CATHERINE RAMPELL ESSAY

For some businesses, the current economic downturn is a bit problematic. For those already facing fundamental threats - like newspapers and American auto makers - it could accelerate their demise.
But history offers some reason for optimism. Industries like bicycle manufacturers, when faced with a threat of obsolescence, managed to creatively reinvent themselves. What lessons do they provide for today’s struggling industries?
There’s no clear route to cheating industrial death. Those companies that have survived technological challenges have in common some combination of perseverance, creativity, versatility and luck. Their precise strategies vary. Some made sweeping changes, and abandoned their original products entirely; others were able to endure by changing little but their marketing.
Take, for example, a certain class of luxury goods. Inventors have created more user-friendly writing implements than fountain pens, more dependable time-keeping devices than mechanical wristwatches, and more efficient ways to heat houses than fireplaces. Yet, many consumers still choose the cultural cachet of technologically more primitive goods.
These older technologies have survived by recasting themselves as luxuries and by marketing their sensory, aesthetic and nostalgic appeal. Producers emphasize their experiential rather than functional qualities.
The popularity of newspapers the day after Barack Obama’s election - when they were valued more as historical artifacts than as sources of news - reflected this development.
But newspapers were not designed with maximum tactile pleasure and durability in mind. “Newspapers were always this scrubby sheet of paper with ink that came off, and that deteriorate in a few hours,” said Gregory Clark, an economic historian at the University of California at Davis. For that reason, he said, it is difficult to imagine newspapers remarketing themselves as a luxury product.
Perhaps there are other qualities unique to newspapers that can be exploited, just as previous creative industries have discovered when facing disruptive technologies.
Photography might have killed Western painting and portraiture, for example, because painters knew they couldn’t compete with the speed and accuracy with which photographs represented the visual world. Instead, many painters and other traditional visual artists innovated with more abstract and less representational images.
Similarly, television might have crowded out movies. Instead, Hollywood focused on bigger, more spectacular, more risque films - the stuff that television couldn’t deliver.
Some survivor industries discovered new customer bases.
Bicycles, for example, grew in popularity through the late 19th century, peaking in the 1890s, but the craze weakened around the turn of the last century. After the First World War, manufacturers discovered a new youth market, which lasted until the baby boomers were kids. Then bikes fell out of favor again, but were revived during the 1970s when those boomers, and their kids, became more interested in personal exercise and gas-free, environmentally friendly modes of transportation.
Radio is an even better example. In its 1940s heyday, it was the center of national entertainment. Then, in the 1950s, television began stealing radio’s biggest stars. National advertisers followed the talent. “Radio, actually shockingly, was pronounced dead in 1953,” says Susan J. Douglas, chair of the communication studies department at the University of Michigan.
But the industry revitalized itself by tapping into new markets. First it stumbled upon the youth music market, congregating around the car radio. Then radio innovators found other neglected markets, including underground music movements, long news programs and talk radio. Along the way, radio’s business model changed; the medium cultivated new niche advertisers, rather than national advertisers, to pay for its new niche programming.
For some companies, a marketing nook wasn’t enough. They made radical transitions to new products and new industries, and survived through evolution, not preservation.
“Much of the history of the ‘American system of manufacturing’ is the story of inventors moving from a declining industry to a new expanding industry,” says Petra Moser, an economic historian at Stanford University who studies innovation. “Inventors take their skills with them.”
Gun makers learned to make revolvers with interchangeable parts in the mid- 19th century, Ms. Moser says. Then those companies (and some former employees, striking out on their own) applied those techniques to sewing machines when demand for guns slackened. Later, sewing machine manufacturers began making woodworking machinery, bicycles, cars and finally trucks.
Some famous companies have taken more improbable turns, either because their original business was fading or because they saw better growth opportunities. Before making cellphones, Nokia made paper. Before making cars, Toyota made looms (a Toyota textile business still exists).
These companies survived by staying aware of changing markets. New customer needs emerged, and smart corporations positioned themselves to meet them. “You have to be willing to walk away from the things that have made you great,” says Scott D. Anthony, president of Innosight, which consults with companies on how to foster innovation.
Unfortunately for newspapers, historians say, the survivors in previous industries facing major technological challenges were usually individual companies that adapted, rather than an entire industry. So a bigger shakeout may yet come.