Deciding our own fate: Newspapers must approach outsourcing intelligently to innovate and survive
Howard Owens touched on an issue I’ve thought about quite a bit lately: Outsourcing of key functions in the newspaper industry. The dangers of over-enthusiastically embracing vendors spread far beyond the specific instance that is the topic of Owens’ post, however. By outsourcing so many of our most important functions, we surrender our expertise in those areas, the very expertise that is necessary, that is absolutely crucial, to innovating and surviving.
Think about real estate listings and search. Real estate is a class of revenue of huge importance to newspapers, and therefore a set of capabilities as critical as any of our industry’s core competencies. Yet responsibility for real estate is all too commonly handed off to a vendor. Sometimes the vendor relationship is direct, sometimes it is via a corporate parent, making the separation between the individual newspaper and the skills and abilities integral to a massive portion of its revenue base that much wider.
The vendor relationship need not even be a paid contract to pose a danger to newspapers’ core competencies. Think editorially. Despite the wealth of public record real estate data available at low or no cost, business reporters in far too many newsrooms still inexplicably rely on spoon-fed monthly press releases from state or regional Realtor associations and national firms such as RealtyTrac as their primary source of information on the direction of their own market. (My frustration with the uselessness of Realtor sales figures is what led to the Mapping the Boom series.) What happens when journalists outsource reporting they could easily do on their own? Well, this happens. And this.
Or consider database development. Or commenting platforms. My point is that an unthinking reliance on vendors to handle our most essential functions is a foolish bet, one that risks our ability to innovate significantly for, at best, immediate and fleeting half-measures.
Outsourcing in itself isn’t the problem. For example, according to the book The Toyota Way, Toyota outsources about 70 percent of the components in its automobiles. Yet Toyota has thrived not by being merely a conservative manufacturer, but through market-leading innovation. (Think the development of the Prius in the 1990s, the launch of the Lexus line in the 1980s, etc.) How does Toyota retain the expertise necessary for innovation while being so seemingly reliant on vendors? Though an unwavering commitment to maintaining internal competency. From the book:
Toyota sells, engineers and makes transportation vehicles. If Toyota outsourced 70 percent of the vehicle to suppliers that controlled technology for them and all its competitors, how could Toyota excel or distinguish itself? If a new technology is core to the vehicle, Toyota wants to be an expert and best in the world at mastering it. They want to learn with suppliers, but never transfer all the core knowledge and responsibility in any key area to suppliers.
In other words, Toyota remains obsessively focused on its mission, and maintains all the internal expertise and capabilities necessary to fulfill that mission, even as it delegates tasks to vendors. If only newspapers had such a laser-like focus on achieving and maintaining mastery of the technologies and abilities that are essential to their mission. Instead, we outsource out of short-term interests and fear, meekly handcuffing ourselves to our vendors’ black box platforms and practices.
I’ve mentioned it before, but it’s worth repeating here a few lines from Toyota’s bedrock corporate philosophy:
We strive to decide our own fate. We act with self-reliance, trusting in our own abilities. We accept responsibility for our conduct and for maintaining and improving the skills that enable us to produce added value.
How many newspapers are truly and boldly striving to decide their own fate? How many are truly acting with self-reliance and confidence in their own abilities? As long as so many newspapers so willingly outsource so much of their core competency, the answer, I’m afraid, is “not enough.”