news production explained by differences in ownership and company culture (Sætren 2013).

The aim of the present article is to provide an updated analysis of the rationale for online publishing in the Norwegian newspaper industry (for the analysis of the 2005 survey, see Krumsvik 2006), and explore whether the newspapers have moved towards a stable strategic approach. As the newspapers are continuing to operate in two types of product-market domains, one relatively stable, the other changing, the expectation of analyzer as the chosen main strategy would still be valid as a reasonable supposition.

The survey is designed to give a preliminary assessment of such a hypothesis. First of all, it is vital to find out (1) whether executives see use of the Internet mainly as an opportunity for their organization, and (2) what the functions of online priorities are in the company’s strategy.

Quantitative surveys of newspaper executives were conducted biennially from 2005 to 2013 in cooperation with the Norwegian Media Businesses’ Association (MBL) and the National Association of Local Newspapers (LLA). Top executives (editor-in-chief, managing directors and publishers) in Norwegian print papers responded to approximately 25 questions in an e-mail/web-based questionnaire.

The respondents were not sampled as all registered newspapers were included, and non-response can be interpreted as a kind of negative self-selection. There were no indications that the non-responses followed a pattern and created systematic biases in the material. The response rate after three rounds of e-mail reminders is presented in Table 1. The results are presented in the following section.

When Norwegian newspaper executives are asked whether they perceive use of the Internet as a threat or an opportunity, they are more optimistic with regard to their own paper than when asked about the newspaper business in general.

Five variables are quite stable over the eight years covered by the five surveys: The perceived threats to and opportunities for both the newspaper industry in general and the respondents’ own newspaper in particular are only marginally changed (Figure 1, Table 2, 3, 4, and 5). The same is the case with general satisfaction with the newspaper’s online activities (Table 6). This image of stability might be surprising given the fact that about half the executives have been replaced during the time covered by this longitudinal study (Table 9), and the rhetoric of rapid change in the media businesses.

Figure 1

A stepwise linear regression of the 2013 dataset (R²=.539; p<.001) indicates that the strongest predictors for the dependent variable “The Use of Internet Represents an Opportunity for My Newspaper” are “The Use of Internet Represents an Opportunity for the Newspaper Industry” (Beta=.601, Sig=.000) and the importance of existing advertisers as a target group (Beta=.261, Sig=.000).

There is a significant relationship between size (measured by print circulation) and level of satisfaction with the newspaper’s online activities (Table 6a and 6b). Executives of larger newspapers tend to be more content.

A stepwise linear regression of the 2013 dataset (R²=.155; p<.001) indicates that the strongest predictors for the dependent variable “All in all, how satisfied are you with the newspaper’s online activities today?” are “The Use of Internet Represents an Opportunity for the Newspaper Industry” (Beta=.266, Sig=.001) and the importance of existing advertisers as a target group (Beta=.212, Sig=.005).

The rationale for online publishing is changing. Marketing of the print edition is less important, and new sources of revenue more important (Table 8). Hence, the focus on user payment for online news has increased (Table 7), and the rationale for this approach has matured: While it was driven by perceived threats from 2005 to 2011, opportunities for the industry are the strongest predictor in 2013 (Figure 2).

Figure 2

The dual leadership model of newspapers might lead to conflicts on strategic issues, however on the question of whether users should be charged, there was no significant difference between the management roles (Table 7).

While 47% identified the function as a source of new revenue streams in 2005, this increased to 61% in 2013. However, the single most important function is either to be “part of a multi-channel strategy” or to be “defending the market position”. These functions have been identified as the most important in all the five surveys, and they have increased in importance over time (Table 8).

Table 9 reveals a high turnover in the executive ranks. The mean differences based on number of years in current position and the questions presented in Table 2, 3, 4, 5, 6, and 7 are not significant at the .05 level.

The findings of this longitudinal approach indicate a high degree of stability in the perception of opportunities and threats (Figure 1, Table 2, 3, 4, and 5). The original survey revealed that Norwegian newspapers’ executives did not approve fully of their own organizations’ online activities. This has been a stable state of mind during these years (Table 6). It is not changed by the fact that about half the executives have been replaced since the first survey (Table 9).

Newspaper executives tend to be recruited from within the industry, and shared assumptions within the newspaper culture might be a factor at play. This indicates similarities with top managers in the defender type of organization, who are “highly expert in their organization’s limited area of operations, but do not tend to search outside their domain for new opportunities”, according to Miles and Snow (2003:29). “As a result of this narrow focus, these organizations seldom make major adjustments in their technology, structure or methods of operation. Instead, they devote primary attention to improving the efficiency of their existing operations” (ibid.).

The trend of new and old media integration might support such a hypothesis, as the main focus has been on benefits of the scale and scope of the joint news production. In the 2005 analysis, the finding that the top executives at the largest newspapers were more satisfied with their online ventures was linked to their structural moves to develop an analyzer approach at the larger organizations:

The [analyzer] approach was realized by establishing separate daughter or sister companies to run and develop new media activities. At the turn of the century, some of these new companies had ambitions to go in the direction of prospectors, but despite several attempts, it turned out to be the related online newspaper concept that received attention. In this sense, these companies also represent the mere partial establishment of an analyzer position for the activities of the media house (Krumsvik 2006).

However, the trend has turned in the opposite direction towards an integrated defender with a main focus on efficiency. Furthermore this has not affected general satisfaction with the online activities. The five stabile variables do not have any significant means difference based on size of the newspaper or the role of executives.

The apparent detachment of key variables normally determining strategy and structural choices of newspapers (from traditional defenders to separated analyzers with ambitions of developing online prospectors, and returning to integrating defenders) might indicate the lack of a consistent strategy-structure relationship associated with the reactor type of strategy. These reactors “seldom makes adjustments of any sort until forced to do so by environmental pressures”, according to Miles and Snow (2003:29). Trendsetters like The New York Times, Aftonbladet, and Dagbladet, as well as dot com optimism and financial crises, seem to have influenced structural choices more than the general view on opportunities and threats.

There are, however, two important indications of newspapers developing a stable type of strategy, such as a defender, rather than an unstable type of reactor:

The first indication is more clarity in the rationale for online publishing (Table 8). Marketing of the print edition is less important, and new sources of revenue more important. This is linked to the second observation; the focus on user payment for online news has increased (Table 7), and the rationale for this approach has matured (Figure 2): While it was driven by perceived threats from 2005 to 2011, opportunities for the industry are the strongest predictor in 2013.

However, it might be alarming that key factors (i.e. opportunity for own newspaper, content with own newspapers, and user payment) in the regression analyses are all predicted by the variable “The Use of Internet Represents an Opportunity for the Newspaper Industry”. This indicates that management has not succeeded in finding a balanced focus between traditional and new activities based on the specific conditions of their own operation. It seems as though newspaper executives still find it hard to respond efficiently to the insecurity created by changes in the environment.

Another strong indication of newspapers not being typical analyzers is the embracement of the iPad platform (Krumsvik 2012a). They were not watching their competitors closely for new ideas, “and then they rapidly adopt those ideas that appear to be most promising”, as is expected of analyzers (Miles and Snow 2003). This resembles the premature launch of online newspapers without any idea of a viable business model. Two decades later, the online revenues are not able to fund the business model of legacy news operations (Krumsvik 2012c).

Business development in this industry is often done at the corporate level (Krumsvik et al. 2013) or by constructing local superstructures in the form of media houses where newspaper, local radio and local television are sister activities in a strategy to keep intruders off the dominant position that local newspapers have managed to establish in the advertising market. This is enhanced by advertising networks that enable them to compete on the national and regional market as well, and if necessary by establishing free newspapers to produce, reach or prevent new startups (Krumsvik 2006). In 2013, we also see the ability to serve existing advertisers as a strong predictor of strategy.

In summary, there seems to be no support for the newspaper industry in general performing as analyzers, but rather as defenders with indications of the reactor type of strategy. This might lead to a situation in which the role of digital media is to serve first and foremost as distribution platforms, enabling “all inclusive” approaches that offer users access on platforms of their choice. Further research is needed to determine the strategic configuration of specific organizations.

The rationale for online publishing is changing. Marketing of the print edition is less important than it used to be, and new sources of revenue are more important for the Norwegian newspaper executives. Hence, the focus on user payment for online news has increased, and the rationale for this approach has matured.

However, newspapers are still struggling in their efforts to find a balanced focus between traditional and new activities. It seems as though newspaper executives find it hard to respond efficiently to the insecurity created by changes in the environment.

The defender strategy might lead to a situation in which digital platforms will be used first and foremost to distribute the newspaper. This makes it possible to focus on the core activities in a traditional newspaper house, utilizing new technology in order to be more efficient. Stability rather than change reduces fear, uncertainty and doubt in the newspaper business.