Hello, Newspapers: When in doubt, rely on the idea of complementarity.

Several years ago during a business conference, a colleague tossed a simple and very direct question to the CEO. “Considering the growth of digital medium how long newspapers in printed form are going to survive?” he asked. CEO thoughtfully acknowledged the threat and appreciated the concern raised by the colleague and made a prophetic announcement; “yes, newspapers will close down in decades to come but we will be the last to shut shop.” This discussion stayed with me and I often wondered what did the CEO mean when he said- last to close. Most of our concerns about the future of print newspapers are as follows:

  • Fall in readership as millennials are not reading print form of newspapers
  • News consumption on digital platforms has  much faster growth
  • Advertisers are shifting their budgets to digital marketing
  • Online presence of newspapers hardly brings any revenue

Clearly, all players are worried about getting substituted by the digital onslaught and it is reasonable to be concerned. However, let us take a leaf from the industry’s tryst with technology in general. Music consumption was primarily through records and then cassettes and CDs and now in digital format. What did this do to the demand for music? It increased and in different formats including the recent innovation of Carvaan that plays digital music on radio like instrument. When computers came into our lives, papers were to become a thing of the past. Did we get a paper-free office? No, the demand for paper has actually gone up with rising penetration of computers. Therefore, it may not be right to think solely on the basis of substitution. More so in the case of news consumption wherein the exposure to information through multiple platforms could enhance the overall consumer experience. Let me illustrate this with an example: I have been reading The Economic Times, print edition for almost 30 years. For the last 10 years, ET is available on my mobile app and of course as an e-paper on my laptop. My engagement with ET has gone up considerably as the app sets the agenda for my ET reading during the day. At least in my case, I can see the complementarity between ET and ET app and it is working well.  However, ET doesn’t seem to know this for when they launched ET Prime; a subscription-based business content service; it tried to keep the content exclusive to online only.

I have been following a Hindi newspaper and its digital edition and other digital content using the same brand umbrella. This is one of the largest read newspaper and its readers are also consuming content online through newspaper apps and social media handles. The newspaper brand is likely to benefit a lot with more engagement on its online platforms and that engagement could strengthen its relationship with the readers. If a newspaper marketer buys into this principle of complementarity, it would be easier to devise a strategy to operationalize the benefits. For example, consider these:

  • Can the online version of the newspaper be a subscription-based revenue model?
  • Can advertising options be bundled across platforms to measure effectiveness through well-defined metrics?

My argument is for the alignment of print and online versions in a complimentary manner that raises the marketing ROI of advertisers. A wider and deeper engagement with the readers can be achieved through innovative bundling of revenue streams; subscription and advertising included.

Back to my business conference, the question and the answer that we will be the last to close. In that answer, there were two hidden insights; first, it all depends on how do you see the change and second, are you ready to conceptualize and articulate the change in a way that takes into account all the stakeholders and most importantly, the readers. As much as newspapers can uncover the deeper mechanism that is driving this change, they would be better placed to not just survive but thrive in the changing business environment. And, then all players in the market can aim to close last!

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Managing Knowledge and Ignorance: A Case for Executive Education

“The more you know, the more you do not know,” writes Shriniv Narayan in The Speaking Tree, a daily column in The Times of India. He argues that the observable universe is about 46 billion light-years in radius and there is an unobservable universe that the scientists are unable to fathom yet. Consider this; if that be the state of our knowledge and ignorance about the universe, what would be like our status in terms of our knowledge and ignorance in the world of business that is evolving at a faster pace. It is just not possible to say that your knowledge expedition is over, for newer developments keep reminding us; you have a long way to go. Specifically, in an Executive’s life, the rule is rather simple; one always remains a work in progress! Therefore, the imperatives of self-growth and self-management are rooted in the idea of new knowledge acquisition and the surest way to succeed here is to build commitment for your development goals. Formal and structured learning is a great way to build such a commitment. Clearly, there are many advantages that accrue for business executives when they sign up for such executive education programs:

  1. Growth Mindset: Sure enough, a growth mindset is about the company’s growth in the market place. But that is just half the story. If a company has to grow, its employees must deploy this mindset at the individual level as well and more specifically, in the way they see themselves as significant partners of the growth story. Executives signing up for executive education programs send a clear signal to their employers that they are committed to learn more and contribute more. Is not that what companies are looking for? It is a win-win for both; the employees and the employers.
  2. A Shift in Perspective: Executives enrolled in an education program develop a wider perspective on their business problems. At their work, they mostly rely on the knowledge bank developed within the company based on its own and or it’s competitors successes and failures. In an executive education program, the participants are encouraged to take a ringside view of the problems and build multiple perspectives on a given situation. In the movie Dead Poets Society, Keating (Played by Robin Williams) said, (https://youtu.be/U91Wl2YpkD8)

    “Just when you think you know something, you have to look at in another way. Even though it may seem silly or wrong, you must try.”

    Clearly, an immediate consequence of good learning from a program is about developing new perspectives embedded in multiple paradigms of business. To illustrate the point, let me cite an example from my own learnings. At an executive education program when I was confronted with a business growth challenge, I was focussing on just one stakeholder; the customer. During the discussion in the classroom, I could build another perspective that included competitors- how to include them in our strategy to build topline growth?

  3. Recast Knowledge in Emerging Realities: Often, the ignorance is not about lack of knowledge but more about the fit with the new realities of business. Lets us take a very simple example to illustrate this point. Most of the Sales Managers are aware of “how to motivate your salesforce” formula and they feel very strongly about their own way of managing a sales force. Most of it is grounded in the expectancy theory that is fundamentally built on reward expectancy. However, if you are having a good number of salespeople from the millennial generation, you would want to ask; are my older views about motivation hold true? Possibly not. Maybe this generation of employees are more independent and they would perform best with least supervision. The emerging paradigm of self-leadership would help the sales managers understand that intrinsic motivation is a more powerful source of the ‘drive’ and all they need to do is to craft a ‘purpose’ for their sales force. Think of several such issues in operations, marketing, and HR; your knowledge of these domains need a recast into the new tech-driven realities of the business.
  4. The Network Learning: A good executive program helps in widening your network; you include more actors in your sphere of influence. Participant from other companies, industry and faculty members for the program, they all potentially become part of your network. The peer learning here is cross-functional and multi-disciplinary and therefore, you become more welcoming of new ideas and possibilities.
  5. Self-Discovery: As you start your learning in a structured curriculum based environment, you also get a sense of what are your natural strengths and weaknesses. Such a high level of awareness results in self-discovery not only in terms of your career choices but also aids in shaping newer options; for example – it is not uncommon for executives to discover their entrepreneurial streak during an executive program.

Therefore, when a business executive is evaluating the options of whether to enroll or not to enroll in an education program, it is worthwhile to consider the truth; that we are all work in progress. The more we invest now, in terms of available resources, our quest for managing the balance of knowledge and ignorance would grow stronger. That very quest is what successful managers are made of, and organizations who hire such managers reap long term dividends.

 

 

 

 

 

Missed Opportunities : An Organizational Perspective

Much has been written about the success of new ideas that turned into huge business entities in both technology and non-technology segments of the industry. These are amazing stories of power of imagination, grit, perseverance and ability to withstand failures and getting up one more time to get closer to success. Consider global brands such as Apple or Indian e-commerce giants such as flipkart – these companies rode on the huge entrepreneurial drive and a belief that it could change the ways consumers behaved! In fact many of these companies believed that consumers could go wrong in the choices that they make and if they are given the right choice, consumers will question their own judgments about the product price, quality and experiences. However, if we look at traditional business conglomerates, specially in India, one wonders why these companies could be missing opportunities one after another. Several reasons can be proposed to dissect the phenomenon and some of these are explained below:( Self-limiting ideas and suggestions to overcome these)

1. Change is a  process : Organizations like to believe that change in technology has to undergo adaption process. Rightly so but for few exceptions wherein it does not necessary have to go through all the stages with a defined transition period. Internet and digital technology is one such example. Two years ago, most of the media companies considered this as a developed economy phenomenon. Today, even the industry forecasts recognize the explosive growth that digital media platforms are looking at. The change is much faster than expected and by the time this realization sets in, its too late. Consider tradition newspapers facing competition from news apps. Today we may like to laugh it off, but sooner than tomorrow we may see that in action!

Think about it : Only if Shoppers Stop knew that technology will change the way people buy, wouldn’t they be the largest e-tailers in India? What they believed in was the power of incremental innovation.

2. Incremental Innovation is Good Enough: For sure it is. It allows organizations to be on a steady growth without taking too much risk at the same time introducing products and services that keep meeting customer needs in a more effective way and results in cost efficiency. Nothing wrong in this philosophy but for one : it s a good idea for focusing on your current business/industry. But if you are looking at riding the next big wave of change, the organizational energy required to fire up imaginations is simply huge. Organizations then need to promote a culture of radical thinking to spot opportunities and expand the planning horizon to may be next two decades!

Today, while we continue to debate the future of print media,  futuristic media organizations are looking at media convergence as a way of incremental innovation. The best ones are busy identifying next big wave of opportunities enabled by technology such as Education! Watch out for Bennett University.

3. Thought Bondage : We are the best in the business! Yes you sure are but this is the era of indirect learning, the benchmarking framework has moved. The best practices of business are industry agnostic and beyond geographical boundaries. Thought leadership has just been redefined and a lack of it could lead to though bondage and cripple growth in an organization. In many organizations best practices benchmarking is a no go,even for  its own functions e.g HR, Finanace, Sales etc.  As Prof Rajesh Chandy suggests, ” Its all about spotting opportunities beyond one’s horizon”.

And one of the effective ways to break the shackle is to visit your people strategy.

4. People are HR and not strategic imperative : Its interesting to follow start-up hiring and the kind of emphasis they place on people. Tradition organizations are process driven and are largely obsessed with the idea of people as operation resource rather than that of a strategic resource. To complicate the people issues further, organizations promote ‘personality cult’ that limits the scope of institution building. As Devdutt Patnaik observes, ” Many great leaders are often Banyan trees, who do not let anyone else grow under them. They hire mediocre people and so create an ecosystem of mediocrity, which listens and obeys. They do everything in their power to kick out talent so that they are never threatened”.

Traditional organizations can afford this ( or can they?). Mediocrity strengthens the status quo,never questions it and thrives in that ecosystem till extinction.

Indian Economy and Print Media Landscape: What are the strategic opportunities?

Let me begin with emphasizing on the promising story about expected boom in Indian Economy. On 28th August, The Economic Times carried a special edition on new government’s 100 days scorecard. The dominant themes of this short-term review are as follows:
1. India Inc is confident and geared to drive the economic growth .
2. Push to FDI and financial inclusion are likely to brighten up the markets.
3. Infrastructure, entrepreneurship will be the key drivers of growth.
4. And, governance will play its role of enabler.
ET followed this up with another story that certainly makes the air pregnant with optimism: Indian economy set to achieve highest ever growth, in the next two years.

What does this mean for Print Media Business?
As per FICCI-KPMG Indian Media and Entertainment Industry Report, 2013, India is one of the largest newspaper markets with more than 107 million newspapers circulated daily, that accounts for more than 20 percent of all dailies circulated in the world. The market potential is even bigger – the penetration of newspapers into the literate population of 579 million is at 30 percent only. The report suggested few important pointers of growth in this sector: ( Quotes from the report )

• “Traditionally English language revenues have enjoyed a majority share; however, revenues from regional languages (Hindi and Vernacular) will catch up with English by 2015 erasing the historical advantage that English enjoyed.”

• “Despite the fact that regional languages command better readership in comparison to English, advertisers have had a higher preference towards urban geographies with English newspapers catering primarily to SECA/B households as target audiences. Though the top six metros constitute only 30 percent of the total consumption of goods and services, roughly 60 percent of the media spend is diverted to these top 6 cities . In 2007-09, the advertising rate premium commanded by English newspapers was roughly 10x times that commanded by regional languages. This was because English newspapers were perceived to have better coverage in Sec A, B homes corresponding to consumers with higher purchasing power and concentrated in urban pockets. Tier 2 and 3 cities witnessed higher advertisement spends in consumer sectors in regional languages and local newspaper editions. Regional language dailies also demonstrated increasing coverage in Sec A, B homes while holding on to their broader readership bases in semi-urban and small towns. We expect the ad premium disparity between English and Regional languages to continue correcting as the value proposition of a strong and expanding regional readership base gains momentum in the years ahead.”

The McKinsey Global institute suggest that while the total no. of households in India will grow by about 40 million (from 2015 to 2025); 34 million will come from middle and the bottom of the consumer pyramid. The aggregate consumption is likely to grow by 100%!

If we summarise the key takeaways of these reports and the projections therein, it’s clearly a big case for projected growth of advertising in smaller markets and not surprisingly, Language newspaper segment would be the potent driver of growth for the industry. This trend was evident from the shift in strategies related to product-market combinations. However,  the strategic vision and unmatched delivery promise of BCCL Languages (A bouquet of language newspaper brands owned by BCCL), is set to change the tactical and innovation value chain in language advertising business. Let us consider the likely shift in consumption patterns and the resultant need for reach to the consumers. No newspaper company can afford to miss this excitement of delivering value to the advertisers.

The big value-creation opportunity and strategic imperatives

• Much like in telecom, credit cards and travel/hospitality business, strategic alliances are the new realities in print media business. Therefore, media brand A in Tamil, B in Marathi, C in Kannada and so on, will be required to evaluate strategic options for alliances that would go beyond the principles of cartel formation and explore value creation opportunities based on advertisers (marketers) needs.

• Language newspaper brands would require a deep sense of market sensing and ability to innovate to create superior customer value: both for the reader and the advertiser.

• Marketers will be eyeing tier 2 markets for several value communication opportunities such as product trails, discounting through coupons etc. Newspapers with better sense of appreciation for their outbound logistics and market distribution will be more successful in delivering higher value to its advertisers.

• Newspapers operating with a tight cost philosophy are likely to be more future ready. There could a full range of strategic considerations including shedding readership that does not add to firm value.

• Since absolute leadership will be impossible to achieve in a fragmented media space, the key source of competitive advantage will be more about spotting collaboration opportunities for value maximization ; both for the customers and the firm.

• Lastly, the possibilities of regional players forming a formidable alliance on a pan India basis across the print media verticals should be a source of serious worry to the bigger players. They would require tighter control on their resources!

Why Indian newspapers would soon be competing with your Wi-Fi router?

“There is still hope for traditional news organizations if we can make some courageous choices and recognise our own flaws.” – David Skok
As per FICCI-KPMG Indian Media and Entertainment Industry Report, 2013, India is one of the largest newspaper markets with more than 107 million newspapers circulated daily, that accounts for more than 20% of all dailies circulated in the world. The market potential is even bigger – the penetration of newspapers into the literate population of 579 million is at 30 % only.. While the global print industry business trend, especially in US and UK, were on decline, India had a promising growth story. Few points to consider:
• “The fortunes of the print industry in India are increasingly tied to those of the advertising industry, which in turn is correlated with nominal GDP growth.
• “Despite the fact that regional languages command better readership in comparison to English, advertisers have had a higher preference towards urban geographies with English newspapers catering primarily to SECA/B households as target audiences. Though the top six metros constitute only 30% of the total consumption of goods and services, roughly 60% of the media spend is diverted to these top 6 cities.

This report indicates that the top six cities and its English newspaper readers are the at the core of print media business in India. By suggesting these cities as core markets, I do not intend undermining the importance of tier II cities. These markets will certainly grow but the core markets comprising of 6 metro cities will present a different set of problems/challenges in varying strengths.

Challenges in Newspaper consumption in core markets

Prof Clayton M Christensen of Harward Business School who developed the theory of disruptive innovation suggested that newspaper organisations can effectively add more and more years to their lives by considering their audiences first. Knowing your audience is great. However, not going beyond the stated statistics and missing the opportunities of helping the audience in his ‘jobs’ (where your newspaper could be of help) could be of detrimental consequences.

Your audience today look forward to your newspaper every morning and he/she likes to be ‘with the newspaper’ while he/she prepares to get ready for work. Well, general knowledge you would say! Yes, but the trouble is that this ‘with the newspaper’ idea may slowly be changing its platform: not through the door step, but with the internet signals through the wi-fi router! No, but we are not losing any readers…..well, correct yourself – you are possibly not losing your buyers but are certainly at risk for losing readers. And at the core of this readership development is ‘engagement’. Let us look at few engagement challenges and opportunities which newspapers companies should consider and build upon for strategic longevity of this business.

Right of Way is not good enough: At an average household, the numbers of devices that can connect to internet are on a rise. It’s common to find people logged in on multiple devices- laptop, tablets et al. Therefore, right of way is a shared thing today. The question is not about whether the newspaper will be read or not….. the real issue here is, will the newspaper be the first to interact with the reader? One of the ways companies can build this up is through focussing on the extant newspaper distribution models. The objective could be to “be there before your reader wakes up” and establish the “First Right of Way”. Let your reader know that he can start his day with his newspaper and at his own pace!

Newspaper Distribution Models: Newspaper distribution in India is a very cost-effective mechanism that is fairly complex and is understood in the context of priorities of the newspaper companies. Companies need to expand these individual priorities horizons to converge on a common canvas: How to make the channel efficient in handling distribution? There are several questions that need to be answered such as: What is the state of distribution business? Are there opportunities for technology adaption? What are the pain points? What are the issues around resources? Landscapes of the cities are changing with residents increasing in high rise buildings. What are the unique challenges and opportunities?

It’s important to recognise that in our country, one of the key strength that this industry enjoys is a very low cost shared distribution model. By that logic alone, companies need to protect this and develop the channel with a common agenda- First Right of The Way.

Value creation at Distribution Channel’s Bottom-of-the Pyramid

One of the ways companies can identify and capture value at the channel’s BOP is to engage with them on a business-to-business partnership. What I am suggesting here is that companies need to make the channel realize its true business potential by partnering with distributors and newspaper vendors. Potentially, they could be a great aid to innovative selling ideas to advertisers who are looking out for ‘fragmented reach’.

Clearly, these opportunities need to be tapped immediately. Industry needs champions who can junk conventional and prohibitive ideas and build a collaborative platform to harness the true potential of value creation opportunities embedded in one of the most mundane, taken-for-granted aspect of business- the distribution channel. As for audience, they are not obliged to wait. Therefore, if I do not receive my newspapers at 6.30am, well, I may continue buying the newspapers, but for my reading I am going to reach out to my Wi-Fi router!