It is October 14th, 1995. You wake up on a lazy Sunday morning and pick up your copy of New York Times from your front door. After looking at the sports section, you go take a look at the headlines. “Times gives it all away”. You start reading quickly to realize that New York Times would be giving away free classifieds each day. You are puzzled and go through the entire paper and read a short report on a email listing service called Craigslist that allows people to share classified via email. Another report tells you that newspapers cannot compete with the web and free online classifieds. You are not sure if this is even real – how will they make any money if they give away the lucrative classified ads business away. Has the newspaper world gone mad?
And you are right. Any newspaper even thinking on these lines would have been considered crazy. Fortune’s Josh Quittner concurs with you too. Such a step would not have been considered brilliant but crazy.
However, if you start looking at Craigslist as a Rogue innovation you would realize that the choices Craigslist gave the newspapers were the classic choices a rogue innovation gives to an incumbent. Quittner talks about choice A as a heretic view – a perspective that incumbents often take.
I am not saying that newspapers should have given away classifieds in any case. That’s really not the best way to deal with a rogue innovation effectively. They had over a decade to figure out a response and we know that the response hasn’t been very effective.
The key to remember is that when dealing with a rogue innovation, it is critical to see it as an innovation gone rogue. Craigslist clearly threatened to destroy classified ad profits of newspapers back in 1996. Did anyone see it as a rogue innovation? Did newspapers underestimate the chances of success of craigslist? Wasn’t this response consistent with the pattern of responses incumbents generally demonstrate when faced with a rogue innovation?
You would be wondering what is an incumbent to do when faced with such an innovation? I have been answering this question for some time now. Stay tuned for answers.
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