How Great Media Companies Fail on the Internet
There is no media company today that is unaware about the great opportunities in Digital. Many of these are fantastic companies, with strong management, fabulous brands and some of the world’s most talented people. Yet when it comes to Digital Media, industry paragons flounder. Why is that?
There seems to be a pattern to Digital Failure. Senior management makes interactive media a “top” priority. Success is to be achieved at “all costs.” Consultants are hired, offsite meetings held, strategies proposed and vetted. All of this is done with the diligence, thought and big budgets with which they became so successful in the first place.
Unfortunately, it is this same approach that has served them so well in the past that dooms successful media companies to Digital Failure. The problem is that best practices in Offline Media can become worst practices Online.
Common “Old Media” Mistakes
Failure to scale the business to the opportunity: Part of the reason that many media companies fail is precisely because they make the stakes too high. They go too fast and spend too much. They often find that they spend much more than the immature, heavily segmented Digital market can earn a return on. (See Disruptive Innovation)
To make matters worse, their competitors are doing the same so competition for scarce resources becomes fierce, raising investment further and making it harder to earn a profit.
Top-Down Management: Usually, top management wants to be involved personally with Digital initiatives because They are so important. Not only does this contribute to the scale problem, it squelches innovation on the ground. When the boss is around, people’s jobs are on the line – risk taking inevitably loses out to conformity and “yes men.”
Overemphasis on Process: Successful media companies have developed a lot of processes and best practices, and that is a big reason that they have succeeded. Naturally, they want to do the same in the all-important digital arena.
Unfortunately, nobody understands interactive media that well and new standards are being created every day. Process needs to be created and that takes a lot of trial and error. Digital Media is about becoming, not being. You have to be constantly learning.
Strategic Rigidity: After big plans are made and big budgets are set, nobody wants to admit it when things start going the wrong way. There is too much riding on the initiative.
It’s an unfortunate situation, because traditional media companies have a lot to offer the digital world (See 5 Things “New Media” Can Learn from “Old Media“) However, in order to succeed, legacy companies will have to do some paradigm shifting.
How to break the cycle
In order to break the cycle, traditional media companies need to do more of the same, but totally different. By more of the same, I mean that these companies already know how to inform, engage and excite audiences. Top media companies have already built brands that people not only love, but help them define themselves.
When a woman says see reads Cosmo or watches MTV, she is defining herself quite differently from one who reads Good Housekeeping and watches Lifetime.
However, as consumer media behavior changes, media incuments will need to learn how to do the old things in new ways and that will entail breaking some old taboos.
Common infrastructure, but decentralized strategy: There are enormous economies of scale with technology. Building a basic infrastructure is crucial for keeping costs down and maximizing functionality. If basic technology is sound, universal, secure and stable, innovation on the component level is fast, cheap and scalable across the entire network. (See 5 Crucial Aspects of a Digital Transition.)
On the other hand, once you have basic technology standards in place, separate brands should be given a small budget and the freedom to set product strategy. Let individual teams drive innovation and you will gain speed as well as improve quality and performance. (See Building Effective Web Product Strategy)
Tear down that Chinese Wall! : Because so little is known about digital media and there are so few standards in place, people will need to learn to work together much more closely than most media companies are used to. Old silos need to be taken down and companies need to be reintegrated. Best practices need to be shared across brands and functions.
Regular best practice meetings should be held without the presence of top management. In my experience, monthly meetings seem to be the right frequency, but every company needs to find what works for them. I never attended a best practice meeting (which is probably one reason they were so popular!)
Use Digital as a Multiplier: Rather than chase the latest fad, which will probably have peaked by the time you hear about it, incumbents should first try to use Digital to multiply the effects of what they already do well. There is no “Great Digital Threat,” only missed digital opportunity.
Make Frienemies: If you put up walls between you and the competition, they will leak anyway. Audiences and advertising money are much more fluid in the Digital World. Legacy media owners will need to learn how to cooperate and compete simultaneously (especially with banner sales, which are transactional rather than strategic).
Change Accounting Templates: New media is a different business with different metrics. It requires greater integration, which means that costs revenues will be mixed together from different brands to a much greater extent than most companies are used to.
As business practices evolve, accounting practices will have to evolve too. CFO’s won’t like it, but they will have to learn to adapt accounting practices to the business practices and not the other way around.
Muddle Through: Digital Media is exciting because it keeps surprising us. Strategic planning goes hand in hand with implementation, which means that you don’t really plan ahead much at all. You’ll be most likely be wrong anyway, so there isn’t much point.
In Digital Media, you have to be willing to make mistakes. By the time you finish a standard planning process, the facts on the ground will have changed. You can only plan for what you can predict. Mistakes won’t kill you as long as you make them cheaply and correct them quickly.
It is probably this last point that is the hardest for seasoned managers to swallow. But once you get past that, what you’re left with is probably the most exciting opportunity in the history of business!
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