Gravity Medium

Pop quiz, hotshot. There’s a bomb on a bus. Once the bus goes 50 miles an hour, the bomb is armed. If it drops below 50, it blows up. What do you do? What do you do?

One of my favorite writers on matters of strategy, especially related to technology application in business, is Bob Lewis, a long-time columnist from InfoWorld and a popular business consultant as well. He writes a weekly column, shared via the web. Great stuff.

This week he wrote a piece (the second in a series) on business strategy: “A business change cornucopicolumn.” And it sounds like he’s talking about my specific public media company in Anchorage and the public media industry in general.

It’s spooky.

Check out this rather heavy quotation (sorry, I just had to) and see if it fits your strategic situation (added boldface is mine):

[Let's] start with a framework for describing any business. It has ten dimensions — five external, five internal.

The external dimensions are:

• Customers: The people who make buying decisions about what the company has to sell.
• Product: What the company sells its customers.
• Price: What the company charges for its products, along with margin goals, contract terms and conditions and so on.
• Marketplace: The business ecosystem — suppliers, distribution channel, competitors and partners.
• Messages: How the business explains itself and its products.

The internal dimensions are:

• People: Employees and contractors — the human [beings] themselves, their skills, knowledge and experience.
• Process: How people do the company’s work.
• Technology: The tools people use when fulfilling their roles in the company’s processes.
• Structure: How the company is organized — its reporting structure, [salary] structure, policies and guidelines, and internal communications.
• Culture: How employees respond to common situations.

In healthy organizations, the ten dimensions are consistent, interconnected, and mutually reinforcing.

Companies don’t undertake strategic change just because one or two are a bit moldy. They undertake it … because the company’s business model no longer works. Perhaps the company’s products are no longer relevant, or the customer segment it serves is shrinking, or its pricing is no longer competitive in its marketplace, or its marketplace has changed in some serious way. It’s fallen behind.

…

Many companies enter a sort of vegetative state in which doing nothing at all becomes the strategy — they pare spending down beyond the minimum, hoping someone buys them before they’re completely [beat]. The alternative, though, is nearly as bad, because there is no such thing as changing just one of the ten dimensions of organizational design.

…

[For example:] Your competitive challenge is pricing. But you can’t change just the price. You need a [better] response than that, because … you’ll lose money on every transaction.

To cut prices while preserving margins you’ll need to change your processes. That means “changing” your people in some way too, because new processes wholly or partially invalidate old skills.

Most likely, you’ll have to change structure and culture as well, and reposition yourself in the marketplace (including, perhaps, bypassing your current distribution channel). All of which will require significant changes in technology.

That’s a lot to change all at once. You have to take an interconnected ten-dimensional model of the business that worked and redesign it into a new interconnected ten-dimensional model of the business that works.

Then you bet the farm, implementing the new organizational design as one massive process. And you don’t get to stop running your business during the change-over.

…[The] company’s executive team decides the basic shape of pricing goals, production strategy (process), and distribution. It also decides on any structural changes that will be required, putting the right people in charge of critical business responsibilities.

And, it will define the underlying cultural changes necessary for everything else to work.

The executive team will focus its attention on the cultural change. The rest of the company will use the 3-1-3-4 formula (3-year vision / 1-year strategy / 3-month goals / 1-week plan) to figure out everything else and make it happen in manageable increments.

Holy shmoly!

I don’t know about your company, but that fits my company, right this second, perfectly.

We’re grappling with these problems all at once:

• Public TV’s audience is dwindling nationally and locally. That reduces advertising (sponsorship!) revenue potential and revenue actuals.
• TV membership dollars are steady, but from a shrinking number of donors (per donor giving is up, total donor count is falling).
• The cost of producing national-quality mass-media-style pubTV programming has risen beyond our ability to do it locally and it’s quickly becoming too expensive to buy it in national packs from PBS.
• The cost of producing lower-end media has collapsed, allowing a flood of programming at the bottom-end of the market, and allowing the “audience” to produce (and consume) their own digital media, without paid gatekeepers like us.
• Our TV fundraising model is based upon transactions with people that don’t usually like us or give us money — we sell them stuff. In so doing, we’ve painted ourselves into a corner: true believers hate us when we grab the money and cut off their favorite programs, yet we need that cash to pay for the true believer programs. When we attempt to raise money around regular programs, they tank, financially.
• Our public radio audience has grown over the past 15 years, but has now flattened and may be starting a long backward slide if we can’t figure out how to grow our audience further or deepen our relationship with the audience we’ve got.
• Our staff is composed almost exclusively of baby boomers and others that built and/or grew up with the public media system. They are approaching retirement and don’t seem to have another “revolution” in them. Internet models are curious, but unproven, for them, and since they largely eschew new media consumption models, they don’t know how to approach them from a business angle.
• Government funding for public media in our state has fallen over the past 15 years. Using inflation-adjusted dollars, funding has dropped by more than 50% in 10 years. Plus, companies successful with fundraising activities are deliberately cut off from state funding. And federal funding has been flat or declining (in inflation-adjusted dollars).
• Our strategic drift has led to an accumulation of drifting employees and a loss of innovating ones. If you’re a striver, a pusher, a mover-and-shaker, if you want to accomplish something, we offer a frustrating environment at best. Our culture says we should wait for a knight in shining armor to come along with bags of money a new and exciting crusade to save us.
• Our product set, as currently deployed, does not compete well enough in a mass market well enough to draw the required revenue, and it doesn’t serve a niche market well enough to garner a rabid following of local support. In web terms, we’re too small to be Google, but too big to be 37signals. (What’s the opposite of a sweet spot?)

I could go on.

Our CEO has repeatedly likened our strategic situation to changing the tires on a bus while driving down the highway at 60 miles per hour. That feels about right.

Personally, I’d like to pull over, get this bus up on a lift and change the tires in a more controlled environment. Then we can get back on the road. But as soon as we drop below 50mph — KABOOM! …the bus explodes, and that’s it for Keanu Reeves and Sandra Bullock.

Which is why Bob Lewis’ 3-1-3-4 formula may be required for us on the mobile pit crew. And it’s why strategies built around a new understanding of the 10 dimensions of business are in order. Clearly, more than 1 or 2 of the 10 dimension have changed:

• Our customers are moving online and expect on-demand access in addition to the streamed services. They also want to interact with us. (Ironically, in a hyper-connected world, they’re more “disconnected” than ever — they need more connection with people like us, people like themselves, people in their neighborhoods.)
• Our marketplace has changed; it’s no longer “3 networks + PBS” and hasn’t been for years. And it’s getting worse as new platforms appear and the audience fractures.
• Pricing models have evolved dramatically as the scarcity economic model dissipates in media markets.
• Our people and processes were selected for legacy customers and markets, not the present day; they need to be retrained technologically and culturally or be replaced.
• Our legacy technology is prohibitively expensive to maintain, doesn’t offer sufficient economic advantage and prevents investment in new technology that would enable new processes and services.
• Our business structures and company cultures are unfocused at best and self-destructive at worst. We focus on “radio” and “TV” and “web” and we promote history over innovation. We need a culture that encourages and develops the best of what our public media “tribe” seeks to experience.

Can we still turn it around? I don’t know. Perhaps in smaller companies with a few lucky lightning strikes of vision and a philanthropic community that supports a positive vision of the future (a vision we must articulate). Or maybe in the largest companies with deeper pockets and tighter links to market forces.

We’re at the cusp of turning it around in Anchorage. Or at least I think so — I hope so. There’s still a great deal of fearless, tireless and perhaps even foolhardy leadership required. We might just have the kernel of what it takes. I think the rest of 2008 will likely set us up for ultimate success or failure. We’ll either get this right quickly or it will likely be too late to recover.

How are you doing with your public media bus?

Recently I’ve told people I know, especially folks I meet via Twitter, that this here blog is really kind of an “inside baseball” thing for public media purveyors or supporters. It’s not a general interest kind of thing. Well, for this post, I’m going to kick up the inside baseball factor a notch…

In the wake of the Ken Stern departure from NPR, the rumblings in D.C. were audible all the way out here in Anchorage (it helps if you have a former NPR staffer working in the next office). Stations across the country were in a tizzy for a few days trying to read the tea leaves — what did it all mean?

Then a few weeks later we heard about the departure of Maria Thomas, NPR’s digital media guru. As one of the chief architects of NPR’s many digital initiatives, her exit fueled speculation that the elimination of Stern was a rebuke of online activities at the company and Thomas left because her days were numbered.

At least that’s the speculation I heard. But I didn’t believe it.

Thomas came to NPR with solid online / e-commerce experience. She did great work at NPR. But I suspected she basically had achieved all she could in a company that, for all its good intentions, cannot move too terribly quickly, given the distributed nature of its goals and relationships. Plus, her work would have gotten her continued attention in web circles. She was likely hit with a job offers repeatedly. 

Today venture capitalist (and uber-blogger) Fred Wilson announced Thomas’ installation as COO of the unique online retailer Etsy.com. While we knew the Etsy part of the story weeks ago, I think the warm welcome she’s being offered tells the real story — that hiring Thomas was a coup for Union Square Ventures and Etsy, not a housecleaning for NPR.

Be sure to check out the introductory video — great stuff. And note what Thomas says when asked why she likes Etsy: “I love that Etsy means connecting with something authentic.” Spoken like the new media veteran she is.

Of course, I could be wrong. Hit me in the comments if I’m missing anything.

Okay, catchy headline, but I’m not actually that “down” on HD Radio per se. But I am against getting excited about it, for all kinds of strategic reasons. A new post by Mark Ramsey has a great kicker paragraph that sums up the state of affairs:

Finally, HD is certainly an “upgrade” from the perspective of the broadcaster and the engineer. But is it an “upgrade” from the perspective of the consumer, who already has more choices than they know what to do with — even if they’re not choices which are not under the control of the radio industry? After all, when the Internet is in my car, isn’t HD Radio actually a downgrade?

This reminded me of a recent instance in which I was on the receiving end of a talk from a broadcast engineer about HD Radio. Not an informative one, but, well… a lecturing one.

The lecture? Basically: “Hey, we’ve got this HD Radio stuff installed. When are we going to start broadcasting additional channels? Because, you know, the FCC grants us a license for community service, so we have an obligation to start using HD Radio to serve the community.”

I was floored.

First, the logic was so brazenly absent from this argument. Second, why is engineering directing public service strategy? Third, we are using the HD Radio gear, even if we aren’t multicasting. And finally, well… let’s list all the obvious market reasons that make multicasting a less-than-critical strategic focus:

• virtually no one has HD devices and sales are not increasingly rapidly
• most consumers don’t know about it
• those that do know about it are not really interested
• HD devices are too expensive for most listeners for casual situations
• additional HD channel development requires additional effort (money), even in a heavily automated approach

…and so on, which makes developing additional HD Radio channels at this time an exercise in wasted money and effort for a regularly-strapped public radio provider. We’d be better off focusing on improving our existing services or forging ahead in new media / social media.

Let’s be clear: the HD Radio technology platform is not the mission of public service media (nor is FM radio or AM radio or analog TV or digital TV or web sites or DVDs or CDs or…). HD Radio is a tool.  It’s up to us to figure out when and how it makes sense to employ this tool in fulfilling our public service mission.

And if, down the road, we find that HD Radio was a waste of money, we should have the courage to scrap it and move on.

The news today that PRX has received a half-million dollar MacArthur grant is fabulous. It’s such a great service in the public media world and it’s gratifying to see good work get rewarded.

They’ve posted all the details here.

I’m assuming that everyone in the public media universe (especially those with FCC licenses of one kind or another) already knows about the Broadcast Law Blog published by law firm Davis Wright Tremaine, LLP.

If it’s not already in your RSS reader or list of sites to review regularly, be sure to get it in there.  The FCC, under the direction of telco-loving politico Kevin Martin, has been very busy in the last year proposing new rules on all kinds of stuff related to broadcasters.  And it’s not little niggling things — this is big stuff that will impact operating costs, reporting activities and more.

Naturally, you should consult with your own attorney before embarking on any changes or new plans, but this is sound coverage of FCC changes and how they relate to broadcasters.

Talk about required reading…

Current published an in-depth article on the NPR / Ken Stern story this week. I’ve updated my list of articles to include it, and it’s a great read on its own. It summarizes a large swath of the Stern history at NPR and points to several core reasons why things just didn’t work out.

I actually came away from this profile liking Ken Stern quite a bit. Did he fit well into the CEO slot? Perhaps not. But he did some great work for NPR. And to everyone’s credit — except a sour-grapes Bob Edwards — the comments from board members and others were incredibly even-handed.

Great show today on Kansas City’s public radio station KCUR with guests Robert Paterson, Todd Mundt and Andy Carvin. The topic? Surprise! New media and public media.

Worth a listen, especially if you’re a little confused about how public radio and public TV can engage the world in an online context.

Total time: about 51 minutes. Download the MP3 here.

(By the way, I’d link to the web page at KCUR, but it appears it won’t be available after this week due to the way it’s published using the Public Interactive CMS.)

If you’re not reading Seth Godin, you’re not paying attention to the future of successful public media. Godin doesn’t address public media directly, but he does address issues of marketing and community and the economics of making money through the products or services a company provides in a new media world.

Godin talks a lot about tending to your “tribe” — that group of people that love your product/service and who share your values or perspectives and interests. If you’ve been in public radio or TV for any length of time, you know these folks. Most likely you’re already a member of this tribe yourself.

Recently Godin gave a talk at a music conference and his comments, while aimed at a music marketing audience, are applicable to all of us in public media — news, music, radio, TV, whatever — because the trends affecting the music business (disastrously) today are the same ones rewriting the rules for all media. And the rules for success in the next generation will be the same: serve your tribe; be indispensible; be the best.

Here are some highlights from Godin’s talk, pointed out by Gerd Leonhard and partially chosen by digitalwaveriding (the boldface highlights are mine):

… if I asked you for the name and address of your 50,000 best customers, could you give it to me? Do you have any clue? [No?] Then what happens every day is you go to a singles bar and you walk up to the first person you meet and propose marriage and if that person won’t marry you, you walk down the bar to every single person until someone says “I do.” That’s a stupid way to get married. A better way to get married is to go on a date. If it goes well, go on another date. Wait to tell them on the third before you tell them you’re out on parole. Then you meet their parents, they me your parents, you get engage, you get married. Permission is the act of delivery. Anticipated, personal and relevant messages to people who want to get them.

… The next thing is what I call the Seinfeld curve. The Seinfeld curve shows us Jerry’s life. If you like Jerry Seinfeld you can watch him on television, for free, in any city in the world two or three times a day. Or, you could pay $200 to go see him in Vegas. But there is no $4 option for Jerry Seinfeld. This is death. You can’t make any money in here. Because if you’re not scarce I’m not going to pay for it because I can get it for free. And one of the realities that the music industry is going to have to accept is this curve now exists for you. That for everybody under eighteen years old, it’s either free or it’s something I really want and I’m willing to pay for it. There is nothing in the center — it’s going away really fast.

… The next thing is this idea that people care very much about who is sitting next to them at the concert. They care very much about the secret handshake. They care very much about the tribal identification. “Oh you like them? I like them!”

… It’s really important to people to feel like they are part of that tribe, to feel that adrenaline. We are willing to pay money, we’re willing to go through huge hoops, trampled to death in Cincinnati if necessary, in order to be in the environment where we feel that’s going on.

… I want to argue that the next model is tribal management. That the next model is to say, what you do for a living is manage a tribe, many tribes, silos of tribes. That your job is to make the people in that tribe delighted to know each other and trust you to go find music for them.

… There is a lot of music I like. There is not so much music I love. They didn’t call the show, “I Like Lucy,” they called it “I Love Lucy.” And the reason is you only talk about stuff you love, you only spread stuff you love. You find a band you really love, you’re forcing the CD on other people, “You gotta hear this!” We gotta stop making music people like. There is an infinite amount of music people like. No one will ever go out of the way to hear, to pay for, music they like.

Fortunately or unfortunately, the future for public media companies will involve considerable “tribe management” and will involve a smaller audience than we have today, either locally or collectively — all media will have far more fragmented communities than in the past. Now is the time to identify who’s in and who’s out of your tribe and figure out how best to serve the community that gathers around public media content and values.

This may sound elitist or even fatalistic to the traditional mass media thinkers out there: “But I want the biggest audience possible!” Well, you can’t have it. Large audiences of mildly engaged viewers or listeners or readers are the old model. The new model requires deep and authentic engagement with that “tribe” of people. You can still invite everyone into the tribe, and you should. But in a world of infinite tribes, folks will naturally gravitate to the tribes that best serve their needs and interests (and they will have multiple tribes, of course).

Personally, I think this is an incredibly exciting time for public media folks that embrace this new approach. There’s new opportunity not only for sustainable businesses, but for truly meaningful, impactful and interactive work. The only problem is developing the courage to let mass media thinking fade over time, even though it’s been tremendously successful for the last 40 years.

Chart created by Bridge Ratings (2006). Click for a larger version.

Last week on the PUBRADIO mailing list, the topic of HD Radio came up again. Commenters went one way, then another — all talking about programming and broadcasting as they usually do. Technology didn’t really enter into the equation, yet it’s one of the core issues in terms of consumer adoption patterns.

Why is HD Radio failing to catch on? Lots of reasons easily come to mind:

• Broadcast audio streams aren’t something new — it’s called Radio and we’ve had it for 100 years; why bother to get a new radio when the old one works fine?
• The higher quality audio possible with HD Radio is nice, but in most listening situations (cheap radios, cars in traffic, noisy offices) the improvement over analog FM is negligible
• Multichannel service really hasn’t arrived at most HD-capable stations so far
• While HD Radio signals are less prone to some types of interference, real-world experience suggests it’s a generally weaker signal, especially if you’re comparing devices with internal antennas (clock radios)
• Though most consumers don’t know it, there are software revisions appearing with HD Radio right now, and most radios are not field-upgradable — it’s not “safe” to invest big bucks in receivers yet
• Satellite radio has blunted the multichannel argument and still offers less commercialism than an HD Radio multichannel service would (admittedly, you have to pay for sat radio, but many are willing to do so)
• Internet audio streams have a bigger audience already and are growing faster than all other streamed audio services

(more…)

Dennis Haarsager, new interim CEO at National Public Radio (NPR), appeared on the NewsGang podcast this past Friday. He spoke fairly openly about the unusual CEO transition and about how NPR may change as it deals with an audience that’s moving to new media distribution channels and interaction platforms.

In addition to Haarsager, the guest list included Stephen Hill from Hearts of Space, Steve Gillmor (the host), and Doc Searls, who also appeared on a panel at the recent Integrated Media Association conference along with Haarsager and others.

UPDATE: Highly Recommended Listening. Haarsager and friends go into depth talking about new media economics and public media’s entanglements — or lack thereof — with new platforms. Money quote from Stephen Hill: “Show the stations how you’re gonna keep them in business and they’ll be very happy to cooperate with [NPR].”

Running time of the MP3 file is about 1 hour, 25 minutes.

The link to the NewsGang podcast has also been added to my (still growing) list of Ken Stern articles.

While searching for more NPR / Ken Stern articles today, I stumbled across a blog post that refers to the news, but spends much more time listing the crimes and misdemeanors of the current public radio landscape, especially as emanating from NPR and other national outlets (APM, PRI, etc.).

Written by Dave Slusher, Public Radio Fails Me explores at length the ways in which Slusher was first captured by public broadcasting and especially public radio many years ago. But it goes on to lambaste public radio for what he feels its become — populist when it comes to cash, elitist when it comes to control, and tired when it comes to programming.

Written by any person on the street, it’s a damning indictment of some of public radio’s (perceived) trends over the past 10 years or so. But this was not written by any random man on the street — it’s written by a man with experience inside the system as a producer as well as consumer.

While I’m not entirely in agreement with Slusher, I do think there are some truths in there with which public radio (and all of public media) must seriously grapple. Slusher’s comments on the changes in the flagship NPR newsmagazines in particular I find fairly accurate. Of course, those changes may account for the doubling in NPR’s weekly audience over the past 10 years. But it’s definitely changed, and for those with an interest in deeper news coverage, it’s not all positive changes.

In any case, it’s a long post but worth a read and a comment at his site, whatever your opinions.

Dennis Haarsager posted his response to the speculation about CEO Ken Stern’s departure from NPR this past week. It doesn’t present a “smoking gun” version of events. However, in the comments to his post, Haarsager lets loose three priceless notes that illuminate these events more than any other account to date:

• “…Mr Stern chose the time and day when he left the building.”
• “…no malfeasance or misfeasance should be imputed.”
• “…transparency is an important ideal; [Stern's] privacy is a right.”

These quotes are very important to understanding the events.

First, he blows the malfeasance idea out of the water. When the news hit about Stern’s departure, I know folks around my shop assumed there was something sinister about the change. Had there been embezzlement? Sexual harassment? Physical confrontation? Why else would the termination be so abrupt? Well, it wasn’t something like that. (And those with personal experience of Ken Stern couldn’t imagine such a scenario anyway.)

Second, Haarsager notes the mutually exclusive issues of transparency and privacy. We observers want transparency in these affairs, but the departed — Stern — has a right to privacy. Personal privacy trumps corporate transparency in this case, and rightly so.

If you’ve ever been in a managerial position, you know there are things you can and can’t talk about when it comes to hiring candidates and terminating employees. Indeed, mostly you can’t say anything. Even if you’re mad at the employee, even if you’d like to give them a swift kick on the way out the door, you say nothing. To say anything negative is an abuse of your power and opens the company up to lawsuits. Besides, the employee is gone now — it’s time to look ahead.

Third, and most importantly, the departure was abrupt, but the timing was Stern’s choice. In other words, Stern could have played this game entirely differently — even leading to a multi-month golden parachute process, I suspect — but he chose to go out this way and at this time. This tells us a tremendous amount without giving details (an excellent balance of transparency and privacy, I think).

Consider how most CEO departures play out: there’s usually a transition period, often a significant one. The Bill Gates departure from Microsoft has been in the works for more than 2 years and he even left the CEO role several years prior to that. Many nonprofits have written succession plans, allowing for smooth transitions either over time or in emergency situations. And even when a CEO departs to “spend more time with his/her family,” there’s at least some degree of hand-off, like a consulting gig with the company until the new CEO is seated. But not here.

So the fact that there’s no transition, that the change was so abrupt and surprising, and the fact that Stern more or less set the timetable speaks volumes. And not to Stern’s credit. In my experience, even if you’re disgruntled, you don’t walk out and cut all ties with the company instantly.

So Haarsager’s statement that the reasons for Stern’s departure were “multivariate” is probably the most accurate, albeit the least satisfying. And from what I’ve gathered privately, it really isn’t all about the new media angle (though that’s one of the variants to which Haarsager is likely referring). But the way this went down — the suddenness of it — suggests much of the problem existed inside the CEO’s office. It didn’t have to end this way.

Personally, I’m ready to move on — we’ve got so much to do in public media. But I’ll continue to update the articles list as needed.