New York Times has a clear strategy and execution. They are definitely moving in the right direction.
It is widely maintained around techonology blogs and analysts that traditional media companies are not aware of our changin landscape. I personally believe that the complex nature of media companies makes it uneasy to lead the changing world, but top executives in some media business know what they are doing.
Having a look to a PPT of New York Times in Bear Stearns 21st Annual Media Conference (March, 2008) is helpful to see a media company situation nowadays. It states 3 challenges.
1. Protecting the brand and maintaining journalistic excellence are paramount
2. Capitalizing on opportunities in print while improving productivity and improving our cost structure
3. Growing our Internet businesses organically while making smart acquisitions
In other words: we want to continue being a reference brand in terms of quality (differenatiation), we have a cow that is decreasing and that is why we got to reduce structural costs, we have Internet to grow both: organically and through acquisitions. So, we got: brand + current cash generation (print) + future cash generation (online).
It is nice to see such a clear statement and assumption of reality. The document as a whole goes around those statements. It is a transitional strategy, a change management problem:
The document quickly focuses in online development. And, concretely, they more concentrate in analysis and business development than in content production. I believe this is a very realistic approach that is completely different to the one taken by some “native” companies that first try to concentrate in product development and content production and then try to work how to monetize it (mobuzz, or lycos may be example of the later, and even some business units in Google). In fact, most failures in Internet are happening in new ventures of pure players, we rarely saw a “traditional” media failing in their Internet operations. There is a pragmatic view coming from offline that is going to change the way to develop business online.
That is business sustainability, caring on how will we monetize our service. 500 MM $ investment in a clear direction: reinvigorate growth within Digital businesses. But also, selling businesses in TV, radio and print (worth 700 MM $). So… aren’t they going in the right direction?
I see them betting hard, and I think they are already transforming their business. For sure, they are going to be a winner also with new technologies.
We may well critizise “traditional” media when they are slow movers, but we have to recognize that this is not always the case.
December 2, 2008 1 Comment
Looking for information on media organizations I found a really interesting work by Ming Hang called Media Business Venturing. It is a dissertation for a PHd about “how to organize venturing and why to choose a certain organizational mode for the development of new business”. Two approaches are used in this analysis: IO (Industrial and Organizational Theories) and RBV (Resource based view).
Adapting to changing environments is crucial for media businesses nowadays, and it is the only way to profit from new opportunities arising. Corporate venturing is the concept that summarizes all related to new businesses creation in an established organization.
RQ: Given the emerging business opportunities, (1) how do firms organize their
new business venturing activities in a structural dimension and (2) why do they
choose a certain organizational mode for venturing?
We all know how media has undergone great changes and challenges from both, internal and environmental factors. Media companies are looking for new revenue streams by stretching their competitive advantages and diversifying their activities/risks. Media compete in a triple market: content, audience and advertising.
New media business oportunities: internet, mobile, webcasting, gaming, digital tv and venture capital.
“Corporate entrepreneurship is the process whereby an individual or a group
of individuals, in association with an existing organization, create a new
organization or instigate renewal or innovation with that organization.”
(Sharma & Chrisman, 1999, p.18)
This work covers several business cases in a deep analysis: Internet Business Venturing and Mobile Media Venturing in News Corporation; the New York Times Company, FiOS TV Venturing and Online Gaming Business Venturing in Verizon Communications, Mobile Distributing Consumer Media Venturing in YouTube, Webcasting Business Venturing in the China Telecom Corporation.
After this analysis, his conclusions are:
Proposition 1: when the level of ‘economics conditions’ and the level of ‘resource conditions’ are both high, the hierarchical modes will be preferred by media companies while venturing for new business.
Proposition 2: when the level of ‘economics conditions’ and the level of ‘resource conditions’ are both low, the more market-oriented modes will be preferred by media companies while venturing for new business.
Proposition 3: when the level of ‘economics conditions’ is high and the level of ‘resource conditions’ is low, the hierarchical modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the direct incentives.
Proposition 4: when the level of ‘economics conditions’ is high and the level of ‘resource conditions’ is low, the market-oriented modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the indirect incentives.
Proposition 5: when the level of ‘economics conditions’ is low and the level of‘resource conditions’ is high, the hierarchical modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the indirect incentives.
Proposition 6: when the level of ‘economics conditions’ is low and the level of ‘resource conditions’ is high, the market-oriented modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the direct incentives.
It can be a bit difficult to understand those propositions without having read the whole book before. The conclusion is that media companies show unflexibilitiy when dealing with relatively small projects (low resources and economic conditions) and when having a complex initiatives they may adopt a hierarchical mode, but not always. In other words, media companies are not good innovation companies within themselves and their business model development may happen mainly through acquisitions. In some cases (like in News Corporation) it is reflected in this book how they deliberately prefer to allow others to move first, and then jump into the market paying the acquisition of an expensive monetary cost but saving the pain of a failed project.
Anyone working in media would more or less presume that these propositions are true by having a look to their own evironments. It is no longer a feasible to keep media businesses in the long term with organizations that are not flexilbe. Media must assume that change is not just merely about how to manage and adopt new techologies but a process that wont stop. Change is our new model, we must continuously be changing, we must be changing organizations on our own, and we have to permanently adapt in order to continue offering what our consumers demand. An organization that does not embrace change, that does not love change will die today or tomorrow.
October 27, 2008 Comments Off