Object lessons on digital transformation from a 165-year-old icon

Photo by Divina Paredes

When Dr James Slezak talks about digital transformation, he points to the rise of AirBnB as a prime example of thriving in a fast moving environment.

By the time AirBnB launched, there were three websites doing the same thing, that is, providing an online marketplace for accommodation.

“What they nailed [was] they got the customer experience right and they talked about the sharing economy,” says Slezak, former vice president and chief of operations at the global digital division of the New York Times.

This example presents an “interesting transition” for organisations that will succeed in the digital era, says Slezak, now founder and managing partner at New Economy Lab.

He says the first wave of successful startups were created typically by technology people.

Creating a technology product that can scale, that start with a few hundred thousand users and very quickly have millions or even hundreds of millions of users, “was a very unique capability”, he states.

He says some organisations like Facebook developed this, while others, like Friendster, failed in this mission.

Today, this technology capability has ceased to be a differentiator, as cloud technologies and more sophisticated technology stacks can deliver these services and shift the playing field.

Like many lessons in business school, when one thing becomes commoditised, other things become more important differentiators, Slezak says.

Designing customer experience and user experience has become much more important now, because the cost of complexity and developing the product for millions of people has diminished by one or three orders of magnitude, he says.

“We are thinking more carefully what consumers, what users want,” he says. “It has now come down to how well designed is the product and that is not something you can outsource to a development shop.”

“That is something you have to own and that really defines your product or your unique way.”

Slezak has first-hand experience on how this approach was used to innovate on the digital business model, which allowed the 165-year-old New York Times to survive and prosper amidst massive disruption.

“We had to go through several different iterations of the right structure, in technology and in products,” says Slezak who was the head of operations for the media company’s international digital division, for three years.

“There was a trial and error process, but there was also a directionality to it,” says Slezak.

'No rest for the wicked'

At the 2017 Accelerate event in Auckland, Slezak shared additional insights about how the media company tackled the disruption of the industry, and what other companies can learn from the experience.

He says before the internet, there were three media channels, covering print, television and radio.

Things changed slowly, he says, then all at once, websites emerged in the late '90s.

“You can start a blog and compete with the New York Times,” he says.

It was a much more competitive marketing structure, which led to an erosion of pricing power that continues today, he adds.

“Digital did not make up for what we lost in print,” he says of the impact on their advertising revenue.

The New York Times created a website and by 2010 had a mobile version of it.

“Five years later, there was a plethora of nine or 10 physical platforms to create and equally diverse channels, web, mobile, IoS, iPad, Android phone, Kindle, Windows phone. We had social and messaging platforms.

"There was 100 per cent growth of technology platforms supporting the marketing side of the business," he adds.

Slezak asks, “How do you create a successful business when you face that complexity?” 

He says the New York Times faced these “tectonic shifts”. Among these were the decrease of user uptake of traditional media; uptake of mobile, social, messaging; and the increasing importance of data to the company's operations.

 There has been a decline of television viewers. Mobile, meanwhile, is quickly overtaking desktop viewing.

"Social has become the only growing access to news. Now people scroll through social media, and these days this means Facebook.

“We used to tell people what is important in headlines. Now, you start on Facebook,” he says. “Peer curation is replacing editorial judgment.”

The disruption continues. “There is no rest for the wicked.”  

Messaging is 'eating' social media. Facebook has acquired some of these apps, like Instagram and WhatsApp.

The New York Times faced this disruption by continuously adding new online services and features that made a subscription compelling to readers, so much that subscriptions doubled in 2016. 

Use data in the right way

He says data tools allowed them to make critical decisions around building the brand.

“We have to use the data in the right way.” 

"The fact is that data sitting on your server does not give you much insight on what to do to make a product better. You have got to carefully analyse and visualise it," he states.

"Use data to learn what works and to look at connections. Where do readers go next? You can recommend better content and they will stay on the platform. Users staying on the platform is the core of the business model, this is also what drives advertising revenue," he explains.

They also used data to innovate rapidly on packaging the story. Through data analysis, they can achieve incredible increase in engagement just by changing the headlines, for instance. 

“Increasingly, we have to be more sophisticated as the number of channels continues to explode,” he says. “We had to tailor content in new ways."

Slezak says the digital channels make it easier to get real-time feedback from readers. Stories are also sourced from that feedback or based on anecdotes from readers.

“You can not understand whether you are being successful, unless you are able to analyse data well," he stresses.

“It's a difficult job,” he adds, “collecting the data, engineering the products to organise the data, data governance, data products internally and externally. All of these are deep disciplines that have rich problems that needed to be solved.

“It needed to be managed by people who understand both the business and the content.”

He says the head of data at the New York Times was recently promoted to the top level of the organisation, joining the executive committee of direct reports to the CEO.

“Previously there were many layers in between the CEO and the head of the data team,” he says.

The elevation of this role is critical, “because the business is increasingly becoming a digital business.”

When asked what was the most challenging aspect of the digital transformation that he led at the New York Times, Slezak replies, "Interdisciplinarity.” 

“It was one of the biggest opportunities and also one of the biggest challenges," he says on working with people from different functions, which include news teams, branding experts and marketers.

“They have to be brought together and [their roles] recombined in different ways.”  

"You need to get up to speed quickly," he adds. "You change the way you work together, learning enough about the other disciplines so you can constructively build something new." 

“The people below the very top can be more confronting,” he says. “They are used to being the experts in the room and suddenly they are faced with a new environment.

“You have to be comfortable with [that change],” he says. “Be honest with what you don't know and be prepared ask dumb questions and challenge things.

“All businesses that are changing face problems like that.” 

The difference today is the rapid pace of change, says Slezak. “Because of how rapidly technology shifts the competitive landscape, the importance of that cross-disciplinary, cross-functional collaboration is increasing.”

Send news tips and comments to divina_paredes@idg.co.nz

Follow Divina Paredes on Twitter: @divinap

Follow CIO New Zealand on Twitter:@cio_nz

Join us on Facebook.