BusinessWeek cannot afford to stay within McGraw-Hill - Stephen Baker

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BusinessWeek cannot afford to stay within McGraw-Hill posted on August 6, 2009

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BusinessWeek is an anxious workplace. We're up for sale. Private equity investors are kicking the tires. Many of us could be jettisoned by Christmas, or even Hallowe'en. We even top a recent ranking (by anonymous "experts") on the brand most likely to disappear. Naturally, many of us wish we could stay within the safe confines of the McGraw-Hill Companies, where the magazine was founded 80 years ago.

But McGraw-Hill is not a safe home. The company, for all its merits, is slow and bureacratic, and it's painfully short on innovation and creative thinking at its highest levels. This is hardly the outfit to remake a business for the age of Google and Wikipedia. We need owners with faster feet and bigger heads.

It is true that it seemed to be a luxury over the last several years to be owned by a patient investor, one who loved the brand and swallowed growing losses. But looking back, this reduced the pressure to remake ourselves. A sharper and more tech-savvy owner would have pressed for transformative changes, and would not have greenlighted extravagent and ill-conceived tech projects.

So, McGraw-Hill, scorched by the Internet economy, dumps us and returns to its safer businesses, including books and credit ratings, right? Well, that's the idea. But the same forces that we confront are also threatening those divisions. An example. At a tech roundtable this week at the Aspen Institute, I met Jesper Andersen, co-founder of FreeRisk, a startup that is out to create crowd-sourced credit ratings. Will FreeRisk topple S&P? Probably not. Most startups fail. But if alternative approaches take root, S&P could lose its pricing power. The same pain is inevitable in the book business. Already students are using networks to trade and share $175 text books.

Yes, the future for BusinessWeek is uncertain and pain is inevitable. But I'll take my chances with a fast company driving these changes. In the end, I'm in full agreement with Terry McGraw: BusinessWeek has no future with McGraw-Hill.