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, Robert Paterson pointed out a Diane Mermigas piece talking about shifts in the advertising market, especially in relationship to network TV sales. According to the Mermigas analysis, network TV stands to lose up to $1.5 billion during this season of “up fronts” alone. That’s a lot of dough for any industry to lose nearly overnight, even if it is spread across several mega-media corporations.

I commented on Paterson’s site, but realized I liked my response so much I wanted to elevate it to my own blog in the process. Here’s Paterson’s question and my own response:

Is this the problem stated in Money terms?
Here is Diane Mermigas talking about the commercial networks — is this the same for NPR and PBS?

I would say Public Media are not impacted as directly by advertising losses like this, nor do the losses/impacts happen in phase with commercial media.

But the losses are there or soon will be (depending on the size and sophistication of your advertising clients).

But what’s worse — much worse — is that revenue from advertising (sponsorship!) is not managed as professionally in public media as it is in commercial media. This means that trends in ad spending are not understood as well in public media as they are elsewhere. So as changes ripple through the ad space, public media won’t figure it out for several cycles. Blunted reaction times will lead to lost opportunity and lost money.

Commercial outlets have a firm, financial bottom line and they calculate where that line lies every day, every week, every month, every quarter. Public media is not so fastidious. Our bottom line is the soft concept of “public service” (imagined in many different ways) and revenue is only a means to that end. We don’t have hard measures of public service, we don’t analyze so deeply or accurately, as a group (I’m sure there are some exceptions, of course).

Indeed, as nonprofits, we tend to downplay “overhead” costs like sales analysts or “management” functions that could lead us to higher revenues and better customer relationships in the underwriting space. We don’t really operate like a business where it matters most — where money intersects with mission.

On top of all that, then there’s the problem of TV. All TV outlets have fewer and fewer viewers as the mass media model breaks down in a flurry of new outlets and platforms. And then there’s the demographics of PBS generally, which are less-than-desirable for many marketers.

In short, the money is moving where it can get greater impact, and public media outlets are pooly prepared to sense the change or alter course to meet the advertisers at their new destinations.

The solution? Get engaged locally in a way that’s unassailable by national trends. Build deep relationships that, yes, can be “monetized” in both corporate and individual realms. Develop relationships with sponsors that have historically not played in local media. Plus, get your butt online in a real way, not with business card web sites. Oh, and be sure to have some hard-nosed analysts on board that keep the business honest on the numbers — avoid the doe-eyed optimism that sometimes overtakes “soft” nonprofits like ours.

There’s been a lot of chatter this week about NPR’s coverage of the earthquakes and their aftermath in the Sichuan province of China, and for good reason. Reporting, especially by Melissa Block from Chengdu, has been remarkable: it’s immediate, detailed, dispassionate, and yet so completely human and humane. Lots of folks in public media have noted how proud they were to be professionally associated with just this kind of public service, and I felt the same way.

Indeed, I felt about NPR’s coverage exactly the opposite of what I feel every time I see or hear commercial media reporting on, well… anything. I’ve cited before my disgust for all things TV news and especially cable news. The disasters that are CNN, MSNBC, Fox, CBS, ABC, NBC and so on would be laughable if they weren’t so fundamentally damaging to our democracy. They’re a cancer, not a public service, as they make our nation dumber with each minute of air time. They’re part of what I call the “bread-and-circuses” media. (And I’m not saying this for dramatic effect — I’m literally angered and saddened with each appearance of Wolf Blitzer and the army of morons that make up commercial TV news.)

Which leads me to a positive point, rather than just a rant.

(more…)

Below is a great little video I’d never seen before today. Had to share it. It concerns Kodak and while it starts out slow for the first minute, it rapidly picks up speed:

Kodak has for many years been the butt of innovation jokes, but it would appear they’ve survived, albeit changed in many ways. They found their way back to their mission: helping folks capture, store and share important images from life. Prior to the turnaround, they thought they were in the film business.

When I finished chuckling I wondered… What would a video similar to this one look like or sound like if it were being done for the public media industry, say 5 years from now?

Many seem to think we’re public broadcasters (I’ve been lectured on this more than once). Really? We only exist to fill FM frequencies or put pictures into living room boxes? That’s it? God, I hope not. I’d much rather be in the business of going out into the community, capturing stories and information, and sharing all that with the community in a thoughtful and community-developing way. I couldn’t give a rip about FM or TV technologies. Or the web for that matter. Those are all just tools.

In any case, thanks to Howard Weaver for blogging the video, but also blogging some great comments collected at a conference panel with Kodak, P&G and Owens-Corning executives. Weaver’s quick write-up is well worth a visit, especially for the killer quotes provided by the execs.

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.

Great little summary of the present and near-term tech developments related to TV and video distribution technologies by Wall Street Journal tech columnist Walt Mossberg.

Found via Gerd Leonhard

I hate the word “community.” It’s a catch-all word that means so many things it feels like it means nothing. When I use it I feel a little silly.

Yet there’s not really a good replacement for the word. Or at least I haven’t found one I like.

Check out a thesaurus — is there anything that can both refer to a geographically-bound collection of individuals while also referring to a group of individuals that are naturally cohesive around a shared affinity?

Society has too many connotations of snootiness or political implications (”The Great Society”). Association is usually attached to the name of a lobbying group. Neighborhood is nice and informal, but it’s too geographically-bound and too small-scale. Nothing else quite matches “community” in terms of flexibility and meaning, right?

If anyone has a better term, please share it in the comments. I really would like to find another word I can use interchangeably with this term.

Tech writer David Pogue has a great little piece up today explaining why using Web 2.0 (interactive) technologies and methods are important for any company. Public media is no different, of course, and if we are supposedly community-focused, then it means even more sense that we open the doors to the public. (It’s always surprised me how little the “public” appears in public media.)

He has a particularly funny example from an internal — yet open-to-the-public — disussion at Microsoft regarding whether the game Minesweeper should be included with Windows.

Bottom line?

Yes, you’ll have to moderate this stuff. Yes, it means spending money with no immediately visible return on investment. Yes, it’s more work for everyone.

But you’ll gain trust, goodwill and positive attention. You’ll put a human face on your company. And you’ll learn stuff about your customers that you wouldn’t have discovered any other way.

Funny how trust comes up first in his list of benefits. Sound familiar?

Good reading.

TV stations and professional staffs — commercial and noncommercial alike — have been around for more than a generation. Television started in the middle of the last century and since then thousands of people across the country have built careers upon the technologies, processes and the advertising dollars that flowed freely for decades. A complex art and science, TV demanded workers develop expertise with an arcane and complex set of tools for their unique work. Creating a high-quality TV show was impossible without armies of specialists to turn all the required knobs and punch all the required buttons at synchronized moments.

Money from national and local advertisers flowed easily to television stations — the mass medium of choice that gave advertisers access to an impossibly huge audience; an audience bigger than the daily newspapers; an audience bigger than any single radio station. Advertising money built the industry, dollar by dollar, viewer by viewer. It’s been a great ride.

But those days are coming to an end. Actually, they’ve already ended. Advertisers and TV execs have simply been slow to realize it and are only now starting to act. (Think of it as the music industry, circa 1995.)

Why? What’s happened in the TV market to make stations swing from cash-rich to cash-poor in just the last 10 years? What’s bankrupting the system? And is this a permanent trend or just a temporary blip? Here’s the answer in less than 5 minutes:

YouTube Link

The economic model of traditional TV has imploded as the viewing options have exploded (not to mention all the competing technologies that have emerged in the last 10 years, exacerbating the problem). And as the money for TV broadcasting goes away, the ability to produce programming similarly dries up.

For small and midsize public television stations (not the rich behemoths like WGBH) that want to produce original programs of public value, the path ahead is actually pretty clear and comprises two primary modes:

1. Big TV. Large-scale high-end TV productions will be few and far between. They will be funded as independent projects, will mostly involve outside contractors rather than inside employees, and will draw most of their funding from external one-off granting sources. Public media companies might manage or “host” these projects, but we won’t fund them from operating cash. When 1 or 2 hours of “PBS quality” video costs $250,000+ to produce, it’s clear the economics are beyond the meager budgets of smaller stations.
2. Small video. Ongoing local productions must scale back to one person + camera + laptop, in variations of the VJ (video journalist) model, as espoused by Michael Rosenblum and others. These small productions must be aimed at multiplatform niche distribution rather than mass entertainment. Plus — an important second fact — we won’t produce all this content by ourselves. We’ll curate and collaborate in ways that will make the traditionalists scoff and sputter. In the end, “TV” folks will either become multifunctional “video” folks or will have to leave for production jobs at specialty video houses.

And that’s just the short-term transformational model (up to 5 years), focused on video content production. It’s quite possible that owning an actual television station (the licenses, the towers, the impossibly heavy technical infrastructure) will become economically unsustainable rather quickly as new technologies chip away at TV’s traditional dominance. Indeed, owning a local over-the-air TV station is likely to be financially dangerous to all but the most efficient regional or national network owner-operators by 2015.

If we in public media believe it’s our mission to serve the public interest using digital media, then video must be part of the equation. But does “TV” have to be in the mix? In the short term, definitely. In the long term, maybe, but probably with significant strategic changes.

For now, we may not know the fate of local TV stations, but traditional TV production models are already dead. The revolution is underway. Click below for another 90-second forehead slap:

YouTube Link

So these are the market realities. It’s up to us to decide whether these are exciting or threatening developments. Should we engage and evolve or should we hunker down and hope for a different future?

I know my answer. What’s yours?

If anyone in public media hasn’t figured it out yet, the merger of the two satellite radio providers — which just got antitrust approval by the Justice Department — is not a big deal. It was inevitable, but it shouldn’t affect your core strategies going forward.

Internet radio, in various forms, was, is and will be bigger than satellite radio. That’s where the action is — the threats and the opportunities.

If you haven’t seen the Bridge Ratings chart before (linked above), be sure to study it at least a little. The satradio providers are just bulking up in the hopes they can eliminate duplicative overhead costs and, together, get a bigger audience. After that, there’s no more “there” there than there was before. And without direct competitors, the merged company is more likely to enter into a period of strategy decay.

So good luck, guys.

UPDATE: Just found Mark Ramsey’s take on the news.

Geeks out there probably know Leo Laporte, the long-time commercial radio and TV host, made especially well-known via the now-defunct TechTV cable channel. He continues to develop media, having built the TWiT podcast “network” over the past couple of years, including the flagship This Week in Tech podcast, drawing some 200,000 listeners a week.

In a blog post this weekend, Laporte describes several changes he’s bringing to the core show, centered on live video streaming. I’m recommending the post because he describes both some Media 1.0 troubles he’s had lately and then describes the changes he’s about to make in his Media 2.0 company.

Why should public media folks care?

Because Laporte is doing what many of us in public media are not, and his strategy is especially well-suited to the Media 2.0 economy:

• he’s engaging with his community in a two-way and multi-way fashion that’s meaningful, open and authentic
• he’s increasing his real-time contact hours across multiple digital platforms (he doesn’t limit himself to one platform)
• he’s doing it all himself, on the cheap — there’s no network or corporation pushing him forward or holding him back

Laporte’s example is inspiring. Imagine what a public service media company with a true local engagement mission could do, using similar methods and the same low-cost, low-risk, rapidly-developing technologies. Engaging your community, communicating with your “true fans” is not a matter of holding public meetings or taking pledge calls. I’m hoping to steal some of this TWiT model for use in my shop (assuming we can get past our difficult strategic planning process).

But we’d better move fast.

Because in a world where Content is a commodity with a value approaching zero (or as Robert Paterson described content recently: noise), all we have left is Contact and Context. PBS and NPR can provide content on a national scale and with unrivaled quality. They can even distribute it and gather financial support for it directly. So we, the locals, must do what they cannot: provide authentic contact and develop a contextual service in tune with our local communities.

Take a look again at Laporte’s example. He’s building out in service of his “tribe,” his community. He’s co-creating value with volunteers in his “TWiT army.” He’s using two-way platforms authentically. He’s got real-time contact with his audience. He’s doing it without transmitters or other oppressively heavy engineering costs. We should be so lucky.

We can be so lucky.

If it seems like the world moves faster, technologically, with each passing year, you’re not imagining things.

Consider this chart:

Starting from its introduction, the simple telephone took 71 years to arrive in just 50% of American homes. Think about that. An entire generation was born, lived and died waiting for a telephone to arrive in their home, and only half of them got it!

Even electricity took 52 years to reach 50% of homes. Cell phones — that ubiquitous device most of us take for granted — took 14 years, but the MP3 player took less than half that time.

Basic Internet access — the new omnimedia connection — took 10 years to reach 50%, and in the early days it wasn’t even that much to talk about. Today, high-speed Internet access is in well over 50% of homes in the U.S. and average speeds are rising (though not fast enough for me).

There are two lessons here I can see:

1. We cannot be transmitter companies (and indeed, we never were — we just thought we were because it was easier that way). Technology is a tool, not a purpose.
2. The public naturally innovates as better tools arrive for information gathering, sharing and entertainment. We must innovate with them to serve them; innovation must be built into our DNA.

What other lessons can you see in this chart?

A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be. –Wayne Gretzky