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June 2, 2014, 2:07 p.m.
Business Models
LINK: www.niemanlab.org  ➚   |   Posted by: Joshua Benton   |   June 2, 2014

I was getting ready to write something on this great New York Times article about the digital strategy of the Harvard Business School, but then I saw that Martin Nisenholtz had already done it on the Riptide blog.

The article is really worth the read, but to sum it up: HBS has spent the past few years thinking about how to deal with MOOCs and other forms of online education. Is online education an existential threat to the traditional business school? Or is it a tool that can be profitably brought into the existing model? The story, by Jerry Useem, lays out HBS’ thinking by putting it in the context of two of its superstar professors: Clay Christensen and Michael Porter.

In the future-of-news world, Christensen gets all the attention (we’re certainly guilty). But Porter looks at the question differently:

Professor Christensen, for one, worried that Harvard was falling into the very trap he had laid out in The Innovator’s Dilemma. “I think that we’ve way overshot the needs of customers,” he said. “I worry that we’re a little too technologically ambitious.”

He also feared that HBX [HBS’ new online learning program] was tied too closely to the business school.

“There have been a few companies that have survived disruption, but in every case they set up an independent business unit that let people learn how to play ball in the new game,” he said. IBM survived the transition from mainframe computers to minicomputers, and then from minicomputers to personal computers, by setting up autonomous teams in Minnesota and then in Florida. “We haven’t got the separation required.”

Professor Porter has expressed the opposite view. Companies that set up stand-alone Internet units, he wrote in 2001, “fail to integrate the Internet into their proven strategies and thus never harness their most important advantages.” Barnes & Noble’s decision to set up a separate online unit is one of his cautionary tales. “It deterred the online store from capitalizing on the many advantages provided by the network of physical stores,” he said, “thus playing into the hands of Amazon.”

Here is where the two professors’ differences come to a head. In the Porter model, all of a company’s activities should be mutually reinforcing. By integrating everything into one, cohesive fortification, “any competitor wishing to imitate a strategy must replicate a whole system,” Professor Porter wrote.

In the Christensen model, these very fortifications become a liability. In the steel industry, which was blindsided by new technology in smaller and cheaper minimills, heavily integrated companies couldn’t move quickly and ended up entombed inside their elaborately constructed defenses.

“If Clay and I differ, it’s that Clay sees disruption everywhere, in every business, whereas I see it as something that happens every once in a while,” Professor Porter said. “And what looks like disruption is in fact an incumbent firm not embracing innovation” at all.

Here’s Nisenholtz, applying that divide to news companies disrupted by the Internet:

This argument played out throughout our Riptide interviews. Almost everyone we interviewed mentioned Clay Christensen and his ideas when discussing their own experiences with digital journalism. Interestingly, no one mentioned Porter, and in hindsight and with the benefit of this article, I wish they had. As Nohria states, it really isn’t “all or nothing.”

There’s another layer, too: In this metaphor, is your news organization Harvard Business School — the industry’s premium brand? Or is it one of the hundreds of other business schools in America? Christensen himself says that HBS is “at the very high end of the market, and disruption always hits the high end last.”

Both the original article and Martin’s post are worth the read.

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