Why industry’s future isn’t what it used to be

Jim Chisholm looks at why now is the time for investment - not more short-term cuts - in creativity, flexibility and technology.

Around 20 years ago I wrote about what was then an emerging trend – publishers for the first time “letting go” staff in order to save costs.

Much of the downsizing seemed to me to be logical, reflecting changes in technology that led to increased efficiency and effectiveness. Since then we have seen the balance of achieving greater “performance” transform into often-desperate measures in a quest for survival.

Over these 20 years, I have no idea just how many articles and reports I have written reflecting, I would hope, the spectrum of our industry’s future and practices.

I’ve enjoyed praise and criticism in equal measure … and had plenty of fun along the way. But, without any doubt, the stories that seem to resonate most are those about our people – because that’s what we are about.

If there is one perk to be derived from age, it has to be the benefit of hindsight. What does history tell us about what we did right or wrong and how we should reprogram for our future?

(1): Despite all the protests and prognostications about “cuts” (what the media reporters say to the few people who read them) or “re-engineering” (what the consultants say to sound good to their clients) or “optimisation” (what the CFOs say to the shareholders), most of the changes have been valid, but badly timed.

As technology took over the production process, we let go all the compositors, but at the same time lost the craft of typography.

In reality we employed far too many production journalists in an unnecessary workflow process with too many steps and indulgences. And we left this too late, believing it was part of our art and culture.

(2): We have savaged our advertising sales resources to the point where I only know one advertising department in our global industry that has enough staff. We’ve lost a higher percentage of advertising staff than we have of revenue and ignored issues of cause and effect.

(3): My estimate, in the UK and USA at least, is that half of our circulation decline was self-inflicted. Coca Cola continue to spend a fortune on branding and marketing (17% of their turnover), to ensure they remain a household name.

Why, when their availability is ubiquitous? Newspapers are disappearing not simply because of declines in interest, but because we know longer invest in our presence. We spend less that 1% of turnover on communication.

As we increasingly move into the digital age – and I genuinely believe we have a successful and profitable future unfolding – it is vital that we promote our brand values.

Ask yourself why Google, Microsoft and Dell advertise in newspapers and on television and so skilfully manipulate their image through PR. It is because their communications people know that their brand values will sustain their futures.

It is ironic that we are great at telling stories about other people, but lousy at promoting ourselves. Have you ever heard a TV news anchor talking about how his audience is declining faster than ours (which is a fact)?

(4): A client of mine, who was the CFO and then CEO of one of the biggest newspaper groups in Europe, told me that as he looked back and reflected about his career, he realised he had made one big mistake.

That was that he thought paying staff to leave was a cost effective option in terms of maintaining profitability, i.e. “managing decline”.

His argument, without serious analysis it must be said, was that if he had “invested” 50 percent of the money that he had “wasted” in making staff redundant in a programme of creating a more entrepreneurial and confident culture his company would have grown exponentially.

Interestingly another client tells a story of “transformation” for the digital age. As his company embarked on this journey, his executives assumed that the younger staff would adapt easily to new working practices, but the older people would fail.

In fact what they found was that the younger people tended to opt out and find other jobs (cheap redundancy!), while the older staff were delighted to be offered training for the first time in 20 years and be given a new set of challenges and skills. The average age of the established workforce went up!

Many publishers – not most, but many – are reaching the tipping point where their digital activities are growing faster than their print businesses are declining and this is before the true benefit of tablet publishing kicks in … which it will in the next two years.

Now is the time for investment – not more short-term cuts – in creativity, flexibility and technology.

One of my mantras regards what I call the Four E’s of performance, namely:Future

  • Effectiveness;
  • Efficiency;
  • Economy;
  • Enterprise (the ability to grow and diversify).

My observation is that traditional managers generally seek to achieve them all, but see them as mutually exclusive.

Accountants in particular do not understand the dynamics of our industry. So we cut advertising sales resources without sufficient cognisance of the impact this will have on advertiser retention.

We put up cover prices knowing that it will impact on circulation – roughly a two percent rise in price causes a one percent fall in circulation – and think of all those yummy savings in paper and distribution without considering how that fall in circulation will affect share of advertising revenue, which in the majority of cases has a more significant effect on profitability.

We cut staff rather than think about the value of redeployment and diversification.  And so it goes on … and so do I! But the lessons are all there.

The past isn’t what it used to be. But without learning from it, neither will there be a future.

Jim Chisholm is an independent media consultant based in France.

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