Doing what’s easy, vs. doing what’s hard – The New York Times

by | Jul 20, 2009 | Current Affairs, Defend & Extend, eBooks, General, In the Whirlpool, Leadership, Lock-in

Years ago there was a TV ad featuring the actor Pauly Shore.  Sitting in front of a haystack there was a sign over his frowning head reading "Find the needle." The voice over said "hard."  Then another shot of Mr. Shore sitting in front of the same haystack grinning quite broadly, and the sign said "Find the hay."  the voice over said "easy."  Have you ever noticed that in business we too often try to do what's hard, rather than what's easy?

Take for example The New York Times Company, profiled today on Marketwatch.com in "The Gray Lady's Dilemma."  The dilemma is apparently what the company will do next.  Only, it really doesn't seem like much of a dilemma.  The company is rapidly on its way to bankruptcy, with cash flow insufficient to cover operations.  The leaders are negotiating with unions to lower costs, but it's unclear these cuts will be sufficient.  And they definitely won't be within a year or two. Meanwhile the company is trying to sell The Boston Globe, which is highly unprofitable, and will most likely sell the Red Sox and the landmark Times Building in Manhattan, raising cash to keep the paper alive. 

Only there isn't much of a dilemma here.  Newspapers as they have historically been a business are no longer feasible.  The costs outweigh the advertising and subscription dollars.  The market is telling newspaper owners (Tribune Corporation, Gannett, McClatchey, News Corp. and all the others as well as The Times) that it has shifted.  Cash flow and profits are a RESULT of the business model.  People now are saying that they simply won't pay for newspapers – nor even read them.  Thus advertisers have no reason to advertise.  The results are terrible because the market has shifted.  The easy thing to do is listen to the market.  It's saying "stop."  This should be easy.  Quit, before you run out of money.

Of course, company leadership is Locked-in to doing what it always has done.  So it doesn't want to stop.  And many employees are Locked-in to their old job descriptions and pay – so they don't want to stop.  They want to do what's hard – which is trying to Defend & Extend a money-losing enterprise after its useful life has been exhausted.  But if customers have moved on, isn't this featherbedding?  How is it different than trying to maintain coal shovelers on electric locomotives?  This approach is hard.  Very hard.  And it won't succeed.

For a full half-decade, maybe longer, it has been crystal clear that print news, radio news and TV news (especially local) is worth a lot less than it used to be.  They all suffer from one-way communication limits, poor reach and frequently poor latency.  All problems that didn't exist before the internet.  This technology and market shift has driven down revenues.  People won't pay for what they can get globally, faster and in an interactive environment.  As these customers shift, advertisers want to go where they are.  After all, advertising is only valuable when it actually reaches someone.

Meanwhile, reporting and commentary increasingly is supplied by bloggers that work for free – or nearly so.  Not unlike the "stringers" used by news services back in the "wire" days of Reuters, UPI and AP.  Only now the stringers can take their news directly to the public without needing the wire service or publishers.  They can blog their information and use Google to sell ads on their sites, thus directly making a market for their product.  They even can push the product to consolidators like HuffingtonPost.com in order to maximize reach and revenue.  Thus, the costs of acquiring and accumulating news has dropped dramatically.  Increasingly, this pits the expensive journalist against the low cost journalist.  And the market is shifting to the lower cost resource — regardless of how much people argue about the lack of quality (of course, some [such as politicians] would question the quality in today's "legitimate" media.)

Trying to keep The New York Times and Boston Globe alive as they have historically been is hard.  I would contend a suicide effort.  Continuing is explained only by recognizing the leaders are more interested in extending Lock-in than results.  Because if they want results they would be full-bore putting all their energy into creating mixed-format content with maximum distribution that leads with the internet (including e-distribution like Kindle), and connects to TV, radio and print.  Pricing for newspapers and magazines would jump dramatically in order to cover the much higher cost of printing.  And the salespeople would be trained to sell cross-format ads which run in all formats.  Audience numbers would cross all formats, and revenue would be tied to maximum reach, not the marginal value of each format.  That is what advertisers want.  Creating that sale, building that company, would be relatively much easier than trying to defend the Lock-in.  And it would produce much better results.

The only dilemma at The New York Times Company is between dying as a newspaper company, or surviving as something else.  The path it's on now says the management would rather die a newspaper company than do the smart thing and change to meet the market shift.  For investors, this poses no dilemma.  Investors would be foolhardy to be long the equity or bonds of The New York Times.  There will be no GM-style bailout, and the current direction is into the Whirlpool. Employees had better be socking away cash for the inevitable pay cuts and layoffs.  Suppliers better tighten up terms and watch the receivables.  Because the company is in for a hard ending.  And faster than anyone wants to admit.

Don't miss my recent ebook, "The Fall of GM"  for a
quick read on how easily any company (even the nation's largest employer) can be
easily upset by market shifts.  And learn what GM could have done to avoid
bankruptcy – lessons that can help your business grow!
http://tinyurl.com/mp5lrm

Hoisted on my own pitard – Radio

by | May 26, 2009 | Current Affairs, Defend & Extend, General, Lifecycle, Lock-in, Openness

Today I was hit by a market shift that left me baffled as to what I should do next. 

Everybody, every work team, every company has Lock-ins.  Lock-ins help you operate quickly and efficiently.  And they blind you to potential market shifts.  I have as many Lock-ins as anyone.  Some I recognize, and some I don't.  It's always the ones we don't recognize that leave us in trouble.

For 18 years I've listened to only one radio station in Chicago.  WNUA 95.5 smooth jazz.  I like jazz, and I've just about quit listening to anything else musically.  I grew accustomed to the people who played the "light jazz" music on WNUA, and so enjoyed it I even listened to the station on my computer when traveling out of town.  I was a stalwart, loyal fan.  My whole family knew that when I was driving the car, the channel would be 95.5.

Then, after a long weekend out of town, I got in the car this morning.  I pushed the button for 95.5, and for some reason there was Hispanic music.  I couldn't figure it out.  This didn't make any sense.  So I turned off the radio and went about my business.  When I returned home I logged onto WNUA.com to find a letter from a Clear Channel Chicago executive telling me that WNUA was no longer broadcasting as of 10:00am on Friday, May 22.  The web site was gone, only this one HTML page existed.  I was stunned. 

I quickly did a Google search and found an article published by the media critic at The Chicago Tribune dated May 22, "WNUA Swings to Spanish Format."  I immediately thought "this can't be right.  There has to be something I can do to get back my radio station.  Maybe if I email Clear Channel?"  See, I quickly wanted to defend my radio selection, and extend the life of the product I personally enjoyed.

But then I read the article.  Turns out there are a lot of smooth jazz lovers who were loyal to WNUA.  But, unfortunately, that number has not been growing for a while.  The channel management had tried many things to boost listeners, but none had worked.  The market just wouldn't grow, despite their efforts.  The jazz radio listener market had stalled – and was showing signs of (oh my gosh) decline!  I was getting older, and apparently us old Chicago smooth jazz hounds aren't creating new jazz followers.

But, the station had done a lot of analysis as to what was growing.  Hispanics now outnumber African-Americans as the largest minority group in the country.  Clear Channel Chicago did a full scenario about the future, thinking about what would be needed to fill the needs of Chicago's biggest listener groups in 5 years.  Looking forward, there was no doubt that smooth jazz wasn't going to grow – but the opportunity for an Hispanic station was "crystal clear".  Competitively, they would continue losing revenue playing smooth jazz, and although the cost of shifting would be great – the opportunity to be part of a growing market had much more to gain.  Chicago is the 5th largest Hispanic population in the USA and growing, with 28% of the current population Hispanic.  Clear Channel management did both scenario planning and competitor analysis before deciding to make this switch – just what a Phoenix Principle company is supposed to do!

KaBoom.  The market was shifting, and I saw it, but I didn't think about the impact on my own life.  I just assumed WNUA would always be there playing jazz for me.  But the people at Clear Channel looked at the market shifts, and how they could best use their 5 stations to service the most people.  That is good for Chicago, and good business for Clear Channel.  If they wanted to keep growing, WNUA had to be replaced.  I would bet the hate mail has been extreme.  The longing for our old station must be felt by several thousand people around Chicago.  It's hard to let go of a Lock-in.

Oh, I feel terrible about not having my radio station.  But the right move was made.  I should have thought about this more, and seen it coming.  I could have scouted out other radio stations, and started looking for other music styles that I'd like to listen to.  But I wore blinders – until the market shifted and left me in the cold. 

I'm curious, have any of you readers found yourself the unfortunate loser due to a market shift?  Did some favorite aspect of your life or work disappear because the market went a different direction – and you found yourself in a small segment unprofitable to serve?  I'd love to hear more stories from folks whose Lock-in left them unprepared for a change in lifestyle or work.

As for me, I guess there's always CDs.  Or NPR (I'm getting old enough to like the news). But those would be D&E behaviors intended to ignore the shifting market.  So, maybe I should start letting others in my family select the radio stations so I could climb out of my cave and learn what more modern musicians are doing these days.  It would do me good to update my music knowledge – get me closer to people who have music appreciation beyond jazz, and probably make me a lot more likable as a driver.  It's never too late to open up some White Space and learn what's new in the world you couldn't see because of your old Lock-in.