What The Newspaper Industry Could Learn About Do Or Die Innovation From General Motors

As newspaper companies lose billions in market capitalization and innovation-minded journalists battle newsroom “curmudgeons” shell-shocked by the rapid pace of change amid increasingly dire economic realities, a lesson in burn-the-rule-book transformation might come from an unexpected source: General Motors. That’s right, the once-dominate car maker, which missed every trend that has lead to Toyota’s dominance, from quality to environmentalism, is betting the farm on a radical approach to a radical new car — and risks going down in flames if it fails.

Most media types probably thought Nick Carr’s article in the July/August Issue of The Atlantic, “Is Google Making Us Stupid?,” was the most interesting and relevant to media. But Jonathan Rausch’s piece on GM’s last ditch effort to transform itself by producing the world’s first mainstream electric car ( after it failed to do so in the 90s), is a tale of do or die innovation that everyone in the newspaper industry — and media generally — must read.

Here are some of the key passages:

When one of the world’s mightiest corporations throws everything it’s got at a project, and when it shreds its rule book in the process, the results are likely to be impressive. Still, even for General Motors, the Volt is a reach. If it meets specifications, it will charge up overnight from any standard electrical socket. It will go 40 miles on a charge. Then a small gasoline engine will ignite. The engine’s sole job will be to drive a generator, whose sole job will be to maintain the battery’s charge—not to drive the wheels, which will never see anything but electricity. In generator mode, the car will drive hundreds of miles on a tank of gas, at about 50 miles per gallon. But about three-fourths of Americans commute less than 40 miles a day, so on most days most Volt drivers would use no gas at all.

That March, the group laid its conclusions before Rick Wagoner and the rest of the top leadership. Preuss and Larry Burns, who runs the company’s research operations and is regarded in the industry as something of a visionary, did not pull punches. GM had to show a real change of mind on the environment and sustainability or remain Toyota’s doormat. It had to lead on plug-ins or get left behind in yet another new market. It had to restore credibility damaged by the mishandling of the EV1, the abdication on hybrids, and the repeated failure to deliver on promises. It needed not just one more in a long series of research programs and concept cars but a real-world product, one ambitious enough to impress even the cynics.

The group proposed a plug-in that would drive at least 10 miles on a charge. It would be a cool, stylish, high-tech car, marketed to trendsetters. They called it the iCar.

The company then made a series of decisions that look, in hindsight, startlingly audacious. Instead of becoming a safer bet as it ran the internal slalom, the iCar became more ambitious. Its target range on a single charge increased from “at least” 10 miles to 40—the outer limit of what seemed possible. Not a few outsiders think this decision was misguided; a 20-mile battery, say, would still allow many commuters to drive gas-free most days, and it would be easier and cheaper to build. But Lauckner, always pushing, insisted on a car that the public would perceive not just as saving gasoline (that was Prius territory) but as replacing gasoline. The Volt, as the iCar was eventually renamed, had to be perceived as severing the umbilical cord between the car and the gas pump, and nothing less than the longest feasible gas-free range, he believed, would accomplish that.

Perhaps most audacious of all was a decision to allow unusual public access to the Volt program. The industry’s standard procedure is to develop new products, especially risky ones, out of sight, unveiling them only when proven. GM decided to do exactly the opposite. The PR department flung open the doors. GM executives discuss the program’s progress as publicly as if it were a bill in Congress. They show off photos of batteries under development. They promise to let reporters ride in test cars. They lead them through the labs and design centers and even into the wind tunnel. They run ads, for instance in this magazine, touting the Volt in the present tense, as if it already existed. By earlier this year, expectations were so high that President Bush was commending the car, and it had developed a national grassroots following. This article is itself a product of the fishbowl strategy.

All the talk about “saving newspapers” is focused on finding new business models to keep doing what they’ve always done — which is like GM looking for a new business model to sell the kinds of cars they made in the 50s and 60s. What the newspaper industry, if it is to survive as such, must find is a radical new value proposition for news — something so audacious, so self-evidently valuable that, if they can find a way to deliver it, would lead to the rebirth of newspaper journalism.

Is this a panacea? Of course, not. Nor is it for GM:

On the other hand, if it fails, it will fail in full view. GM will have given its critics the most spectacular example yet of a broken promise, and Toyota will look prudent instead of timid.

Despite its head start, GM will have to fight to be first. In January, after a year of watching GM bask in the Volt’s publicity, Toyota reacted. At the 2008 Detroit auto show, Katsuaki Watanabe, the president, announced that Toyota would produce a lithium-ion plug-in car of its own, and would have it on the street in test fleets “not at the end of 2010, but earlier than that.” Toyota was talking about a few hundred experimental cars in a controlled setting, not tens of thousands of cars in dealer showrooms, a much less ambitious goal than GM’s. But Toyota is famous for under-promising and over-delivering.

In February, Tesla, the Silicon Valley company, announced plans for an electric sedan with a gasoline-powered generator, like the Volt—but set to arrive a year earlier, in late 2009. In March, BMW said it might produce an electric car for the U.S. market, and in May, Nissan said it would have one in test fleets in 2010. The drumbeat seems likely to continue. Simply by announcing the Volt, GM has attracted a bevy of competitors, bringing the electric car’s mass-market advent from over the horizon to around the corner.

A bold new vision won’t immediately turn the economic tide, but it could turn the tide of defeatism.

GM is using the publicity to excite the public, of course. It is also using the publicity to push itself. “We thought it would be a motivating thing to do,” Wagoner says. “Certainly it gets everybody aligned”—not always easy in a giant corporation. And GM wants credit for trying, which it never received for the EV1. “If it fails,” Harris says of the Volt, “we want people to know exactly why it failed. It wasn’t lack of commitment or passion on our part; we hit a hard point we couldn’t get around.”

GM’s leaders, needless to say, do not particularly welcome the competition from a business point of view. But they relish it from a psychological one. When I asked Larry Burns, the R&D vice president, how he felt about Toyota’s plans, he said, “Paranoid, because they’re good.” But the real answer was the grin that spread across his face as he recalled Watanabe’s announcement and said, savoring each syllable, “He was a follower.”

The newspaper business is being crippled by competition, which, like Toyota in the case of GM, is doing a better job of delivering what the market wants and needs. GM realized that to survive they couldn’t just catch up to the competition — they had to surpass it — and they had to do so by delivering the holy grail for consumers.

How can newspaper companies surpass the competition? How can they be better than Google? Those are the kind of questions that newspapers should be asking — and then pursuing bold answers.

Newspapers need to stop trying to save the old business or searching amorphously for new business models and instead figure out what needs are going unmet in the market for news — and then be first in the market to deliver breakthrough solutions.

And they need to do it FAST:

Moreover, improvements were being incorporated as fast as they could be conceived; the battery would be on its second generation in January, its third in June. “It’s incredible,” Turner said. “The design they’ve come up with for thermal changed 10 times before they delivered the first battery.” And all of this was before the arrival of a competing battery that might be as good or even better, designed jointly by the Massachusetts-based company A123 Systems and the German company Continental A.G. “We’re inventing and creating on the critical path,” Turner said. He was using the industry jargon for the countdown to production, when time is money and delays can cost millions. “I’ve got guys trying to release things before they’re actually invented.