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HBS, the NYT and the Star System

My first post on the excellent New York Times article about business model disruption at the Harvard Business School compared the School’s attempts to sustain its existing economics with similar attempts at high-end newspapers like The New York Times and the Wall Street Journal. HBS has chosen to pursue what Professor Clay Christensen refers to as a “sustaining” approach, similar to the strategies followed by several large newspaper companies. In his tweet in response to my post, Jonathan Glick asked the question: “Is HBS the next NYT?”

This question is exactly right. What I didn’t mention in my first post is that educational institutions like Harvard and newspapers like The New York Times depend, in part, on a kind of symbiotic relationship between talent (employees) and these very prestigious institutions. When we think of Michael Porter, we think of the Harvard Business School, and vice versa. Similarly, when we think of Tom Friedman or Maureen Dowd or David Brooks, we think of The New York Times. Mention Bob Woodward and the Washington Post immediately comes to mind. Historically, the institution bestowed its prestige on people like Porter, Friedman and Woodward and, in turn, their identities grew together. In this context, the “talent” would almost always remain with institution until retirement, and in many cases even after, in a kind of emeritus status.

Interestingly, in The Times article, the Dean of Wisconsin’s business school, Francois Ortalo-Magne’, addresses this issue head-on:

Recently, a rival school offered one of his faculty members not just a job, but also shares in an online learning start-up created especially for him. “We’re talking about millions of dollars,” Mr. Ortalo-Magné said. “My best teachers are going to find platforms so they can teach to the world for free. The market is finding a way to unbundle us. My job is to hold this platform together.”

To that end, he has changed his school’s incentive structure, which, as in most of academia, was based primarily on the number of research articles published in elite journals. Now professors who can’t crack those journals but “have a gift for inspiring learning,” he said, in person or online, are being paid as top performers, too. “We are now rewarding people who have tenure to give up on research,” Mr. Ortalo-Magné said.

Mr. Ortalo-Magné spins out the possibilities of disruption even further. “How many calculus professors do we need in the world?” he asked. “Maybe it’s nine. My colleague says it’s four. One to teach in English, one in French, one in Chinese, and one in the farm system in case one dies.”

What is to stop a Coursera from poaching Harvard Business School faculty members directly? “Nothing,” Mr. Nohria said. “The decision people will have to make is whether being on the platform of Harvard Business School, or any great university, is more important than the opportunity to build a brand elsewhere.

“Does Clay Christensen become Clay Christensen just by himself? Or does Clay Christensen become Clay Christensen because he was at Harvard Business School? He’ll have to make that determination.”

This gets at the very heart of institutional coherency (“unbundling”) and is, in my view, the fundamental question that newspapers face as well. It’s true that the Economist has mostly never used bylines. This is the most extreme example of “the brand” subsuming all of the talent in the organization. But that’s an anomaly. In almost all of journalism “stars” are major attractions. Last year, we saw Walt Mossberg and Kara Swisher take their AllThingsD team out of the Journal and almost instantly create a new brand around them called Re/code. I was told by an insider that their recent conference – the first under the new brand – sold out in 45 minutes.

This fundamentally changes the balance of power between institutions like Harvard and the Journal and the “talent” they depend upon to sustain their models. The “talent” now holds the power, and as Mossberg and Swisher prove, a new brand can be built overnight on the web. Perhaps Re/code is sui generis, but just as in academia, these fissures have only just begun to appear in journalism. We haven’t seen a wholesale rush of “star” talent out of places like The Times and the Post, despite high profile moves by the likes of Nate Silver and Ezra Klein, respectively. Nor have we yet seen it in academia.

But the two have striking similarities. And if the “sustaining” approach to their business models has a point of vulnerability, this is where it is in a post-advertising, consumer paying world. David Carr, himself an example of the phenomenon I’ve outlined above, wrote on all of this in his Times Media Equation column about Medium, the blogging tool:

I’ve always been struck by how digital disrupters care deeply about the quality of content that lives online. Even as they helped destroy the business model of traditional publishing, Steve Jobs of Apple, Eric Schmidt of Google and Craig Newmark of Craigslist were always harping on the importance of offering significant content that would enlighten readers.

I personally found Carr’s column to be ahead of itself with respect to Medium’s success. Good for Ev Williams for having charmed him. But fundamentally all the pieces are there. And despite Carr’s words about the traditional business model, that’s still where he earns his living. When Carr, Dowd and Brooks start earning their daily bread from Medium, we’ll know that the fissures have turned to earthquakes.

June 4, 2014, 9:55 am