Consider this analogy: Professional basketball teams are much better than hobby league teams because they have a much stronger talent pool and incentive feedback loop. Yet individual teams rise and fall within their league, because it’s a competitive ecosystem. Business is currently the pro league for brainpower, but individual companies still rise and fall within that league.
Business is also a faster-changing game than basketball because consumer preferences, supplier offerings and technological progress are all moving targets. So a company full of really smart people will still often find itself much less competitive than it used to be.
Companies like Yahoo that fall too far stop being able to generate large profits and attract top talent, and eventually go extinct. The analogy with sports teams breaks here because many sports leagues give their worst teams some advantages to rebuild themselves, while failing companies just go out of business.
GM, IBM and AT&T are teams who have fallen in the league rankings, but if they’re still operating in the market then they’re still effectively competing for talent and their higher-paid positions still probably have correspondingly higher average IQ.
The NYT is a case where the competitive ecosystem shifted drastically, and the business successfully continued optimizing for profit within the new ecosystem. Before the internet, when information was a scarce resource, the NYT’s value prop was information creation and distribution, with a broad audience, and paid for by broad-targeted ads. Now their value prop is more focused on advocacy of the viewpoints of its narrower subscriber base, paid for by that subscriber base. The governing board of the NYT may care about neutral news reporting, but they also care a lot about profit, so they consider the NYT’s changes to be good tradeoffs.
If you think of the NYT like a public service providing neutral reporting, then yes that service has been crumbling, and no company will replace it doing that same service (the way IBM’s services are getting replaced by superior alternatives) because it wasn’t designed with the right incentive feedback loops for providing neutral reporting, it was designed as a profit-maximizing company, and profit only temporarily coincided with providing neutral reporting.
Consider this analogy: Professional basketball teams are much better than hobby league teams because they have a much stronger talent pool and incentive feedback loop. Yet individual teams rise and fall within their league, because it’s a competitive ecosystem. Business is currently the pro league for brainpower, but individual companies still rise and fall within that league.
Business is also a faster-changing game than basketball because consumer preferences, supplier offerings and technological progress are all moving targets. So a company full of really smart people will still often find itself much less competitive than it used to be.
Companies like Yahoo that fall too far stop being able to generate large profits and attract top talent, and eventually go extinct. The analogy with sports teams breaks here because many sports leagues give their worst teams some advantages to rebuild themselves, while failing companies just go out of business.
GM, IBM and AT&T are teams who have fallen in the league rankings, but if they’re still operating in the market then they’re still effectively competing for talent and their higher-paid positions still probably have correspondingly higher average IQ.
The NYT is a case where the competitive ecosystem shifted drastically, and the business successfully continued optimizing for profit within the new ecosystem. Before the internet, when information was a scarce resource, the NYT’s value prop was information creation and distribution, with a broad audience, and paid for by broad-targeted ads. Now their value prop is more focused on advocacy of the viewpoints of its narrower subscriber base, paid for by that subscriber base. The governing board of the NYT may care about neutral news reporting, but they also care a lot about profit, so they consider the NYT’s changes to be good tradeoffs.
If you think of the NYT like a public service providing neutral reporting, then yes that service has been crumbling, and no company will replace it doing that same service (the way IBM’s services are getting replaced by superior alternatives) because it wasn’t designed with the right incentive feedback loops for providing neutral reporting, it was designed as a profit-maximizing company, and profit only temporarily coincided with providing neutral reporting.