Wednesday, January 30, 2008

Collective inertia – if you don’t join them, you can beat them!

Ever wondered why newspapers always had this ridiculously large, uncontrollable size? Perhaps when you were trying to read one in your garden on a sunny yet windy afternoon, forcing you to peel the pages of your face every annoying three seconds? Or while reading one on the train, smashing your elbow in a nodding neighbour’s face when turning the page? I did. Not smashing my elbow in anyone’s face, but wondering why these pages had to be so bloody large.

I simply assumed that it was much cheaper to print on large pages than small ones. Turns out I was wrong.

To my surprise, I found out that printing on large pages is actually more expensive than on smaller ones…?! Why did they do it then; are these Times, Guardian and Daily Telegraph people closet sadists, finding secret joy in giving us a daily struggle with inky pages? Here’s what happened:

In 1712 British newspapers came to be taxed on the number of pages published. Editors then decided to print the news on enormous pages, and fewer of them, creating the broadsheet format. The original tax disappeared in 1855 but, despite being considerably more expensive, the format persisted.

As you may remember (if you’re from London), a couple of years ago, after the free newspaper “Metro” entered the industry, the Independent was the first to abandon the broadsheet and “go tabloid”. Their sales figures surged. Soon The Times followed, and later also the Guardian, all to their benefit. But why did it take so long – centuries!? Had no-one ever conceived the idea of printing newspapers on smaller (and cheaper!) pages?

Sure they had. Many times over the years someone would bring it up; “shouldn’t we print on smaller pages?” But they would always dismiss the idea: “no-one is doing it” and, mostly, “the customer would not want it”… Yes we did!

I call this “collective inertia”. Every existing player in the industry was afraid to break the mould and take the plunge. I have also learned, studying many firms in many different lines of business, that most industries have such a slightly strange, idiosyncratic convention that everybody adheres to but nobody really remembers why we’re doing it that way.

But hardly anyone dares to challenge it. And that is where the business opportunity lies. If you’re the first one to spot the silly convention (just to name a few candidates: buy-back guarantees in book publishing, detailing in the pharmaceutical industry, insane working hours in investment banking) and do it differently, it might just make you a heck of a lot of money.

And it would save many of us customers from a daily elbow in the face.